No one likes being duped, deceived, or swindled. Consumer protection laws help protect you from scenarios where these types of situations can happen.
Acting as a stopgap between consumers and businesses, consumer protection laws act as a line of defense against would-be deceptive businesses, holding them to certain standards of practice that keep consumers informed and safe. But they also protect direct sellers, shielding them from legal disputes that often arise from following unethical practices.
Here’s what you need to know about direct selling consumer protection laws and who enforces them in the U.S. and abroad.
What Are Consumer Protection Laws?
Consumer protection laws are regulations that ensure fairness and honesty in commercial transactions, protecting consumers from activity that is:
- Fraudulent
- Deceptive
- Unfair
Or, as Georgetown Law puts it, “Consumer protection law focuses on guarding against unfair trade practices that harm buyers in the consumer marketplace. It involves statutes and regulations that seek to prevent businesses from using unfair, deceptive, or fraudulent practices in sales and similar transactions.”
It’s worth noting that in addition to consumer protection laws, reputable direct sellers are also bound by the Direct Selling Association’s Code of Ethics.
List of Consumer Protection Laws in the U.S. That Apply to Direct Sellers & Consumers
The landscape in which consumer protection laws exist is, complex, multifaceted, and ever-evolving, with a number of different laws having been developed over the years. Here are a few that are most applicable to the direct selling industry:
- Federal Trade Commission Act (FTC Act): The FTC Act empowers the Federal Trade Commission to stop unfair business practices, help consumers get their money back, make rules against bad business practices, investigate companies, and suggest new laws. It’s relevant to direct sellers & customers of direct sellers because it offers specific guidance to MLMs, focusing on deceptive income claims and pyramid scheme structures.
- Telemarketing Sales Rule (TSR): The TSR “requires telemarketers to make specific disclosures of material information; prohibits misrepresentations; sets limits on the times telemarketers may call consumers; prohibits calls to a consumer who has asked not to be called again; and sets payment restrictions for the sale of certain goods and services.”
- Cooling-Off Rule: “The Cooling-Off Rule gives you three days to cancel certain sales made at your home, workplace, or dormitory, or at a seller’s temporary location, like a hotel or motel room, convention center, fairground, or restaurant. The Rule also applies when you invite a salesperson to make a presentation in your home.”
Looking for more pertinent direct selling terms or definitions? Read our blog post “The Direct Selling Definitions and Terms You Need to Know”.
Consumer Law Protection: Regulating Bodies
Laws to protect consumers are enforced by various U.S. federal agencies, including the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and the Federal Communications Commission (FCC). What’s more, at the state level, each Attorney General investigates and enforces consumer protection laws.
Internationally, several governing bodies exist to protect your rights as a consumer.
Stay Compliant as a Direct Seller
Thinking about getting into direct sales? Stay compliant and protect your customers—learn about the essential consumer protection laws today! Be sure to also guard yourself against misinformation, disinformation, and malinformation in direct sales. After all, the more educated you are about your rights as a direct seller or consumer, the less likely you are to either run afoul of the law or be taken advantage of.