I think you're being too narrow in your conception of what markets do. I'm not denying the existence of snake oil salesman--they absolutely do exist--but there are many ways markets combat such behavior. I suspect much of this gets crowded out by the existing regulatory regime, but it's not hard to envision how it would work outside of the status quo (with substantially less cost to consumers).

Underwriters' Laboratories, Consumer Reports, Amazon Reviews, and Yelp are all good examples of effective, though imperfect, market regulation. Producers have no interest in harming their consumers and consumers have no interest in dealing with producers who will harm them. Everyone has an incentive to find ways to ensure mutually beneficial trade. However, when regulatory regimes are monopolized, a new set of incentives emerge which often have nothing to do with consumer safety. Worst of all, consumers and producers have no means to express their dissatisfaction and exit the regime. This is inherently different from companies like Yelp who must fight on a daily basis to continue delivering value to their customers.