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Chapter 3: Section 3.3

Chapter 3: Section 3.3. Deception and Fraud. Deception . Fraud. When a sales tactic is questionable or unethical, but not illegal . When the sales tactic becomes illegal, and cheats the consumer. Must meet 2 requirements: Person must know statement they made is false

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Chapter 3: Section 3.3

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  1. Chapter 3: Section 3.3 Deception and Fraud

  2. Deception Fraud • When a sales tactic is questionable or unethical, but not illegal • When the sales tactic becomes illegal, and cheats the consumer. • Must meet 2 requirements: • Person must know statement they made is false • Purpose of making statement must be to cause others to give up something of value (like property or money) What’s the difference?

  3. Examples of deception:Trading Up Pressuring a customer to buy a more expensive unit than they had intended

  4. Sale Price Should be below the regular price

  5. Suggested Retail Price Can be higher than the retailer actually expects to get for the product

  6. Loss Leader In order to get you in the store, a retailer may offer an item below the cost to them

  7. Examples of Fraud: Bait and Switch Offering a nonexistent bargain in the advertisement and switching to a more expensive option when you get to the store

  8. Pyramid Schemes Financial fraud where people pay to join an organization in exchange for the right to sell memberships to others. In a pyramid scheme there is no legitimate product being sold

  9. Internet/Phone Fraud Often involves pressure to make an immediate purchase, play on your emotions, and may seem to good to be true. Can be difficult to find recourse since you can’t see them, interpret their body language or identify what they look like

  10. Red Flags of Fraud Items that promise to cure the incurable Contractors requiring more than 50% payment before the work is done Vacation clubs requiring money be sent in now to enjoy upscale vacations later super cheap repair work unrealistic weight loss promises

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