You buy a new bike for your daughter as a birthday gift. When she tries it in the park three weeks later, you both notice the front tire is bent. What do you do? Should you fix it yourself and avoid the trouble of going back to the store? Has the return time lapsed? Is the bike still covered under warranty? What do you do if you didn't purchase extra insurance coverage?
The blue sweater you bought has given you a rash. When you look at the label, you notice that it's not 100% cotton as advertised. Instead, it is made from a mix of unpronounceable materials. Have you got a legitimate dispute with the seller?
These are some of the scenarios that customers go through daily. Consumer protection legislation is meant to protect us against these types of issues. That is why it's important to familiarize ourselves with the more common consumer protection laws.
Consumer Warranties and Service Contracts
Whenever you buy merchandise, it comes with a warranty. This is a guarantee that it will serve the purpose it was purchased for – in other words, it will function.
The two basic types of warranty are express and implied. An express warranty is a promise from the seller, either written, oral or expressed in an ad, promising that the item will perform its function for a specified period. Whether the item purchased is new or used, an express warranty is a guarantee that the item will work. However, not all items come with an express warranty.
The law automatically provides the second type of warranty, the implied warranty. Implied warranties are a part of all retail sales of new and used consumer goods. Basically, the retailer of an item implies that the item will work properly and be of average grade and quality, as long as it is used for the purpose it was sold. For example, a refrigerator will keep stuff cool as long as you are not trying to cool the entire room, and a blender will blend as long as you are not blending rocks.
Whenever you buy something, it's important to get warranty specifics in writing. Find out what the warranty covers. Does it include service fees if the item needs to be repaired? How long is the warranty? According to the Federal Trade Commission (FTC), an implied warranty can last as long as four years but the actual time period can vary according to the state.
Dealing with Warranty Breach
If a warranty is breached, get the item replaced or repaired by the seller. If that doesn't work, try resolving the dispute through mediation. If that fails, you have the right to sue the manufacturer or seller.
Service contracts cannot be canceled after you've signed them, but according to the FTC, there is a cooling-off period in which, under certain circumstances, you might be able to void a contract. Contact the Federal Trade Commission at FTC.gov for information on the right way to approach your particular situation.
To file a complaint about a seller or manufacturer, you can contact the Federal Trade Commission, Consumer Product Safety Commission or call up your local prosecutor and ask for the consumer fraud division. If you were defrauded by a telephone solicitor or fell into a TV advertisers trap, the Federal Communications Commission is the place to turn for help.
According to the book "The Truth About Avoiding Scams," by Steve Weisman, scam artists always take advantage of whatever is happening at a particular place in time. In the wake of the housing bust of 2008, for example, there were a lot of phony foreclosure rescues that caused people to lose the equity in their house to so-called rescuers. There are also numerous scams involving popular social websites like Facebook.
It also helps to use credit cards, not debit cards, for online shopping. Debit cards offer fewer protections. A debit card could also give access to your entire checking and/or savings account.
Keeping an Eye on Scams
Closely review every item on your monthly bills. If there is a transaction you don't recognize, question the creditor in writing. If you think a charge is fraudulent, also notify your card company in writing no later than 60 days after the charge appears. Customers should use a separate email account for their online shopping. This method helps avoid spam. Also, never respond to emails asking you to "confirm" recent transactions after you shop because they can be phishing scams.
Getting Your Facts
Under the Fair and Accurate Credit Transaction Act (FACTA), you are entitled to a free copy of your credit report, at your request, once every 12 months. Financial institutions use the information contained in this report to determine risk in lending to you. Consumers usually find out about this report only after there has been negative information reported (mishandled accounts, erroneous data and so on).
A report can be obtained annually for free from credit reporting agencies. It contains accounts opened and checks ordered in your name. However, it is not the same as the free full consumer credit report. This report is a completely separate report that the mass majority of consumers only find out about after they have been declined by a financial institution to open a checking or savings account. The majority of banks and credit unions use the information contained in the report to approve, decline or determine what type of account if any can be opened at their financial institution. Consumers who have a negative report may not be able to open a checking or savings account for five years.
The Bottom Line
Finding out about the warranties of products you buy, reading service contracts, avoiding scams and obtaining a consumer report is part of the overall maintenance of your financial health. Staying on top of these details helps you to make better informed decisions and get more out of your hard-earned money. There are many other acts worth learning about that apply in certain situations, including the Home Owner Protection Act, the Home Affordable Modification Program, the Fair Credit Reporting Act (FCRA), the Electronic Funds Transfer Act, the Fair Debt Collection Act, and the Fair Credit Billing Act.