Special Message to the Congress on Consumer Protection.

To the Congress of the United States:

The history of American prosperity is the history of the American free enterprise system. The system has provided an economic foundation of awesome proportions, and the vast material strength of the nation is built on that foundation. For the average American, this strength is reflected in a standard of living that would have staggered the imagination only a short while ago. This constantly rising standard of living benefits both the consumer and the producer.

In today's marketplace, however, the consumer often finds himself confronted with what seems an impenetrable complexity in many of our consumer goods, in the advertising claims that surround them, the merchandising methods that purvey them and the means available to conceal their quality. The result is a degree of confusion that often confounds the unwary, and too easily can be made to favor the unscrupulous. I believe new safeguards are needed, both to protect the consumer and to reward the responsible businessman.

I indicated my deep concern for this matter in my special message to the Congress of October 30, 1969. At that time I urged the Congress to enact a legislative program aimed at establishing a "Buyer's Bill of Rights." This proposal found little success in the 91st Congress. But putting the remedies aside has not sufficed to put the problems aside. These remain. They must be dealt with.

Accordingly, I am again submitting proposals designed to provide such a Buyer's Bill of Rights by:

--Creating by Executive Order a new Office of Consumer Affairs in the Executive Office of the President which will be responsible for analyzing and coordinating all Federal activities in the field of consumer protection;

--Recognizing the need for effective representation of consumer interests in the regulatory process and making recommendations to accomplish this after full public discussion of the findings of the Advisory Council on Executive Organization;

--Establishing within the Department of Health, Education, and Welfare a product safety program. The Secretary of Health, Education, and Welfare would have authority to fix minimum safety standards for products and to ban from the marketplace those products that fail to meet those standards;

--Proposing a Consumer Fraud Prevention Act which would make unlawful a broad but clearly-defined range of practices which are unfair and deceptive to consumers and would be enforced by the Department of Justice and the Federal Trade Commission. This act, where appropriate, would also enable consumers either as individuals or as a class to go into court to recover damages for violations of the act;

--Proposing amendments to the Federal Trade Commission Act which will increase the effectiveness of the Federal Trade Commission;

--Calling upon interested private citizens to undertake a thorough study of the adequacy of existing procedures for the resolution of disputes arising out of consumer transactions;

--Proposing a Fair Warranty Disclosure Act which will provide for clearer warranties, and prohibit the use of deceptive warranties;

--Proposing a Consumer Products Test Methods Act to provide incentives for increasing the amount of accurate and relevant information provided consumers about complex consumer products;

--Resubmitting the Drug Identification Act which would require identification coding of all drug tablets and capsules;

--Encouraging the establishment of a National Business Council to assist the business community in meeting its responsibilities to the consumer; and by

--Other reforms, including exploration of a Consumer Fraud Clearinghouse in the Federal Trade Commission, increased emphasis on consumer education and new programs in the field of food and drug safety.

NEW OFFICE OF CONSUMER AFFAIRS

The President's Committee on Consumer Interests has made important gains on behalf of the American consumer in the past two years.

It has brought a new and innovative approach to the problem of keeping the consumer informed and capable of handling the complex choices presented to him in today's commercial world. One such measure involves the dissemination of information which the United States Government, as the nation's largest single consumer, collects on the products it uses. In my message of October 30, 1969, I announced that I was directing my Special Assistant for Consumer Affairs to develop a program for providing the buying public with this information.

On the strength of her recommendations, on October 26, 1970, I signed Executive Order 11566 which establishes a means for making available to the public much of the product information which the Federal Government acquires in making its own purchases. A Consumer Product Information Coordinating Center has been established in the General Services Administration with continuing policy guidance from my Special Assistant for Consumer Affairs to make these data available to the public through Federal information centers and other sources throughout the country.

In addition, the Committee on Consumer Interests has made significant strides in developing Federal, State and local cooperation in consumer programs, encouraging establishment of strong State and local consumer offices, and advising on the enactment of effective consumer laws and programs.

Nevertheless, further cooperation among Federal, State and local governments is essential if we are truly to insure that the consumer is properly served. Therefore, I am asking my Special Assistant for Consumer Affairs to intensify her efforts on behalf of the consumer at the State and local level. I am also directing her to conduct regional meetings with State officials concerned with consumer issues, with consumer groups, and with individual consumers to discuss common problems and possible solutions.

But I believe the greatest overall accomplishment of this office has been to give the consumer new assurance of this administration's concern for Iris and her welfare in the marketplace. In manifesting this concern during the past two years, the responsibility of the President's Committee on Consumer Interests has grown, as has its impact on consumer problems. I have therefore signed today a new Executive Order [11583] creating a new Office of Consumer Affairs in the Executive Office of the President. I am appointing my Special Assistant for Consumer Affairs to be Director of this new office. This change reflects the increasingly broad scope of responsibilities assigned to the Special Assistant for Consumer Affairs and will increase the effectiveness of the Office. The Office will advise me on matters of consumer interests, and will also assume primary responsibility for coordinating all Federal activity in the consumer field.

Finally, while I am deeply concerned with obtaining justice for all consumers, I have a special concern to see justice for those who, in a sense, need it most and are least able to get it. Therefore, I am directing my Special Assistant for Consumer Affairs to focus particular attention in the new Office on the coordination of consumer programs aimed at assisting those with limited income, the elderly, the disadvantaged, and minority group members.

A CONSUMER ADVOCATE

In my message of October 30, 1969, I pointed out that effective representation of the consumer requires that an appropriate arm of the government be given the tools to serve as an advocate before the Federal agencies. I proposed then that this function be performed by a Consumer Protection Division created for the purpose and located within the Department of Justice. That proposal was not acted on.

Since that time my Advisory Council on Executive Organization has completed its Report on Selected Independent Regulatory Agencies. This report makes sweeping recommendations on the reorganization of those agencies for the purpose of helping them better serve the interests of the consumer.

One specific recommendation involves the creation of a new Federal Trade Practices Agency dealing exclusively with matters of consumer protection. This Agency would result from a general restructuring of the Federal Trade Commission. The report specifically suggests that a consumer advocate might be placed within the Federal Trade Practices Agency.

I believe that this is a better approach than the creation of still another independent agency which would only add to the proliferation of agencies without dealing with the problems of effectiveness to which the Advisor)' Council report addresses itself.

As I indicated at the release of the Advisory Council's report, I am delaying legislative proposals on these issues pending full public discussion of the findings and recommendations of the Council. I urge that those who comment on the Advisory Council recommendations also focus on the manner in which the consumer interest can best be represented in Federal agency proceedings. I further urge the Congress to view the problems of consumer advocacy and agency structure as part of the general problem of making the Federal Government sufficiently responsive to the consumer interest.

After April 20, when comments have been received, I will make the recommendations I consider necessary to provide effective representation of consumer interests in the regulatory process. If the Congress feels it must proceed on the matter of consumer advocacy prior to receiving my recommendations, then I strongly urge and would support, as an interim measure, the placement of the advocacy function within the Federal Trade Commission.

A PRODUCT SAFETY ACT

Technology, linked with the American free enterprise system, has brought great advantages and great advances to our way of life. It has also brought certain hazards.

The increasing complexity and sophistication of many of our consumer goods are sometimes accompanied by the increasing possibility of product failure, malfunction, or inadvertent misuse resulting in physical danger to the consumer.

Therefore, I propose legislation providing broad Federal authority for comprehensive regulation of hazardous consumer products.

This product safety legislation will encompass five major responsibilities which would be assigned to a new consumer product safety organization within the Department of Health, Education, and Welfare. Through this organization the Secretary of Health, Education, and Welfare will:

1. Gather data on injuries from consumer products;

2. Make preliminary determinations of the need for particular standards;

3. Develop proposed safety standards with reliance on recognized private standards setting organizations;

4. Promulgate standards after a hearing and testimony on the benefits and burdens of the proposed legislation; and

5. Monitor industry compliance and enforce mandatory standards.

The mechanisms which will be included in this bill provide for full participation on the part of private organizations and groups in the development of standards.

NATIONAL ATTACK ON CONSUMER FRAUD

Consumer fraud and deception jeopardize the health and welfare of our people. They cheat consumers of millions of dollars annually. They are often directed against those who can least afford the loss, and are least able to defend themselves-the elderly, the handicapped, and the poor.

At the same time, the honest businessman is damaged by fraud and deceptive practices every bit as much as the consumer--and perhaps more. He is subjected to the unfair competition of the unscrupulous businessman, and he loses money. He is subjected to the opprobrium of those who have suffered at the hands of unscrupulous businessmen, and he loses the goodwill of the public. For it is a fact, however unfortunate, that in the area of business especially, the many are commonly judged by the actions of the few.

Efforts to eliminate these unethical business practices have not been successful enough. It is commonly profitable for unscrupulous businessmen to operate in defiance of the enforcement authorities, to accept whatever penalties and punishments are incurred, and to continue to operate in spite of these. The penalty is just part of the overhead. I want these practices brought to an end.

With this message I am committing this administration to a full and forceful effort to see that they are brought to an end.

CONSUMER FRAUD PREVENTION ACT

I am again submitting and I urge prompt attention to a bill to make unlawful a broad but clearly defined range of practices which are deceptive to consumers. The legislation would provide that the Department of Justice be given new powers to enforce prohibitions against those who would victimize consumers by fraudulent and deceptive practices.

It would give consumers who have been victimized by such practices the right to bring cases in the Federal courts to recover damages, upon the successful termination of a government suit under the Consumer Fraud Prevention Act.

I am also recommending civil penalties of up to $ 10,000 for each offense in violation of this act.

The Department of Justice has created a new Consumer Protection Section within the Antitrust Division, which has centralized the Department's enforcement in the courts of existing statutes designed to protect the consumer interest. Thus the Department of Justice is prepared to enforce promptly the proposed Consumer Fraud Prevention Act.

FEDERAL TRADE COMMISSION

While there is a need for new legislation to insure the rights of the consumer, there is also a need to make more effective use of the legislation we already have, and of the institutions charged with enforcing this legislation.

A principal function of the Federal Trade Commission has historically been to serve as the consumers' main line of resistance to commercial abuse. In the past year the Commission, under new leadership, has been substantially strengthened. A major organizational restructuring has produced within the Commission a Bureau of Consumer Protection, a Bureau of Competition, and a Bureau of Economics. An Office of Policy Planning and Evaluation has been created to establish a more effective ordering of priorities for the Commission's enforcement efforts.

In order to make FTC procedures more responsive to the needs of consumers, responsibilities of the eleven Commission field offices have been extended to include trying cases before hearing examiners in the field, negotiating settlements, conducting investigations, and referring complaints to the Commission. Six Consumer Protection Coordinating Committees have been established in selected metropolitan areas.

I am submitting today legislation which would provide the FTC with the authority to seek preliminary injunctions in Federal courts against what it deems to be unfair or deceptive business practices. The present inability to obtain injunctions commonly results in the passage of extended periods of time before relief can be obtained. During this time the practices in question continue, and their effects multiply.

The proposed bill would expand the jurisdiction of the Commission to include those activities "affecting" interstate commerce, as well as those activities which are "in" interstate commerce.

Finally, I recommend that the penalty schedule for violation of a Commission cease-and-desist order be adjusted from a maximum of $5,000 per violation to a maximum of $10,000 per violation.

GUARANTEES AND WARRANTIES

A constant source of misunderstanding between consumer and businessman is the question of warranties. Guarantees and warranties are often found to be unclear or deceptive.

In 1970, I submitted a proposal for legislation to meet this problem. I am submitting new legislation for this purpose.

This proposal would increase the authority of the Federal Trade Commission to require that guarantees and warranties on consumer goods convey adequate information in simple and readily understood terms.

It would further seek to prevent deceptive warranties; and it would prohibit improper use of a written warranty or guarantee to avoid implied warranty obligations arising under State law.

CONSUMER FRAUD CLEARINGHOUSE

My Special Assistant for Consumer Affairs is examining the feasibility of a consumer fraud clearinghouse--a prompt exchange of information between appropriate Federal, State and local law enforcement officials which can be especially helpful in identifying those who perpetrate fraudulent, unfair and deceptive practices upon the consumer and deprive the honest businessman of his legitimate opportunities in the marketplace.

Upon her recommendation, I am asking the FTC to explore with State and local consumer law enforcement officials an effective mechanism for such an exchange.

CONSUMER EDUCATION

Legislative remedies and improved enforcement procedures are powerful weapons in the fight for consumer justice. But as important as these are, they are only as effective as an aware and an informed public make them. Consumer education is an integral part of consumer protection. It is vital if the consumer is to be able to make wise judgments in the marketplace. To enable him or her to do this will require a true educational process beginning in childhood and continuing on.

The Office of the Special Assistant for Consumer Affairs has established guidelines for consumer education suggested for use at the elementary and high school level. Those guidelines have been sent to every school system in the country, and their reception has been encouraging. I believe they mark an effective step toward developing an informed consumer. The Office has also begun the development of suggested guidelines for adult and continuing education with particular emphasis on special socio-economic groups and senior citizens.

Now, in order to expand and lend assistance to Consumer Education activities across the nation, I am asking the Secretary of Health, Education, and Welfare, in coordination with my Special Assistant for Consumer Affairs, to work with the nation's education system to (1) promote the establishment of consumer education as a national educational concern; (2) provide technical assistance in the development of programs; (3) encourage teacher training in consumer education; and (4) solicit the use of all school and public libraries as consumer information centers.

I am also asking the Secretary of Health, Education, and Welfare, in coordination with my Special Assistant for Consumer Affairs, to develop and design programs for the most effective dissemination of consumer information, and particularly to explore the use of the mass media, including the Corporation for Public Broadcasting.

ADDITIONAL PROPOSALS CONSUMER REMEDIES

As we move to shape new consumer legislation, I believe we must also review all consumer remedies. Although this is primarily a matter of State and local responsibility, I believe that the problem is also of national concern. Accordingly, I am asking the Chairman of the Administrative Conference of the United States to join with other interested citizens representing a broad spectrum of society to undertake a thorough study of the adequacy of existing procedures for resolving disputes arising out of consumer transactions.

The study would ( 1 ) focus particularly on the means of handling small claims and explore methods for making small claims courts more responsive to the needs of consumers; (2) examine existing and potential voluntary settlement procedures, including arbitration, and potential means of creating incentives to voluntary, fair settlements of consumer disputes; (3) address the difficult and troublesome questions presented by mass litigation; (4) examine problems and solutions at the State as well as the Federal level; and (5) draw on the experience of other nations in improving consumer remedies.

The purpose of this study will be to gather those facts needed to determine the means of gaining the greatest benefit to consumers with the least cost to production processes and to the country. I urge Federal, State, local, and private bodies to cooperate in this effort. I also ask that recommendations to the President, the Congress, the courts and the general public be made within the shortest practicable time.

FOOD AND DRUG PROGRAMS

Events in the past year have reconfirmed the need for urgent action to insure thorough and effective quality control through the Food and Drug Administration over the food Americans consume and the drugs they take.

In my message of October 30, 1969, I called for stronger efforts in the field of food and drug safety.

At that time I announced that the Secretary of Health, Education, and Welfare had initiated a thorough study of the Food and Drug Administration. As a result of that study, a number of management reforms have contributed to a more effective functioning of the FDA. Food. During the past two years consumer concern about the quality of certain foods in this nation has become acute. I have instructed the Food and Drug Administration to develop new and better methods for inspecting foods--domestic and imported-to insure that they are entirely free from all natural or artificial contamination. In addition, a major study is under way reviewing the safety of all food additives. Finally, because too many Americans have no understanding of the most basic nutritional principles, the Food and Drug Administration has developed programs of nutritional guidelines and nutritional labeling. Different approaches to labeling are presently being tested for method and effectiveness.

Drugs. In the past year the Food and Drug Administration has been engaged in an extensive program to insure the effectiveness of the drugs Americans use. Decisions have been made on some 3,000 drugs marketed between 1938 and 1962 and representing 80% of the most commonly prescribed drugs.

In addition, the Food and Drug Administration will expand its research efforts aimed at insuring that all drugs available on the market are capable of producing the therapeutic effects claimed for them.

I have resubmitted legislation requiring the identification coding of drug tablets and capsules to prevent those poisonings which result from the use of drug products of unknown or mistaken composition.

A CONSUMER PRODUCT TEST METHODS ACT

Consumers are properly concerned with the reliability of the information furnished them about the goods they buy, and I believe they have a right to such information.

Accordingly, I again propose legislation aimed at stimulating product testing in the private sector. Under this legislation, the Secretary of Commerce, through the National Bureau of Standards, in consultation with my Special Assistant for Consumer Affairs, would identify products that should be tested. Competent Federal agencies would identify product characteristics that should be tested and would approve and develop, where necessary, testing methods to assess those characteristics. Suppliers of goods would be permitted to advertise their compliance with government approved testing standards. In addition, interested private organizations may receive accreditation indicating their competence to perform the approved tests, and the use of an accredited organization in testing a product may be advertised.

NATIONAL BUSINESS COUNCIL FOR CONSUMER AFFAIRS

Most businessmen recognize and accept their responsibility to the consumer, and in many cases they have voluntarily undertaken efforts to assure more fully that these responsibilities are met throughout the business community.

To emphasize and encourage such voluntary activity, a National Business Council for Consumer Affairs will be organized by the Secretary of Commerce. It will work closely with my Special Assistant for Consumer Affairs, the Federal Trade Commission, the Justice Department and others as appropriate in the further development of effective policies to benefit American consumers.

The Council will be a vehicle through which Government can work with business leaders to establish programs for accomplishing the goal I stated in my 1969 message on consumer protection of fostering "a marketplace which is fair both to those who sell and those who buy." And it will encourage everyone who does business to do an even better job of establishing competitive prices for high quality goods and services.

CONCLUSION

In submitting the foregoing proposals, I want to emphasize that the purpose of this program is not to provide the consumer with something to which he is not presently entitled; it is rather to assure that he receives what he is, in every way, fully entitled to. The continued success of our free enterprise system depends in large measure upon the mutual trust and goodwill of those who consume and those who produce or provide.

Today, in America, there is a general sense of trust and goodwill toward the world of business. Those who violate that trust and abuse that goodwill do damage to the free enterprise system. Thus, it is not only to protect the consumer, but also to protect that system and the honest men who have created and who maintain it that I urge the prompt passage of this legislative program.

RICHARD NIXON

The White House

February 24, 1971