Consumer Protection Guide: Safeguard Your Finances and Rights

2. 14 Consumers in the Marketplace

3. Chapter Objectives • Explain how consumers can take advantage of various selling methods. • Identify different types of advertising and marketing techniques. • Identify reliable sources of consumer information and protection. continued

4. Chapter Objectives • Recognize andguard against various forms of financial fraud. • Write an effective letter to resolve a consumer problem. • Outline steps to take in resolving consumer disputes. • Describe the rights and responsibilities of consumers.

5. Selling Methods • Sellers use various methods to make you want their goods and services • By practicing consumer self-defense, you protect yourself against fraudulent practices

6. Advertising: Getting the Message to You • Businesses spend billions on advertising to sell • goods • services • ideas • images continued

7. Advertising: Getting the Message to You • You win when you look for and find useful information in ads • You lose when you let ads persuade you to buy what you do not want, do not need, or cannot afford

8. Insecurity appeal Testimonials Celebrity endorsements Sex appeal Bandwagon Puffery Nostalgia Humor Statistics Green ads Common Advertising Appeals continued

9. Common Advertising Appeals • By using an image that has positive associations, advertisers hope to link desirable traits to their products continued

10. Common Advertising Appeals • Advertisers look for new ways to grab consumers’ attention • Product placement is when advertisers pay to have their product or brand appear in movies or television shows

11. Helpful Information • Factual description of what is for sale • Listing and demonstration of product features and qualities • Statement of differences between advertised items and competitors • Details on prices, special offers, terms of sale continued

12. Signs of possible deception are the words free, one-time offer, valued at If it sounds too good to be true, it probably is Helpful Information

13. Infomercial • An infomercial is a program-length advertisement that • offers easy payments and risk-free trials • often claims a limited availability of the featured item • can offer valuable information and demonstrations, but consumers should do their own research

14. Direct Mail Advertising • Direct mail advertising includes use of advertising circulars, catalogs, coupons, and other unrequested offers that arrive via mail • Direct business-to-consumer advertising is also done via phone and e-mail

15. Special Sales and Promotions • Price reductions and promotions can benefit sellers by increasing sales and profits continued

16. Special Sales and Promotions • When consumers buy things they need on sale, they benefit • But when consumers buy sale items they don’t need, they lose

17. Buying Incentives • Buying incentives include trading stamps, coupons, loss leaders, contests, games, rebates, premiums, and prizes • Alert shoppers can recognize which incentives offer real savings that truly meet their needs

18. Packaging and Display Tools • A product’s presentation: • Color • Size • Name • Logo • Label • Packaging • Product’s location on store shelves

19. Consumer Credit • Businesses often offer credit to consumers so they will buy more and higher-priced goods and services • Credit use can be good for consumers, if used with forethought and planning

20. Deceptive Selling Techniques • False and misleading statements about products, services, prices, or guarantees • Advertising sale items that are not available • Falsely stating that products are being sold at reduced prices

21. Bait and Switch • Using bait and switch, a pricier product is shown to the customer instead of the affordable one advertised

22. Pyramid Schemes • Pyramid schemes promise participants huge profits in a short time • Each participant must buy into the plan and recruit others to do so • The many at the bottom of the pyramid pay money to the few at the top • Eventually the pyramid collapses

23. Chain Letters • Chain letters or e-mails often involve a get-rich-quick scheme or an emotional plea • Some threaten serious consequences for breaking the chain • They are a waste of time • Those that promise money, valuable items, and big returns are illegal

24. Sweepstakes, Lotteries, and Games of Skill • Are forms of advertising that offer consumers opportunities to win prizes continued

25. Sweepstakes, Lotteries, and Games of Skill • Sweepstakes require no purchase or entry fees • Lotteries award prizes in exchange for payment • Skill contests may require a fee or purchase to enter; the winning skill is usually determined by judges

26. Protection Against Financial Fraud • Financial fraud is on the rise • Includes • crimes related to credit card accounts, electronic fund transfers, and identity theft • unauthorized use of bank, credit, Social Security, and investment accounts continued

27. Protection Against Financial Fraud • Incidents of identity theft are rapidly increasing • Identity theft is often committed online continued

28. Protection Against Financial Fraud • Online identity thieves use many techniques including pop-up messages and spam e-mails • Phishing e-mails may look official and ask the receiver to send personal information that is then used to commit identity theft continued

29. Protection Against Financial Fraud • To minimize damage, • file a police report • immediately report missing checks, credit and debit cards • contact the Social Security administration’s fraud line • notify the three national credit reporting agencies

30. Consumer Self-Defense • Consumers need to heed the principle of caveat emptor • Be cautious and follow up when products and services don’t meet your expectations or a seller’s claims

31. Successful Complaining • The art of complaining is an essential self-defense tool • Complain to the right person in the right way • Simple exchanges and returns of unsatisfactory merchandise can often be handled by taking purchases back to sellers continued

32. Successful Complaining • For more complicated matters, • put your complaint in writing • be prompt • address the right source • be specific and factual • suggest a solution • be reasonable, businesslike, and persistent continued

33. Successful Complaining

34. Consumer Advocates • If you can’t settle differences directly with sellers, an outside party can help • One such party is a consumer advocate • A government regulatory agency can help when dealing with dishonest and fraudulent business practices

35. Difficult Cases • A last resort is legal action: • Binding arbitration • Small claims court • Class action lawsuits • Individual lawsuits

36. The Informed Consumer • Consumers need to know the available data sources that can help them make wise economic decisions • Community resources include local newspapers • The Internet provides much valuable information; check reliability of sources

37. Dealing with Distance Sellers • Understand the details of the sale: what you are buying? from whom are you buying? • Maintain your security when shopping online • Check the privacy policy • Keep a complete record of each transaction continued

38. Dealing with Distance Sellers • Pay by credit card • Know your rights • Take your time • Don’t fall for the unbelievable

39. Evaluating Consumer Information • Create a file to help you make intelligent consumer decisions • Evaluate filed materials periodically • Use reliable and informed sources • Determine their primary purpose; ads give only positive facts • Review the data’s usefulness and discard outdated material

40. Consumer Rights and Responsibilities • Eight consumer rights have been endorsed by the United Nations and Consumers International, a worldwide consumer organization • Each right carries responsibilities for consumers

41. Safety: Rights and Responsibilities • Consumers are entitled to protection from dangerous goods and services • Government’s role is crucial continued

42. Safety: Rights and Responsibilities • Consumers are responsible for • reading and following product directions • safe use, storage, and disposal of potentially dangerous products • reporting product-related health and safety problems to seller, manufacturer, and sometimes the proper government agency

43. Truthful Information: Rights and Responsibilities • Consumers are entitled to accurate information on which to base choices and decisions • Government also plays an important role continued

44. Truthful Information: Rights and Responsibilities • Consumers are responsible for • investigating a seller’s policies • checking a store’s reputation • evaluating advertising claims and product performance • comparing quality and prices

45. Choice: Rights and Responsibilities • Consumers are entitled to choose which goods and services to buy and where to shop continued

46. Choice: Rights and Responsibilities • Consumers are responsible for • carefully choosing products and services that best meet their needs at prices they can afford • dealing only with reliable, reputable businesses

47. A Voice: Rights and Responsibilities • Consumers are entitled to speak up, be heard, and expect results when they have legitimate problems or concerns • Business and government are required to respond continued

48. A Voice: Rights and Responsibilities • Consumers are responsible for • speaking out and expressing concerns to appropriate business and government representatives • learning and using appropriate and effective means of communication • letting businesses know what they like and want, as well as what they dislike

49. Satisfaction of Basic Needs: Rights and Responsibilities • Consumers are entitled to satisfying their basic needs continued

50. Satisfaction of Basic Needs: Rights and Responsibilities • Consumers are responsible for • putting essential needs ahead of other items when spending • learning about and taking advantage of basic services • getting the training and education that enables them to earn a living wage