Consumer Protection Unit Consumer Economics

Unit Overview I. Protecting Yourself II. Consumer Fraud III. Consumer Redress IV. Governmental Protection

I.Protecting Yourself (video) video Warranties Warranties Implied – warranty in effect even though it is not in writingImplied – warranty in effect even though it is not in writing Warranty of merchantability – product does what it is supposed to do Warranty of merchantability – product does what it is supposed to do Warranty of fitness for a specific purpose – specialty items purchased for a special purpose (i.e., waterproof hiking boots) Warranty of fitness for a specific purpose – specialty items purchased for a special purpose (i.e., waterproof hiking boots) Full - meets standards specified by Magnuson-Moss Warranty Act:Full - meets standards specified by Magnuson-Moss Warranty Act: For anyone who owns the product during the warranty period For anyone who owns the product during the warranty period No cost for the warranty service No cost for the warranty service Consumer only has to notify the company of the problem Consumer only has to notify the company of the problem If company cannot repair the product, it must offer a refund or replacement part or product If company cannot repair the product, it must offer a refund or replacement part or product Does not limit the duration of the implied warranty Does not limit the duration of the implied warranty

Protecting Yourself (cont’d) Warranties (cont’d) Warranties (cont’d) Limited – similar to full, but does not meet all requirementsLimited – similar to full, but does not meet all requirements Limited to the original owner Limited to the original owner Consumer may have to pay for service (postage) Consumer may have to pay for service (postage) Consumer may have to fulfill requirement (card) Consumer may have to fulfill requirement (card) Refund or replacement may not be available Refund or replacement may not be available Time period may be specified Time period may be specified Products may have combination of full and limited warranties (full for one year, limited for another three years)Products may have combination of full and limited warranties (full for one year, limited for another three years)

Computer Security Computer Security Social Security number – don’t give it out, use another IDSocial Security number – don’t give it out, use another ID Preventing ID theft (link) (video)Preventing ID theft (link) (video)linkvideolinkvideo Handle mail with care Handle mail with care Keep personal information in a locked, secure area Keep personal information in a locked, secure area Use difficult-to-guess passwords, hide & don’t share with others Use difficult-to-guess passwords, hide & don’t share with others Don’t give out personal information unless you initiate it Don’t give out personal information unless you initiate it ( , mail, or through a web site)( , mail, or through a web site) Be sure web sites are secure (look for the lock icon) Be sure web sites are secure (look for the lock icon) Secure sites should start with “shttp://” or “ sites should start with “shttp://” or “ Find out what security measures your Internet provider uses Find out what security measures your Internet provider uses Shred / destroy important documents when finished with them Shred / destroy important documents when finished with them Protecting Yourself (cont’d)

Telephone Solicitation (video) Telephone Solicitation (video)video Have to by law state the following (per FTC):Have to by law state the following (per FTC): State that they are selling something State that they are selling something State the name of the company they represent State the name of the company they represent Avoid all forms of deception Avoid all forms of deception Can only call during certain hours (8:00 am – 9:00 pm)Can only call during certain hours (8:00 am – 9:00 pm) Do Not Call list ( Not Call list ( Companies have 31 days to remove your name from the list Companies have 31 days to remove your name from the list If unsure, ask person to send you more information through the mailIf unsure, ask person to send you more information through the mail Protecting Yourself (cont’d)

Door-to-door Solicitation Door-to-door Solicitation Cooling-Off Rule – Consumers have three days to cancel purchases of $25 or more made in their homes or outside the seller’s normal place of businessCooling-Off Rule – Consumers have three days to cancel purchases of $25 or more made in their homes or outside the seller’s normal place of business Seller must provide this information and a form to use to cancel Seller must provide this information and a form to use to cancel Does not apply to home maintenance and repairs Does not apply to home maintenance and repairs Protecting Yourself (cont’d)

II.Consumer Fraud Pyramid Scheme (video) Pyramid Scheme (video)video –Illegal get-rich-quick schemes –Each person gets others to pay to join, who in turn get others, who in turn get others… –Eventually you run out of people (can’t work) and the last person to join is out of luck and money –Figure on page 42 shows how it can’t work Questionable Business Practices Questionable Business Practices –Bait and switch –False promise of free gifts –Deceptive pricing –Hidden catches

Consumer Fraud (cont’d) Avoiding Consumer Scams Avoiding Consumer Scams –If it looks too good to be true, it probably is –Ask friends/family for their opinions –Get company information and contact BBB for their advice –Report the incident state attorney general state attorney general FTC ( FTC ( National Fraud Information Center ( National Fraud Information Center ( Local post office if the mail was involved Local post office if the mail was involved Local media (television / radio stations, newspapers) (video) Local media (television / radio stations, newspapers) (video)video

III.Consumer Redress Steps to Redress Steps to Redress –Register a complaint Contact the merchant ( video ) Contact the merchant ( video ) video Write a letter of complaint Write a letter of complaint Right to Refusal Right to Refusal Dispute Resolution Dispute Resolution –Mediation – two parties bring in a neutral third party to bring them together (such as Better Business Bureau) –Arbitration – two parties bring in a neutral third party to make the decision for them Legal Action Legal Action –Small claims court – typically for amounts under $5,000 –Lawsuit – can be expensive but worthwhile –Class action suit – filed on behalf of a large group

IV. Government Protection FTC – Federal Trade Commission (link) FTC – Federal Trade Commission (link)link –Enforces laws on dishonest advertising, protects consumer rights (Kevin Trudeau scam)(FTC response) Kevin Trudeau scamFTC responseKevin Trudeau scamFTC response CPSC – Consumer Product Safety Commission (link) CPSC – Consumer Product Safety Commission (link)link –Protects the public from unsafe products and set standards (link) link USDA – United States Department of Agriculture (link) USDA – United States Department of Agriculture (link)link –Inspects/sets standards for meat, poultry, canned fruits and vegetables (link) link FDA – Food and Drug Administration (link) FDA – Food and Drug Administration (link)link –Covers purity, quality, labeling of food, drugs, & cosmetics (link) link U. S. Department of Labor (link) U. S. Department of Labor (link)link –Monitors unsafe working conditions, sets minimum wage (link) link HHS – Department of Health and Human Services (link) HHS – Department of Health and Human Services (link)link –Monitors and protects the health of all Americans (link) link

Government Protection (cont’d) HUD – Department of Housing and Urban Development (link) HUD – Department of Housing and Urban Development (link)link –Enforces and enacts laws on unfair housing practices (link) link EPA – Environmental Protection Agency (link) EPA – Environmental Protection Agency (link)link –Protects the environment and human health OSHA – Occupational Safety and Health Administration (link) OSHA – Occupational Safety and Health Administration (link)link –Sets and enforces standards in the work environment (link) link FCC – Federal Communications Commission (link) FCC – Federal Communications Commission (link)link –Regulates interstate and international communications by radio, television, wire, satellite and cable (link) link