1. Consumers – The Engine That Runs the Economy Chapter 1 – Sections 1.1 & 1.2 Consumer Education

2. Values Your principles – the standards by which you live –Life Values –Work Values –Cultural Values – ethnic heritage or religion –Social Values – community in which you live –Demographic Values – how and where people live Values Change; Different People have Different Values

3. Goals The things that you want to accomplish in your life –Needs Things you cannot live without –Wants Things that you would like to have, but can live without Long-term goals –Accomplishments you want to achieve over a period of years during your life span Short-term goals –Accomplishments you want to achieve within a year

4. Opportunity Cost The value of your next best alternative whenever you make a choice –Example: Becoming a full-time student or becoming a full-time employee Consider other options –Goals can change just as your values can change

5. Decision Making Process Identify the need or want you are fulfilling (goals) Gather information about alternatives Analyze your options (opportunity cost) Choose and act on it Evaluate the results of your decision

6. Decision Making Process Alternative process outline: –Specify Need or Want? Goals Values

7. Decision Making Process –Search Plan your search Avoid Impulse Purchases –A purchase made on a whim, without using a decision making process –Sift Look at Your Options Look at Your Opportunity Costs –Select –Study

8. Consumer Protection – Rights, Responsibilities, Resolutions Chapter 3 Consumer Education

9. A Consumer Bill of Rights President John F. Kennedy, 1962 –Established a set of four fundamental consumer rights; later three more were added Consumer Bill of Rights –Expect fair value in exchange for money you spend on goods and services –Treated with respect and honesty by merchants –Expect products to be reliable and safe Rights carry Responsibilities

10. Consumer Bill of Rights 1.Right to Safety 2.Right to Be Informed 3.Right to Choose 4.Right to Be Heard 5.Right to Redress 6.Right to Consumer Education 7.Right to a Healthy Environment Consumer Responsibilities 1.Responsibility to Use Products Safely 2.Responsibility to Use Information 3.Responsibility to Choose Carefully 4.Responsibility to Express Satisfaction or Dissatisfaction 5.Responsibility to Seek Redress 6.Responsibility to Be an Educated Consumer 7.Responsibility to Contribute to a Healthy Environment

11. Key Terms – Consumer Bill of Rights Right to Choose –Competition – a contest among sellers to win customers –Competition lowers prices in the marketplace –Monopoly – a situation in which there is only one company that sells a specific product or service Right to Redress –Redress – to seek and receive a remedy, such as a refund or other compensation

12. The Rise of the Consumer Movement A Growing Awareness –Silent Spring – Rachel Carson, 1962 –Unsafe at Any Speed – Ralph Nader, 1965 The Consumer Movement –Also known as Consumerism –Seeks to protect and inform consumers by requiring such practices as honest advertising, product warranties, and improved safety standards

13. Federal Agencies (Pg. 96) FTC – Federal Trade Commission (1914) CPSC – Consumer Product Safety Commission (1972) EPA – Environmental Protection Agency (1970) USDA – United States Department of Agriculture FDA – Food and Drug Administration SEC – Securities Exchange Commission –Cease-and-desist order – order requiring a company to stop a particular practice

14. Government Protection Federal Laws or Statutes Child protection and toy safety act –SNL Sketch: Consumer ProbeSNL Sketch: Consumer Probe Fair packaging and labeling act Automobile information disclosure act

15. The Consumer Movement State and Local Protection –State and local consumer protection agencies are usually part of each state’s Attorney General’s office –Illinois – Lisa Madigan – www.illinoisattorneygeneral.gov www.illinoisattorneygeneral.gov Consumer Movement Today –Consumers Union Consumer Reports - magazine

16. Warranties A company’s promise that the product will meet specific standards over a given time period Magnuson-Moss Warranty Act (1975) –Specifies how a warranty must be written if a company offers one –All written warranties are divided into two groups – Full and Limited

17. Warranties Full Warranty –Specific written guarantee –Repair or replace within a specific time period –Explains how to file a claim and how to return Limited Warranty –All the guarantees of a Full Warranty, but with specified limitations Implied Warranty –An unwritten guarantee that the product is of sufficient quality to fulfill the purpose for which it was designed

18. Deception & Fraud A matter of degree –Advertising that misleads consumers through false statements or omitted information is deceptive –Selling practices taken to unlawful extremes becomes fraud

19. Deception (or Deceptive Advertising) Trading Up –Pressuring consumers to buy a more expensive product than they had intended Sale Price –A sale is only a sale if the price is below the regular price Suggested Retail Price –MSRP – manufacturer’s suggested retail price (cars) Loss Leader –The item priced below cost to attract you to a store

20. Fraud Deliberate deception designed to secure unfair or unlawful gain –Bait and Switch –Pyramid Schemes

21. Fraud Bait and Switch Baiting consumers with an advertised but nonexistent bargain and then switching them to a more expensive product –“out of stock” –“sold out” Pyramid Schemes A type of financial fraud in which people pay to join an organization in exchange for the right to sell membership to others

22. ID Theft Facts More than one billion records were leaked in 2014. (IBM) Medical ID theft-500,000 cases in 2014 where benefits were fraudulently used. Taxes-e-filing from several states was shut down due to fraudulent returns. 19 million “suspicious” tax returns and $63 billion in fraudulent returns. Even kids are at risk. Foster care children more likely to become victims. More than 30% of victims are scammed by family and close friends.

24. Resolve Consumer Problems Resolve the Problem Have your facts straight Have documentation –Receipt, warranty Be polite, do not demonstrate anger Be reasonable when seeking redress

25. Information Needed When Making a Complaint 1.Date and location of transaction 2.Description of the product you purchased 3.Products price and the method of payment (receipt) 4.Specific explanation of what is wrong with the product 5.Statement of how you want the problem resolved (reasonable redress)

26. The Complaint Process 1.Return to the store and speak with a salesperson (preferably your salesperson) 2.Speak to a manager 3.Write a complaint letter to the manufacturer or the firm’s home office 4.Contact a consumer group or professional organization –Better Business Bureau (BBB)- reliability report 5.File a lawsuit

27. Dispute Resolution Cooling-Off Period – a specified period of time within which a consumer can back out of an agreement to buy something Mediation –Two parties try to resolve a dispute with the help of a neutral third party Movie Reference: Wedding Crashers Arbitration –A neutral person or panel listens to both sides of a dispute Example: Professional Athletes –Binding Mandatory Arbitration Giving up your rights to sue

28. Legal Action Small Claims Court –No lawyers –Monetary Limit Varies Winnebago County $10,000 Lawsuit Class Action Suit –A group of people who all have the same complaint file a lawsuit Movie Reference: Erin Brockovic

29. Other Consumer Assistance – Consumer Groups –Consumer Affairs Department-(within a company) communicate with customers about their rights and needs –Consumer Action Panels-group formed by trade associations (an industry) to address consumer complaints. News Media – word of mouth, other consumers