ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 WHAT’S AHEAD 3.1Consumer Rights and Responsibilities 3.2Government and Consumer Protection 3.3Deception and

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3

© 2010 South-Western, Cengage LearningSlide 11

WHAT’S AHEAD3.1 Consumer Rights and Responsibilities3.2 Government and Consumer Protection3.3 Deception and Fraud3.4 Resolve Consumer Problems


LESSON 3.1Consumer Rights and ResponsibilitiesGOALGOAL►Describe each of your consumer rights

and responsibilities.



KEY TERMSKEY TERMS

competition monopoly redress



KEY TERMS competition – a contest among sellers

to win customers. Competition helps keep prices reasonable.

monopoly – a situation in which there is only one company that sells a specific product or service.

redress – a right to seek and receive a remedy, such as a refund or other compensation.


A Consumer Bill of RightsRight to . . .

►Safety►Be Informed►Choose►Be Heard►Redress►Consumer education►A Healthy environment



Rights Carry ResponsibilitiesResponsibility to . . .

►Use products safely►Use information►Choose carefully►Express satisfaction or dissatisfaction

►Seek redress►Be an educated consumer►Contribute to a healthy environment



As a consumer, what rights are you entitled to when dealing with businesses that sell goods and services? What responsibilities do you have in return?



As a consumer, what rights are you entitled to when dealing with businesses that sell goods and services? What responsibilities do you have in return?

• Businesses should respect consumers’ rights to safety, information, choice, being heard, redress, education, and a healthy environment

• Consumers have the responsibility to use products correctly and to inform businesses of any problems


ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3LESSON 3.2Government and Consumer Protection

GOALSGOALS►Describe the evolution of the consumer

movement.►Identify government agencies and laws

that help protect consumers.►Describe different types of products

warranties and how they protect consumers.



KEY TERMSKEY TERMS

consumer movement Federal Trade

Commission (FTC) cease-and-desist order Consumer Product

Safety Commission (CPSC)

Environmental Protection Agency (EPA)

warranty full warranty limited warranty implied warranty



KEY TERMS consumer movement – seeks to protect and

inform consumers by requiring such practices as _________ advertising, product ___________ and improved _________ standards.

Federal Trade Commission (FTC) – the most important federal ___________ _____________ agency.

cease-and-desist order – Issued by the ______, this order requires a company to stop using a ___________ advertisement.

Consumer Product Safety Commission (CPSC) – Agency created to protect consumers from _____________ products.


KEY TERMS warranty - a company’s promise that a product

will meet specific ___________ over a given time period or the company will repair/replace or give a ________ .

full warranty – a written _____________ the promises the company will repair/replace a defective product within a specified time period at no charge.

limited warranty – a written warranty that does not meet the standards of a full warranty because of specified _____________.

implied warranty – an unwritten guarantee that the product is of ____________ ____________ to fulfill the purpose for which it was designed.


The Rise of the Consumer Movement►A growing concern►A growing awareness►The consumer movement



Government Protection►Federal Trade Commission ►Consumer Product Safety Commission ►Environmental Protection Agency ►State and local protection►Consumer movement today



Warranties►The Magnuson-Moss Warranty Act

►Full warranty►Limited warranty

►Implied warranties



Why do many people feel that consumers need protection more now than in the past?

What federal agencies are charged with protecting consumers from false advertising, dangerous products, and pollution?

What differences are there between full and limited warranties? How do warranties benefit businesses that offer them?



Why do many people feel that consumers need protection more now than in the past?

Today’s more complicated products make them more difficult to evaluate, leaving consumers vulnerable to poor-quality or even dangerous goods and services



What federal agencies are charged with protecting consumers from false advertising, dangerous products, and pollution?

• FTC protects consumers from unfair or deceptive business practices

• CPSC protects consumers from dangerous products

• EPA is responsible for protecting the environment



What differences are there between full and limited warranties? How do warranties benefit businesses that offer them?

• Full warranty: promises repair or replacement of defective product over a specific period of time at no cost to the customer

• Limited warranty: promises repair or replacement of defective product subject to stated limitations

• Businesses that offer warranties provide an incentive to customers to buy products with the stated protection



LESSON 3.3

Deception and FraudGOALSGOALS►Explain the meaning of deception and

describe how consumers may be harmed by this practice.

►Identify common types of fraud and explain how consumers may protect themselves against it.



KEY TERMSKEY TERMS

trading up loss leader fraud bait and switch pyramid

scheme



KEY TERMS trading up – The practice of pressuring consumers

to buy a ______ ____________ product than they had intended.

loss leader – An item priced ______ ______ to attract you to the store.

Fraud - ___________ deception designed to secure unfair or unlawful gain.

bait and switch – The practice of “baiting” consumers with an advertised but nonexistent bargain and then “switching” them to a more expensive product.

pyramid scheme – a type of financial _______ in which people pay to join an organization in exchange for the right to sell memberships to others.


Deception►Trading up►Sale price – A sale is only a sale if the

price is below the regular price. Sale prices can be deceptive.

►Suggested retail price – They are sometimes higher than any retailer expects to actually get for the product.

►Loss leader



Fraud►Fraud: deliberate deception, designed

to secure unfair or unlawful gain.►A statement is fraudulent if it meets

these two conditions:►The person who made the statement must

know it is false.►The purpose of the statement must be to

cause others to give up property that has value, such as money.



Examples of Fraud►Bait and switch►Pyramid schemes►Internet and telephone fraud –

advantageous to con-artists because you can’t see them. Are they legitimate?



Internet and Telephone FraudWatch out for . . .► Deal offered seems too good to be true► Credit card/Social Security number requested

to verify identity► Must buy item to get something else for free► No written contract or sales agreement is

provided► You “must act now” or offer expires► No method given to contact the organization► Information about organization not available

from independent sources© 2010 South-Western, Cengage LearningSlide 2626


The Many Faces of FraudExamples: Healthcare products that promise to cure

incurable diseases Home-improvement contractors who want

payment before doing any work Vacation clubs that require money in advance with

the promise of inexpensive first-class vacations later

Repair work offered for less than the going rate Weight-loss programs that promise unrealistic

results



What is the definition of a deceptive selling practice?

How can you protect yourself against fraudulent selling practices?



What is the definition of a deceptive selling practice?

• Deceptive selling practices are intended to mislead consumers

• Trading up, false sales, and inflated suggested retail prices can be deceptive



How can you protect yourself against fraudulent selling practices?

• Learn to be skeptical• Check out unfamiliar companies and ask

questions• Carefully evaluate responses to questions• Understand what you are buying and make

decisions with your head rather than your emotions

• Use the decision making process© 2010 South-Western, Cengage LearningSlide 3030

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3LESSON 3.4

Resolve Consumer ProblemsGOALSGOALS►Describe how to successfully complain

about a product you purchased.►Identify government programs that can

help resolve consumer problems.



KEY TERMSKEY TERMS

Better Business Bureau

arbitration cooling-off period small claims court



Prepare to Make a ComplaintWrite down the facts►The date and location of the transaction►A description of the product►The product’s price and your method of

payment►A specific explanation of what is wrong►A statement of how you want the

problem resolved



The Complaint Process►Start with the seller►Seek help from consumer organizations

►Better Business Bureau (BBB)►Arbitration►Media help



Government Efforts to Help Consumers►Truth in information

►Enforcement is difficult►Use common sense

►Cooling-off periods►Reporting consumer problems►Using small claims court



At which step of the complaint process is an organization such as the Better Business Bureau best able to help a consumer?

What are several ways in which the government works to protect consumers?



At which step of the complaint process is an organization such as the Better Business Bureau best able to help a consumer?

At the fourth step of the complaint process, organizations such as the BBB are best able to help consumers when they are interacting with managers.



What are several ways in which the government works to protect consumers?

The government protects consumers by . . .• passing and enforcing laws• setting standards • licensing businesses• requiring labeling• providing a court system that consumers

may use to protect themselves


Documents

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 WHAT’S AHEAD 3.1Consumer Rights and Responsibilities 3.2Government and Consumer Protection 3.3Deception and