Bell Ringer 1
“You get what you pay for.”
How do you interpret this saying?
Are there certain things that one
should always expect when making
a purchase?
What might those things be?
Chapter 3: Consumer
Protection
Chapter 3.1
Consumer Rights
and Responsibilities
Consumer Bill Of Rights
• As an American Consumer….
• You expect the product you purchase to work properly
• You expect to be treated fair and honestly by a
merchant
• You expect products you buy to be reliable and safe
• If there is a problem, you expect to be able to
exchange or return the item and get a refund
• President John F. Kennedy established 4 consumer rights
in 1962, 3 more were added later
Matching Up!
 You will be given two sheets of paper
 Consumer Bill Of Rights
 Consumer Responsibilities
Match up the explanations of consumers’ rights to
the explanations of consumers’ responsibilities
Rights & Responsibility
Right To Safety
• Products must not
endanger consumers’
lives or health
Responsibility to
Use Products Safely
• Consumers are
responsible for following
the manufacturer’s
instructions for proper
use and maintenance of
the products
Rights & Responsibility
Right To Be Informed
Responsibility To Use
Information
• Businesses must
provide accurate
information in
advertising, labeling,
and sales practices
• Consumers are
responsible for using the
information to evaluate
product choices
Rights & Responsibility
Right To Choose
Responsibility To Choose
Carefully
• Consumers should have
a wide variety of goods
and services from which
to choose
• Consumers should take
advantage of product
variety by considering
many options and
making rational choices
Right To Choose
• Competition - contest among sellers to win
customers
• Keeps prices low
• Monopoly – situation in which there is only one
company that sells a specific product or service
Competition
• Contest among sellers to win customers.
• Competitors know that if their prices are too high, you will buy
from someone else.
• Competition encourages manufacturers to keep improving
their products.
• Competition among businesses is ENCOURAGED in our
economy.
• Firms that attempt to take advantages of consumers can be
fined or in extreme cases broken up into smaller businesses.
Monopoly
• A situation in which a single company or group owns all or
nearly all of the market for a given type of product or service.
• Most believe that, with few exceptions, the system just
doesn't work when there is only one provider of a good or
service because there is no incentive to improve the product
to meet the demands of consumers.
• Legal Monopoly: A business or group that owns a patent on a
particular product or service
• License that gives the holder exclusive rights to a process, design or
new invention for a designated period of time. (~20 years)
• This time frame is often used for research and development
• United States Postal Service
• Federal law prohibits anyone but the Postal Service from delivering firstclass mail.
Rights & Responsibility
Right To Be Heard
• The government must
consider consumers’
interests when creating
laws
Responsibility to Express
Satisfaction or Dissatisfaction
• Consumers should tell
their elected officials
their opinions on
consumer issues and
inform them of improper
business practices
Rights & Responsibility
Right To Redress
• Consumers should be
able to obtain fair
remedies to consumer
problems
Responsibility To Seek
Redress
• Consumers should
inform businesses of
product defects and
unfair practices,
Consumers should
pursue remedies
Right To Redress
• Remedy to a problem
• Refund or other compensation
• You should seek redress when you are dissatisfied
• Most companies want to fix a problem- protect their
reputation
• If you cant work out a solution, you have the right to
sue
• You have been physically harmed by the product or service
• Last resort
• Lawyer is usually necessary
Rights & Responsibility
Right To Consumer
Education
Responsibility to Be an
Educated Consumer
• Sufficient information
should be available for
consumers to make
rational decisions
• Consumers should take
advantage of
opportunities to gather
information and learn
how to make rational
buying decisions
Rights & Responsibility
Right To A Healthy
Environment
Responsibility To
Contribute To a Healthy
Environment
• Businesses should avoid
polluting the
environment and should
contribute to the welfare
of the community in
which they operate
• Consumers should
support businesses that
operate responsible and
report environmental
abuses to authorities
Bell Ringer 2
COME TO
CARPETOWN’S
ONE-DAY SALE!
For one day only—
Saturday!
You can carpet three
rooms for only $799,
You can choose the
carpet.
Well install it free.
You wont pay a penny
until next year!
DON’T MISS YOUR
BIG CHANCE!

If you wanted to buy carpet for your home and you saw
this advertisement, how would you evaluate the
information it provides? How would the following facts
influence your decisions?

1. The store runs this promotion at least once a month.
2. The store defines an average room as 12 feet by 12 feet.
It will provide up to 432 square feet at this price.
3. You must choose from a specified group of carpet that
is priced at $13.99 or less per square yard.
4. Although you wont pay a penny until next year, you will
be charges 18% interest, which will increase the amount
you owe.




Explain why you should ask questions about ads before
acting on them. Does this type of advertisement respect
consumer rights?
Safety Search
Circle the ways the consumer family in
the picture uses products unsafely.
Find at least 20 unsafe consumer habits.
Consumer Rights Questions…
• Which consumer right protects you if:
• 1. The teddy bear that you bought your little sister has an arm
that pulls off easily. _____________________
• 2. One company has a monopoly on cable and so they can set any
price they want for the service. __________________
• 3. You bought a used car and the dealer did not reveal numerous
flaws on the vehicle. You have been dealing with that problem for
eight months.
_______________________________________________
Consumer Responsibility
Questions…
• It is your consumer responsibility to:
• 1. _______________________ when you know that something
should be recalled because you see a dangerous safety issue.
• 2. _______________________ when you are going to purchase a
major appliance.
• 3. _______________________ when someone has contracted
with you to provide a service and they have fallen far short of
what was agreed to in your contract.
Consumer Reports Magazine
It publishes reviews and comparisons of consumer
products and services based on reporting and results from
its in-house testing laboratory and survey research center.
They accept no advertising, pay for all the products they
test, and, as a not for profit organization, they have no
shareholders.
It also publishes cleaning and general buying guides.
Activity
Consumer Report Assignment
Bell Ringer 3
 There are many resources we can use to find
information about products we want to purchase.
 Where can we find information (reviews) on
products?
 If you have ever looked up a review about a
product, tell me what product it was and what you
did to review that product.
CHAPTER 3.2: GOVERNMENT &
CONSUMER PROTECTION
Consumer Movement
• A.K.A. Consumerism
• Seeks to protect and inform consumers by
requiring such practices as honest
advertising, product warranties, and
improved safety standards
• Grew out of consumers’ desire for
government intervention on their behalf
Federal Trade Commission
• Created in 1914
• Most important Federal Consumer
Protection Agency
• Responsible for protecting consumers
from unfair or deceptive business
practices, such as misleading information
in advertising or on product labels
Federal Trade Commission
Cease-and-Desist order
• Issued by the FTC if it has discovered
a company is using deceptive
advertising
• This order requires the company to
stop using the advertisement
• Continued use of the ad would result
in a stiff fine
Cease-and-Desist case
• Terry Wilson from New Jersey created a protective sleeve for
her notebook computer out of spandex pants.
• She began trying to sell her product online and came up with
the name “Tightpod.”
• Apple owns trademark for iPod
• Apple also owns trademark for “pod” in EUROPEAN countries
with pending applications in the United States
• Apples’ argument is that Terry is selling her product to be
used with Apples’ products
• The case is still in the works
Tebow vs. Cubby Tee
The "NY" is replaced with "MY"
and the "JETS" is replaced with
"JESUS." In addition, what's
normally a football at the
bottom of the logo is the "sign
of the fish," often used to
express faith.
• T-shirt Made by
“Cubby Tee” Company
• Tebow’s attorney sent
cease and desist letter
to Cubby Tee Company
• "The Merchandise
makes it appear as if
Mr. Tebow actually
endorses Cubby Tees
and its products."
Tebow Vs. Cubby Tee
• Cubby Tee thought
Tebow would have
liked the shirt since he
endorsed this jersey
• Cubby Tee are not
backing down and
responded to Tebow’s
attorney by saying the
design "shares nothing
with Mr. Tebow except
for promotion of a
common Lord and
Savior"
Environmental Protection
Agency (EPA)
• Created in 1970
• Enforces laws that protect our environment
• Makes sure businesses safely discard hazardous waste
produced during manufacturing
• Also sets standards for air quality
• Example:
• BP Oil Spill- Well blew out
• In response to the BP oil spill, EPA monitored air, water, sediment,
and waste generated by the cleanup operations
Consumer Product Safety
Commission (CPSC)
• Created in 1972 to protect consumers from dangerous
products
• Has power over ALL consumer products
• They can set safety standards for any consumer product and
ban those that it considers to be hazardous
• CPSC Web Site
• Names products that have been recalled
• Lists hazardous products based on data collected from emergency
rooms
• Recalls- News Story
• Product Recalls
Warranty
• A company’s promise that the
product will meet specific standards
over a given time period, or the
company will repair it, replace it, or
give you a refund
Warranty
• Way for companies to gain your trust
• Reduces consumer risk because they assure you that if
the product is defective, you will be able to remedy the
situation without much trouble
• Only the company that issues the warranty backs it up
• If the company goes out of business, the warranty is
useless
Magnuson-Moss Warranty Act
• Passed to protect consumers from worthless warranties
in 1975
• It specifies how a warranty must be written if a company
offers one
• Under this law, all warranties are grouped into two
categories:
• Full warranties
• Limited warranties
Full Warranty
• Specific written guarantee
• Must promise that it will repair or replace a defective
product within a specified time period at no charge
• Must explain how to file a claim and how to return the
product to the business
Counterpoint Carpet Corp.
Full Five Year Warranty
What is Covered
This warranty covers any defects in materials or workmanship, including installation, with the
exceptions stated below.
How Long Coverage Lasts
This warranty runs for five years from the date your carpet is installed.
What is not covered
This warranty does not cover fading or discoloration caused by exposure to sunlight or
chemicals such as ammonia, laundry detergent, or household bleach. (For information on how
to prevent fading or discoloration, consult our manual "Care Tips From Counterpoint Carpet,"
available free from your Counterpoint dealer.)
What Counterpoint Will Do
Counterpoint will repair any carpet that proves to be defective in materials or workmanship. In
the event repair is not possible, Counterpoint will either replace your carpet with new carpet
of similar composition and price, or refund the full purchase price of your carpet, whichever
you prefer.
How To Get Service
Contact any Counterpoint dealer, listed in the Yellow Pages under "Carpet” or contact
Counterpoint at 800-987-6543. A service representative will come to your home and take any
necessary action to correct problems covered by this warranty.
How State Law Applies
This warranty gives you specific legal rights, and you may also have other rights which vary
from state to state.
Limited Warranty
• Written warranty that does not meet the standards of a full
warranty because of specified limitations (explained in
warranty)
• Must specify coverage time period
• Must explain how to make a claim and promise a solution
within a reasonable time period
Magnifisound Corporation
Limited Warranty
What Does This Warranty Cover?
This warranty covers any defects or malfunctions in your new Magnifisound hearing aid.
How Long Does The Coverage Last?
This warranty lasts as long as you own your Magnifisound aid. Coverage terminates if you sell or otherwise
transfer the aid.
What Will Magnifisound Do?
Magnifisound will replace any defective or malfunctioning part at no charge. You must pay any labor charges.
What Does This Warranty Not Cover?
Batteries, or any problem that is caused by abuse, misuse, or an act of God (such as a flood) are not covered.
Also, consequential and incidental damages are not recoverable under this warranty. Some states do not allow
the exclusion or limitation of incidental or consequential damages, so the above limitation or exclusion may
not apply to you.
How Do You Get Service?
In order to be eligible for service under this warranty you must return the warranty registration card attached
below within 30 days of purchasing the aid.
If something goes wrong with your aid, send it postage paid with a brief written description of the problem to:
Magnifisound Corp.
Box 10000
Auditory, Ohio
We will inspect your aid and contact you within 72 hours to give the results of our inspection and an estimate
of the labor charges required to fix the aid. If you authorize repairs, we will return the repaired aid to you COD
within 72 hours. You must pay any labor charges upon receipt of the repaired aid.
If you inform us that you wish us to provide necessary parts to you but you wish to have repairs performed
elsewhere, we will return the aid and replacement parts to you within 72 hours.
There is no charge for inspection.
How Does State Law Apply?
This warranty gives you specific legal rights, and you may also have other rights which vary from state to state.
Treadwell Tire
Full Warranty During First 20%
of Usable Tread Life
If a defect in materials or workmanship appears in your Treadwell Tire before 20%
of the tread is worn away, Treadwell Corporation will provide, at your choice, either
free replacement of the same model number Treadwell Tire or a complete refund of
the original purchase price.
Limited Warranty During Remaining
80% of Usable Tread Life
If a defect in, materials or workmanship appears in your Treadwell Tire after 20% of
the tread is worn away and before the remainder of the tread is worn away,
Treadwell Corporation will provide you with a credit good for the purchase of any
Treadwell Tire of the same model number. The credit will drop by 10% of the
original purchase price for each additional 10% of the tread that is worn away when
the defect appears.
How to Get Service
Just bring the defective tire to any Treadwell Dealer. The address of the dealer near
you is listed on the other side of this document
How State Law Relates to this Warranty
This warranty gives you specific legal rights, and you may also have other rights
which vary from state to state.
Implied Warranty
• An unwritten guarantee that the product is of
sufficient quality to fulfill the purpose for which
it was designed
• Example:
• If you buy a hammer, you expect that it wont
break when you hammer a nail into wood
• If it does break, you have the right to return it,
even if the hammer came with no written
warranty
Warranty Example
Use the warranty example to answer the following
questions. You may work with a partner.
1. What does the warranty cover/not cover?
2. What is the period of coverage?
3. What will the business do to correct problems?
4. How can the customer get warranty service?
5. How will the state law affect your customer rights
under the warranty?
Activity
Sources of Consumer Protection
Worksheet
Bell Ringer 4
 Think about a time you received an email, text
message or phone call that said you won
something… a gift card, iPad/iPod, designer purse,
vacation, etc.
 Where did you receive this message from?
Email, Facebook, pop up ad, instant message?
 How did you react and what did you do?
 What did you discover?
Chapter 3.3:
Deception & Fraud
Deception vs. Fraud
• Advertising becomes deceptive when it misleads
• Deceptive advertising or selling practices taken
to unlawful extremes become fraud
“Let the buyer beware!”
• In spite of all the protections offered to consumers, this
saying is still important for consumers to remember
because there are misleading business practices, both
legal and illegal, that can cause buyers unnecessary
aggravation and loss
Video
Part 1: Online Job Application
Internet Scams
Trading Up
• Pressuring consumers to buy a more expensive
product than they intended
• Example: You see an advertisement for a very
low priced DVD player. You go to Wal-Mart to
buy the DVD player. When you get there the
sales associate tells you the product isn't really
that good and tries to convince you to buy a
more expensive model.
Sales Price
• Only if the price is below the regular price
• Can be deceptive
• For example: stores can offer products at higher prices for only
one day, then lower prices and call it a sale
Suggested Retail Price
• Manufacturer’s suggested retail price
• Can be higher than any retailer expects to actually get for the
product
• For example: most car dealers expect you to negotiate a lower
price than the manufacturer’s suggested retail price shown on
the sticker (MSRP)
Loss Leader
• An item priced below cost to attract you to the store
• Sometimes a retailer’s goal is to simply get you into the store.
They will price an items below manufacturers price.
• If you only buy that item, the retailer will lose money on that
one item, but if you buy more… they gain!
• How many times have you gone to the store for that one item
and left with 12 items? I know I have!
Loss Leader Examples
Fraud
• Deliberate deception designed to secure unfair or
unlawful gain
• Cheating the consumer
• According to law, a statement is fraudulent if it meets
two conditions:
• 1. The person who made the statement must know it
is false.
• 2. The purpose of the statement must be to cause
others to give up property that has values, such as
money, without fair compensation.
Fraud
• Without written evidence or witnesses, fraud is hard to
prove
• Safest bet is to follow the phrase:
“If it seems too good to be true, it probably is!”
Bait & Switch
• Practice of baiting consumers with an
advertised but nonexistent bargain and
then switching them to a more expensive
product
• Example: You go into Best Buy to buy an advertised DVD
player. You are told by the sales associate that the item is
out of stock or sold out. Then, the sales person leads you
over to a much better, more expensive, available DVD
player.
Pyramid Scheme
• Type of financial fraud in which people pay to join an
organization in exchange for the right to sell memberships to
others
• The difference between a pyramid and a legitimate multilevel
marketing organization is that the pyramid sells no legitimate
product
• At the end the pyramid falls apart and the only people who
get the big payoff are the people at the top
Pyramid Scheme Example
One pyramid scheme, called Airport, had each person who
joined pay $1,500 to buy a square (membership). This gave
that person the right to sell 8 squares to others for $1,500
each. Members who found 8 people to buy squares earned
$10,500 in profit.
Income: $1,500 X 8 = $12,000
Income – Cost = Profit
$12,000 - $1,500 = $10,500
Internet & Telephone Fraud
• Clues to watch out for when an offer is made to you online or
over the telephone:
• The deal offered seems too good to be true
• You are asked for your credit card or social security number to
verify your identity
• You must buy something to get something else of greater value
for free
• You are not offered a written contract or sales agreement before
you buy
• You are told you must act immediately or the offer will expire
• NO method is provided to contact the organization
• NO information about the organization’s business record is
available from independent sources
Videos
•Part 2: Online Job Application
Internet Scams
•Part 3: Online Job Application
Internet Scams
Bell Ringer 5
 How do you protect yourself?
 Jot down some ways to protect yourself from
fraud.
 What things should you watch for or do so
you can prevent becoming a victim of a conartist?
PROTECT YOURSELF!
1. RECOGNIZE IT!
2. Check out unfamiliar companies before buying!
3. Ask questions about offers that seem too good
to be true
4. Understand the product or service you were
buying
5. Make decisions with your head, not your
emotions
6. Use the Decision Making Process to evaluate
options!!!
Chapter 3.4: Resolve
Consumer Problems
Purpose of A Complaint
• To resolve the problem, NOT to demonstrate anger
• Being rude and disrespectful will not get you anywhere!
• How you will be successful and most likely get a
resolution:
• Have your facts straight
• Have documentation (sales receipts, warranty)
• Write down facts about the problem
• Have a resolution in mind
List of Facts
1. Date and location of transaction
2. Description of what you bought, including model
number, color, size, and so on
3. Product’s price and your method of payment: credit
card, check, cash…
4. A specific explanation of what is wrong with the product
5. A statement of how you want the problem resolved
• Repaired, replaced, refund?
• It should be fair to both parties involved
The Complaint Process
1. Return to the store
• Explain the problem to a sales person in the
appropriate department or customer service
department
2. If that doesn’t work, ask to speak to a manager
3. If that doesn’t work, write to the manufacturer
• Describe problem clearly and honestly
4. Next step would be to contact a consumer group or
professional organization such as the BBB
5. If all else fails… lawsuit
Better Business Bureau
• Nonprofit organization that helps consumers resolve
problems
• Helps consumers:
• resolve disputes between consumer and sellers
• Keeps a file of complaints against local businesses
and supplies this information to consumers who ask
for it
• Stay educated by providing information and printed
tip sheets and booklets on the internet
• Promotes honest advertising and selling practices
Arbitration
• An impartial third-party will hear both sides of a
dispute and will make a decision
• When consumers sign binding mandatory
arbitration (BMA) agreements, they give up their
right to sue if they have a dispute with the firm
• They must accept the decision of the arbitration
board no matter what
Think???
Imagine that you purchased an expensive brandname sweater from a local outlet of a national clothing
store. It was labeled “machine wash in cold water and lay
flat to dry.” After wearing the sweater, you washed it
according to these instructions. When you tried to put it
on again, you found that it had shrunk at least two sizes.
You took it back to the store but were unable to get a
refund. The store manager said you must have put the
sweater in a hot dryer to make it shrink so much.
What should you do next?
Cooling Off Period
• Specified period of time within which a
consumer can back out of an agreement to buy
something
• Usually 3 days from the day the purchase was
made
Cooling Off Period
• The FTC made a rule that consumers can cancel
contracts they have sign in their homes within 3
days of signing
• Protects the consumer from
• High pressure situations
• Door to door salespeople
Small Claims Court
• A court that handles suits for small dollar
amounts without the service of a lawyer
• In most states, the range is from $1,000-$10,000
• Advantages
• You don’t need a lawyer (they are actually not
allowed)
• Court costs are low (under $250)
• Most cases resolved quickly
To Begin A Lawsuit…
•
•
•
•
•
Take all information to courthouse
Clerk will tell you how to proceed
Be sure to exhaust all options before deciding to sue
If you don’t win, you may be required to pay defendant’s costs
Even if the court rules in your favor, you may still have
problems getting the defendant to pay
• In this case, you may need to hire a lawyer and take case to a
high court
• If loss is small, it could cost you more than you might win
Make sure it is worth it!
Small Claims Court
The People’s Court
Season 17 Episode 15
Bell Ringer 6
 Think about a product you want to complain
about…
 Write down the following:
 What the item is
 Where you bought it and when (date)
 Price and how you paid
 What happened/ what is the problem?
 What solution do you expect?
Complaint Letter Assignment
 Assignment Sheet and Sample Letter are in the
Student Files (J:) Drive
 Complete the “Making A Successful Written
Complaint” worksheet then compose your letter
 Print your letter
 DON’T FORGET TO SIGN IT!
 Staple your “Making A Successful Written
Complaint” worksheet to the back of your letter
and turn it in!
CHAPTER 3 BINGO!!
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Pyramid Scheme
Fraud
Better Business Bureau
Consumer Product Safety
Commission
Federal Trade Commission
Arbitration
Consumer Movement
Warranty
Limited Warranty
Full Warranty
Implied Warranty
Cooling Off Period
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Monopoly
Competition
Small Claims Court
Lawsuit
Bait and Switch
Trading Up
Consumer Reports
Loss Leader
Environmental Protection
Agency
Redress
Consumer Bill Of Rights
Consumer Responsibilities
Cease and desist order