A. Influences on Consumers I. CONSUMER LAW 1. Consumer= one who buys goods and services from a seller Consumer 2. Contract = Legal agreement to pay for goods or services Contract 3. Caveat emptor = “Let the buyer beware” 3. Caveat emptor = “Let the buyer beware”Caveat emptor Caveat emptor a. In the old days consumers had no protections from unscrupulous sellers 4. Advertising= information provided by the seller regarding their products (can be useful, but also can be misleading) 4. Advertising= information provided by the seller regarding their products (can be useful, but also can be misleading)Advertising misleadingAdvertising misleading NEXT

B. How Laws Protect the Consumer 1. Federal laws a. Prohibit misleading ads, prices and labelsmisleading adslabels b. Set standards for safety and qualitysafety c. Create agencies to enforce standards d. Create laws to regulate marketplace e. Protect those with disabilitiesdisabilities 2. State laws a. Similar to federal laws b. Terms: class action class actionclass action class action= more than one plaintiff takes a defendant to court remedy remedy= making up for harm done cease and desist order cease and desist order= court orders a company to stop an illegal practice restitution restitution= having to repay money that was illegally obtained NEXT

C. Protecting Your Rights as a Consumer 1. What to do before buying a product a. Research products (Consumer Reports)Consumer Reports b. Compare prices c. Consider a store’s reputationstore’s reputation -service/delivery charges? d. Read the warrantywarranty e. Read the contract (if applicable) 2. What to do after buying a product a. Inspect the product (save receipts) b. Read the instructionsinstructions c. If there’s a problem: -contact seller first (be polite but firm)seller first -contact the manufacturermanufacturer -contact a government agencygovernment agency NEXT

3. Consumer protection agencies a. Consumer groupsConsumer groups b. Business and trade associationsassociations c. Media (publicity)Media d. Professional associationsProfessional associations e. State and local government f. Federal government 4. Taking your case to court a. Criminal court fraud fraud= salesmen who knowingly lie insalesmen order to make a sale b. Civil court damages damages= money won as a result of an injury or loss rescission and restitution rescission and restitution= court orders contract cancelled and money refunded specific performance specific performance= the seller is forced to carry out the contract NEXT

Way advertisers “get” you  Buy our product receive what you see  Pop ups on the internet  Puffing “World’s Best Fries”  Fine print, fast talking

D. Deceptive Sales Practices 1. Door-to-door and telephone salesDoor-to-doortelephone sales a. Be very wary to give your credit card number on the phone b. donotcall.gov – good for 5 years 2. Phony contest and referral sales Advertising and the consumer a. Some ads are illegal (tobacco ads on tv, radio.) b. Can be helpful/informative c. Ads must be truthful -except “puffing” (opinion statements) d. Bait and switchBait and switch -luring customers into a store and then trying to sell them more expensive items

e. Mail order sales -companies must ship products quickly -read the contract carefully f. Repairs and estimates -always get a written estimatewritten estimate

E. CONTRACTS 1. 1.Elements of a contract a. Offer b. Acceptance Consideration c. Consideration= something of value must be exchanged (usually money) 2. Minors and contracts a. Minors may enter contracts, but generally Minors can’t be forced to carry them out -generally they must have a cosignercosigner 3. Written and oral contractsWritten and oral contracts a. Either type are legal -the law favors written contracts 4. Illegal contracts a. Contracts contrary to the law (drugs, etc.) b. Unconscionable contractsUnconscionable contracts -contracts that are unfair NEXT

F. Warranties 1.Warranty 1.Warranty= a guarantee from the seller as to the quality of the product Breach a. Breach= if the seller does not live up to the conditions of the warranty 2. Types of warranties Express warranty Express warranty a. Express warranty= statements of factsExpress warranty about a products performance Implied warranty Implied warranty b. Implied warranty= the law says that allImplied warranty products should do what they’re supposed to do -applies to stores/dealers only -only if product is used properly Disclaimer c. Disclaimer= a seller’s attempt to limit their responsibility -ie. “as is” or “with all faults”“as is” NEXT

G. Credit 1.Credit 1.Credit= buying things, promising to pay in the future Creditors Creditors a. Creditors= those who lend moneyCreditors (banks, loan sharks, etc.) Debtors b. Debtors= those who borrow money Finance charge c. Finance charge= money paid by debtors for the right to borrow money 2. Types of credit Unsecured credit Unsecured credit a. Unsecured credit= money borrowed with only the promise to repay (no collateral)Unsecured credit Secured credit Secured credit b. Secured credit= debtor must provide collateral to obtain loanSecured credit Default credit Default credit c. Default credit= if debtor does not make payments they lose their collateral (pawn shops)Default credit NEXT

3. Credit cards and charge accounts a. Credit cards make it easy to borrow money to purchase items APR -APR= Annual Percentage Rate b. If you lose your card, just report it missing Debit cards Debit cards c. Debit cards= look/act like credit cards, butDebit cards money comes directly out of ones bank account 4. When should you use credit? a. Using credit makes the item cost more, so use it sparingly (home, education, business and possibly car) use it sparingly b. If possible pay credit card bills in full each monthbills NEXT

5. The cost of credit Interest rates- a. Interest rates- very high on credit cards Loan sharking- b. Loan sharking- very, very high interest ratesvery high interest Balloon payments c. Balloon payments= the last payment is much larger Acceleration clause d. Acceleration clause= if one payment is missed the entire loan comes due immediately Bill consolidation Bill consolidation e. Bill consolidation= all bills are combined into one payment (often costs the consumer more than original loans)Bill consolidation 6. Truth in lending a. Creditors must provide the debtor with accurate information -must be in writing NEXT

7. What to do if you’re denied credit a. Ask the creditor why you were turned down b. Check your credit file H. Default and collection practices Default 1. Default= when a debtor can’t make his payments a. How to avoid default - put yourself on a budgetbudget - ask the creditor for more time - get financial counseling - get help from family or friends b. Bankruptcy -if you’re out of choices, declaring bankruptcy may be best option bankruptcy -it will be on your credit report for 10 years!! NEXT

2. Buying a used car a. Always have a mechanic check it out b. Some used cars come with warrantieswarranties 3. Financing a car a. Shop around for the lowest rates b. Read the contract carefully c. Consider the costs of owning a carcosts of owning a car -insurance, gas, repairs/maintenance, licenses, registration Cars and the Consumer 1. Buying a new car- things to considerthings to consider a. Safety (airbags, design strength, etc.) b. Price c. Quality d. Warranty e. Fuel economy

Checking Accounts  8 parts to an actual check 1. Number of check 2. Your name 3. Date of check 4. Payee’s name 5. Amount of check written in numerals 6. Amount of check written in words 7. Your signature 8. Number of your checking account

Two types of Checking Accounts Service Charge  No interest being charged to you but…  $.50 a month and $.10 each check written are charged to you Free Checking  You’re checking account is free if you stay above a minimum number of dollars in your account

Mechanics of Checking  Balance – amount in your account  Deposit – putting money into your account  Withdrawal – taking money out of account  Canceled Checks – checks that people (the payees) have turned in in order to get cash

Mechanics of Checking cont  Statement – bank’s sheet telling you how much is in your account, service charges, # and amount of checks written for that particular month, etc  Checkbook- contains your checks and….  Check Register – an organized way to keep your balance right on the spot and compare your balance to your banks balance

4 more…  Overdraft – when you spend more than what’s in your account  Bounces – when you write a check larger then what’s in your account  Cover – re-writing a check to the receiver of the bounced check  Stop-payment – letting the bank know not to let a check be cashed

Differences between the Plastic  Debit- a plastic card in the form of checks, all payments are subtracted from checking account  Charge- a plastic card in which you defer all payments until the end of each month –Pay each month in full

One more…credit card  Credit-  Credit- Plastic cards make it easy to borrow money to purchase items, unpaid credit gathers interest –APR –APR= Annual Percentage Rates In any case, if you lose one of these cards, call the provider and cancel it!!!

Default and collection practices Default 1. Default= when a debtor can’t make his payments a. How to avoid default - put yourself on a budgetbudget - ask the creditor for more time - get financial counseling - get help from family or friends b. Bankruptcy -if you’re out of choices, declaring bankruptcy may be best option bankruptcy -it will be on your credit report for 10 years!!

C. Creditor collection practicescollection practices -calls and letters may not be harassing repossession -repossession= creditor takes the purchased item back court action= creditor takes the debtor to court -court action= creditor takes the debtor to court garnishment garnishment -garnishment= court orders a creditor be paid by taking money directly from a debtor’s pay checkgarnishment

Savings – Methods  Saving Accounts- accounts maintained by retail financial institutions that pay interest but cannot be used directly as money financial institutionsinterestmoneyfinancial institutionsinterestmoney  CD’s- a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions. time depositthrift institutionscredit unionstime depositthrift institutionscredit unions

1 more method  Bonds- Certificates that represent money a government or corporation has borrowed from other entities

More on Savings Why save?  Emergency  Take advantage of opportunities  Reach financial goals Pay yourself first  Save to reach goals  From each paycheck – save 1 st, spend 2 nd

Vocab – last one of Consumer Law  26 – corrective advertising  27 – cease and desist orders, restitution, FTC, FDA  28 – none!  29 – tenant, landlord, lease, warranty of habitability, sublease clause, right to quiet enjoyment

What’s collected Friday  12 bell ringers between 4/25-5/12 –6pts  Notes on Warranties, Checking, Credit, and Savings/Investment –8pts

Contracts  3 things that make up a contract  Minors and contracts  What makes voids a contract  Identify parties of contract

Warranties  Express Warranties  Implied Warranties –Merchantability –Fitness for a Particular Purpose –Title

Checking Accounts  Parts of a check  Types of checking accounts  Mechanics of Checking

More concepts  Credit –Types of Plastic –Bankruptcy –Collection practices –Savings Accounts – Banks, CD’s, Bonds

More concepts  Housing –Tenant, landlord, lease, sublease, right to quiet enjoyment –Identify a Lease  Cars –Things to look at before buying, what resources to look at, Interest Rates on loans

2 more concepts  DSP –What we went over today in class  Basic Consuming –FTC, FDA, Angie’s List, Consumer Reports, Nutrition Facts