Consumer Defense Stocks
Consumer defense is the effort by government and private organizations to ensure that consumers are not harmed through unfair, misleading or deceptive practices in the marketplace. Consumer protection is often accomplished through the use of laws and regulations imposed by legislative bodies or administrative agencies, but it can also be achieved through public education and the efforts of individuals to avoid scams and fraudulent business practices. Government participation in consumer protection is often a combination of enforcing laws and regulations at the federal, state and local levels. In addition, a variety of private companies regularly engage in consumer advocacy through corporate “consumer affairs” departments and by supporting community organizations that monitor businesses for violations of consumer rights.
Consumers generally are not well-positioned to protect themselves from unscrupulous business practices, and it is a major function of government to step in when it becomes necessary to do so. A wide range of laws and policies exist to protect consumers, including limiting false advertising, forcing producers to disclose the ingredients in a product, prohibiting price fixing, requiring a right to repair products that are defective or dangerous and imposing restrictions on data collection, surveillance and other practices that violate privacy.
Another important component of consumer defense is ensuring that consumers are given full and sympathetic consideration in the processes that make laws and regulations to safeguard them from unfair, misleading or detrimental practices. Consumers should be allowed to participate in all processes of lawmaking and to challenge any laws or regulations that do not serve their best interests.
The need for consumer defense is a constant challenge to society because the ability of market parties to exploit consumers is virtually unlimited. The current trend in consumer protection advocacy is to search for more powerful remedial devices such as Federal Trade Commission enforcement and private class action lawsuits. These types of solutions tend to miss the mark and can be counterproductive, leading to over-regulation and excessive litigation that harms the interests of both consumers and business.
A variety of industries are involved in consumer defense, such as utility companies, food and beverage manufacturers and healthcare providers. Companies that manufacture and supply these essential services have the advantage of being less sensitive to changes in the business cycle because they provide a regular service that is not easily replaced.
Investors often choose to invest in consumer defensive stocks, which are those that are involved in producing or supplying goods and services that are essential to the human condition. Some of the most popular consumer defensive stocks include telecommunications companies, utilities and drug and pharmaceutical firms.
The Division of Consumer Protection helps New York consumers who are harmed in the marketplace. The division also encourages business and industry to maintain high standards of honesty, fair business practices and public responsibility in the production, promotion and sale of consumer products and services. The department frequently publishes reports on consumer issues and works with other state agencies to provide information and education to the public. The division provides assistance to consumers with debt problems, credit reporting and identity theft, among other matters. The office also monitors businesses to ensure they are complying with state and federal treatment standards for the mentally ill.
