What Is Consumer Protection? - Product Liability, Laws & Rights

Lesson Transcript
Instructor: Ashley Dugger

Ashley has a JD degree and is an attorney. She has extensive experience as a prosecutor and legal writer, and she has taught and written various law courses.

The laws that establish consumer rights in business practices fall under the umbrella of consumer protection. Learn how the Federal Trace Commission enforces consumer protection laws, and discover the principles of product liability by exploring a famous case example, Escola vs Coca-Cola. Updated: 09/26/2021

What Is Consumer Protection?

America is known for its consumerism. Good or bad, many argue that our culture places a high value on material possessions and encourages people to consume more than they need. But, consumerism has more than one definition. In business and economy, it means to promote the rights and safety of consumers.

Our current consumer protection efforts grew out of this business definition of consumerism. Simply put, consumers are people. They are people who buy things. Consumer protection, therefore, refers to laws and other forms of government regulation designed to protect the rights of consumers. The Federal Trade Commission, or FTC, serves as our nation's consumer protection agency and administers many different consumer protection laws, like the Telemarketing Sales Rule and the Equal Credit Opportunity Act.

Consumer protection is based on consumer rights, or the idea that consumers have an inherent right to basic health and safety. The FTC protects these rights by:

  • Enforcing product safety
  • Distributing consumer-related information
  • Preventing deceptive marketing

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  • 0:07 Consumer Protection
  • 1:29 Product Liability
  • 2:49 Example Case
  • 5:21 Lesson Summary
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What Is Product Liability?

Consumer protection is often achieved through the legal doctrine of product liability. Generally speaking, this is the legal responsibility imposed on a business for the manufacturing or selling of defective goods. Product liability laws are state laws, and therefore vary by state. However, the laws share a common goal. The laws are built on the principle that manufacturers and vendors have more knowledge about the products than the consumers do. Therefore, these businesses bear the responsibility when things go wrong, even when consumers are somewhat at fault.

Product liability cases can result in large civil lawsuits and lucrative monetary judgments for the plaintiffs. This can be harmful to small businesses and manufacturers and has been an argument for tort reform. But keep in mind that, on the other hand, many of the product safeguards consumers now enjoy are the result of previous lawsuits.

There are three main types of product liability. Businesses will be found liable to consumers when a court finds:

  • Design flaws
  • Manufacturing defects
  • A failure to warn consumers of a possible danger

Example Case

Let's take a look at how consumer protection and product liability laws work in the real world. One famous case comes out of California back in 1944 and is known as the 'Exploding Coca-Cola Case,' or Escola v. Coca-Cola Bottling Co.

Escola was a waitress in a restaurant. She was putting away glass Coca-Cola bottles when a bottle exploded in her hand for no apparent reason. She suffered a severe, five-inch wound to her palm and thumb. The top portion of the bottle, including the bottle cap, remained in her hand while the bottom portion of the bottle smashed to the floor. She suffered severed muscles, nerves and blood vessels. At trial, a Coca-Cola representative admitted to seeing other similarly exploded bottles in the warehouse, though he didn't know how they might have exploded.

The main issue in this product liability case involved possible negligence in the bottle's design. When the case went to trial, Escola's attorneys wanted to prove Coca-Cola's liability by simply presenting evidence of the shattered bottle. Coca-Cola argued that the bottle was out of its exclusive care and control when the accident occurred, and therefore really anything could've happened to compromise the condition of the bottle.

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