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Trading up: The practice of pressuring consumers to buy a more expensive product EX: you go to Best Buy to purchase a DVD player, and the salesman gets you to buy a better brand with more functions Loss Leader: The practice of raising the normal price, and then lowering it in order to call it a “sale” EX: Finish Line raises a pair of Jordan’s to $120, that is normally $100, then puts them back to $100 and calls it a sale
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DECEPTION AND FRAUD
CH. 3.3 & 3.4
DECEPTION AND FRAUD
DECEPTION: when advertising purposefully misleads you
FRAUD: deliberate deception, designed to secure an unlawful gain
Who is this guy
TYPES OF DECEPTION AND FRAUD Trading up:
The practice of pressuring consumers to buy a more expensive productEX: you go to Best Buy to purchase a DVD
player, and the salesman gets you to buy a better brand with more functions
Loss Leader: The practice of raising the normal price, and
then lowering it in order to call it a “sale”EX: Finish Line raises a pair of Jordan’s to $120,
that is normally $100, then puts them back to $100 and calls it a sale
TYPES OF DECEPTION AND FRAUD Sale price:
A sale is a sale only if the price is below the regular price.
Can be deceptive: if the store raises the price for a day or two then lowers it and calls it a sale
Suggested Retail price: A manufacturer’s suggested price is usually
higher than any retailer expects to actually get for a product.
Ex: Cars!
TYPES OF DECEPTION AND FRAUD Bait and Switch:
The practice of baiting consumers with an advertised, but nonexistent bargain and then switching them to a more expensive product.
My example at office depot – shredder –
Pyramid Schemes: A type of financial fraud in which people pay to
join an organization in exchange for the right to sell memberships to others
Pyramid scheme
TYPES OF DECEPTION AND FRAUD Internet and Telephone fraud:
The many different methods of scheming people out of money over the phone
http://www.youtube.com/watch?feature=player_embedded&v=G3p79-M0lHY.com
Some things to look out for when an offer is made to you online or over the phone:
1. Too good to be true www.lookstoogoodtobetrue.gov
2. Asked for your social security card or credit card number
3. Must buy something to get something else of greater value for free
TYPES OF DECEPTION AND FRAUD CONTINUED…
1. Not offered a written contract or sales agreement
2. You are supposed to act immediately or the offer will expire quickly
3. No method is offered to contact the organization
4. No information about the organization’s business record is available
TOO MANY FACES OF FRAUD Here are some scenarios that should
bring out the skeptic in you:1. Healthcare products that promise to cure
incurable diseases HEALTHY CEREAL?
2. Home-improvement contractors who want you to pay most of the cost before they do the work Holmes on homes
TOO MANY FACES OF FRAUD
1. Vacation clubs that require you to send money to join with the promise of inexpensive 1st class vacations later
2. Repair work offered at well below the going rate
3. Weight-loss programs that promise unrealistic results.
Lets talk about any scams that you have encountered… or your parents.
Were they similar to these? How were they resolved? How about internet fraud? Have any of you tried to deceive anyone…
we are all friends here…
SCAMS AND FRAUDhttp://www.cbsnews.com/video/watch/?id=7398476n
SCAMS AND FRAUD Follow the money
HOMEWORK
Read the “ID Thieves’ New Tricks: Cybercriminals
are getting smart. You can too” packet and be prepared to discuss it.
HOMEWORK
Re-Read pages 108-112Write the 1 page complaint letter
RESOLVING CONSUMER PROBLEMS HOW TO RESOLVE THE PROBLEM
Wait approximately 3 days to ‘cool down’Use facts, no emotions, to solve the
problemKeep your receipt!Decide what you want before you complain
RESOLVING CONSUMER PROBLEMS THE COMPLAINT PROCESS
Take it slowStart with the Seller
Go to the storeTalk to the manager
Email / write the manufacturerContact a consumer group or professional
organizationMedia help
Check online, sometimes there is a way to resolve problems through the website
RESOLVING CONSUMER PROBLEMS Government Involvement
LawsuitYou may contact a lawyer and take the claim
to courtSmall Claims court
Different states have different maximums ($1000-$10,000)
You do not need a lawyer for this court If you lose, you have to pay the fees of the person
you are suing