Government Protection of the Consumer

Government Protection of the Consumer

American used to operate under the assumption that it was the
consumer’s obligation to protect them self against unfair business
practices. The motto of the day was “E Caveat Emptor,” or Let the
Buyer Beware. Today this is no longer the case. Ever since the
Progressive Era and the efforts of muckrakers like Upton Sinclair,
the government has played an increasing role in protecting the

As civilized society has developed, the dangers we face are
increasingly of our own making poisonous chemicals, polluted air,
automobile accidents, defective products. And as the nature of the

dangers has changed, so has the way we respond. We have increasingly
looked to government to protect us from man-made dangers that we feel
incapable of protecting ourselves from. One dangerous place in modern
society is the highway.

Over 50,000 people are killed in automobile accidents in the US. each
year. In order to reduce the death and injury rate, the Department of
Transportation (DOT) has required automobile manufacturers to provide
certain safety features such as seat belts, standards for bumpers,
and secure fuel tanks. The DOT conducts crash tests on new car models
to determine which ones give the passengers the most protection.



Agencies that regulate

Interstate Commerce
Commission (ICC) – 1887 – Railroads, trucking, pipelines, barges,
express carriers

Federal Reserve Board (FRB) –
1913 – Banks

Federal Trade Commission
(FTC)- 1913 – Interstate Trade

Federal Power Commission
(FPC) – 1930 – Public utilities

Food and Drug Administration
(FDA) – 1931 – Food, drugs, cosmetics

Federal Communications
Commission (FCC) – 1934 – Radio, television, telephone,

Federal Aviation
Administration (FAA) – 1967 – Airline safety

National Highway Traffic
Safety Administration (NHTSA) – 1970 – Motor vehicles

Agencies that regulate

Securities and Exchange
Commission (SEC) – 1934 – Sales of securities

National Labor Relations
Board (NLRB) – 1935 – Labor-management relations

Equal Employment Opportunity
Commission – (EEOC) – 1964 Hiring practices

Environmental Protection
Agency (EPA) – 1970 – Pollution of the environment

Occupational Safety and
Health Administration (OSHA) – 1971 – Conditions in

Consumer Product Safety
Commission (CPSC) – 1972 – Design and labeling of

One of the most important government agencies dealing with product
safety is the Food and Drug Administration (FDA). If products are
found to be unsafe, the FDA has the power to order them off the
market. The agency conducts tests on prepared foods to find out if
any of the ingredients are cancer-causing. No new drugs may be put on
the market without the FDAs approval.

Another federal agency concerned with consumer safety is the Consumer
Product Safety Commission, which issued a recall of
asbestos-insulated hair dryers, put an end to the use of benzene in
paint removers, banned the use of Tris, cancer-causing flame
retardant in children’s clothing-and required that slats on baby
cribs be set closer together to prevent strangulation.

There are government agencies not only to protect our health, but to
protect our pocketbooks. The Federal Trade Commission (FTC) tries to
prevent deceptive advertising. These are called Truth in Advertising
laws. It has made producers of aspirin pills, diet breads,
toothpastes, cigarettes, and numerous other products either prove
their claims or change their advertisements. The FTC also has the
power to issue what is known as a “cease and desist” order. This
powerful tool allows the FTC to halt any unfair business practices.

To protect the interests of investors and provide more stability
to the financial markets, the Securities and Exchange Commission was
set up in 1934 to regulate the stock market. It requires full
disclosure of a company’s financial condition when new stock is
issued, and has helped eliminate stock swindles.

In recent years there has been legislation requiring financial
institutions and companies extending credit to provide the borrower
with complete information about the true interest charges and payment
conditions. These are called Truth in Lending Laws. In some states,
customers are allowed to cancel certain kinds of purchase contracts
within a few days after signing them. Some of the types

of contracts which can be canceled are land purchases in
undeveloped land promotions and contracts signed with door-to-door
salespeople. These laws are designed to protect consumers from being
manipulated into hasty, unwise decisions by high-pressure sales

The Occupational Safety and Health Act (OSHA) gave the Labor
Department the power and responsibility to set standards for the
workplace to protect workers from work-caused injury and illness.
Since 1972, the first full year of OSHA operation, job fatalities
have been reduced 10% and disabling injuries have declined from one
for every 34 workers to one for every 43 workers during the year.