Consumer defense is the process by which consumers seek to protect themselves from unfair or illegal practices in the marketplace. It includes both voluntary and regulatory approaches to protecting consumers.
Voluntary protection is a relatively common way of defending consumers against fraud and scams in the marketplace, and it is often undertaken by nongovernmental organizations (NGOs). It also occurs when governments issue regulations to ensure that certain goods or services meet safety, quality and other standards.
This type of protection can be especially important for vulnerable populations, such as children, elders and those living in poverty. It can help to protect against predatory behavior and rip-offs by companies who are trying to exploit vulnerable groups, such as immigrants or members of tribal communities.
It is also useful for protecting against racial and gender-based harms, such as child trafficking and discrimination in housing and employment. These kinds of policies also benefit the general population by ensuring that consumers have access to products and services that are safe and legal.
NGOs that are funded by governments typically focus on protecting the rights of consumers and communities, including those who have historically been excluded from market participation or who have been subjected to unfair practices in the marketplace. These projects include policymaking, community outreach and other interventions that will improve access to justice for these groups, as well as research regarding harms or risks faced by these groups.
In the United States, for example, consumer protection is a major concern of the Consumer Financial Protection Bureau. The agency is responsible for enforcing federal law on issues like mortgages, credit cards and student loans.
The agency is funded through a combination of fees on consumer financial products, donations from lenders and the government’s appropriation of funds. It has faced a number of challenges, including legal challenges from Republicans and business interests who want to stifle the agency.
Economists have studied the effects of various forms of government regulation, such as licensing restrictions on business owners and government-approved standards for food or drug development. These restrictions can stifle innovation and limit choice for consumers.
These regulations can be costly for businesses and can hurt the economy, but they are also effective in protecting consumers from exploitation by unscrupulous companies. These regulations also make the marketplace safer for consumers, as they prevent dangerous products from entering the market.
Several countries have passed laws to protect their citizens from predatory business practices. These laws can include licensing restrictions on business owners, regulations that impose stricter rules for certain industries and enforcement of laws against false advertising and deceptive practices.
One of the most notable examples is the Food and Drug Administration, which carries out its mission to protect consumers from unsafe drugs and other products by regulating pharmaceutical manufacturers and pharmacies.
The FDA, along with other government agencies, has become a prominent target for criticism from economists who point out that these agencies are inherently political, and that they have the power to regulate based on their own political agendas.