2You’re a consumerBeing a consumer goes way beyond just shopping. Your actions as a consumer causes a ripple effect, like throwing a stone into a pond.A consumer is someone who uses goods and services.Goods are physical objects that are produced, such as radios, chocolate chip cookies, and magazines.Services are actions that are performed for someone, such as repairing a car, serving a meal, or caring for a child.
3Your economic roles Three Economic Roles Consumer Worker Citizen Right now, you are someone’s classmate. A teen and a friend. Someday you will be a husband or wife, and a parent. These are roles you fulfill in your personal life.You also have roles in your economic life-the part of life concerned with earning, spending and managing money.Three Economic RolesConsumerWorkerCitizen
43 economic roles1. Consumer-You’re a consumer when you use goods and services, even if you’re not the one who pays for them. Even babies are consumers, using up diapers and formula as soon as they’re born2. Worker-You’re a worker if you earn money at any kind of job, or even if you do volunteer work. Workers produce goods and perform services.3. Citizen-As a citizen, you use public services such as schools and roadways. Citizens pay taxes in order to pay for public services, and they have the right to vote for elected leaders.
5Consumers have powerDo you think that which movie you choose to watch or which brand of soap you buy matters to anyone else?
6Consumers have powerSure it does, the purchasing decisions made by consumers have an impact. They affect which goods are produced and which services are offered.That means that as a group, consumers have power to influence the marketplace-all of the goods and services available for sale to the general public.When consumer’s buy a business’s products, that business profits.
7Consumers have powerWhen businesses are thriving, they want to please their present customers and attract new ones by developing new and better products. When this happens the number of goods and services increases, and so does the competition for the consumer dollar.Marketing experts are those professionals who define what a product is and how it’s sold, and they work to determine what the consumer wants and will buy.Retailers – those who sell goods and services directly to consumers, strive to offer the right mix of products and to provide helpful service.Pleasing the customer is the key to business success.
8Teens are important consumers Teens are very active consumers. By the beginning of this century, total annual spending by teen consumers reached $172 billion!Teens not only spend their own money, but they also play a role in family buying decisions.Example: Parents depend on teens to do household shopping, input on grocery lists, vacations destinations.
9Technology and the consumer Technology has changed the way consumers shop. Technology is available for communicating, accessing information, and purchasing goods and services.Instead of going to a local store to shop, you might order a product that you saw on TV by phone, or use websites to learn about different products, read customer reviews, compare prices, ask questions, and make purchases.Although technology has many positives it also has some challenges too: how to sort through so much information, to many options, and making it easier to buy on impulse.
10Effective consumersWhat are some of the characteristics of an effective consumer?Effective consumers set goals. They decide what they want and how to carry out the plan. They place priorities on how they spend their time, energy, and money.Effective consumers think critically. They make decisions based on careful consideration of alternatives and their possible outcomes. They avoid acting on impulse, and maintain a realistic perspective when encountering persuasive advertising or salespeople.Effective consumers do their research. They read, observe, and ask questions about the many options available to them. They search for reliable businesses, and compare prices, quality, features, and customer service policies.Effective consumers manage everyday finances. They handle their income, expenses, taxes, banking, and credit in a responsible way.Effective consumers plan for financial security. They set up plans for saving, investing, and insurance, calling upon qualified professionals for helping as needed.
11Bell Ringer:Do you think that technology has changed the way consumers shop? Why or why not?
12Protecting consumers’ rights Section 1.2 Through history, consumers have often faced unfair treatment, but they have also continued to gain protection. In some cases, today’s consumers are reaping the benefits of struggles ended long ago. Other battles have occurred more recently.
13The consumer movementConsumers used to not have a voice in issues that affected them, but the development of the consumer movement changed that.The consumer movement is based on the idea that the power of consumers as a group can balance the economic and political power of business industry.The consumer movement has been led by many consumer advocates, people or organizations who work on behalf of consumers. They have worked to investigate business practices, expose unfair or dangerous situations, and encourage the passage of laws protecting consumers.
14Pioneers of the consumer movement Harvey Wiley-a medical Dr., proved that adding certain chemicals to foods and drugs was dangerous. His campaign against mislabeled foods and drugs led to the passage of the Food and Drug Act of 1906.Upton Sinclair-published The Jungle in This novel exposed the filthy conditions in meat packing plants, leading to the passage of the Meat Inspection Act of 1906.Stuart Chase and F.J. Schlink-published Your Money’s Worth in 1927, a book demonstrating how misleading advertising affects consumers.Rachel Carson-published Silent Spring, a book that revealed the damaging effects of insecticides and pesticides on songbird publications, in 1962.Ralph Nader-published Unsafe at Any Speed in 1965, demonstrating that many highway deaths were caused by defects in cars. Since then him and many others have worked on behalf of consumers in areas including: air travel, food safety, the env’t, health care, insurance, and others.
15Consumer rights & responsibilities Chart on Page 29
16Gov’t protectionThe actions of governments can help define and enforce the rights and responsibilities of consumers.For example: one of the rights of consumers is the right to redress, remedy for a wrong or a loss.Consumer protection is provided by both laws and government agencies at federal, state, and local levels.
17Select federal consumer protection laws See chart on Page 30
18Group WorkWith a partner look up the federal consumer protection law that has been assigned to you. Tell what it does and find a case where that federal law has been used by a consumer.
19Federal agenciesFederal Trade Commission (FTC)-enforces laws against dishonest advertising, and consumers rights in areas of credit transactions, product labeling, ad privacy.Consumer Product Safety Commission (CPSC)-works to protect the public against unreasonable risks and to develop safety standards for many household products.United States Department of Agriculture (USDA)-inspects and sets standards for meat, pultry, and canned fruits and vegetables.Food and Drug Administration (FDA)-enforces laws and regulations on the purity, quality, and labeling of food, drugs, and cosmetics.Federal Communications Commission (FCC)-regulates interstate and international communications by radio, TV, wire, satellite, and cable. Provides consumer information and addresses consumer complaints related to these areas.
20Federal agencies cont.National Telecommunications and Information Administration (NTIA)- works to provide consumers with more choices and better quality telecommunications products and services, such as Internet, cellular, and cable service at lower prices.Federal Consumer Information Center (FCIC)- provides information to consumers on a wide range of topics through low-cost publications, a Website, and toll-free phone assistance.
21Better Business Bureau - BBB Look at the symbol on page 32The BBB group is the best known example of Business and Industry Groups. It offices throughout the U.S. and Canada provide reliability reports on local businesses and allow consumers to file a complaint in the event of a problem.Consumer affairs departments- they communicate with customers about their rights and needs as consumers. Many large firms have a toll free number that consumers can use when they need information or want to make a complaint.Consumer action panels-groups formed by trade associations to address consumer complaints. The panels also keep their member businesses up to date on consumers’ opinions.
22News MediaMedia-are channels of mass communication, such as newspapers, magazines, radio, TV, and related websites.Why is the news media especially effective in helping to resolve consumer complaints?
23News Media-ANSWERThe news media plays a vital role in warning consumers about local scam artist who try to cheat consumers.Alerts consumers of a recallProvides useful advice on investing, health, housing, and other topics of interestCan help to resolve consumer complaints because companies want to avoid bad publicity.
24Bell RingerDo you know someone that has experienced identity theft? What were the circumstances?
25Safeguarding your privacy section 1.3 How many people have access to your personal and financial information? Take steps to safeguard your privacy and to ensure that information you voluntarily provide remains secure.One of the most significant threats to personal security is identity theft, the illegal use of an individual’s personal information.Look at the chart on Page 35
26Your social security number Social security number- is an unique 9 digit number used by the Social Security Administration to keep track of your earnings. It can also be used to access bank and credit card accounts as well as other personal information.If someone request it, always ask WHY? Some businesses use it as an easy way to identify people, but you can ask them to use a different type of id number instead.Never carry your SS# in your wallet or have the number printed on your checks, or kept in your phone.
27Preventing identity theft Handle mail with careKeep items with personal information in a safe place, such as a locked drawer.Safeguard sensitive information on your computer or online with passwords. Avoid easily guessed combinations, such as your birthday. Don’t share your passwords, and don’t write them down where others can see them.Before sending sensitive data to a website be sure it’s a secure site, one that uses safeguards to protect information from theft during transmission.If you have an Internet connection at home, ask the service provider about it’s security measures.Always tear or shred expired credit cards and other important personal information.
28If your identity is stolen File a report with the policeNotify your bank and credit card company immediately. Close any account that may have been tampered with.Call the 3 major credit reporting agencies: Equifax, Experian, and Trans Union. Ask that they put a fraud alert on your file and that no new accounts be opened without your approval.Call the FTC or visit its website for information about resolving identity theft problems.
29Data collection & privacy issues Sometimes there is a legitimate need to provide personal information to financial institutions. How various information is used with whom its shared have become important issues for consumers.What might these companies do with the information they gathered about you?Some information, such as your credit card number, is only needed to process your order. Reputable companies keep it secure and don’t share them with anyone.The catalog company will probably keep your name, address, and purchasing history in its database for its own marketing use.The company may sell our name and address to other retailers, either directly or through data-collection companies.Your responses to the product registrations survey will probably be combined with those of other customers and analyzed to revel patterns.
30Protecting your privacy Many companies and organizations voluntarily give customers choices about how their personal information is used.Financial Services Modernization Act, passed in 1999 requires companies involved in financial activities to send privacy notices to customers. This requires the company to notify the customer of their policy regarding the sharing of customers’ personal information with other businesses.Under many policies you have the right to “opt-out” of having your information shared or used in certain ways.
32Internet safetyKeeping your personal information private is important in many other Internet situations, including chat rooms, forums, and instant messaging.Remember that information that you put on the Internet is available to practically anyone.Each year thousands of people report that they have been victims of online harassment, sometimes called cyber-stalking.
33Harassment online or not, is illegal Harassment online or not, is illegal. Here are some steps to prevent online harassment and deal with it if it occurs:Reveal as little personal information online as possible. Use gender-neutral screen names and addresses. Don’t put your picture on your personal website.Share your primary address only with trusted friends and family. Get an alternative address to use for other online activity.Watch what you say online, avoid creating enemies.Use preference options to block transmission of mail, chat, or instant messages from anyone who persists in bothering you.If someone is harassing or threatening you, save the communications as proof. Tell a parent or other trusted adult. Contact the appropriate service provider, such as the administrator of the chat room or your provider, and police.
34Recognizing Deception & Fraud Section 1.4 A well-known Latin phrase is commonly used to advice consumers, Caveat emptor means, “let the buyer beware.” Being a skilled consumer includes recognizing dishonest, illegal approaches used in some sales and advertising and protecting yourself against them.
35Deceptive advertising Most advertisers are honest, but some try to take unfair advantage of consumers. Deceptive advertising is advertising that is likely to mislead consumers through false statements, omitted information, or other unfair means.Deceptive advertising is illegal!!
36Examples of Deceptive advertising: Bait and switch-if a retailer advertises a product that it has no intention of selling, hoping to persuade customers to buy another at a higher price.False promise of free gifts-when a store advertises a “free” gift, the gift must actually be free, with NO strings attached. If customers must buy an item in order to receive the gift, an advertisement that says “free” is deceptive. To avoid deception the ad could use the wording such as “gift with purchase.”Deceptive Pricing-Advertising a “sale” price that is actually no better than the product’s everyday price is deceptive.Hidden catches-Suppose an ad for low-cost “spring break” airline tickets involves extra charges, such as processing fees, and hidden restrictions, such as a requirement to stay at a specific hotel in order to take advantage of the deal. If the ad doesn’t clearly disclose these details, it’s deceptive.
37fraudFraud-is deceitful conduct designed to manipulate another person for some gain.The deceit may take the form of lying, repeating something that ought to have been known to be false, or concealing a fact that might have saved the party from being cheated.According to the U.S. Department of Justice, more than 24 million people become victims of fraud each year.
38Pyramid schemesA common example of fraud is a pyramid scheme, an illegal get- rich-quick plan. Each person who participates pays a sum of money to join, then recruits several other people. Those people in turn pay a fee, then recruit more people, and so on. Supposedly, each participant will eventually receive money from people who join later.Pyramid schemes are fraudulent and illegal because they get people to contribute money based on false promises.Look at the pyramid on page 42
39Chain lettersA variation on the pyramid scheme is a chain letter, a message sent by postal mail or that instructs the recipient to send copies to a certain number of other people.Chain letters are fraudulent and illegal when they include instructions to send money or an item of value to someone and make promises that participants will receive, money or valuables in return.
40Fraud & technologyTechnology can also be combat fraud, as the FTC has done by posting “teaser site” on the Web. These site are similar to ones that a dishonest person or company might create.Look at the Dollars and Sense on Page 43
41Resolving consumer problems Section 1.5 Consumers expect good quality, safety, and service when they buy. Sometimes, however, what seems like a routine purchase turns out to be a source of frustration. When consumer problems arise, speak up for your rights in order to obtain satisfaction.
42Registering a complaint Any number of problems can occur after a purchase.In order to register a complaint, you must be able to state the problem clearly, and decide what sort of outcome you desire. Do you want to exchange the item, get your money back?Next, gather up your receipts and product information related to the purchase. If you want a refund or exchange, then make sure you know the store’s policies.
43Contacting the merchant If your complaint is about service, talk to the person who did the work.If it’s about a product purchased in a local store, you might talk to the salesperson who assisted you with the purchase or to an employee at the customer service desk.If you made a purchase over the phone or through the Internet you may need to contact the merchant by phone or .ALWAYS be polite! While frustrating, most problems between consumers and businesses can be resolved fairly easily. Merchants want to keep their customers happy.If you contact by phone then make sure to take careful notes, and document who you spoke with. If a reasonable amount of time has passed and a resolution has not been resolved then a follow-up call with a manager will be necessary.
44Writing a letter of complaint If your 1st attempts at resolving the problem don’t succeed, you may need to write a formal letter of complaint.How you direct the letter will depend on the situations, but normally you might write the letter to the manager or the customer service department.The letter should be honest, polite, and to the point.Along with your letter enclose copies, not originals of the sales receipt and any other supporting documents. Always keep copies of the letters you write.If you don’t receive satisfaction, be persistent. Write the person again or to someone at a higher level in the company. State all the previous steps taken to solve the problem.Send a copy of the letter to the Better Business Bureau and the local or state government office responsible for consumer protection.
45Dispute resolutionIf after writing several letters you are still not satisfied, consider using a dispute resolution program-mediation or arbitration.Mediation-is a process in which 2 parties try to resolve a dispute with the help of a neutral 3rd party.Arbitration-is a procedure in which a neutral person or panel listens to both sides of a dispute, weighs the evidence, and reaches a decision.In binding arbitration, both parties agree in advance that the arbitrator’s decision will be final.Both mediation and arbitration are less costly alternatives than going to court.
46Your options for legal actions include: If all else fails, you may need to take legal action.At this point it’s essential to have written record of all steps taken to resolve the matter.Your options for legal actions include:Small Claims Court- this court of law disputes sums under a certain amount of money and is resolved by a judge. Usually up to $5,000Lawsuit- another option is to hire a lawyer and file a lawsuit in regular court. This can be costly and time consuming.Class Action Suit-a lawsuit filed on behalf of a group of people who all have the same complaint.