Consumer laws are set up in order to see to it that consumers benefit from the competition through low prices, better products and services in a freely competitive market where each business involved in the competition will try as much as it can, to attract consumers in various ways. In this kind of mix up, however, there is always a possibility of inefficient companies or firms coming up, which fail to understand or react to consumers’ needs and thus consumers’ laws are set in order to check such excesses, especially by companies which are monopolies in certain goods and service provision (Friedman 2004).
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When such laws are proposed and drafted they cannot be complete unless they are successfully enforced. Just like in the commission I work for, it is easier to agree on the content of the law but disagreement arises on how such consumer law should be enforced. For that case, there are three proposals that are all means but they can be analyzed and compared when their pros and cons are discussed.
Enforcement by private action
Those who want the law to be enforced by a private lawsuit, are advocating for private action in law enforcement. In this method of law enforcement, lawsuits are brought by private parties asserting damage claims. Most states have laws protecting consumers from unscrupulous trade practices but the statutes vary widely (Federal trade commission 2006). In the enforcement of consumer laws, most statutes allow the consumers, who win a case, to be granted an award of attorney’s fees. Moreover, by allowing a private action to enforce the consumer law, we will allow recovery of actual damages. This is also true because a few of the statutes will allow the recovery of multiple damages. Another way this will ensure consumers are fully protected is by the plaintiff recovering attorney’s fees.
This incentive is very overwhelming to consumers and will encourage most of them to come out; whenever they are exploited or harmed by the products they buy from the market. In short, private lawsuits have got the advantage of quicker settlement in resolving their lawsuits. Private lawsuits will also ensure individual consideration of the details of consumers’ cases and finally, in private lawsuits, consumers will have direct contact with attorneys or lawyers representing them (Federal trade commission 2006).
However, under private lawsuits, not all purchases of goods are allowed to sue under state UDAP statutes. In some other instances, retailers may be incorporated and allowed to sue as consumers.
The disadvantages of private lawsuits will include; the complexity of cases, difficulty in tracking down defendants and the obscenity of records that are difficult to obtain as well as inadequate information that could generate the best settlement of consumer cases. Therefore private lawsuits require a person who has enough resources to fund the whole process plus the attorney fee in case the defendant carries the day.
Enforcement by Class action
This is another law enforcement method that those members of the commission proposed when they proposed to have a large staff that would be allowed to sue to enforce the law. Enforcement through class action is whereby many consumers come together when they are displeased with a certain product, to file a lawsuit seeking compensation for the damages (Federal trade commission 2006). These suits may arise as a result of deceptive advertising, business practices or product lines thus they collectively file a lawsuit and claim damages and compensation. Class actions, therefore, have been seen as a key player in the enforcement of consumer protection laws where consumers pull together resources in the search for common justice. This will be preferred in cases whereby private consumer claims would result in small damages awards. The attorney’s fees in a class action may be available and higher due to economies of scale. A class action is an effective way of enforcing consumer laws as it forces the producers to learn from their actions.
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Moreover, lawyers and law firms represent tens, hundreds or even thousands of plaintiffs and they have more resources, especially contributive knowledge, that result in comprehensive records as they source from different consumers (Friedman 2004). Class actions can also enable injured people to pursue claims that might not be worth it on their own by bringing together their small claims. Class actions are also cost-effective and give the plaintiff a strong negotiating position.
However, a class action is very complex in procedure and this nature makes it very expensive to prosecute in terms of time and also resources. A lot is also required in terms of the analysis of the merits of the case, the costs and the scope of the case thus practitioners are left with a narrow scope than anticipated.
Enforcement through a licensing agency
Those members, who preferred to have a licensing system set up, were basically talking of setting up an agency that will be tasked with issuing licenses to businesses. By issuing business licenses, the agency has the authority in controlling the way businesses and companies are run (Federal trade commission 2006). This way, unscrupulous companies are less likely to appear and can be kept in check so that consumers get the best of the best in the market. Most consumers’ harm emanates from environmental and ecological harm and therefore business licensing keeps this in check.
However, the licensing system will face a number of disadvantages like a tedious procedure is to be followed before such licenses are issued by the agency. This means that there can be businesses running a form of black market operations and offering products which could harm consumers. In most cases, such businesses can not be traced for the case of any liability for any harm caused by their products. On the other hand, a consumer may not know whether to sue the agency or the company in case products harm them (Friedman 2004). The company may blame the licensing system for poorly inspecting the product or vice versa. This means that using the licensing system is not in any case an effective consumer protection method because it is very expensive to keep all businesses in check.
Therefore the best way to enforce the consumer law will be a combination of private and class lawsuits. This way consumers will have a choice on which method to take because of the complementing nature of these two methods; when one fails, the other can pick successfully.
Alderman, R.M., 2003. The Texas Deceptive Trade Practices Act: Still Alive and well. Journal of Texas Consumer Law, 74(1), pp. 74-89.
Federal trade commission, 2006. The Fair Debt Collection Practices Act As amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966, Web.
Feinman, J.M., 2006. Law 101: Everything You Need to Know About the American Legal System. New York: Oxford University Press.
Friedman, L.M., 2004. American Law in the 20th Century. New Haven: Yale University Press.