Consumer Rights And Responsibilities History • Every consumer has certain basic rights • In 1962, President Kennedy outlined what was called the Consumer Bill of Rights • Consumer rights have received much attention since the beginning of the consumer movement in the 1960’s. • Consumer rights come with certain responsibilities. Consumer Bill of Rights • Right to Safety – Consumers should be protected against goods that are hazardous to health and life. • Right to be Informed – Consumers should be protected against fraudulent or misleading advertising, labeling, or sales practices. They should be given the facts needed to make informed choices. • Fraud is the deliberate deception designed to secure unfair or unlawful gain. (selling something as new, when it has actually been returned) Consumer Bill of Rights • Right to be Heard – Consumers should be assured that their interests will be considered in the making of laws. • Right to Choose – Consumers should be assured access to a variety of goods and services at competitive prices. • When a business has no competition and control over the market for a good or service they are said to have a “monopoly”. Consumer Responsibilities • Responsibility to use products safely – Consumers should use products as they were meant to be used and follow recommended procedures for care and maintenance. • Responsibility to choose carefully – Consumers should use their buying power intelligently to encourage ethical business practices and safe, reliable products. Consumer Responsibilities • Responsibility to speak up − Consumers should keep themselves informed on consumer issues and let public officials know their opinions. • Consumers should be honesty with their complaints and should conduct themselves as upright citizens. (no shoplifting, dishonest returns, removal of tags, etc…) • Responsibility to learn – Consumers should take advantage of every opportunity to develop consumer skills. It’s Not Easy! • Being a consumer is difficult when you have many choices. • Grocery stores/dept. stores may have hundreds of options of different products on sale. • Thankfully, there are many places to look for the best buy. The Informed Consumer • A wise consumer is an informed consumer! – In order to be an informed consumer, we must acquire information about products and services before buying them. – Consumers have to power to decide to buy or not to buy. The Business Role • Businesses go to great lengths to be responsive to the needs of the consumers. • Without satisfied consumers, businesses would not make sales, earn profits, or perhaps remain in business. Your Standard of Living • People usually seek the highest standard of living that their incomes will allow. – You can get more for your money and raise your standard of living by becoming an informed consumer. – Your standard of living is probably determined more by how wisely you spend rather than by how much money you earn. Consumer Information Organizations Organizations or branches of organizations have been developed to help inform consumers. – They test products and offer advice – They publish magazines, award seals of approval, and endorse products for quality and safety. Product Testing Organizations • Their main purpose is to test products/services. • Manufacturers pay private firms to perform safety tests on products. • Underwriters Laboratory, Inc. (UL) – Tests electrical products for fire safety. • Association of Home Appliance Manufacturers (AHAM) • Consumer Reports Deception and Fraud • The difference between deception and fraud is a matter of degree. • Advertising becomes deceptive when it misleads. • Deceptive advertising or selling practices taken to extremes becomes fraud. • Most advertising provides accurate product information. DECEPTIVE TECHNIQUES • Trading Up: The practice of pressuring consumers to buy a more expensive product than they intended to. • Sale Price: A sale is only a sale if the price is below the usual price. If the store recently sold the product at a higher price, then the lower price can legally be called a sale. • Loss Leader: The item priced below cost to attract you to the store. Deceptive Techniques Cont. • Puffery: Exaggerated claims or descriptions of a product/service “extra-strength, ultimate fresh breath, made from the best stuff on earth” Legal, but there is a thin line. It is considered harmless because it assumes that no reasonable person would take the exaggerations seriously. Also, since the terms mean different things to different people, it would be difficult to prove such advertising false. They cannot be measured or precisely defined. Fraud According to law, a statement is fraudulent if it meets these two conditions: 1. The person who made the statement must know it is false. 2. The purpose of the statement must be to cause others to give up property that has value, such as money. Fraud Techniques Cont. • Bait and Switch: The practice of baiting consumers with an advertised but nonexistent bargain and then switching them to a more expensive product. Chain Letters and Pyramid Schemes: • Chain Letters: you are asked to send money to several people on a list. Add your name to the bottom; you are promised a big payoff. The only people making the money are at the top. Fraud Techniques Cont. • Pyramid schemes: people are led to believe they are starting a business and it requires an investment of money. They recruit others who are below them in the “chain”. The products they are “selling” are secondary to the money coming in from new pyramid members. • These schemes are fraudulent and illegal because their purpose is not to start a legitimate business but simply to get people to contribute money. They system cannot sustain itself mathematically. • Fraud Techniques Cont. Referral Sales: You are promised a money rebate, prize, or discount if you provide names of fiends and acquaintances who are prospective customers. Such promises are illegal if actual payment of the rebate, prize, or discount is not made. Delaying payment pending a sale, presentation, or other even is also illegal. Sometimes the friends who names you supply are harassed by companies to purchase merchandise they do not want. Fraud Techniques Cont. Lowballing: Advertising a repair service at an unusually low price to lure customers, then attempting to persuade them that additional services are needed. You should stipulate that you do not want any repairs other than what is agreed upon. Do not pay for unauthorized work. Get a second opinion. Deal with reputable merchants. Shop around! Other Forms of Fraud • Healthcare products that promise to cure incurable diseases. • Home-improvement contractors who want you to pay most of the cost before they do any work. • Vacation clubs that require you to send money to join with the promise of inexpensive first class vacations later. • Repair work offered at well below the going rate. • Weight-loss programs that promise unrealistic results. Keep from being victim by: * Think for yourself and watch for tip-off * Know what you need * Do not give out your credit card number over the phone unless you know the organization is reputable * Take the time to make a decision before investing – research! * Get promises in writing * Check on the organization by written request or the Better Business Bureau or the state attorney general’s office.
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