U.S. Consumer Protection Law: A Federalist Patchwork

UNLIKE MANY foreign jurisdictions, the United States lacks a singular, comprehensive consumer protection code. Consumer protection law in the United States is instead a patchwork of federal and state laws. This patchwork is primarily a product of U.S. federalism, which allocates sovereign powers to both the federal and state governments. But it is also a function of the federal and state governments' piecemeal approach to consumer protection legislation. Accordingly, consumer protection law in the United States is not so much a cohesive body of law as it is a jumble of discrete (yet often interrelated and overlapping) federal and state laws. Federal Consumer protection law reflects piecemeal Congressional efforts to protect consumers. Rather than enact comprehensive or overarching consumer protection legislation, Congress has passed a series of separate laws targeting specific business practices, industries, and consumer products. The most significant of these laws address unfair or deceptive business practices (e.g., the Federal Trade Commission Act), food and drugs (e.g., the Food, Drug, and Cosmetic Act), household goods (e.g., the Consumer Product Safety Act), and consumer financial products and services (e.g., the recent Dodd-Frank Wall Street Reform and Consumer Protection Act). Many of these laws also created new federal agencies charged with carrying out their provisions, most notably the Federal Trade Commission, Food and Drug Administration, Consumer Product Safety Commission, and newly formed Bureau of Consumer Financial Protection. In other words, federal consumer protection law is scattered throughout the federal statutes and enforced by a variety of federal agencies. State consumer protection law is no less complex. While every state has enacted laws prohibiting unfair or deceptive business practices, the scope, evolution, and enforcement of those laws vary considerably from state to state. In addition, state law--i.e., the non-statutory decisional law of torts and contracts--may offer aggrieved consumers an extra layer of protection. The contours of state common law vary considerably from state to state. Further complicating state consumer protection law is its sometimes uneasy coexistence with federal law. Because the U.S. Constitution requires that federal law supersede or preempt conflicting state law, the constitutional viability of state consumer protection laws is often called into question. Finally, no survey of U.S. consumer protection law would be complete without briefly mentioning consumer class action lawsuits. Consumer class actions have been a prominent feature of U.S. consumer protection law since the 1960s, and some might argue they represent the chief enforcement mechanism for certain consumer protection laws. (1) While a few other countries permit class actions or a close facsimile, consumer class actions in the United States are unique in their prevalence, scale, and economic impact. Consumer protection law in the United States is idiosyncratic, both in its federalist complexity and reliance on class actions. While this paper does not purport to catalog every federal and state consumer protection law, it does attempt to summarize the most significant laws. While this article is directed primarily towards international practitioners, the discussion of the Dodd-Frank Wall Street Reform and Consumer Protection Act in Section I.C may also prove useful to domestic practitioners. I. Federal Consumer Protection Law The U.S. Constitution does not address the authority of the federal government to protect consumers. Instead, federal consumer protection law derives from Congress's constitutional power to regulate domestic commerce] Accordingly, federal consumer protection law is generally scattered among the various topical commercial laws (e.g., laws addressing trade, food, drugs, and banking) rather than codified in one federal law or statute. …