Understand Threats to Financial Security

1. Understand Threats to Financial Security Personal Finance Unit 2.02

2. Vocabulary • Failure to plan • Not making shopping lists, spending plans, doing comparison shopping, etc. • Failure to protect • Not securing personal information and property • Failure to be informed • Not reading labels, fine print, contracts, sales offers, etc. • Failure to communicate • Not asking questions, discussing purchases, saying “no” when needed

3. Scam/scheme • A plot designed to trick someone; a deception • Illegal • Against the law • Lie/lying • To tell an untruth/the habit or practice of telling untruths • Concealing information • Hiding information; hiding the truth • Pyramid • A scam that usually involves a “get rich quick” chain letter, sending money to others in order to, supposedly, receive money in the mail yourself

4. Chain letter • A letter asking one to send several letters with money in order to, supposedly, receive money in the mail yourself • High-pressure sales approach • Using extreme tactics to persuade a consumer to buy • Vague offers • Offers that withhold certain details, expecting one to pay up front to get them • Sweepstakes letter • States that one has won a valuable prize, but must pay a fee to claim it

5. Lottery • Prizes awarded by chance after purchase of a ticket; very small chance of winning • Earn-money-at-home offers • Offers that hinge on a consumer first purchasing something • Condition • A stipulation or prerequisite • Winning bid at auctions • A scam artist may notify you that you have the winning bid, ask for money, but never ship the item purchased

6. Identity theft • Stealing one’s personal information to commit theft or fraud • Media • Means of communicating---e.g., word of mouth, telephone, texting, emails, etc. • Federal Trade Commission • FTC; a government agency to assist consumers who’ve been victims of fraud • National Consumers League • Has a website where incidents of consumer fraud may be reported

7. Better Business Bureau • A local consumer protection agency • State Attorney General • This state office assists consumers who have been victimized by fraud

8. Threats to Personal and Family Financial Security • From within consumers • Results from consumer behavior • Lack of knowledge

9. Threats to Personal and Family Financial Security • From without • Result of deceitful, fraudulent, scams and schemes • Designed to manipulate or trick consumers in ways that lead to financial loss

10. Types of Consumer Behaviors that can Lead to Financial Losses • Failure to plan • Not comparing job offers carefully in light of expected expenses • Shopping without a list, which often leads to impulse buying • Spending without using a spending plan, which often leads to overspending • Failure to protect • Making personal information available that can lead to identity theft • Not securing life, health, and property to minimize risks of crimes and emergencies • Not following Internet safety practices

11. Types of Consumer Behaviors that can Lead to Financial Losses • Failure to be informed • Not reading the fine print in sales agreements, product labels, contracts • Not researching sales offers in depth before making a commitment • Not separating facts from opinions in considering advertisements • Failure to communicate • Not asking sufficient appropriate questions to inform financial decisions • Not discussing financial decisions with all parties/family members involved • Not taking enough time to make a careful decision because of sales pressure • Not saying “no” when needed

12. Types of Deceitful/Fraudulent Scams and Schemes • Lying---e.g., accepting money for a stated purpose, then using it for a different purpose; • Selling a product or service that will not perform as promised • Concealing information---e.g., sellers not willing to state their physical addresses

13. Types of Deceitful/Fraudulent Scams and Schemes • Deals that are too good to be true---e.g., a pyramid scheme, an illegal scheme that influences people to contribute money based on the false promise that they will get rich quickly; the pyramid collapses and money is lost, not gained • Chain letter---a variation of the pyramid scheme that involves postal correspondence, also illegal • High-pressure sales approaches---e.g., claiming the offer is only good for one day • Vague offers---e.g., expecting you to pay up front in order to receive full information about a product or service

14. Types of Deceitful/Fraudulent Scams and Schemes • Sweepstakes letter---states that you have won a valuable prize, but need to pay a processing fee to claim the prize • Lotteries---prizes awarded by chance after purchase of ticket; very small chance of winning • Earn-money-at-home offers---on the condition that you purchase software, etc.; once paid for, nothing arrives

15. Types of Deceitful/Fraudulent Scams and Schemes • Winning bid in auctions---you pay the bid amount, but never receive the item bought • Identity theft---stealing one’s personal information in order to commit theft or fraud • Wide variety of other unsolicited online offers

16. Communicating and Reporting Deceitful/Fraudulent Scams and Schemes • Communicating with fellow consumers • Use available communication media---live conversation, telephone, texting, emails, etc. • Be specific, include key details • Reporting to government agencies and other consumer advocates • Go to the Federal Trade Commission (FTC) website; complete a Consumer Complaint Form • Call or visit the website of the National Fraud Information Center of the National Consumers League • Contact local consumer protection agency • Contact Better Business Bureau • Contact State Attorney General’s office • Contact the post office if you receive a fraudulent offer by mail • Contact the local media