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

2. Values Change; Different People have Different 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 Consumer Responsibilities
Right to Safety
Right to Be Informed
Right to Choose
Right to Be Heard
Right to Redress
Right to Consumer Education
Right to a Healthy Environment
Responsibility to Use Products Safely
Responsibility to Use Information
Responsibility to Choose Carefully
Responsibility to Express Satisfaction or Dissatisfaction
Responsibility to Seek Redress
Responsibility to Be an Educated Consumer
Responsibility to Contribute to a Healthy Environment
Pg. 88

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 – government order requiring a company to stop a particular practice

14. Government Protection
Federal Laws or Statutes protecting consumers:
Child protection and toy safety act
SNL 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 –
(View Top 10 Consumer Complaints)

16. The Consumer Movement Today
Consumer Testing Agencies and Publications
Consumers Union
Publication (magazine): Consumer Reports
Business and Industry Groups
BBB – Better Business Bureau
Consumer Affairs Department
Consumer Action Panels
News Media – word of mouth, other consumers

17. 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

18. Warranties Full Warranty Limited Warranty Implied 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

19. 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

20. 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

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

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

23. Fraud Activity Illinois Attorney General handout Lisa Madigan
Tips to Prevent Consumer Fraud

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

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

26. The Complaint Process
Return to the store and speak with a salesperson (preferably your salesperson)
Speak to a manager
Write a complaint letter to the manufacturer or the firm’s home office
Contact a consumer group or professional organization
Better Business Bureau (BBB)
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 Lawsuit Class Action Suit No lawyers
Monetary Limit Varies
Less than $1,000 to $5,000
Lawsuit
Class Action Suit
A group of people who all have the same complaint file a lawsuit
Movie Reference: Erin Brockovic

29. Safeguarding Your Privacy
Identity Theft
The illegal use of an individual’s personal information
Your most significant piece of personal information you have - Social Security # - - Don’t give it out unless
absolutely necessary
FTC Video: Deter, Detect,
Defend

31. Preventing Identity Theft
Handle your mail with care
Keep items with personal information in a safe place
Safeguard sensitive information on your computer or online with passwords
Don’t give out personal information over the phone, mail, , or on the web
Make sure web site is secure

32. Tips to Prevent ID Theft
Keep all important personal information in one place in your home in case of emergency
Credit Cards and Debit Cards – 2 Options
Sign the back as soon as you receive them
Write the words “SEE ID” on the back of the card
Computers
Turn off computers when not in use
Log off of web pages and all computer networks
Change passwords frequently
Before discarding, donating, or selling an old computer, be sure to clean out the hard drive
Pin Numbers
Do not write pin numbers on the back of ATM or Debit cards
Do not keep your pin in your wallet or purse
Choose smart pin numbers (not 1111 or 1234)
Do not use everyday numbers known to others like your address or birthday
Do not write your pin number on the back of your card

33. Preventing Identity Theft
Ask your Internet Service Provider (ISP) about its security measures (Comcast, Charter, etc.)
Shred all important documents before you throw them away
Even expired credit cards or debit cards (or cut
them up)

34. If your identity is stolen
File a report with the police
Notify bank and credit card companies
Call major credit reporting agencies
Experian
Equifax
Trans Union
(We will cover these in
more detail during our
Credit unit)

35. Online Profiling Online Profiling Cookies
A practice in which companies collect information about the Web sites a consumer visits, and then use that information to predict what the consumer may buy in the future
Cookies
Small files stored on your computer that allow a Web site to “remember” information about you

36. Internet Safety
Reveal as little personal information online as possible
Share your work address only with colleagues and trusted friends and family
Watch what you say or post online
Use the preference options to block transmissions
Save and electronic communications as proof when necessary
Utilize complex passwords