Consumer Rights & Responsibilities Consumer Protection Consumers Beware Making Choices

Tammy has rented a DVD from Hollywood Video. She then proceeds to

softball practice, leaving the DVD to bake in the car for two hours. When

Tammy gets home to watch the DVD, it doesn’t function properly.

WHO is your first line of defense against consumer fraud and deception?

WHO must seek assistance when a violation of consumer rights has occurred?

WHO must contact the appropriate agency in order to seek assistance and advice?

WHO has rights and responsibilities as a consumer?

What is the Consumer Movement?Developed to protect the consumer

What makes the Consumer Movement successful?

Poor economic conditions

Scandals/fraud

Active participation by all players

Four Key Players in the Consumer Movement

Sellers Government Consumer

Organizations Consumers

What Do We Want Today?

Increased quality & info of products Consumer Reports The Consumers Union Environmental Groups

Objective & useful info Consumer Reports Better Business Bureau

Resolving consumer problems & strengthening redress systems

The Consumer Bill of Rights

The Right to SafetyThe Right to be InformedThe Right to ChooseThe Right to be HeardThe Right to RedressThe Right to Consumer EducationThe Right to a Healthy Environment

John F. Kennedy

The Consumer Bill of Rights

The Right to SafetyProtection against products

that are hazardous to health/life

The Consumer Bill of Rights

The Right to be InformedAgainst fraud/deceitThe assurance of receiving the

necessary facts to make an informed choice

The Consumer Bill of Rights

The Right to ChooseAccess to a variety of quality

products and servicesThe right to buy what you

want at a fair price

The Consumer Bill of Rights

The Right to be HeardAssurance of representation

against governmentHelp in the formulation of

policies

The Consumer Bill of Rights

The Right to RedressThe right to complain, and

achieve satisfaction from the complaint process

The Consumer Bill of Rights The Right to Consumer Education

Receive the necessary education and assistance to use resources efficiently

The Consumer Bill of Rights The Right to a Healthy Environment

At home and while out and about

Your Consumer Rights Ensure

Quality products Product knowledge No Monopolies Your opinions matter Customer satisfaction Being informed Green movement

SOURCES OF ASSISTANCE

Federal Agencies Private Agencies State/Local Assistance

Federal Agencies

USDA – U.S. Dept. of Agriculture FDA – Food & Drug Administration CCCS – Consumer Credit Counseling Service

CPSC – Consumer Product Safety Commission

FCC – Federal Communications Commission

FTC - Federal Trade Commission

Federal Agencies

USPSIS – U.S. Postal Inspection Service FAA– Federal Aviation Administration NIST – National Institute Standards & Tech

SEC – Securities Exchange Commission

FCIC – Federal Citizen Information Center

NTIA – National Telecom & Info Administration

Notable Federal Acts

Food, Drug, and Cosmetic ActHazardous Substances Labeling

Act Cigarette Labeling and

Advertising ActChild Protection and Toy Safety

Act

Notable Federal Acts

Wool Products Labeling Act Poultry Products Inspection Act Flammable Fabrics ActNational Traffic and Motor Vehicle

Safety Act

Private Organizations

BBB – Better Business BureauBusiness sponsored, not government

Private Organizations

MACAP – Major Appliance Consumer Action PanelRepresents consumer in the purchase and use of home appliances

Private Organizations

Consumer Advocates Promote and/or protect the causes of interest of consumers

State/Local Assistance

County/city governmentsPublic interest groupsIndependent consumer groupsNewspapers, TV, other media

Consumer Protection

Contracts

Promises

Warranties

Consumer Protection

Contracts – An agreement between two or more parties

Must be 18 yrs. old +

Consumer Protection

Promises – Declaration that something will or will not happen in the future

Create moral, not legal obligations

*Consumer Protection*

Warranties – A promise that a product will perform in a specified manner

Implied Warranty– unspoken and/or unwritten promises made by a seller to a buyer that the item being sold worksImplied Warranty of Merchantability

Implied Warranty of Fitness

Implied Warranties

Implied Warranty of Merchantability - the promise that the product sold is in good working order and will do what it is supposed to do

Implied Warranty of Fitness (for a particular purpose) - the promise that the seller’s advice on how to use the product will be correct

Implied Warranties

Express Warranty - an explicit written and/or verbal offer made voluntarily by the seller that a product will perform according to particular expectationsFull Warranty

Limited Warranty

Express Warranties

Full Warranty – if the product malfunctions, is defected or does not conform with the written warranty, the seller must remedy the product free of charge within a reasonable amount of time by repair, replacement, or refund

Limited Warranty - specifies under what conditions, to what extent, and for how long the manufacturer of an item guarantees that it will perform as claimed

Express Warranties

Extended Warranty – a prolonged warranty in addition to the original warranty, usually costs extra, and certain exclusions often apply (normal wear and tear, owner abuse, and “acts of God”)

Common for automobiles and electronics

Also called a Service Contract

Extended Warranties

“As Is Goods - goods that do not require the seller to offer any warranty, the seller is required to make clear to consumers that the product is being sold in less than prime condition and that the consumer assumes all responsibility for any faults and flaws

Some states prohibit this practice, Illinois is NOT one of them

“As Is” Goods

Amy agreed to go to the homecoming dance with Mike. Later Steve, the captain of the football team, asked Amy to be his

date for the dance.

Amy broke her date with Mike to go out with Steve instead. Does Mike have a legal claim against

Amy? Why or why not?

*CONSUMER BEWARE*Fraudulent & Deceptive Marketing Practices

Bait & SwitchReferral SalesFake SalesLow BallingPyramid

Schemes

Pigeon DropFraudulent

RepresentationHealth &

Medical Product Fraud

Infomercials

Bait and Switch A marketer advertises a very

attractive price that is designed to draw customers.

Once the customer comes into the store the advertiser will attempt to sell the customer a more expensive product (the "switch").

Fake Sales When a store places a high

"regular" price on an item, then deeply discounts it to try to make customers think they're getting a bargain.

in some cases the discount amount is very small or is in fact still higher than a competitor’s regular price.

Fraudulent Representation Making a false statement about

a material fact, with the full knowledge the statement is false

Intention is to make another person believe a false statement in order to get that person to enter a contract or sales agreement

Health & Medical Product Fraud

Fraudsters prey on their victims by tricking them into believing they will receive an approved form of alternative medicine at a lower price than comparable legitimate products

Ex: Miracle products with miracle cures

Low-Balling A persuasion and selling technique in

which an agreed upon item or service is offered at a lower price than is actually intended to be charged

After a customer feels attached or committed to the product or service being offered, the seller adds items or services to the original order which raises the price for the customer and increase profits for the seller

Pigeon Drop In the pigeon drop scam, swindlers work in

pairs or teams. One befriends an unsuspecting consumer, the "pigeon," while the other approaches them with money or valuables he claims to have just found.

After some rehearsed conversation, the con artists agree to split the money three ways with you and arrange to meet at a lawyer's office or somewhere else of their choosing.

Pigeon Drop (continued)

But can they trust you, they ask. To get your share, you'll need to put up some "good faith" money, which they will return to you after the goods are divided.

To prove yourself trustworthy, you turn over a large sum of money to them and later go to meet them at the designated spot. Soon after arriving, you realize the pair is long gone -- and so is your money.

Pyramid Schemes It starts with one person - the

initial recruiter This person recruits a second

person, who is required to “invest” money which is paid to the initial recruiter

Pyramid Schemes (continued)

The new recruit must recruit more people to “invest” to make his or her money back

The process continues until the base of the pyramid can NOT support the top of the pyramid

The initial recruiter(s) keep their money while everyone else loses theirs

Referral Sales When a consumer is persuaded to

buy goods or services by promises of a rebate, commission, or other benefit for supplying information that helps the trader sell to other consumers

The consumer does not get the promised benefit unless some other event happens after the agreement is made

Infomercials

1. Failure to promptly deliver the product in a timely manner, if at all.

2. Excessive or artificially inflated shipping and handling charges.

3. Failure to provide the quality or characteristics advertised.

Infomercials (continued)

4. Failure to deliver the quality construction or workmanship promised.

5. Difficulty returning or receiving a refund.

6. Difficulty communicating with customer service.

*Making Choices* We are constantly making decisions about

wants and needsObtain & evaluate accurate informationCompare alternativesTake ActionRe-evaluate

Making Choices – InfluencesPersonal Factors

PERSONAL FACTORS Personal resources – time, money,

energy, skills Position in life – Age, gender, martial

status, lifestyle, employment status Cultural factors – background,

customs, religion Values and goals

Making Choices – InfluencesOutside Factors

OUTSIDE FACTORS Economy – interest rate, inflation,

general condition Technology - advances Environment – actions to clean up

and prevent damage Social pressures - media

Making Choices – Influences

ANY PURCHASES

Information for your purchase should be:1. Accessible2. Current3. Factual4. Unbiased

Making Choices – Influences

MAJOR PURCHASE FACTORS

Why? How long will I use this product? Substitutes? Can it be postponed? Additional costs? Other purchases instead? What is the total cost of this product?

Making ChoicesPromotional Techniques & Incentives

Displays Contests/Games Coupons Packaging Sampling/Give-a-ways Rebates Direct Mail Marketing Print

MediaHow much do these

techniques influence your decision to buy?

Making ChoicesMarketing Influences

Pricing$1.99, $2.985/$1.00 instead of $.20 each

SalesEnd of season, end of month,

anniversary and holiday salesBuy One, Get One FreeClearance merchandise or

going out-of-businessDoor Busters

Ex: Black Friday

*Advertising* Target Market—the specific group of

people we are trying to aim at:

AgeGenderIncomeEthnicityLifestyleInterests

Function of Advertisements

Educational Informative Economic Social Value

Types of Advertisements

Product/Consumer Advertising Specific product at specific group of people Ex: Trix Cereal, HoverRound

Selective/Comparative Advertising No particular product, just choose our company Ex: Ford vs. Chevy, McDonald’s vs. Burger King

Primary Advertising General product, no specific company Ex: Milk, Beef, Cotton

Types of Advertisements

Newspapers & Magazines

Radio Television Direct Mail or

Junk Mail Outdoor Media Internet

*Are we Influenced by media?

Elements of Print Media

Logo Artwork/Picture Description

Optional elements Copy White Space Price

Celebrity Endorsements

Do they actually have to claim use of the product?

Cost & Effectiveness

The average production cost for a 60 second TV spot is:

$30,000 - $70,000

Cost & Effectiveness

Do you really NEED it?

If it sounds to good to be true?

Does this have the same meaning?

Studies suggest that the use of Acetaminophen is linked Asthma…

OR

This study proves that Acetaminophen use causes Asthma …

False or Misleading Advertisements

What did the DOT say?

Protect Yourself from Unfair Sales Practices

Know what you want in a purchase beforehand and

insist on it!

Unordered Products

If you receive unordered products they are yours for the keeping and the business cannot expect payment

Cooling Off Period (FTC)

You have 3 days to change your mind Door to door, phone

solicited sales Applies to Purchases

over $25

Advertisements

Now that you are aware of the persuasive methods of advertisers…

Use this information to become a wiser consumer!

Advertising Project