Consumer Powers & protections

advertisement
CONSUMER POWERS &
PROTECTIONS
Chapter 1
YOU’RE A CONSUMER
 Being a consumer goes way beyond just shopping. Your actions
as a consumer causes a ripple effect, like throwing a stone into a
pond.
 A consumer is someone who uses goods and services.
 Goods are physical objects that are produced, such as radios,
chocolate chip cookies, and magazines.
 Services are actions that are performed for someone, such as
repairing a car, serving a meal, or caring for a child.
YOUR ECONOMIC ROLES
 Right now, you are someone’s classmate. A teen and a friend. Someday
you will be a husband or wife, and a parent. These are roles you fulfill in
your personal life.
 You also have roles in your economic life-the part of life concerned with
earning, spending and managing money.
Three Economic Roles
1. Consumer
2. Worker
3. Citizen
3 ECONOMIC ROLES
1. 1. Consumer-You’re a consumer when you use goods and
services, even if you’re not the one who pays for them. Even
babies are consumers, using up diapers and formula as soon as
they’re born
2. 2. Worker-You’re a worker if you earn money at any kind of
job, or even if you do volunteer work. Workers produce goods
and perform services.
3. 3. Citizen-As a citizen, you use public services such as schools
and roadways. Citizens pay taxes in order to pay for public
services, and they have the right to vote for elected leaders.
CONSUMERS HAVE POWER
 Do you think that which movie you choose to watch or
which brand of soap you buy matters to anyone else?
CONSUMERS HAVE POWER
 Sure it does, the purchasing decisions made by
consumers have an impact. They affect which goods are
produced and which services are offered.
 That means that as a group, consumers have power to
influence the marketplace-all of the goods and services
available for sale to the general public.
 When consumer’s buy a business’s products, that
business profits.
CONSUMERS HAVE POWER
 When businesses are thriving, they want to please their present
customers and attract new ones by developing new and better
products. When this happens the number of goods and services
increases, and so does the competition for the consumer dollar.
 Marketing experts are those professionals who define what a
product is and how it’s sold, and they work to determine what
the consumer wants and will buy.
 Retailers – those who sell goods and services directly to
consumers, strive to offer the right mix of products and to
provide helpful service.
 Pleasing the customer is the key to business success.
TEENS ARE IMPORTANT CONSUMERS
 Teens are very active consumers. By the beginning of this
century, total annual spending by teen consumers reached $172
billion!
 Teens not only spend their own money, but they also play a role
in family buying decisions.
 Example: Parents depend on teens to do household shopping,
input on grocery lists, vacations destinations.
TECHNOLOGY AND THE CONSUMER
 Technology has changed the way consumers shop. Technology
is available for communicating, accessing information, and
purchasing goods and services.
 Instead of going to a local store to shop, you might order a
product that you saw on TV by phone, or use websites to learn
about different products, read customer reviews, compare
prices, ask questions, and make purchases.
 Although technology has many positives it also has some
challenges too: how to sort through so much information, to
many options, and making it easier to buy on impulse.
EFFECTIVE CONSUMERS
 What are some of the characteristics of an effective consumer?
1.
Effective consumers set goals. They decide what they want and how to carry out the
plan. They place priorities on how they spend their time, energy, and money.
2. Effective consumers think critically. They make decisions based on careful
consideration of alternatives and their possible outcomes. They avoid acting on
impulse, and maintain a realistic perspective when encountering persuasive
advertising or salespeople.
3. Effective consumers do their research. They read, observe, and ask questions about
the many options available to them. They search for reliable businesses, and compare
prices, quality, features, and customer service policies.
4. Effective consumers manage everyday finances. They handle their income,
expenses, taxes, banking, and credit in a responsible way.
5. Effective consumers plan for financial security. They set up plans for saving,
investing, and insurance, calling upon qualified professionals for helping as needed.
BELL RINGER:
Do you think that technology has changed
the way consumers shop? Why or why not?
PROTECTING CONSUMERS’ RIGHTS
SECTION 1.2
 Through history, consumers have often faced unfair
treatment, but they have also continued to gain
protection. In some cases, today’s consumers are
reaping the benefits of struggles ended long ago. Other
battles have occurred more recently.
THE CONSUMER MOVEMENT
 Consumers used to not have a voice in issues that affected
them, but the development of the consumer movement
changed that.
 The consumer movement is based on the idea that the power of
consumers as a group can balance the economic and political
power of business industry.
 The consumer movement has been led by many consumer
advocates, people or organizations who work on behalf of
consumers. They have worked to investigate business practices,
expose unfair or dangerous situations, and encourage the
passage of laws protecting consumers.
PIONEERS OF THE CONSUMER MOVEMENT
 Harvey Wiley-a medical Dr., proved that adding certain chemicals to foods and drugs was
dangerous. His campaign against mislabeled foods and drugs led to the passage of the Food and
Drug Act of 1906.
 Upton Sinclair-published The Jungle in 1906. This novel exposed the filthy conditions in meat
packing plants, leading to the passage of the Meat Inspection Act of 1906.
 Stuart Chase and F.J. Schlink-published Your Money’s Worth in 1927, a book demonstrating how
misleading advertising affects consumers.
 Rachel Carson-published Silent Spring, a book that revealed the damaging effects of insecticides
and pesticides on songbird publications, in 1962.
 Ralph Nader-published Unsafe at Any Speed in 1965, demonstrating that many highway deaths
were caused by defects in cars. Since then him and many others have worked on behalf of
consumers in areas including: air travel, food safety, the env’t, health care, insurance, and others.
CONSUMER RIGHTS & RESPONSIBILITIES
Chart on Page 29
GOV’T PROTECTION
 The actions of governments can help define and enforce
the rights and responsibilities of consumers.
 For example: one of the rights of consumers is the right
to redress, remedy for a wrong or a loss.
 Consumer protection is provided by both laws and
government agencies at federal, state, and local levels.
SELECT FEDERAL CONSUMER
PROTECTION LAWS
See chart on Page 30
GROUP WORK
 With a partner look up the federal consumer protection
law that has been assigned to you. Tell what it does and
find a case where that federal law has been used by a
consumer.
FEDERAL AGENCIES
 Federal Trade Commission (FTC)-enforces laws against dishonest advertising, and
consumers rights in areas of credit transactions, product labeling, ad privacy.
 Consumer Product Safety Commission (CPSC)-works to protect the public against
unreasonable risks and to develop safety standards for many household products.
 United States Department of Agriculture (USDA)-inspects and sets standards for meat,
pultry, and canned fruits and vegetables.
 Food and Drug Administration (FDA)-enforces laws and regulations on the purity, quality,
and labeling of food, drugs, and cosmetics.
 Federal Communications Commission (FCC)-regulates interstate and international
communications by radio, TV, wire, satellite, and cable. Provides consumer information and
addresses consumer complaints related to these areas.
FEDERAL AGENCIES CONT.
 National Telecommunications and Information Administration (NTIA)works to provide consumers with more choices and better quality
telecommunications products and services, such as Internet, cellular, and
cable service at lower prices.
 Federal Consumer Information Center (FCIC)- provides information to
consumers on a wide range of topics through low-cost publications, a
Website, and toll-free phone assistance.
BETTER BUSINESS BUREAU - BBB
 Look at the symbol on page 32
 The BBB group is the best known example of Business and Industry
Groups. It offices throughout the U.S. and Canada provide reliability
reports on local businesses and allow consumers to file a complaint in the
event of a problem.
 Consumer affairs departments- they communicate with customers about
their rights and needs as consumers. Many large firms have a toll free
number that consumers can use when they need information or want to
make a complaint.
 Consumer action panels-groups formed by trade associations to address
consumer complaints. The panels also keep their member businesses up to
date on consumers’ opinions.
NEWS MEDIA
Media-are channels of mass communication, such
as newspapers, magazines, radio, TV, and related
websites.
Why is the news media especially effective in
helping to resolve consumer complaints?
NEWS MEDIA-ANSWER
 The news media plays a vital role in warning consumers
about local scam artist who try to cheat consumers.
 Alerts consumers of a recall
 Provides useful advice on investing, health, housing,
and other topics of interest
 Can help to resolve consumer complaints because
companies want to avoid bad publicity.
BELL RINGER
Do you know someone that has experienced
identity theft? What were the
circumstances?
SAFEGUARDING YOUR PRIVACY
SECTION 1.3
 How many people have access to your personal and financial
information? Take steps to safeguard your privacy and to ensure
that information you voluntarily provide remains secure.
 One of the most significant threats to personal security is
identity theft, the illegal use of an individual’s personal
information.
 Look at the chart on Page 35
YOUR SOCIAL SECURITY NUMBER
 Social security number- is an unique 9 digit number used by the
Social Security Administration to keep track of your earnings. It
can also be used to access bank and credit card accounts as well
as other personal information.
 If someone request it, always ask WHY? Some businesses use it
as an easy way to identify people, but you can ask them to use a
different type of id number instead.
 Never carry your SS# in your wallet or have the number printed
on your checks, or kept in your phone.
PREVENTING IDENTITY THEFT
 Handle mail with care
 Keep items with personal information in a safe place, such as a locked drawer.
 Safeguard sensitive information on your computer or online with passwords. Avoid easily
guessed combinations, such as your birthday. Don’t share your passwords, and don’t write
them down where others can see them.
 Before sending sensitive data to a website be sure it’s a secure site, one that uses
safeguards to protect information from theft during transmission.
 If you have an Internet connection at home, ask the service provider about it’s security
measures.
 Always tear or shred expired credit cards and other important personal information.
IF YOUR IDENTITY IS STOLEN
 File a report with the police
 Notify your bank and credit card company immediately. Close
any account that may have been tampered with.
 Call the 3 major credit reporting agencies: Equifax, Experian,
and Trans Union. Ask that they put a fraud alert on your file and
that no new accounts be opened without your approval.
 Call the FTC or visit its website for information about resolving
identity theft problems.
DATA COLLECTION & PRIVACY ISSUES
 Sometimes there is a legitimate need to provide personal information to financial institutions.
How various information is used with whom its shared have become important issues for
consumers.
 What might these companies do with the information they gathered about you?
 Some information, such as your credit card number, is only needed to process your
order. Reputable companies keep it secure and don’t share them with anyone.
 The catalog company will probably keep your name, address, and purchasing history
in its database for its own marketing use.
 The company may sell our name and address to other retailers, either directly or
through data-collection companies.
 Your responses to the product registrations survey will probably be combined with
those of other customers and analyzed to revel patterns.
PROTECTING YOUR PRIVACY
 Many companies and organizations voluntarily give customers
choices about how their personal information is used.
 Financial Services Modernization Act, passed in 1999 requires
companies involved in financial activities to send privacy notices
to customers. This requires the company to notify the customer
of their policy regarding the sharing of customers’ personal
information with other businesses.
 Under many policies you have the right to “opt-out” of having
your information shared or used in certain ways.
ONLINE PROFILING
 Computer technology continues to give companies greater ability to
gather and use data about consumers. One example is online profilinga practice in which companies collect information about the websites a
consumer visits, and then use that information to predict what the
consumer may buy in the future.
 Typically online profiling is done by companies that specialize in Internet
advertising. They use cookies, small files stored on your computer that allow a
website to “remember” information about you.
 Cookies may be turned off on your computer, but it may prevent you from using
certain sites.
INTERNET SAFETY
 Keeping your personal information private is important
in many other Internet situations, including chat rooms,
forums, and instant messaging.
 Remember that information that you put on the
Internet is available to practically anyone.
 Each year thousands of people report that they have
been victims of online harassment, sometimes called
cyber-stalking.
HARASSMENT ONLINE OR NOT, IS ILLEGAL.
HERE ARE SOME STEPS TO PREVENT ONLINE
HARASSMENT AND DEAL WITH IT IF IT OCCURS:
 Reveal as little personal information online as possible. Use gender-neutral
screen names and email addresses. Don’t put your picture on your personal
website.
 Share your primary email address only with trusted friends and family. Get an
alternative email address to use for other online activity.
 Watch what you say online, avoid creating enemies.
 Use preference options to block transmission of mail, chat, or instant messages
from anyone who persists in bothering you.
 If someone is harassing or threatening you, save the communications as proof.
Tell a parent or other trusted adult. Contact the appropriate service provider, such
as the administrator of the chat room or your email provider, and police.
RECOGNIZING DECEPTION & FRAUD
SECTION 1.4
 A well-known Latin phrase is commonly used to advice
consumers, Caveat emptor means, “let the buyer
beware.” Being a skilled consumer includes recognizing
dishonest, illegal approaches used in some sales and
advertising and protecting yourself against them.
DECEPTIVE ADVERTISING
 Most advertisers are honest, but some try to take unfair
advantage of consumers. Deceptive advertising is
advertising that is likely to mislead consumers through
false statements, omitted information, or other unfair
means.
 Deceptive advertising is illegal!!
EXAMPLES OF DECEPTIVE ADVERTISING:
 Bait and switch-if a retailer advertises a product that it has no intention of selling, hoping
to persuade customers to buy another at a higher price.
 False promise of free gifts-when a store advertises a “free” gift, the gift must actually be
free, with NO strings attached. If customers must buy an item in order to receive the gift,
an advertisement that says “free” is deceptive. To avoid deception the ad could use the
wording such as “gift with purchase.”
 Deceptive Pricing-Advertising a “sale” price that is actually no better than the product’s
everyday price is deceptive.
 Hidden catches-Suppose an ad for low-cost “spring break” airline tickets involves extra
charges, such as processing fees, and hidden restrictions, such as a requirement to stay at
a specific hotel in order to take advantage of the deal. If the ad doesn’t clearly disclose
these details, it’s deceptive.
FRAUD
 Fraud-is deceitful conduct designed to manipulate
another person for some gain.
 The deceit may take the form of lying, repeating
something that ought to have been known to be false,
or concealing a fact that might have saved the party
from being cheated.
 According to the U.S. Department of Justice, more than 24
million people become victims of fraud each year.
PYRAMID SCHEMES
 A common example of fraud is a pyramid scheme, an illegal getrich-quick plan. Each person who participates pays a sum of
money to join, then recruits several other people. Those people
in turn pay a fee, then recruit more people, and so on.
Supposedly, each participant will eventually receive money from
people who join later.
 Pyramid schemes are fraudulent and illegal because
they get people to contribute money based on false
promises.
 Look at the pyramid on page 42
CHAIN LETTERS
 A variation on the pyramid scheme is a chain letter, a message
sent by postal mail or email that instructs the recipient to send
copies to a certain number of other people.
 Chain letters are fraudulent and illegal when they include
instructions to send money or an item of value to someone and
make promises that participants will receive, money or
valuables in return.
FRAUD & TECHNOLOGY
 Technology can also be combat fraud, as the FTC has
done by posting “teaser site” on the Web. These site are
similar to ones that a dishonest person or company
might create.
 Look at the Dollars and Sense on Page 43
RESOLVING CONSUMER PROBLEMS
SECTION 1.5
 Consumers expect good quality, safety, and service when they
buy. Sometimes, however, what seems like a routine purchase
turns out to be a source of frustration. When consumer
problems arise, speak up for your rights in order to obtain
satisfaction.
REGISTERING A COMPLAINT
 Any number of problems can occur after a purchase.
 In order to register a complaint, you must be able to
state the problem clearly, and decide what sort of
outcome you desire. Do you want to exchange the item,
get your money back?
 Next, gather up your receipts and product information
related to the purchase. If you want a refund or
exchange, then make sure you know the store’s policies.
CONTACTING THE MERCHANT
 If your complaint is about service, talk to the person who did the work.
 If it’s about a product purchased in a local store, you might talk to the salesperson who
assisted you with the purchase or to an employee at the customer service desk.
 If you made a purchase over the phone or through the Internet you may need to contact
the merchant by phone or email.
 ALWAYS be polite! While frustrating, most problems between consumers and businesses
can be resolved fairly easily. Merchants want to keep their customers happy.
 If you contact by phone then make sure to take careful notes, and document who you
spoke with. If a reasonable amount of time has passed and a resolution has not been
resolved then a follow-up call with a manager will be necessary.
WRITING A LETTER OF COMPLAINT
 If your 1st attempts at resolving the problem don’t succeed, you may need to write a
formal letter of complaint.
 How you direct the letter will depend on the situations, but normally you might write the
letter to the manager or the customer service department.
 The letter should be honest, polite, and to the point.
 Along with your letter enclose copies, not originals of the sales receipt and any other
supporting documents. Always keep copies of the letters you write.
 If you don’t receive satisfaction, be persistent. Write the person again or to someone at a
higher level in the company. State all the previous steps taken to solve the problem.
 Send a copy of the letter to the Better Business Bureau and the local or state government
office responsible for consumer protection.
DISPUTE RESOLUTION
 If after writing several letters you are still not satisfied,
consider using a dispute resolution program-mediation
or arbitration.
 Mediation-is a process in which 2 parties try to resolve a dispute with the
help of a neutral 3rd party.
 Arbitration-is a procedure in which a neutral person or panel listens to
both sides of a dispute, weighs the evidence, and reaches a decision.
 In binding arbitration, both parties agree in advance that the arbitrator’s
decision will be final.
 Both mediation and arbitration are less costly alternatives than going to
court.
LEGAL ACTION
 If all else fails, you may need to take legal action.
 At this point it’s essential to have written record of all steps taken to
resolve the matter.
 Your options for legal actions include:
1. Small Claims Court- this court of law disputes sums under a
certain amount of money and is resolved by a judge. Usually
up to $5,000
2. Lawsuit- another option is to hire a lawyer and file a lawsuit in
regular court. This can be costly and time consuming.
3. Class Action Suit-a lawsuit filed on behalf of a group of people
who all have the same complaint.
Download