Investing in Consumer Defense Stocks
In a world where many people have become dissatisfied with the quality of service they receive, their purchasing power has diminished, and their bargaining ability has been weakened, consumer defense is more important than ever. Consumers can protect themselves by buying products and services from companies that have earned high marks for their quality, by using alternative means of dispute resolution, and by exercising their rights under existing laws.
Businesses that engage in anti-consumer practices violate state and federal consumer protection laws, consumer fraud legislation, antitrust law, and criminal laws. These statutes often provide separate causes of action to victims, and empower state attorneys to mount a concerted enforcement effort. Moreover, such business conduct also violates established legal principles — including the right to fair dealing and the rule against deception.
The emergence of consumer protection as an independent legal field is linked to the evolution of economic and political systems. The first regulations aimed at protecting consumers took root in the end of a long dictatorial period and within the framework of a new political charter. The charter explicitly declared that “the State defends the interests of consumers” and provided the framework for the issuance of the first regulation aimed at consumer protection in 1983: Supreme Decree No. 036-83-JUS of 1983.
Since then, the scope of consumer protection has expanded and has been reinforced in a variety of ways. In the 1990s, the European Union created the Consumer Rights Directive and the European Data Privacy Regulation to impose rules on companies that process consumer information. The directives set strict limits on how companies can use personal data and require them to notify customers when their data has been hacked.
In addition, individual countries have adopted their own laws regulating the protection of consumers. The United States has the Fair Credit Reporting Act and the Consumer Privacy Protection Act. Both the FCRA and the CPPA have substantial penalties for violating their provisions, and they make it illegal to report inaccurate information or give misleading information on your credit report.
Investors are able to invest in consumer defensive stocks, which produce or distribute essential goods and services that are relatively insensitive to changes in the economic cycle. These include water, gas, and electric utilities, food and beverage manufacturers, hygiene products, tobacco, and household items. These companies usually have high barriers to entry and brand recognition. They usually pay dividends, which can help investors sustain their portfolio during periods of stock market turbulence.
