1. Consumer Responsibilities and Protections
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Consumer Responsibilities and Protections
11.1 Consumer Choice
11.2 Use Credit Responsibly
11.3 Consumer Protection

2. 11.1 Consumer Choice Learning Objectives
LO1 Understand the importance of setting personal financial goals.
LO2 Describe how making wise spending choices helps you achieve your goals.
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3. Key Terms consumer personal finance budget comparison shopping
rational consumer choice
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4. Personal Financial Goals
Anyone who uses a good or service is a consumer.
People consume within the limits of their resources.
People allocate scarce resources when they make consumer choices that are intended to maximize the satisfaction they achieve in their lives.
To achieve the greatest satisfaction in your life, you need a plan.
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5. Personal Financial Goals
(continued)
Your plan should state the things you most want to achieve and explain the steps you intend to take to achieve them.
Most of these steps will require you to spend money.
You should be sure to include a financial plan within your general life plan.
Personal finance involves the way you plan to spend or save your income.
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6. Set Financial Goals
Choosing what you want most and setting goals is the first step in creating a financial plan.
Short-term goals are things you hope to accomplish within a year or less.
Long-term goals take longer than one year to achieve, while your most important life goals can take decades to reach.
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7. Strategies for Achieving Your Financial Goals
Questions to ask
Seek expert advice
Ask other people
Shop at reputable businesses
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8. Make Wise Consumer Decisions
When you choose how to spend your income, you should be sure that your decision is based on reason and logic rather than on emotion or impulse.
Making wise spending decisions can take you a long way along the path to achieving your most important life goals.
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9. Budget Your Income
Budget—a consumer’s plan showing the sources and uses of income
Budget worksheets
Keep your budget up to date
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10. One-Month Budget Worksheet for a Typical Student
Figure 11.1
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11. Comparison Shopping
Comparison shopping—the act of reviewing products and prices offered by different businesses for similar products before making a purchase decision
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12. Rational Consumer Choice
Rational consumer choice—a choice to buy or not to buy a product so that your satisfaction is the greatest possible per dollar spent
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13. 11.2 UsE Credit Responsibly
CONTEMPORARY ECONOMICS
11/14/2018
11.2 UsE Credit Responsibly
Learning Objectives
LO1 Understand whether to use cash or credit to pay for purchases.
LO2 Name the two sources of consumer credit.
LO3 Describe how lenders decide who qualifies for credit.
LO4 Explain how you can avoid credit problems.
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14. Key Terms consumer loan consumer sales credit secured loan
unsecured loan
creditworthiness
credit history
credit rating
credit scoring
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15. Paying for Your Purchases
Will that be cash or charge?
Benefits and costs of paying cash
Benefits and costs of using credit
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16. Popularity of U.S. Consumer Payment Systems: 2005 vs. 2015
Figure 11.2
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17. Sources of Consumer Credit
Consumer loan—borrowing money to be repaid in regular installments over time
Consumer sales credit—amounts charged to an account that involves variable payments over time
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18. Consumer Loans
Secured loan—loan for which property is pledged to back its repayment
Unsecured loan—loan for which no specific property is pledged by the borrower that can be used to satisfy the debt if payments are not made
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19. Consumer Sales Credit Credit-card fees Interest on credit-card debt
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20. Creditworthiness
The term creditworthiness refers to the measure of your dependability to repay a loan.
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21. The Three Cs of Credit
Lenders typically consider three factors when they evaluate creditworthiness.
Character is a measure of a consumer’s financial responsibility.
Capacity is a measure of a consumer’s ability to repay a debt on time.
Capital is a measure of the value of things a consumer owns that could be sold or cashed in to repay a loan.
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22. Credit-Reporting Agencies
Credit-reporting agencies (or credit bureaus) gather, maintain, and share financial information about almost every adult in the United States.
Three primary credit-reporting agencies:
Equifax
Experian
TransUnion
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23. Credit-Reporting Agencies
(continued)
Credit history—a person’s record of paying bills and debts over time
Credit rating—the measure of a person’s creditworthiness
Credit scoring—a system that assigns a number, or score, to each consumer indicating whether this person is a good or bad credit risk
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24. Accessing Your Credit File
Legal rights
Online access
Annual review
Corrections
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25. Avoid Credit Problems Use credit wisely
Establish a positive credit history
Repair a damaged credit rating
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26. CONTEMPORARY ECONOMICS
11/14/2018
11.3 Consumer Protection
Learning Objectives
LO1 Explain why consumers sometimes may need the government to protect them from defective or dangerous products.
LO2 Understand how to protect yourself as a consumer.
LO3 Know how to prevent identity theft and what to do if your identity is stolen.
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27. Key Terms Food and Drug Administration (FDA)
Federal Trade Commission (FTC)
cease and desist order
Consumer Product Safety Commission (CPSC)
Environmental Protection Agency (EPA)
identity theft
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28. Government Efforts to Protect Consumers
Most consumers rely on manufacturers to be responsible and on the government to set quality and safety standards to protect them from harm.
The government intervenes in the market in an effort to protect consumers from dishonest or careless producers.
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29. The Pure Food And Drug Act
Food, Drug, and Cosmetic Act (1938)
Food and Drug Administration (FDA)—federal agency that sets standards for foods and drugs produced or sold in the United States
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30. The Federal Trade Commission
Federal Trade Commission Act (1914)
Federal Trade Commission (FTC)—government agency that ensures that businesses compete and market their products fairly and honestly
Enforces antitrust laws.
Sets standards for product packaging and labeling and honesty in advertising.
Cease and desist order is an FTC-issued directive to stop a firm making a false or misleading advertising claim.
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31. The Consumer Product Safety Commission
Consumer Product Safety Commission (CPSC)—federal agency created to protect consumers from dangerous products they might purchase or use
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32. Number of CPSC-Ordered Recalls During the Month of April, 2000–2011
Figure 11.3
Source: CPSC website: May 5, 2011.
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33. The Environmental Protection Agency
Environmental Protection Agency (EPA]—federal agency that interprets and enforces laws passed by Congress that involve the environment
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34. Other Government Protections
Other federal agencies
Many other federal agencies are responsible for protecting consumers in other ways.
These agencies are designed to provide a degree of safety to consumers they could not reasonably be expected to achieve on their own.
State and local protection
All state and many local governments also have agencies that are responsible for protecting consumers.
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35. Take Responsibility for Your Protection
Consumer rights and responsibilities
Use common sense
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36. Dealing with Identity Theft
Identity theft—a crime in which one person fraudulently uses another’s identity to obtain credit or to access financial accounts
Protect yourself from identity theft
Know what to do if your identity is stolen
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