OBJECTIVE 2.02
E SSENTIAL Q UESTIONS

What consumer behaviors can threaten a
person’s financial security and lead to financial
losses?

What scams and schemes can lead to financial
losses?

How can a consumer communicate caution and
report incidents of fraud?
T HREATS
Threats to personal and family
financial security come from within
the consumer and without (outside).
 Threats from within are:
 Threats from without are:
 the result of consumers behaviors
 the result of deceitful, sometimes
that lead to financial problems
 often the result of lack of
knowledge
 YOU must be your own best
ADVOCATE!
 How? Educate yourself in
financial matters
 How? Use your brain.
If it
seems too good to be true…it
probably is!
even fraudulent, scams and
schemes designed to manipulate
or trick consumers in ways that
lead to financial loss.
 YOU must be your own best
ADVOCATE!
 What is FRAUD? A material
misrepresentation with intent to
take advantage of another party
C ONSUMER BEHAVIORS THAT 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 (budget),
which often leads to overspending
C ONSUMER BEHAVIORS THAT LEAD
TO FINANCIAL LOSSES
Examples: Failure to plan

Judy accepted a great modeling job in NY City. Her
apartment rent in Charlotte was $800, but the shared cost
of a smaller apartment is over $2000 monthly. She is having
trouble making ends meet.

Meg and her two children took $300 to shop for back to
school clothes. Purchases included a new basketball and 2
video games for her sons.

Tony and Lana charged $300 in restaurant bills on their
weekend anniversary fling because they stayed at a 4 star
hotel that used up their cash.
C ONSUMER BEHAVIORS THAT LEAD
TO FINANCIAL LOSSES
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
C ONSUMER BEHAVIORS THAT LEAD
TO FINANCIAL LOSSES
Examples: Failure to protect

Fran dumped old credit card statements and other bills
into her garbage can without shredding any of them.

Neta parked her car in the parking garage after work. She
did not lock the car. When she returned her cd player, cds,
and a wedding present she had purchased had been
stolen.

Sarah used a simple pass code and did not change it for
over 5 years. She was surprised when a hacker accessed
her computer and got personal banking information.
C ONSUMER BEHAVIORS THAT
LEAD TO FINANCIAL LOSSES
Failure to be informed

Not reading the fine print in sales agreements,
product labels, contracts

ALWAYS read and understand contracts BEFORE
signing

Not researching sales offers in depth before making a
commitment

Not separating facts from opinions in considering
advertisements
C ONSUMER BEHAVIORS THAT
LEAD TO FINANCIAL LOSSES
Examples: Failure to be informed

Kevin and Nate are friends. Kevin got a new cell phone. Nate
wanted a new cell phone like it. He signed the 2 year contract
without reading it. When the first bill came, he found he only had
100 free text messages per month. All texts over 100 cost $.15
EACH. His first bill was over $300.

Nate realized that he should have shopped several companies and
reviewed various plans to find one that would meet his texting
needs.

Kevin bragged to Nate that his phone would access internet and 50
other apps for free. Nate tried the apps and there were minimum
monthly fees for each one. Kevin did not know the cost because his
mom still paid his bill.
C ONSUMER BEHAVIORS THAT LEAD
TO FINANCIAL LOSSES
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
video link- Grover's
high pressure sale
C ONSUMER BEHAVIORS THAT LEAD
TO FINANCIAL LOSSES
Examples: Failure to communicate

Tom forgot to ask about the truck’s warranty and
thought it was 100,000 miles. It was only 70,000
mile and excluded the 4WD components.

When Tom arrived at home with the new truck, his
wife was very upset that monthly payments would
be over $300. Their agreed upon budget was only
$250.00.

Tom told his wife that the salesman was so helpful
and nice that he just could not say no after taking up
his time. Can you say “no”?

The salesman said he had another customer wanting
this truck and if Tom really wanted it he should
commit before the other buyers returned later that
day.
T YPES OF D ECEITFUL , FRAUDULENT
SCAMS THAT LEAD TO FINANCIAL LOSSES
 Vague offers---e.g., expecting you to pay up front in order to receive full
information about a product or service
 Television
infomercials to order cd’s or books and make a lot of $!
 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;
once paid for, nothing arrives
Television infomercials to order cd’s or books
T YPES OF D ECEITFUL , FRAUDULENT
SCAMS THAT LEAD TO FINANCIAL LOSSES
 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
video link How-To-Prevent-Identity-Theft
 Sweepstakes letter---states that you
have won a valuable prize, but need to
pay a processing fee to claim the prize
video link to citibank theft commercial
video link - ftc.gov identity-theft
 Wide variety of other unsolicited online
offers
video link - id theft fbla national winner
T YPES OF D ECEITFUL , FRAUDULENT
SCAMS THAT LEAD TO FINANCIAL LOSSES
 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
video - charlotte sales scam-BBB "F"
 Concealing information---e.g., sellers
not willing
to state their physical addresses, only POBoxes or
Internet sites
T YPES OF D ECEITFUL , FRAUDULENT
SCAMS THAT LEAD TO FINANCIAL LOSSES

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
video clip- how ponzi scheme works

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, or if you call in the next
15 minutes, or stay with you until you purchase
Video link: Is this a high pressure car sale?
W HAT TO DO ABOUT SCAMS ?
Communicate or report deceitful/fraudulent scams
and schemes to fellow consumers
 Use available communication media---live
conversation, telephone, texting, emails, etc.
 Contact the local media to get attention to the topic
 Be specific, include key details
 Report to government agencies and other consumer
advocates
 Go to the Federal Trade Commission (FTC) website;
complete a Consumer Complaint Form
T HE F EDERAL T RADE
C OMMISSION


The FTC works for the consumer
to prevent fraudulent, deceptive
and unfair business practices in
the marketplace and to provide
information to help consumers
spot, stop, and avoid them.
The FTC enters Internet,
telemarketing, identity theft, and
other fraud-related complaints
into Consumer Sentinel, a secure
online database available to
hundreds of civil and criminal law
enforcement agencies in the U.S.
and abroad.

To file a complaint or to
get free information on
consumer issues, visit
www.ftc.gov or call tollfree, 1-877-FTC-HELP (1877-382-4357); TTY: 1-866653-4261.
video link- filing a claim with FTC
W HAT TO DO ABOUT SCAMS ?
Communicate or report deceitful/fraudulent scams
and schemes with fellow consumers
 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