What are the measures used to protect consumers by the government. Explain each.
The government has commissioned several institutions charged with activities geared towards protecting the consumer. Additionally, the government plays an important role in the passage of laws aimed at consumer protection.
For instance, the Federal Trade Commission (FTC) has a Bureau of Consumer Protection, which is charged with stopping fraudulent and deceptive business practices aimed at swindling the customer. The Bureau collects and investigates complaints forwarded by consumers. Lawsuits are initiated against the businesses, which may result in payment of damages or closures.
The Food and Drug Administration (FDA) plays an important role in ensuring that the food and drugs available for consumption meet health and safety standards. The FDA ensures that the consumer is protected from harmful products through regulation and enforcement of stipulated laws.
Laws such as the antitrust laws protect consumers by ensuring that healthy competition remains in effect in the market. Healthy competition ensures that businesses do not take advantage of the market to adversely exploit the consumer by creating monopolies and abusing its power.
Following the Industrialization period in American History, legislation was passed and enacted that were designed to protect the consumers. The most sweeping reforms were seen by the passage of the Federal Trade Commission (FTC). Created in the early 1900s to "bust the trusts" that created collusion between business and government and dis-empowering the consumer, the FTC oversees the relationships between consumers and businesses in many domains. One of its primary responsibilities is to ensure that individuals are not subjected to predatory business practices and that consumers are always alerted to their rights and have the information needed to act upon such autonomy. The disclosure of credit rating information to all consumers, the articulation of reasonable expectations, as well as the very idea that individuals can demand certain entitlements when interacting with companies and businesses.
Governments of different countries protect the interests of the consumers through the mechanism created by three types of legal provision. These are direct consumer protection laws, anti trust laws or the laws to curb monopolistic practices, and laws to govern management of corporations including trading exchanges. In addition to these laws designed to protect interest of common consumer and investors, other general laws such as contract law also provide some protection to consumers.
Consumer protection laws regulate the quality of different types of goods sold to the manufactures and the disclosure of information about quality, use and prices of these goods. Among others it includes provisions for liability of manufactures and sellers in terms of warranty, guarantee and safety.
Antitrust laws put restriction on activities of companies so that they do not take undue advantage of their economic power to restrict competition, or engage in other unethical practices such as overcharging, hoarding, or forcing customer to buy unwanted products by bundling them with other products.
Retail or small investors are also consumer of financial products. To safeguard their interest governments enact and enforce laws that regulate the management of large corporations and other institutions such as trading exchanges. These laws govern various aspects of these organizations including their formation, formation of management team, and accounting including public disclosure of important information. For trading exchanges the laws also regulate the trading mechanisms.