Chapter 3 Section 3.3 Deception & Fraud   Pages 101-107   ~People sometimes buy products that don’t meet their needs.   ~Products that the quality is not good.   ~Advertising is deceptive if it is misleading.   ~Most advertising provides accurate information.   ~Salespeople usually try to help you find a product that meets your needs.   ~Exaggerated claims and misleading prices are deceptive practices.        

TRADING UP You’ve seen a product advertised.   ~You go to the store and the salesperson tells you the product isn’t good….that you REALLY WANT to buy the more expensive product….this is TRADING UP. ~It is not illegal. ~Salespeople make more money if you purchase this “better” product.

SALES PRICE ~a sale is a sale ONLY if the price is below the usual price.   ~Sometimes sales prices are deceptive.

SUGGESTED RETAIL PRICE ~Prices can be deceptive. ~Manufacturer’s suggested retail price is sometimes HIGHER than any retailer EXPECTS to actually get for the product. ~Beware of claims of lowest prices in town

LOSS LEADER ~Sometimes stores GET YOU TO COME TO THEIR STORE by attracting you with a product priced below cost. ~Store will lose money on this product WITH HOPES you buy OTHER PRODUCTS. ~Items prices below cost to attract you to the store are called a LOSS LEADER. ~This is legal…BUT…beware that the OTHER PRODUCTS aren’t priced HIGHER then usual.

FRAUD ~Deliberate deception ~Designed for unfair or unlawful gain. ~Cheating the consumer ~A statement is fraud when it meets 2 conditions: ~person making the statement knows the statement is false. ~purpose of statement must be to cause others to give up property that has value (usually money). ~proving fraud can be difficult ~without written evidence or witnesses, fraud is hard to prove. ~Best protection against fraud is to AVOID IT. ~Need to learn the difference between honest and dishonest offers. ~When an offer seems to good to be true…it may be fraud.

BAIT AND SWITCH ~If you arrive at a store to buy an ADVERTISED product and it is OUT OF STOCK or SOLD OUT…the salesperson tries to get you to buy a “better” “more expensive” AVAILABLE product. ~Baiting consumers with an advertised BUT non-existent bargain and then switching them to purchase a more expensive product (similar to the advertised product but with more features “to meet their needs”) ~Don’t just buy the more costly item because you came to the store ready to buy

PYRAMID SCHEME ~Example Chain letter that asked you to mail $1 to the person on the top of the letter and sent copies to 10 friends…telling you that you will receive LOTS OF MONEY ~Pyramid scheme is a type of FINANCIAL FRAUD in which people PAY to join an organization or participate in a financial “sure thing” money maker. ~People are PROMISED lots of money. ~In the end, the only people who make money are the people on the TOP

TELEPHONE FRAUD ~You can’t see them   ~They can tell you they are calling from a legitimate business…but are they!? ~Can’t see their body language to judge if they are telling you the truth.

Telephone Fraud Clues To Look For   ~Offer a deal too good to be true. ~Ask for your credit card or Social Security Number to VERIFY your identity. ~You must BUY SOMETHING to get something of a greater value. ~They refuse to send you a written copy of a sales agreement…or what they are offering BEFORE you buy. ~They demand you ACT NOW or the offer will expire. ~They refuse to provide a TELEPHONE NUMBER of ADDRESS of their organization.   ~Telephone fraud tries to PLAY ON YOUR EMOTIONS. ~They have SCRIPTS to tell them what to do to respond to ANY SITUATIONS they may encounter when talking to potential customers.

How To Protect Yourself From Deception and Fraud ~How to Protect Yourself From Deception & Fraud:   ~Recognize it when you see it. ~Check out unfamiliar companies BEFORE purchasing anything. ~Ask questions about offers that seem too good to be true. ~Know the product or service you are buying. ~Make decisions with your head, not your emotions. ~Use your decision-making process to evaluate your options.