Consumers have special rights under the law, to protect them from being defrauded by dishonest sellers. In order to enforce your rights, you need to know what they are. In this section you'll find out what constitutes fraud and what you can do if it happens to you. We'll also touch on other areas of consumer protection and how you can resolve disputes with sellers.
Not all unfair practices are fraud. Consumer fraud has a very specific definition under the law, and occurs when a person is purposely tricked into entering into a contract. The slide above lists the five conditions that must be present for fraud to occur. Remember these are legal requirements, so all five conditions must be present in order for there to be fraud.
If you've been the victim of fraud, you should contact the Better Business Bureau and your state or local consumer protection office. You may be able to sue for damages, and some frauds are crimes which may be prosecuted.
Fraud can only occur when there is a contract involved. All consumer-seller transactions involve contracts, whether written down or not. A contract is any legally binding agreement, and does not need to be in writing to be valid and enforceable. To form a contract, all you need is an offer and an acceptance. While oral contracts are sometimes harder to prove, they are generally every bit as valid as written contracts.
Here are some other things about contracts you should know:
Contracts cannot be changed by only one of the parties -- both parties must agree to change a contract's terms.
A wife cannot accept an offer for her husband.
An offer and acceptance must be identical in order for there to be a contract. If the acceptance imposes any conditions, or tries to change the terms of the offer in any way, it is not a valid acceptance.
Offers can have expiration dates. So if someone says their offer is only good until 5pm, and you accept it at 5:01, there is no contract.
A contract doesn't have to be in writing to be valid. But keep in mind that oral statements cannot be used to change a written contract. What's in writing is assumed to be the entire contract. So if anyone ever says "Don't pay attention to what's in the written contract" you can't take their word for it. Make sure you get EVERYTHING in writing!
Failure to live up to a contract is usually not a crime. It is called a breach of contract, and generally only results in civil penalties (usually money). When someone fails to honor a contract, the other party can sue in court to enforce their rights.
Losing a debit or credit card can result in unauthorized charges to your account. Fortunately, there are laws that protect you in the event of such losses. It is important to know what those laws are.
Federal laws provide you with protection if your debit card is lost or stolen. But it is very important to notify your card issuer as soon as possible. If you report a lost or stolen card within 2 business days, your liability is limited to no more than $50. If you wait longer than 2 days to report it, your liability goes up to $500. And if you wait more than 60 days, there is no limit to your liability for unauthorized transactions.
The Fair Credit Billing Act says that a credit card issuer cannot hold you responsible for any unauthorized charges to a credit card if you report the loss of your credit cards before they are used. If a thief uses your cards before you report them missing, the most you will owe is $50. But you must report the loss of the cards. Your monthly billing statement will have instructions on how to do this.
The Fair Credit Billing Act also provides another very important protection for consumers who use bank credit cards to make purchases. Under this law, you can ask your credit card company to charge a purchase back to the seller when you have tried and been unable to get satisfaction for a defective product or service. But be aware that the seller still has the right to come after you for payment, so it is always better if you can work things out directly with the seller.
If you have a defective product, your first step should be to read the product instructions and warranty carefully. The warranty should describe the steps you must follow to get a problem resolved. Next, try to resolve the problem where you bought the product or service. Give them a chance to set things right. Make your complaint as soon as possible after experiencing dissatisfaction. Be polite, but firm. Be very clear about what you want the seller to do. If it's a refund, indicate the dollar amount you desire. If all else fails, contact the manufacturer by mail. Send all items certified mail, return receipt requested, and keep copies for your records.
If all else fails, contact your state or local consumer protection office. They can help if you can't resolve the situation with the seller or manufacturer. Most use mediation to try to get a mutually agreeable solution to the problem. Look under the government listings in your phone book for offices in your area.
Another great resource to be aware of is the Consumer Action Handbook, which the federal government publishes every year. It is free, and contains thousands of addresses and web sites for companies, and consumer protection and government agencies that regulate businesses. It also offers tips on how to be a smart shopper
So let's review what we've covered about consumer protection. If you've been a victim of consumer fraud, you may be able to get relief through the courts, and if the seller has broken the law, he or she could go to jail. A contract is formed when an offer is made and accepted. A verbal contract can be valid, but it's best to get everything in writing. If you use debit and credit cards, Federal law and the Fair Credit Billing Act protect you against unauthorized use of your cards, but only if you report them lost or stolen within a certain period of time. To resolve a dispute with a seller, start by reading your product instructions and warranty carefully. Then try to resolve the problem by going to the seller. If that doesn't work, contact the manufacturer by certified mail. If all else fails, contact your local or state consumer protection office, which may use mediation to arrive at a mutually acceptable solution.