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Governments Role in Consumer Protection & Advertising

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U.S. Governments Role in Consumer Protection & Advertising The United States government has continued to grow in size and influence, its effect on marketing is no exception. Consumer protection and product safety include the efforts made by government, nonprofit organizations, businesses, and individuals to create, protect, and enforce the rights of consumers who buy products or services. This may also be identified as consumerism, or the organized efforts of individuals, groups, and organizations to protect the rights of consumers (Pride102). Consumer protection was brought upon through several medians, but is primarily attributed to background legislation. The first major federal law to affect the marketing environment was the Sherman Antitrust Act of 1890, which prohibited contracts, combinations, and conspiracies to restrain trade, in an attempt to discourage monopolies (Pride 73). Many federal laws regarding consumer protection have since followed, such as the Wheeler-Lea Act of 1936 and the FTC Act of 1914. Such legislation is generally the work of the Federal Trade Commission, which was created in the aforementioned FTC Act of 1914, and is considered the primary consumer protection agency at the federal level. By the 1950’s the consumerism movement had a substantial following and consumers began pushing for legal protection against malicious business practices. Two of the most well known and significant consumer activists are Ralph Nader and the late John F. Kennedy. Mr. Nader has had a tremendous effect on car safety through the publication of his book Unsafe at Any Speed. President JFK was also a key consumer activist and created The Consumer Bill of Rights. Many corporations and businesses regulate themselves in an attempt to be better corporate citizens and avoid government interference. Likewise, many trade associations have instituted self-regulatory programs, such as the BBB, Better Business Bureau. Self-regulatory agencies help settle disputes between customers and businesses. Whether for better or worse, the United States government’s role in marketing, specifically consumer protection and advertising, has significantly increased over the past century through background legislation, and the rise of consumerism. “The history of consumer protection in the United States is the story of specific formal legal responses to crises and emergencies that generated great public outrage and required a public response” (Brady). This has led to the creation of federal regulatory agencies with jurisdiction over certain products, as well as consumer protection legislation that allow consumers private rights that can be used to sue a business if harm from the illegal practice is demonstrated. One of the first examples of such legislation was the Sherman Antitrust Act of 1890. It was the first federal law to limit monopolies and is still relevant today, as it has since served as the basis for various antitrust litigations by the federal government. The law attempts to prevent the unnatural increase in prices by the restriction of trade or supply. Therefore, a monopoly achieved through merit is by all means legal, but if a monopoly is raised through the artificial acts to maintain its position atop the marketplace it is not. It also required the United States federal government to investigate and pursue suspicious trusts, companies, and organizations that exhibit questionable practices. Consumer rights legislation has benefited alongside society’s technological and economical advances. For example, laws in the late 1890’s and early 1900’s concerning food purity were a direct result of the mass commercialization of products throughout the industrial revolution. The passage of the pure food and drug legislation, in 1906, came in response to efforts led by crusaders, such as Upton Sinclair, who were concerned about unsanitary conditions and high prices. Mr. Sinclair, author of the novel The Jungle, illustrated the harsh and filthy environment inside the Chicago stockyards. Public reaction to Sinclair's exposition led to an investigation by the federal government and subsequent regulation of food safety (Brady). Following the creation of the pure food and drug act, the major succeeding legislation was the formation of the Federal Trade Commission, by way of the FTC Act of 1914. The FTC is the primary, but not the sole, consumer protection agency at the federal level and oversees an array of consumer protection laws. The principal goal is to afford customers a deception-free marketplace and provide the highest-quality products at competitive prices. The FTC also ensures that advertising is not false or misleading. The FTC may also benefit businesses by helping them to understand laws and assess new marketing methods for each year. It also brings businesses together for hearings and conferences to help firms avoid price fixing, deceptive advertising, and questionable telemarketing practices (Pride 76). Succeeding the Sherman and FTC Acts, in 1938 the Wheeler-Lea Act was formed. It prohibits unfair and deceptive acts and practices regardless of whether competition is injured, and also placed advertising of food and drugs under the jurisdiction of the FTC. This had a substantial impact, because before this amendment the Federal Trade Commission could only restrict practices that were unfair to competitors. This allowed the FTC to administer the protection of consumers as well. The government continued its provisions in 1938, when Congress enacted the Food, Drug and Cosmetic Act, which made manufacturers prove the safety of new drugs before releasing them to the market. The Food and Drug Administration, FDA, is responsible for administering the pure food and drugs acts. It enforces laws and regulations to prevent the distribution of adulterated or misbranded foods, drugs, medical devices, cosmetics, veterinary products, and potentially hazardous consumer products (Pride 76). Such acts were created to guarantee that food, drugs, vaccines, devices, and cosmetics are safe, properly labeled, and pure. Since their origin, the acts have undergone additional amendments, like the 1962 condition that requires manufacturers to prove the effectiveness and safety of drugs before they are marketed to consumers (“Consumer Protection”). The United States government has a significant role in the advertising aspect of marketing as well. Consumers must have readily available and accurate knowledge regarding a product or particular service in order to make an educated and well informed purchase. Federal legislation requires manufacturers to disclose information about the product to better protect potential buyers. For instance, the Fair Packaging and Labeling Act of 1966 is responsible for ensuring that labels identify product information such as quantity and ingredients. Another example of how the government affects marketing, specifically advertising, is witnessed in the Truth in Lending Act of 1968, which requires that credit loan applicants be given accurate information concerning the cost and terms of the applied loan. As stated earlier, the Federal Trade Commission is the federal agency responsible for ensuring that advertising is not false or misleading. The FTC also regulates business between states and enforces consumer protection laws. It is capable of forcing companies to remove false advertising and correct deceptive ads (“Consumer Protection”). To counter deception in the market place consumers took it upon themselves to organize their efforts and protect consumer’s rights. This movement is known as consumerism, its largest forces are consumer advocates, organizations, interest groups, consumer education and legislation. The rise in consumer credit and product safety awareness, led to an increase in consumer protection legislation during the 1960s and 1970s. This was mainly attributed to the rise of consumerism, led in particular by two individuals, President John F. Kennedy and Mr. Ralph Nader. In 1965, Nader published Unsafe at Any Speed, a book that continues to have major implications regarding car safety today and undoubtedly will in the distant future. The book exposed the questionable manufacturing and design practices of automobile manufacturers and exemplified the resistance to implement safety features such as seatbelts and airbags. “Nader's advocacy of automobile safety and the publicity generated by the publication of Unsafe at Any Speed, along with concern over escalating nationwide traffic fatalities, contributed to the unanimous passage of the 1966 National Traffic and Motor Vehicle Safety Act. The act established the National Highway Traffic Safety Administration and marked a historic shift in responsibility for automobile safety from the consumer to the manufacturer. The legislation mandated a series of safety features for automobiles, beginning with safety belts and stronger windshields.” (“Ralph Nader” Wikipedia)
Since Nader’s publication of Unsafe at Any Speed he has gained national recognition for his work in consumer activism, and has organized a network of young supporters dubbed Nader’s Raiders. The group conducts research, writing, and lobbying efforts in a variety of areas related to consumer protection. “The book has continuing relevance: it addressed what Nader perceived as the political meddling of the car industry to oppose new safety features, which parallels the debates in the 1990s over the mandatory fitting of air bags in the United States.” Due to Mr. Nader’s contributions the government has the power to make me wear my seatbelt, or at least punish me if I don’t. Nader has also assisted in the passing of several other noteworthy consumer protection laws, like the Wholesome Meat Act of 1967, Radiation Control for Health and Safety Act of 1968, the Clean Water Act of 1972, and the Toxic Substance Act of 1976 (“Unsafe at Any Speed” Wikipedia). A man who made equally as substantial a contribution for consumer protection was President John F. Kennedy. In 1962 President Kennedy delivered a speech before Congress and presented the Consumer Bill of Rights. It contained and described four basic rights; the right to safety, the right to be informed, the right to choose, and the right to be heard. The right to safety implies that products, when used correctly, should cause no harm to the user of the product, and concerns all products other than automobile vehicles. In other words marketers are not compelled to market a product they know could cause harm to the consumers, and the product must include instructions for safe and proper use. The second right, the right to be informed, states that a business must provide the consumer with enough information to the degree that the individual is capable of making an intelligent and informed product selection. There is legislation that requires specific labeling to ensure this right. The alcohol and tobacco industries are obligated to inform consumers that these products may cause illness and other health related problems. The right to choose states that a consumer should have a variety of alternatives, supplied by different companies, to choose from. Satisfactory quality and a fair price are necessary for the consumer’s protection. The government has many precautions, such as anti-trust legislation, to prevent monopolies and prohibit the practice of price cutting and gouging, in order to ensure the availability of competition in the marketplace. The final right of the four basic rights, the right to be heard, affirms that the consumer has the ability to voice complaints and concerns of a particular product, and will receive full sympathetic consideration, so that the issue may be handled appropriately and accordingly. While there may not to be a federal agency overseeing operations, there are alternatives that aid the consumer if an agreement can not be met. The consumer is not the only party that stands to benefit from such legislation, the marketers can use the information gathered from a consumer’s complaint to modify the product and thus make it more satisfying for all. The abovementioned rights were the only four basic rights described in President Kennedy’s speech before Congress in 1962 (“Consumer Bill of Rights” Wikipedia). Twenty-three years later, in 1985, the United Nations took interest in the concept of consumer rights and expanded the four basic rights to eight basic rights. The four additional rights include; the right to satisfaction of basic needs, the right to redress, the right to consumer education, and the right to a healthy environment. The right to satisfaction of basic needs concerns the access to essential goods and services such as food, water, sanitation, public utilities, education, health care, shelter, and clothing. The right to redress says a consumer has the right to receive a settlement and may include compensation for unsatisfactory services, shoddy goods, and misrepresentation. Another one of the four additional rights is the right to consumer education; that is, a consumer should always have the opportunity to acquire the necessary knowledge to make an informed and intelligent decision regarding goods and services, and must also be aware of the basic consumer rights and responsibilities. The eighth and final right of the Consumer Bill of Rights asserts that one has the right to live and work in a safe environment. It also states that consumer protection is only capable of being implemented in developed nations, due to the fact that fiscal resources are essential to effectively practice consumer protection (“Consumer Bill of Rights” Wikipedia). Businesses attempt to avoid government intervention whenever possible through self-regulation, and several trade associations have developed self-regulatory programs themselves. The principal reason for the existence of self-regulatory forces is to stop or stall the development of laws by federal regulatory groups that regulated their marketing activities. Trade associations frequently institute a code of ethics for which their members must follow or they will assume the risk of exclusion from the trade association. The Better Business Bureau is one of the most well-known self-regulatory groups; it is a system of independent agencies that the local businesses support. If a business continues to violate what are believed to be good business practices, the bureau notifies consumers through the local media, and if the organization is a member of the Better Business Bureau, they may be expelled from the local bureau. The National Advertising Review Board, NARB, regulates cases where an advertiser challenges issues brought up by the NAD about an advertisement. The National Advertising Division manages a self-regulatory program that inspects deceptive advertising claims. The NARB has no official enforcement powers, but if a particular business refuses to cooperate with the decision, the NARB may file a complaint to the FTC. There are several advantages self-regulatory programs have over federal laws and federal regulatory agencies. For example, the formation of a self-regulatory agency is less expensive, guidelines are more appropriate, and self-regulatory programs fill a void that the federal government would otherwise pursue. However, self-regulatory programs often lack the authority to enforce guidelines (Pride 77). Throughout the entirety of this paper I have discussed the United States government’s role in consumer protection and advertising. The marketing environment first felt the governments influence through background legislation, like the FTC, Wheeler-Lea Act, and Sherman Anti-Trust Act. Such legislation was followed by the rise of consumerism, led by consumer advocates Ralph Nader, who wrote the highly controversial and influential book Unsafe at Any Speed, and President John F. Kennedy who delivered The Consumer Bill of Rights to Congress. This movement called consumerism may be described as the organized efforts of individuals, groups, and organizations to protect the rights of consumers. In an effort to showcase social responsibility, good citizenship and prevent government intervention many businesses partake in self-regulation such as the Better Business Bureau. Over the course of the last century or so, government bureaucracy has significantly increased throughout the marketing environment, specifically consumer protection and advertising, by way of background legislation and the rise of consumerism.

Works Cited
Brady, Jillian G. "Consumer Protection in the United States: An Overview." Luc.edu. Loyola University Chicago. Web. .
"Consumer Bill of Rights." Wikipedia, the Free Encyclopedia. Web. 18 Oct. 2011. .
"Consumer Protection." Jrank.org. Web. .
Pride, William M., and O. C. Ferrell. Marketing. Mason, OH: South-Western Cengage Learning, 2012. Print.
"Ralph Nader." Wikipedia, the Free Encyclopedia. Web. 18 Oct. 2011. .
"Unsafe at Any Speed." Wikipedia, the Free Encyclopedia. Web. 18 Oct. 2011. .
Writer, Phillip KurataStaff. "Consumer Protection Has Deep Roots in U.S. History." America - Engaging the World - America.gov. 09 Oct. 2007. Web. 18 Oct. 2011. .

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