Consumer Education: Values, Goals, and Decision Making

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

2. 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 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 • 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

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 – www.illinoisattorneygeneral.gov (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 • 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 A type of financial fraud in which people pay to join an organization in exchange for the right to sell membership to others • Baiting consumers with an advertised but nonexistent bargain and then switching them to a more expensive product • “out of stock” • “sold out”

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 • 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, e-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 • 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 email address only with colleagues and trusted friends and family • Watch what you say or post online • Use the preference options to block transmissions • Save e-mail and electronic communications as proof when necessary • Utilize complex passwords