Personal Finance Unit 2.02 Understand Threats to Financial Security

Vocabulary Failure to plan Not making shopping lists, spending plans, doing comparison shopping, etc. Failure to protect Not securing personal information and property Failure to be informed Not reading labels, fine print, contracts, sales offers, etc. Failure to communicate Not asking questions, discussing purchases, saying “no” when needed

Scam/scheme A plot designed to trick someone; a deception Illegal Against the law Lie/lying To tell an untruth/the habit or practice of telling untruths Concealing information Hiding information; hiding the truth Pyramid A scam that usually involves a “get rich quick” chain letter, sending money to others in order to, supposedly, receive money in the mail yourself

Chain letter A letter asking one to send several letters with money in order to, supposedly, receive money in the mail yourself High-pressure sales approach Using extreme tactics to persuade a consumer to buy Vague offers Offers that withhold certain details, expecting one to pay up front to get them Sweepstakes letter States that one has won a valuable prize, but must pay a fee to claim it

Lottery Prizes awarded by chance after purchase of a ticket; very small chance of winning Earn-money-at-home offers Offers that hinge on a consumer first purchasing something Condition A stipulation or prerequisite Winning bid at auctions A scam artist may notify you that you have the winning bid, ask for money, but never ship the item purchased

Identity theft Stealing one’s personal information to commit theft or fraud Media Means of communicating---e.g., word of mouth, telephone, texting, s, etc. Federal Trade Commission FTC; a government agency to assist consumers who’ve been victims of fraud National Consumers League Has a website where incidents of consumer fraud may be reported

Better Business Bureau A local consumer protection agency State Attorney General This state office assists consumers who have been victimized by fraud

Threats to Personal and Family Financial Security From within consumers Results from consumer behavior Lack of knowledge

Threats to Personal and Family Financial Security From without Result of deceitful, fraudulent, scams and schemes Designed to manipulate or trick consumers in ways that lead to financial loss

Types of Consumer Behaviors that can Lead to Financial Losses Failure to plan Not comparing job offers carefully in light of expected expenses Shopping without a list, which often leads to impulse buying Spending without using a spending plan, which often leads to overspending Failure to protect Making personal information available that can lead to identity theft Not securing life, health, and property to minimize risks of crimes and emergencies Not following Internet safety practices

Types of Consumer Behaviors that can Lead to Financial Losses Failure to be informed Not reading the fine print in sales agreements, product labels, contracts Not researching sales offers in depth before making a commitment Not separating facts from opinions in considering advertisements Failure to communicate Not asking sufficient appropriate questions to inform financial decisions Not discussing financial decisions with all parties/family members involved Not taking enough time to make a careful decision because of sales pressure Not saying “no” when needed

Types of Deceitful/Fraudulent Scams and Schemes Lying---e.g., accepting money for a stated purpose, then using it for a different purpose; Selling a product or service that will not perform as promised Concealing information---e.g., sellers not willing to state their physical addresses

Types of Deceitful/Fraudulent Scams and Schemes Deals that are too good to be true---e.g., a pyramid scheme, an illegal scheme that influences people to contribute money based on the false promise that they will get rich quickly; the pyramid collapses and money is lost, not gained Chain letter---a variation of the pyramid scheme that involves postal correspondence, also illegal High-pressure sales approaches---e.g., claiming the offer is only good for one day Vague offers---e.g., expecting you to pay up front in order to receive full information about a product or service

Types of Deceitful/Fraudulent Scams and Schemes Sweepstakes letter---states that you have won a valuable prize, but need to pay a processing fee to claim the prize Lotteries---prizes awarded by chance after purchase of ticket; very small chance of winning Earn-money-at-home offers---on the condition that you purchase software, etc.; once paid for, nothing arrives

Types of Deceitful/Fraudulent Scams and Schemes Winning bid in auctions---you pay the bid amount, but never receive the item bought Identity theft---stealing one’s personal information in order to commit theft or fraud Wide variety of other unsolicited online offers

Communicating and Reporting Deceitful/Fraudulent Scams and Schemes Communicating with fellow consumers Use available communication media---live conversation, telephone, texting, s, etc. Be specific, include key details Reporting to government agencies and other consumer advocates Go to the Federal Trade Commission (FTC) website; complete a Consumer Complaint Form Call or visit the website of the National Fraud Information Center of the National Consumers League Contact local consumer protection agency Contact Better Business Bureau Contact State Attorney General’s office Contact the post office if you receive a fraudulent offer by mail Contact the local media