Consumer defense involves the efforts of government and private organizations to protect consumers from bad business practices. It includes the promotion of fair and ethical marketplace conduct, the enforcement of legal remedies for consumers who have been wronged, and the improvement of public policies to promote fair and equitable economic growth.
Consumer protection begins with the need for trust between producers and consumers. Producers must demonstrate that their goods and services are of good quality and safe for use. They must make that promise clear to the consumer through advertising, labels, displays, sales assistance, and try-out periods. When a producer fails to live up to that promise, the consumer and other consumers test and monitor the firm by means of unannounced inspections, decoys, undercover operatives, investigations, and second opinions.
The importance of trust between producers and consumers is a core element in the economic system. When consumers have enough confidence in producers to be willing to pay for their products and services, economic activity flourishes.
But consumer defense also entails protecting consumers from fraud and theft. Fraudulent and untrustworthy business practices can destroy the financial well-being of families, harm their reputations, and ruin their lives. In addition to pursuing law enforcement actions against businesses that engage in these practices, government agencies and private nonprofit organizations provide information, education, and resources for consumers to safeguard themselves from scams and fraudulent offers.
In the market, consumers have a wide range of choices when it comes to goods and services. These options can include traditional products such as groceries and clothing, or newer innovations that involve electronic devices and social networking.
One of the most common issues facing consumers is that of contract law. These contracts are often enforceable only by the business, so that consumers can only pursue legal remedies if the business breaches the terms of the contract. The business may sue the consumer, employ collection agencies, or engage in any other self-help measure that is legally available to it.
However, there are some instances where this approach leaves consumers vulnerable to legal threats. For example, if the business violates state and federal laws by embezzling the money of a client, the victim can recover any amount that exceeds the contractual amount of the service.
The problem with one- way contracts, then, is that they leave consumers without a remedy for fraud or other violations of their rights. It is akin to having no law in place that provides a mechanism for recovering property rights when they are illegally expropriated by a stranger or a contract partner.
This is the reason that many advocates of consumer protection advocate for enforcement- based solutions, such as class litigation and Federal Trade Commission enforcement. While these are important, they do not always work.
Instead, we need more potent alternative remedies to bolster the law of the contract. This will require a shift in the way we think about contract law.
In my view, this requires the development of a new type of contract law that is based on a system of voluntary consumer protection. A voluntary system can provide a stronger protection than a one- way contract regime by creating incentives for firms to comply with consumer-oriented legal requirements, rather than simply allowing them to do so on their own. In such cases, the underlying structure of the contract is not changed, but new forms of enforcement are developed.