| Term | Definition |
|---|
| Product safety and manufacturer's role -How do we protect consumers? -Ethics of advertising -Privacy protection -International contexts | Issues we will address today |
| Consumers are exposed daily to high levels of risk simply by using consumer products- Example: Vehicle safety, toys, home equipment, sub-prime mortgages etc -Consumers must also bear the costs of deceptive sales practices, shoddy merchandise, and warranties not honored | The necessity of consumer protection |
| Market approach to consumer protection -Contract view of duty to consumers -Due Care theory -Social Costs view | How do we ensure consumer protection? |
| Consumer safety is seen as a good that is most efficiently provided through the mechanism of the free market -If consumers want products to be safer, they will indicate this preference in markets by willingly paying more for safer products -Producers will have to respond to this demand by building more safety into their products or they risk losing customers to competitors -If consumers do not place a high value on safety then it is wrong to force them to accept higher levels of safety through regulation | Market approach |
| It only works when all 7 conditions of the free market exist; most importantly perfect information -Some products are simply too complex for anyone but an expert to understand them. -Gathering information is time consuming and expensive -We are not always | Problems with Market Approach |
| The relationship between a firm and its customers is essentially contractual. -The seller has a duty to provide a product with the characteristics they have agreed to supply. -Consumers have a right to receive the product they have been promised -Contracts are free agreements that impose on each side the duty of complying with the terms of the agreement | The contract view |
| 1. Complying with the terms of the sales contract e.g. reliability, service life, safety, and maintainability 2.Disclosing the nature of the product e.g. specifications, components, usage, and cost of running | Moral duties of business under the contract view (I) |
| 3.Avoiding misrepresentation e.g. calling cards, APR & Admin fees, online & in-store prices, old & new display, similar brand names 4. Avoiding the use of duress and undue influence e.g. creating fear, guilt, or responsibility, and using gullibility, immaturity, or ignorance Conditions of treating and rights of a free person | Moral duties of business under the contract view (II) |
| Most manufacturers do not deal directly with consumers -Consumers can freely agree to purchase a product without certain qualities ( Eg- Sales Final, No returns, refunds!) -The assumption that buyer and seller meet on equal ground is false | Problems with contractual view |
| Consumer and manufacturer are not equal -Manufacturers have an advantage through knowledge and expertise that the consumer lacks -Because of this, they have a duty to take special care to ensure that the products they offer do not harm the consumers | The Due Care Theory |
| Due care must enter into the product's design, choice of materials and construction methods, quality control, and warnings attached to it. -Manufacturers' responsibilities to exercise due care extend to the following three areas: Design -Production -Information | Scope of Due Care |
| No way to determine when one has exercised enough due care. Every product involves some small risk -It assumes that the manufacturer can discover all the risks attendant upon using a product before it is actually used -It assumes that the manufacturer alone should make the important decisions about the level of risk the consumer should bear | Problems with Due Care |
| A manufacturer must pay the costs of any injuries sustained through any defects in the product -A manufacturer must pay the costs of any injuries sustained through any defects in the product -Pros- efficient use of society | The Social Costs View |
| The primary function of advertisements is to sell products to prospective buyers. -It is publicly addressed to a mass audience -It is also intended to create desire and a belief in consumers that the product will satisfy the desire | What is the real purpose? |
| Psychological Effect Debases society by cultivating material tastes -Advertising and Waste Waste, consumerism -Advertising and Market Power Loyalty and monopoly or oligopoly | Problems with advertising |
| Deceptive advertising takes many forms: the "bait and switch," untrue paid testimonials, or simulating brand names are all forms of deception -Deception involves three necessary conditions from the author: The author must intend to have the audience believe something false. The author must know it to be false. The author must knowingly do something to bring about this false belief. | Deceptive advertising |
| The rising capabilities of computer processing, database software and communication technology has given businesses personal information, and power to use it like never before. -For e.g., Credit bureaus (43% error rate), banks, medical institutions -Right to Privacy: The right of people to determine what, to whom, and how much information about themselves are they willing to disclose to others | Consumer Privacy |
| Psychological privacy is privacy with respect to a person | Types of Privacy |
| Protects individuals from shame, interference, hurting loved ones, self incrimination -Enables the development of personal and professional relationships and distinct social roles | Why is privacy important? |
| Collecting information relevant to purpose -Informing the consumers -consent - accuracy -Legitimacy of purpose -Recipients and Security | Balancing privacy with legitimate business needs |
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