Chapter 1

The Power of Consumers

Bell Ringer

What is a consumer? Do you think teens are important

consumers? Why?

Consumer

Someone who uses goods or services

Goods

Physical objects that are produced

Examples

Radios Chocolate chip

cookies Magazines

Services

Actions that are performed for someone

Examples

Repairing a car Serving a meal Caring for a child

Your Economic Roles

Right now you are a student, classmate, and friend

Part of life concerned with earning, spending, and managing money

The three major economic roles:

Consumer- when you use goods and services

Worker-if you earn money at any job. They produce goods and services

Citizen- use public services such as schools and roadways

Marketplace

All of the goods and services available for sale to the general public.

When you choose to buy one product over another, your decision directly affects the marketplace…

How can consumers more consciously use this power?

Retailers

Those who sell goods and services directly to consumers

They strive to offer the right mix of products and to provide helpful service

Technology-Good

Learn about products at home

Read customer recommendations, compare prices, ask questions, and make purchases

Can allow you to make more informed decisions

Bad

Buying on impulse How can you sort

through all this information

How many options should you consider

How do you know when you have enough information

Characteristics of an Effective Consumer

Set goals- decide what they want and how they can best carry out a plan

Think critically- make decisions based on careful consideration of alternatives and their possible outcomes

Do their research-read observe and ask questions about the many options available to them

Characteristics of an Effective Consumer

Manage everyday finances- handle their income, expenses, taxes, banking and credit in a responsible way

Plan for financial security- savings, investing, and insurance. Use professionals for advice

End of 1.1

Bell Ringer

Should the government be allowed to step in and make laws that protect consumers? What type of laws should be enacted?

Consumer Advocates

People or organizations who work on behalf of consumers.

What do they do?

Work to investigate business practices, expose unfair or dangerous situations, and encourage the passage of laws protecting consumers.

The Consumer Movement President John F.

Kennedy in 1962 recognized the four basic rights of consumers

Right to S_______ Right to be I______ Right to C_______ Right to be H_______

Right to Redress Right to Consumer Education Right to Service

Page 29

Redress

Remedy for a wrong or loss

Food, Drug, and Cosmetic Act

Federal Law Ensures the purity,

quality, and the labeling of food, drugs, and cosmetics

Federal Agencies

Created to watch over specific industries Enforces the laws set about

Set up rules and regulations to ensure that individual businesses comply with the laws and to prosecute those that do not

Federal Trade Commission (FTC)

Enforces laws against dishonest advertising

United States Department of Agriculture (USDA)

Inspects and sets standards for meat, poultry, and canned fruits and vegetables

Mad cow Page 31

Consumer Groups

Organizations that are focused on consumer education, protection, and advocacy

Their interests and membership vary

Example: National Consumer League

Consumer Testing Agencies and Publications

Examples: Consumer Union-

independent consumer testing agency that buy products from stores, test them, and report the results Consumer Reports.

Better Business Bureau

Helps the U.S.A. and Canada provide reliability reports on local businesses and allow consumers to file a complaint in the event of a problem.

Consumer Affairs Departments

Many businesses uses this to communicate with customers about their rights and needs as consumers (customer service department).

Toll free numbers

Consumer Action Panels

Companies in a particular industry such as health care form trade associations together to handle customer complaints

Media

Channels of mass communication Newspapers, magazines, radio,

television, and websites Help resolve consumer complaints

because businesses want to avoid bad publicity

End of 1.2

Bell Ringer

How does someone go about stealing your identity?

How can you prevent this from happening?

Identity Theft

The illegal use of an individual’s personal information

http://www.youtube.com/watch?v=kPg-vyBHgPs

http://www.youtube.com/watch?v=KERwnA8VfFM

Social Security Number

The unique nine-digit number used by the S.S.A. to keep track of your earnings

Used to access bank and credit card accounts

Preventing Identity Theft

Handle mail with care- deposit outgoing in post office boxes or at the post office. Remove mail as soon as it is delivered.

Keep personal information in a safe place (locked drawer)

Online safety- use passwords with letters and numbers

Preventing Identity Theft

Don’t give out personal information over the phone, mail, email, or web unless you know it is safe

Secure site- uses safeguards to protect information from theft during transmission. Use a security measure on your computer

Cut up and shred any charge receipts, credit apps., bank statements, checks, and expired credit cards

If Your Identity is Stolen

1. File a report with the police2. Call your bank and credit card

companies. Close accounts that may be tampered with.

3. Call the 3 major credit reporting agencies (Equifax, Experian, and Trans Union.

4. Call the FTC

http://www.youtube.com/watch?v=L08EIg0zsJ8

http://www.youtube.com/watch?v=7AHORRN5wC0

Online Profiling

A practice in which companies collect information about the Web sites a consumer visits, and then use that info to predict what the consumer may buy in the future

Cookies

Small files stored on your computer that allow a Web site to “remember” information about you.

End of 1.3

Bell Ringer

Explain a time when you or a friend was a victim of deceptive advertising or fraud.

Deceptive Advertising

Advertising that is likely to mislead consumers through false statements, omitted information, or other unfair means.

http://cbs2chicago.com/health/airborne.settle.suit.2.796263.html

Bait and Switch

If a retailer advertises a product that it has no intention of selling, hoping to persuade customers to buy another product at a higher price

False Promise of Free Gift

When a a store advertises a “free” gift, the gift must actually be free, with not strings attached.

Deceptive Pricing

Advertising a “sale” price that is actually no better than the product’s everyday prices is deceptive

Hidden Catches

Look out for extra charges, such as processing fees, and hidden restrictions, such as staying a certain place.

Fraud

Deceitful conduct designed to manipulate another person for some gain. It may take form as lying.

Pyramid Scheme

Common and illegal get-rich- quick plan.

Each person who participates pays a sum of money to join, then recruits several other people. Then in turn pay a fee and recruit others, and so on. Each person supposedly and eventually receive money from those that join later.

Chain Letter

Message sent by postal mail or emails that instructs the recipient to send copies to a certain number of other people.

Usually includes instructions to send money or items of value for more money or items later.

If you send one you are committing fraud.

Reporting Deception and Fraud

Report the fraud or deception at the FTC’s web site. You can also find more info there.

End of 1.4

Registering a Complaint

1. Must be able to state the problem clearly. Decide what sort of outcome you desire.

2. Gather receipts and product information. Know the store policies.

3. Contact the merchant4. Write a letter of complaint

Writing a Letter of Complaint

Honest, polite and to the point.

The Parts of a Complaint Letter

Salutation- address your letter to the right person

Opening- identify the product, and problem clearly. Give as many details. Remember to enclose a copy of the receipt

Body- explain what you did do and what you would like done

Close- set a time for a resolution. Include your address, phone # and email

A COMPLAINT LETTERPSHS Electronics, Inc. 7800 W. Catton Farm Road Plainfield, IL 60544 To Whom It May Concern

My name is Karen Gannon and on October, 1st I purchased a new Sony CD boom box from Best Buy. I was very excited

when I purchased this product because I did a lot of comparison shopping and found this product to be the best buy. When I got

home to use the product I position the mode so that I could listen to the radio. To my dismay, I could hardly hear anything. I thought

that maybe I didn’t have enough reception in the house to hear any radio stations so I switched the mode to listen to CDs. I put in a

CD and the same problem happened. I could hardly hear the music even with the volume turned up all the way. The same day I

purchased this product, I brought it back to best buy with the receipt. They refused to return or exchange my CD player.

I’m writing to you so that I can get my problem fixed. Best Buy should have returned or exchanged my product. Since that

didn’t happen, I’m asking for the manufacture to fix my problem. Enclosed you will find a copy of the original receipt I’m hoping

that this problem can be fixed within the next two weeks. I will be having a small children’s party and the boom box would be great

entertainment. I would like my money back or a replacement.

I choose to buy Sony products because of their good reputation. I have also purchased other Sony products in the past and

have relied on their good quality for years. I would also like to continue to buy Sony products if this problem can be fixed. I hope to

hear from you within a few days to discuss this matter. You can contact me by email. My email address is abc@yahoo.com.

Thank you,

Karen Smith

Small Claims Court

Court of law in which disputes involving sums under a certain amount and are resolved by a judge

Class Action Suit

Lawsuit filed on behalf of a group of people who all have the same complaint

Your Address Your City, State, Zip Code Date

Name of Contact Person, if available Title, if available Company Name Consumer Complaint Division (If you have no specific contact.) Street Address City, State, Zip Code

Dear (Contact Person):

Re: (account number, if applicable)

On (date), I (bought, leased, rented, or had repaired) a (name of the product, with serial or model number or service performed) at (location, date and other important details of the transaction).

Unfortunately, your product (or service) has not performed well (or the service was inadequate) because (state the problem). I am disappointed because (explain the problem: for example, the product does not work properly, the service was not performed correctly, I was billed the wrong amount, something was not disclosed clearly or was misrepresented, etc.).

To resolve the problem, I would appreciate your (state the specific action you want - money back, charge card credit, repair, exchange, etc.) Enclosed are copies (do not send originals) of my records (include receipts, guarantees, warranties, canceled checks, contracts, model and serial numbers, and any other documents).

I look forward to your reply and a resolution to my problem, and will wait until (set a time limit) before seeking help from a consumer protection agency or the Better Business Bureau. Please contact me at the above address or by phone at (home and/ or office numbers with area code).

Sincerely,

Your name

Enclosure(s)

• describe purchase • name of product, serial number • include date and place of purchase • ask for specific action • enclose copies of documents • state problem • give history • allow time for action • state how you can be reached

Keep copies of all your letters, faxes, e-mails, and related documents.