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Consumer protection regulation refers to government involvement in the marketplace to protect consumers in commercial transactions from potential harm caused by businesses. The potential harm may arise from the use of unreliable or unsafe products, deceptive advertising, asymmetry of knowledge of products and services, and privacy intrusion in the Internet age. In the United States, the federal and state governments took important steps in consumer protection, especially in the late 1960s and 1970s. Before this, the ancient rule of caveat emptor, or “let the buyer beware,” generally guided consumer transactions. Although consumer protection regulation did exist (e.g., the 1906 Food and Drug Act, the creation of Federal Trade Commission [FTC] in 1914), it was limited and weakly enforced.

The surge of government protection regulation in the ...

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