Deception and Fraud 3.3

Deception and Fraud Deception & Fraud It’s a matter of degree

Deceptive Advertising Misleading advertising Exaggerated claims Trading Up – practice of pressuring consumers to buy a more expensive product then they intended. Salesperson persuades you to buy another product Not illegal Use the decision making process to buy what meets your needs

Sale Price Price below the usual price Price sold at higher price then reduced is known as a sale price

Trading Up Michael Silverstein and Neil Fiske, the authors of Trading Up: The New American Luxury, recently published an update reinforcing their findings that consumers will gladly “trade up” and purchase more expensive goods/services so long as they are of higher- quality and have greater emotional benefits than their less expensive counterparts Trading Up: The New American Luxuryupdate

Suggested Retail Price SRP might be higher than any retailer expects to actually get for the product Examples: Car List Price What to do? Shop and Compare Prices

Loss Leader Item priced below cost to attract customers into store. Goal: You will buy other items as well Caution: Use decision making processing when purchasing other items.

Checkpoint What is the difference between legitimate and deceptive selling practices? Describe three practices that are legal and deceptive.

Fraud Deliberate deception Designed to secure unfair or unlawful gain. Cheating the customer. Conditions to constitute fraud: 1. Person knowingly made false statement 2. Statement caused others to give up property (money)

Bait and Switch Illegal Seller never intended to sell advertised product Advertised but nonexistent product

Pyramid Schemes Type of fraud People pay to join an organization in exchange for the right to sell memberships to others

Pyramid Schemes Airport game Telephone fraud—ask for credit card or SS #