1. LESSON 3-4 CONSUMER RIGHTS AND RESPONSIBILITIES Learning Goals: -Describe your rights as provided by major consumer protection laws, and list sources of consumer assistance if you have a complaint. -Describe common deceptive practices that defraud consumers. -Discuss your responsibilities as a consumer to protect yourself from consumer fraud.

2. LAWS DEFINING CONSUMER RIGHTS  The Consumer Bill of Rights - 1962  Right to safety  Right to be informed  Right to choose  Right to be heard  Right to redress  Right to consumer education  Airline Passenger Rights – 1999  Confirmed reservations – you must be given a seat  Refunds – when the ticket is cancelled, you must be given a refund or your fares must be applied to another trip.  Compensation for hardships – when there are delays and cancellations, you must be given compensation

3. LAWS DEFINING CONSUMER RIGHTS  Consumer Technology Bill of Rights  Time-shifting – when you record video or audio for later viewing or listening  Space-shifting – allows you to copy the contents of a CD or other media to a portable or other device for personal use, not commercial purposes  Backup copies – allowed to make backups of purchased CDs, DVDs and other media in case it is destroyed.  Platform of choice – Allowed to listen to music on whatever device you choose.  Translation

4. LAWS DEFINING CONSUMER RIGHTS  Patients’ Bill of Rights  Informed disclosure  Choice of providers  Access to emergency services  Treatment decisions  Respect and nondiscrimination  Confidentiality

5. CONSUMER PROTECTION LAWS  Food, Drug, and Cosmetic Act of 1938 – Food be safe, pure, and wholesome – Drugs and medical devises be safe and effective – Cosmetics be safe for human use. Truthful labeling is also required.  Hazardous Substances Act of 1960 – Warning labels must appear on all products that are potentially dangerous to consumers.  Kefauver-Harris Drug Amendment of 1962 – Drug manufacturers must test drugs for safety and effectiveness before they are sold to consumers.  Cigarette Labeling and Advertising Act of 1965 – warning labels regarding health hazards must be clearly visible on products. Warning labels warn consumers of risks and safety issues.

6. CONSUMER PROTECTION LAWS  National Traffic and Motor Vehicle Safety Act of 1966 – Testing and inspections are required to be sure they meet minimum standards for safety.  Care Labeling Rule of 1971 – Clothing a fabrics must be labeled with instructions for cleaning, wash and dry temperatures, and other care needed to preserve the product.  Nutrition Labeling and Education Act of 1990 – All foods and drinks must have labels that disclose the amount of nutrients including the amount of calories, fat, salt, and other ingredients. In 1993, the act was extended to restaurants that must comply with health claims on signs and menus.

7. CONSUMER PROTECTION LAWS  Family Educational Rights and Privacy Act (FERPA) of 1974 – a federal law that protects the right of student records. Information can not be released without consent of a parent or guardian. Social Security numbers cannot be used as student ID numbers.  Health Insurance Portability and Accountability Act (HIPPA) of 1996 – protects your health and billing information, including information stored on computer networks, by limiting who can have access to it. Social Security numbers cannot be used for patient identification.

8. SOURCES OF CONSUMER PROTECTION  Federal Agencies:  U.S. Department of Agriculture (USDA)  Food and Drug Administration (FDA)  Consumer Product Safety Commission (CPSC)  Federal Communications Commission (FCC)  Federal Trade Commission (FTC)  Federal Aviation Administration (FAA)  Securities and Exchange Commission (SEC)

9. SOURCES OF CONSUMER PROTECTION  State and Local Assistance  State Attorney General  County and Cities may have consumer protection offices  Private Organizations  The Better Business Bureau (BBB)  The Major Appliance Consumer Action Panel (MACAP)  The National Consumers League (NCL)  Consumers Union (CU) – publishes a magazine called Consumer Reports  Public Officials

10. DEFRAUDING CONSUMERS  Marketplace is full of deceptive and misleading information. Deception is false or misleading claims made about the quality, price, or purpose of a product.

11. TYPES OF DEFRAUDING  Bait and Switch – an illegal sales technique in which the business advertises a bargain product with the intent of persuading consumers to buy a more expensive product.  Fake Sales – A business advertises a big sale but keeps items at a regular price.  Low-Balling – advertising a basic service at an unusually low price and then claiming additional repairs or services are needed.  Pyramid Schemes – an illegal multilevel marketing gimmick that promises commissions on one’s own sales as well as on the sales of recruits

12. TYPES OF DEFRAUDING  Ponzi Schemes – a fraudulent investment operation in which money collected from new investors is used to pay off earlier investors.  Pigeon Drop – a scam in which a con artist convinces a person to give up his or her money in return for a share of a larger sum of money.  Fraudulent Representation – telephone or door-to- door solicitation well-known made by people who claim to represent well-known companies or charities are another type of swindle  Health and Medical Product Frauds – involves deceptive advertising for expensive “miracle” pills, creams, or devices to enhance health and beauty.

13. INFOMERCIALS  An infomercial is a lengthy paid TV ad that includes testimonials, demonstrations, and introductory prices.  Some infomercial are genuine but not all.  Infomercials often make product claims that do not deliver on their promises.

14. PROTECT YOURSELF FROM FRAUD  Identify deceptive practices  Shop smart  Stay informed  Seek redress

15. IDENTIFY DECEPTIVE PRACTICES  You can get something for nothing  You can buy a high-quality product for an incredibly low price  To receive a prize or “free” product or service, you must supply your credit card or checking account number or pay a high shipping fee  You will receive a free gift if you act now  You or your home has been specially selected  You can attend a demonstration with no obligation to buy  If you don’t decide right now, you will lose the opportunity

16. SHOP SMART  Be aware of prices  Understand sale terminology  Sale means that goods are offered for sale, not necessarily at a reduced price  Clearance sale means the business wants to clear out merchandise, it may not be a reduced price  Liquidation means the business wants to sell everything right away, but not necessarily at reduced prices  Computer unit prices  Read Labels  Check packages carefully  Read contracts  Keep receipts and warranties  Compute total cost  Research businesses

17. STAY INFORMED  Educate yourself about products and services.  Check publications such as Consumer Reports  Analyze advertisements and assess your needs.  Be wary of emotional appeals that are too good to be true.  Ask questions  Be aware of the latest scams  Report fraudulent practices to consumer protection agencies.

18. SEEK REDRESS  Follow these steps: 1. Take the product back to the store where you bought it. 2. Stay firm but not angry. 3. Put your complaint in writing. 4. Send copies of evidence, such as sales receipts, warranties, previous correspondence, and anything else that will support your position. 5. File with consumer protection agencies. 6. As a last resort, seek legal recourse.

19. ASSIGNMENT  Due Friday, Jan. 30: pg. 111 questions 1-9, 10, 12-14, 16, 18-22