ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 WHAT’S AHEAD 3.1Consumer Rights and Responsibilities 3.2Government and Consumer Protection 3.3Deception and Fraud 3.4Resolve Consumer Problems

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 LESSON 3.1 Consumer Rights and Responsibilities GOAL ► Describe each of your consumer rights and responsibilities. © 2010 South-Western, Cengage Learning Slide 2

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  competition  monopoly  redress © 2010 South-Western, Cengage Learning Slide 3

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  competition – a contest among sellers to win customers. Competition helps keep prices reasonable.  monopoly – a situation in which there is only one company that sells a specific product or service.  redress – a right to seek and receive a remedy, such as a refund or other compensation.

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 A Consumer Bill of Rights Right to... ► Safety ► Be Informed ► Choose ► Be Heard ► Redress ► Consumer education ► A Healthy environment © 2010 South-Western, Cengage Learning Slide 5

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Rights Carry Responsibilities Responsibility to... ► Use products safely ► Use information ► Choose carefully ► Express satisfaction or dissatisfaction ► Seek redress ► Be an educated consumer ► Contribute to a healthy environment © 2010 South-Western, Cengage Learning Slide 6

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  As a consumer, what rights are you entitled to when dealing with businesses that sell goods and services? What responsibilities do you have in return? © 2010 South-Western, Cengage Learning Slide 7

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  As a consumer, what rights are you entitled to when dealing with businesses that sell goods and services? What responsibilities do you have in return? Businesses should respect consumers’ rights to safety, information, choice, being heard, redress, education, and a healthy environment Consumers have the responsibility to use products correctly and to inform businesses of any problems © 2010 South-Western, Cengage Learning Slide 8

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 LESSON 3.2 Government and Consumer Protection GOALS ► Describe the evolution of the consumer movement. ► Identify government agencies and laws that help protect consumers. ► Describe different types of products warranties and how they protect consumers. © 2010 South-Western, Cengage Learning Slide 9

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  consumer movement  Federal Trade Commission (FTC)  cease-and-desist order  Consumer Product Safety Commission (CPSC)  Environmental Protection Agency (EPA)  warranty  full warranty  limited warranty  implied warranty © 2010 South-Western, Cengage Learning Slide 10

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  consumer movement – seeks to protect and inform consumers by requiring such practices as _________ advertising, product ___________ and improved _________ standards.  Federal Trade Commission (FTC) – the most important federal ___________ _____________ agency.  cease-and-desist order – Issued by the ______, this order requires a company to stop using a ___________ advertisement.  Consumer Product Safety Commission (CPSC) – Agency created to protect consumers from _____________ products.

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  warranty - a company’s promise that a product will meet specific ___________ over a given time period or the company will repair/replace or give a ________.  full warranty – a written _____________ the promises the company will repair/replace a defective product within a specified time period at no charge.  limited warranty – a written warranty that does not meet the standards of a full warranty because of specified _____________.  implied warranty – an unwritten guarantee that the product is of ____________ ____________ to fulfill the purpose for which it was designed.

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 The Rise of the Consumer Movement ► A growing concern ► A growing awareness ► The consumer movement © 2010 South-Western, Cengage Learning Slide 13

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Government Protection ► Federal Trade Commission ► Consumer Product Safety Commission ► Environmental Protection Agency ► State and local protection ► Consumer movement today © 2010 South-Western, Cengage Learning Slide 14

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Warranties ► The Magnuson-Moss Warranty Act ► Full warranty ► Limited warranty ► Implied warranties © 2010 South-Western, Cengage Learning Slide 15

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  Why do many people feel that consumers need protection more now than in the past?  What federal agencies are charged with protecting consumers from false advertising, dangerous products, and pollution?  What differences are there between full and limited warranties? How do warranties benefit businesses that offer them? © 2010 South-Western, Cengage Learning Slide 16

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  Why do many people feel that consumers need protection more now than in the past? Today’s more complicated products make them more difficult to evaluate, leaving consumers vulnerable to poor-quality or even dangerous goods and services © 2010 South-Western, Cengage Learning Slide 17

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  What federal agencies are charged with protecting consumers from false advertising, dangerous products, and pollution? FTC protects consumers from unfair or deceptive business practices CPSC protects consumers from dangerous products EPA is responsible for protecting the environment © 2010 South-Western, Cengage Learning Slide 18

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  What differences are there between full and limited warranties? How do warranties benefit businesses that offer them? Full warranty: promises repair or replacement of defective product over a specific period of time at no cost to the customer Limited warranty: promises repair or replacement of defective product subject to stated limitations Businesses that offer warranties provide an incentive to customers to buy products with the stated protection © 2010 South-Western, Cengage Learning Slide 19

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 LESSON 3.3 Deception and Fraud GOALS ► Explain the meaning of deception and describe how consumers may be harmed by this practice. ► Identify common types of fraud and explain how consumers may protect themselves against it. © 2010 South-Western, Cengage Learning Slide 20

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  trading up  loss leader  fraud  bait and switch  pyramid scheme © 2010 South-Western, Cengage Learning Slide 21

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Deception ► Trading up- The practice of pressuring consumers to buy a more expensive product than they intended ► Sale price – A sale is only a sale if the price is below the regular price. Sale prices can be deceptive. ► Suggested retail price – They are sometimes higher than any retailer expects to actually get for the product. © 2010 South-Western, Cengage Learning Slide 22

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Deception ► Loss leader- A product priced below cost to attract customers to the store ► Bait and Switch- The practice of “baiting” consumers with an advertised but non- existent bargain and then “switching” them to a more expensive product when they arrive at the store ► Pyramid Scheme- A type of financial fraud in which people pay to join an organization in exchange for the right to sell membership to other people © 2010 South-Western, Cengage Learning Slide 23

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Fraud ► Fraud: deliberate deception, designed to secure unfair or unlawful gain. ► A statement is fraudulent if it meets these two conditions: ► The person who made the statement must know it is false. ► The purpose of the statement must be to cause others to give up property that has value, such as money. © 2010 South-Western, Cengage Learning Slide 24

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Examples of Fraud ► Bait and switch ► Pyramid schemes ► Internet and telephone fraud – advantageous to con- artists because you can’t see them. Are they legitimate? © 2010 South-Western, Cengage Learning Slide 25

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Internet and Telephone Fraud Watch out for... ► Deal offered seems too good to be true ► Credit card/Social Security number requested to verify identity ► Must buy item to get something else for free ► No written contract or sales agreement is provided ► You “must act now” or offer expires ► No method given to contact the organization ► Information about organization not available from independent sources © 2010 South-Western, Cengage Learning Slide 26

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 The Many Faces of Fraud Examples:  Healthcare products that promise to cure incurable diseases  Home-improvement contractors who want payment before doing any work  Vacation clubs that require money in advance with the promise of inexpensive first-class vacations later  Repair work offered for less than the going rate  Weight-loss programs that promise unrealistic results © 2010 South-Western, Cengage Learning Slide 27

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 LESSON 3.4 Resolve Consumer Problems GOALS ► Describe how to successfully complain about a product you purchased. ► Identify government programs that can help resolve consumer problems. © 2010 South-Western, Cengage Learning Slide 28

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 KEY TERMS  Better Business Bureau  arbitration  cooling-off period  small claims court © 2010 South-Western, Cengage Learning Slide 29

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Prepare to Make a Complaint Write down the facts ► The date and location of the transaction ► A description of the product ► The product’s price and your method of payment ► A specific explanation of what is wrong ► A statement of how you want the problem resolved © 2010 South-Western, Cengage Learning Slide 30

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 The Complaint Process ► Start with the seller ► Seek help from consumer organizations ► Better Business Bureau (BBB) ► Arbitration ► Media help © 2010 South-Western, Cengage Learning Slide 31

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3 Government Efforts to Help Consumers ► Truth in information ► Enforcement is difficult ► Use common sense ► Cooling-off periods ► Reporting consumer problems ► Using small claims court © 2010 South-Western, Cengage Learning Slide 32

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  At which step of the complaint process is an organization such as the Better Business Bureau best able to help a consumer?  What are several ways in which the government works to protect consumers? © 2010 South-Western, Cengage Learning Slide 33

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  At which step of the complaint process is an organization such as the Better Business Bureau best able to help a consumer? At the fourth step of the complaint process, organizations such as the BBB are best able to help consumers when they are interacting with managers. © 2010 South-Western, Cengage Learning Slide 34

ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 3  What are several ways in which the government works to protect consumers? The government protects consumers by... passing and enforcing laws setting standards licensing businesses requiring labeling providing a court system that consumers may use to protect themselves © 2010 South-Western, Cengage Learning Slide 35