CONSUMER BEHAVIOR, EXPERIENCES ANDATTITUDES: A COMPARISON BY AGE GROUPS

CONDUCTED FOR

BY

PRINCETON SURVEY RESEARCH ASSOCIATES

PRINCETON SURVEY RESEARCH ASSOCIATES911 COMMONS WAY

PRINCETON, NEW JERSEY 08540

MARCH 1999

© 1999, AARP

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TABLE OF CONTENTS

PREFACE......................................................................................................................................................... 4EXECUTIVE SUMMARY................................................................................................................................ 7DETAILED FINDINGS .................................................................................................................................. 13INTRODUCTION AND BACKGROUND ............................................................................................................. 14CONSUMER VULNERABILITY INDEX................................................................................................................... 15CONSUMER EXPERIENCES ............................................................................................................................. 19

Dissatisfaction With Services or Products ................................................................................................... 19Discontentment With Home Repairs And Improvements.............................................................................. 20Experiences with Major Frauds or Swindles ............................................................................................... 21Responses to Experiences with Major Fraud and Faulty Home Repairs ...................................................... 22Efforts to Resolve Other Bad Buying Experiences....................................................................................... 23Actions Taken Over Time............................................................................................................................ 24

CONSUMERS IN THE EXPANDING MARKETPLACE ................................................................................................ 26Potentially Risky Borrowing and Buying..................................................................................................... 26

FINANCIAL SECURITY ....................................................................................................................................... 29A Financial Base ........................................................................................................................................ 29Covering Routine Bills and Emergency Expenses ....................................................................................... 30Long Term Savings and Investments ........................................................................................................... 31Consumer Debt........................................................................................................................................... 32

CONSUMER KNOWLEDGE .................................................................................................................................. 34Actual Knowledge of Consumer Rights and Regulations ............................................................................. 34Knowledge About Investment Issues............................................................................................................ 37

SOURCES OF INFORMATION AND ASSISTANCE..................................................................................................... 40Sources of Information for Products and Services....................................................................................... 40Sources of Financial Advice ....................................................................................................................... 41Sources of Help with Resolving a Complaint............................................................................................... 43

CONSUMER TRUST IN SERVICE AND RETAIL INDUSTRIES..................................................................................... 45Perceptions About Unfair and Deceptive Business Practices ...................................................................... 45Consumer Privacy ...................................................................................................................................... 47Laws About Consumer Privacy ................................................................................................................... 48

CONCLUSION AND IMPLICATIONS ...................................................................................................................... 49APPENDIX..................................................................................................................................................... 51SURVEY METHODOLOGY............................................................................................................................... 52

Sample Design............................................................................................................................................ 52Weighting ................................................................................................................................................... 53Statistical Tests........................................................................................................................................... 54Data Collection .......................................................................................................................................... 54Response Rates ........................................................................................................................................... 55Note on Methodology.................................................................................................................................. 60

TOPLINE.......................................................................................................................................................... 61

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PREFACE

Remarks Of

Katie Smith Sloan, Group Leader

AARP Applied Gerontology Group

March 17, 1999

Consumers are wary and dissatisfied - and as AARP’s survey of Consumer Behaviordemonstrates - they should be. AARP conducted a telephone survey of consumers age 18 andover. We are releasing the results today.

Three quarters of consumers report having had a bad buying experience in the past year and, ifthat’s not bad enough, nearly one in six report having been a victim of a major consumer fraud orswindle at some point, a three percentage point change since 1993.

If we were to project the 17% who report victimization to the 189 million consumers who areover the age of 18, it would yield a stunning 32 million consumers who report having been thevictim of a major fraud or swindle.

Clearly, there is far from a level playing field for consumers. Consumers are at a distinctdisadvantage. They are vulnerable to the whims of unscrupulous businesses and the complexity oftheir rapidly changing product offerings, their inexplicable terms and their deceptively fine print.

To see how well consumers are faring in this new environment, we created a ConsumerVulnerability Index. The Index is based on how many consumers are aware of their rights, howaware they are of how businesses should conduct themselves and where - or if- they go if theyhave a problem.

The Consumer Vulnerability Index shows that 8 percent of consumers are “very vulnerable.”The overwhelming majority – 79 percent – are “somewhat vulnerable.” Only 13 percent ofconsumers are “not vulnerable” according to the scale.

Among the most vulnerable consumers are those over the age of 75. Their expectations aboutthe honesty of the marketplace, and their lack of knowledge in an increasingly complexmarketplace contributes to the vulnerability. In addition to age, vulnerability correlates witheducation. Older persons simply have not had as many years of education or as much formaltraining as younger consumers.

From a consumer perspective, it is simply hard to trust a marketplace that you feel not onlytakes advantage of you, but engages in criminal behavior.

We asked consumers which industries they felt were most likely to mislead consumers most ofthe time. The rankings are instructive:

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Three-quarters have little trust in used car dealers and companies that sell products overthe phone. Sixty percent are suspicious of home repair contractors and 59 percent are suspiciousof telephone companies. Following close behind are finance companies, stores that rent furnitureor appliances and pawn shops.

A number of the industries asked about in this study were also evaluated in the 1993 AARPConsumer Behavior Study. Of the seven industries that are reported in this survey only homerepair contractors and telephone companies receive notably different evaluations from consumers.Distrust of home repair contractors has grown by 8 percentage points and distrust of telephonecompanies has grown by 6 percentage points. Mainstream industries simply do not have the trustof many consumers.

There’s good reason for the lack of trust of home repair contractors. One in five (21%)consumers say they have had a bad experience related to home repairs at some point. Andconsumers age 50 to 64 (26%) are more likely than younger consumers (20%) or those age 65and over (19%), to say they have had a problem. The conventional wisdom of relying on friendsand family to recommend a contractor is not a fail-safe method - consumers still report problems.

An issue that is looming on the public agenda is privacy. We asked consumers if they trust thespecific businesses they patronize to keep their personal information confidential. Most don’t.Only 38 percent of consumers said they completely trust their main financial institution, 26percent their insurance company, 20 percent their supermarket and 14 percent their credit cardcompany - to keep their personal information private. Seventy-three percent of consumers don’tbelieve federal and state laws to protect their privacy are adequate.

Are these consumers complacent? Not when they have been wronged! Practically all consumers- 94% - have taken some action when they have been wronged. As many as eight in ten havecomplained directly to a company or salesperson and have stopped buying from a company, askedfor a refund or replacement, or told friends and others not to buy from the company.

Sadly, only about a third of consumers are completely satisfied with the action taken as aresult of their complaint. Very few take the next step of complaining to a consumer agency, or anAttorney General. Consumer complaints are a powerful tool to incite action on the part ofregulators, law enforcement and policy makers. Consumers need to take their complaints a stepfurther - to provide the evidence that the proper authorities need to investigate, prosecute orregulate.

From this survey, AARP also wanted to get a snapshot of consumer knowledge of basicinvestment-related issues. As so many consumers are venturing into uncharted seas of the stockmarket, we found that consumer investment knowledge is woefully inadequate.

• Consumers need to know - but don’t - that diversification reduces financial risk.• Consumers need to know - but don’t - that no-load mutual funds do involve fees.• Consumers need to know - but don’t - the basis on which financial planners and brokers are

compensated.• Consumers need to know - but don’t - that FDIC insurance coverage does not cover mutual

funds purchased at a bank.

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Certain business transactions are more unfriendly than others because of the increasedpotential for exposure to high fees and/or interest rates, or unfair business practices. The surveyasked about six types of transactions that, depending on the financial situation of the consumerand the terms and conditions of the contract, can expose a consumer to potential risk or high fees.The good news is that a majority of consumers have not engaged in transactions, such as cashinga check at a check-cashing outlet, pawning a personal item or renting furniture. But, those whohave engaged in these six activities - anywhere from 10 to 31% - represent millions of consumers.

We must put some truth behind corporate appeals to being consumer friendly or to puttingthe customer first. We need to lower the barriers to consumer information. Eliminate the fineprint. Clarify the squirrely terms and provide full and clear disclosure of terms and conditions.We need to design fair and meaningful ways for consumers to complain, to be heard and toreceive restitution.

One bright light in this survey is that the hard work of consumer educators is having an effect.Sixty percent of consumers rated their understanding of their rights as a consumer and the lawsthat protect them as excellent or good in this study, a jump from 49 percent in 1993.

Knowledge is power - but knowledge is not enough. In order to keep pace with theincreasing number of choices and variables inherent in today’s - and tomorrow’s - marketplace,the demands on consumers to navigate themselves - and take more control over their owninterests will be even greater.

As consumers continue to complain - and hopefully, more often and to more sources,businesses must be prepared to give consumers what they deserve - fairness and value. As oursurvey shows, a healthy economy does not equate with a healthy marketplace for consumers.

It’s time that consumers have an advantage - rather than a distinct disadvantage!

CONSUMER BEHAVIOR, EXPERIENCES AND ATTITUDES:A COMPARISON BY AGE GROUPS

Conducted byPRINCETON SURVEY RESEARCH ASSOCIATES

forAARP

MARCH 1999

EXECUTIVE SUMMARY

American consumers face an increasingly diverse and complex marketplace. One in sixAmericans say they have been the victim of a major consumer fraud or swindle at some point, andthree in four report having a “bad buying” experience in the past year. AARP commissioned thissurvey in order to ascertain the experiences of consumers, older consumers1 in particular, innavigating today’s marketplace and to determine which attitudes or behaviors relate to the wayconsumers manage in the marketplace. While this study probes some of the same topics as the1993 AARP Survey of Older Consumer Behavior, many new areas are explored, including homerepair fraud, privacy of personal information, online purchasing, saving and investing, and the useof check-cashing outlets, pawnshops, and credit counseling services.

Consumer Vulnerability

Consumers are vulnerable to unfair or deceptive business practices and potentially tofraud, for a variety of reasons that range from the way business conduct themselves to their ownbehaviors, attitudes and levels of knowledge. As in the 1993 research, a vulnerability index hasbeen calculated for this survey, providing a summary of consumers' strengths and needs in facingan often unfriendly marketplace. As in the past, this index counts the number of attitudes,behaviors or lack of knowledge that could make the consumer vulnerable. The sums of theseindividual sources of vulnerability are segmented into categories ranging from very lowvulnerability to high vulnerability.

The lowest possible score on the index is zero, indicating the respondent answers none ofthe questions in a manner that would denote vulnerability. Theoretically, the highest possiblescore is 29, meaning the respondent answers every single question to indicate vulnerability. Theactual highest score was 19.

The vulnerability index finds that about half of consumers (54%) demonstrate low or verylow vulnerability, while just under half are susceptible or highly susceptible to unfair or deceptivebusiness practices. About one-tenth (8%) of consumers are especially vulnerable. Older

1 Unless otherwise specified, throughout this report “older consumers” refers to people aged 65 and older, and

“younger consumers” refers to people aged 18 to 64.

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consumers are disproportionately represented among the very vulnerable, and susceptible tounfair or deceptive business practices.

• Twenty-one percent of those aged 75 and older rate highly vulnerable in the index, comparedwith 11 percent of those aged 65 to 74, and six percent of those under age 65.2 Conversely,only five percent of consumers aged 75 and older rate very low in vulnerability. Fewerconsumers aged 65 to 74 (9%) rate very low in this index compared with consumers underage 65 (15%).

Older consumers’ susceptibility to unfair or deceptive business practices is compoundedby their tendency to have lower annual incomes and lower levels of educational attainment, theother two major factors that predict a high level of consumer vulnerability.

Investment Knowledge

In recent years, financial investments have attracted more attention and interest from manyconsumers, and the marketplace increasingly demands that consumers take more control overtheir personal investment interests. Thus, in addition to overall consumer vulnerability,vulnerability in the financial sector is of particular interest.

The survey asked a series of basic questions about financial investment issues to see howknowledgeable consumers are about these matters. Using a separate index of investmentknowledge, the survey finds that older consumers are far less knowledgeable overall about theseissues than their younger counterparts. These questions related to the terms for no-load mutualfunds, FDIC coverage of bank-sponsored mutual funds, the impact of investment diversificationand the basics on which most brokers are compensated. From these four questions, an InvestmentKnowledge Index was created as a way to summarize the public’s knowledge about some basicand important information pertaining to investing.

Not many consumers are knowledgeable about financial investments. Only 11 percentrank as very knowledgeable, having answered all four questions correctly, and about one in four(25%) rank as knowledgeable having correctly answered three out of the four. The majority,however, have only some knowledge (46%) or little or no knowledge (18%) about basicinvestment issues.

• While only 12 percent of consumers under age 65 answered all the questions correctly, evenfewer (6%) older consumers did so. In addition, more than one in four older consumers(26%), compared with about one in seven younger consumers (15%), display little or noknowledge of these matters.

Other Consumer Attitudes and Behaviors Related to Vulnerability

In addition to gaps in their financial knowledge, older consumers are more vulnerable tounfair or deceptive business practices in other important ways. Older people are less likely to bewary of businesses with which they interact, are less likely to have a firm grasp on the rules and

2 Throughout this report, differences are noted only if they meet the criterion of statistical significance at

the 95% level of confidence.

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regulations that govern various industries, and less likely to have an ample, secure financial basethat might provide some degree of protection from certain consumer pitfalls.

Consumers do not completely trust the businesses they patronize to keep their personalinformation confidential. Only 38 percent completely trust their main financial institution, 26percent their insurance company, 20 percent their supermarket and 14 percent their credit cardcompany to keep their personal information private. Only five percent completely trustcompanies that provide services or information over the Internet.

· Skepticism about businesses they patronize is less pronounced among those over age 65. Thisgroup is more likely to say that they completely trust each type of company asked about in thesurvey to keep their personal information confidential, except for companies that provideinformation over the Internet.

Federal law guarantees everyone the right to see his or her credit report if it has been usedin a decision that denied the consumer credit, insurance or housing. Most consumers under age65 (91%) are aware of this legal right, although six percent mistakenly say that the right does notexist. Older consumers are somewhat less aware of their rights.

Three out of four consumers know their rights under the Federal “Truth in Lending Act.”This Act provides a range of consumer protections by requiring banks and other financialinstitutions to disclose some important facts about a loan before the consumer makes acommitment. For example, 78 percent of all consumers know that the bank is required to disclosethe loan’s Annual Percentage Rate. And most consumers (75%) understand that the bank mustinform potential borrowers of the total dollar amount of the finance charge for the loan.

A large majority of consumers (89%) have a savings or checking account with a financialinstitution. Eleven percent do not have any type of account. However, more older people thanyounger people report that they do not have any such accounts (16% vs. 10%), which impliesthey may be more susceptible to exposure to high interest rates and fees as well as unfair ordeceptive business practices.

Consumers express skepticism about the practices of specific industries including used cardealers, telemarketers, telephone companies, and home contractors. A substantial number ofconsumers think seven of the 15 industries asked about mislead or take advantage of consumers.Older people give more lenient evaluations to more than half of the industries examined, includingtelephone companies, stores that rent furniture, check-cashing outlets and used car dealers.

The survey also asked about six types of transactions that can be costly to consumers,depending on their financial situation and the terms and conditions of the transaction. Themajority of consumers have not engaged in transactions that expose them to the greatest potentialfor high fees or loss of money, such as those involving check-cashing outlets, pawnbrokers andrent-to-own stores. Younger consumers are more likely than older consumers to engage in suchactivities.

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Still, as many as one in 10 consumers over age 65 have engaged in such activities. Inaddition, more older than younger consumers have an annual income of less than $20,000 (26%vs. 16%), a demographic characteristic that makes them more likely to have engaged in theactivities that expose them to the greatest potential for risk.

Dissatisfaction With Services or Products

Most consumers (82%) report having had a bad experience at some point in time whenpurchasing a product or service. For three-quarters of those surveyed, the bad buying experienceoccurred in the past year. Younger consumers have more complaints than older consumers do.Consumers under age 65 are also more likely than older consumers to take action as a result of abad buying experience.

· Even though six in 10 older consumers say they had a bad buying experience in the past year,more of those aged 50 to 64 (72%) and more still of those younger than age 50 (80%) saythey were displeased about a purchase or service during this same period.

· Older consumers are also more likely than younger consumers to say they have never had any

kind of dissatisfying consumer experience. One in three persons aged 65 and older (31%),compared with one in five aged 50 to 64 (19%), say they have never felt they were takenadvantage of or misled when purchasing a product or service.

· In contrast, consumers aged 50 and older are more likely than those under age 50 to say they

have had problems related to home repair in the past year (30% vs. 23%). Experience With Major Fraud

Considering all of the consumer experiences they have ever had, nearly one in six (17%)included in the study feel they have been the victim of a major consumer fraud or swindle. Aswith the majority of more ordinary consumer complaints, people under age 65 are generally morelikely than older people to report having been a victim of a major consumer fraud (19% vs. 8%).

· People aged 50 to 64 are the most likely to feel they have been a fraud victim. Specifically, 23percent of consumers in this age group, compared with 18 percent of those under age 50 andeight percent age 65 and older, say they feel that they have been a victim of a major fraud orswindle.

· A smaller proportion of people aged 65 and older, compared with those under age 65, haveever cashed a check at a check-cashing outlet, pawned a personal item, or rented furniture oran appliance.

These are among the findings of the new AARP survey about the experiences andattitudes of American consumers. This telephone survey of adults aged 18 or older wasconducted on behalf of AARP by Princeton Survey Research Associates (PSRA). The research isthe most recent update of similar AARP studies completed in 1990 and 1993. A nationallyrepresentative sample of 1,504 adults aged 18 and older was interviewed by telephone during theperiod November 18 through December 22, 1998. Special sampling techniques were used toensure that a large number of the oldest consumers would be interviewed so that the experiencesof older and younger adults could be compared. Ultimately, interviews were completed withapproximately 573 adults aged 18 to 49, 387 aged 50 to 64, and 459 aged 65 and older.3 Forresults based on the total sample, one can say with 95 percent confidence that the errorattributable to sampling is plus or minus three percentage points. Results based on smallersubgroups are subject to a larger margin of sampling error. In addition to sampling error, thepractical difficulties of conducting telephone surveys can introduce error or bias into their results.

3 The sum of the number of interviews for the age subgroups does not equal the total number of interviews

due to respondents’ refusals to give their exact age. A detailed explanation of the sample and other surveymethodology information is provided in the Appendix of this report.

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DETAILED FINDINGS

INTRODUCTION AND BACKGROUND

AARP commissioned this survey in order to determine the experiences of consumers,older consumers4 in particular, in navigating the diverse and complex marketplace to which theyare exposed today. While this study probes some of the same topics as the 1993 AARP Survey ofOlder Consumer Behavior, many new areas are explored, including home repair fraud, privacy ofpersonal information, online purchasing, saving and investing and the use of check-cashingoutlets, pawn shops and credit counseling services.

This telephone survey of adults aged 18 or older was conducted on behalf of AARP byPrinceton Survey Research Associates (PSRA). A nationally representative sample of 1,504adults was interviewed by telephone during the period November 18 through December 22, 1998.Special sampling techniques were used to ensure that a large number of the oldest consumerswould be interviewed so that the experiences of older and younger adults could be compared.Ultimately, interviews were completed with approximately 573 adults aged 18 to 49, 387 aged 50to 64, and 459 aged 65 and older.5 For results based on the total sample, one can say with 95percent confidence that the error attributable to sampling is plus or minus three percentage points.Results based on smaller subgroups are subject to a larger margin of sampling error.6 In additionto sampling error, the practical difficulties of conducting telephone surveys can introduce error orbias into their results.

4 Unless otherwise specified, throughout this report “older consumers” refers to people aged 65 and older,

and “younger consumers” refers to people aged 18 to 64.

5 The sum of the number of interviews for the age subgroups does not equal the total number of interviewsdue to respondents’ refusals to give their exact age. A detailed explanation of the sample and other surveymethodology information is provided in the Appendix of this report.

6 Margin of sampling error for the main age subgroups used in this report are: age 65 and older is plus orminus 6 percentage points; age 50 to 64 is plus or minus 6 percentage points, and; age 18 to 49 is plus orminus 5 percentage points.

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CONSUMER VULNERABILITY

Consumers are vulnerable to unfair and deceptive business practices for a variety ofreasons that range from the way businesses conduct themselves to their own behaviors, attitudesand knowledge. As in the 1993 research, a vulnerability index was created for this survey,providing a summary of consumers’ strengths and needs in facing an often unfriendly marketplace.As in the past, this latest index counts the number of attitudes, behaviors or gaps in knowledgethat could make the consumer vulnerable. The sums of these individual sources of vulnerabilityare segmented into categories ranging from very low vulnerability to high vulnerability. The 1993AARP Survey of Older Consumer Behavior focused on direct marketing appeals, especiallytelemarketing. This study covers a broader range of issues, including consumer privacy and basicinvestment knowledge. Thus, this latest version of the vulnerability index differs somewhat fromthe 1993 version, in that new questions were added to the index and practically all the questionsrelated to direct marketing, which were key components of the 1993 index were deleted.

This study’s Consumer Vulnerability Index was calculated by counting the number of thespecific responses listed below and assigning one point to each:

• Does not know that the financial institution can take ownership of the home for non-paymentof the mortgage. (Question 2b)

• Does not know where to turn with a complaint about a product or service. (Question 4)• Believes it is not okay to hang up on a telemarketer. (Question 5)• Relies on advertising and promotional materials for product information. (Question 6a)• Does not think articles or books about a product or service are useful sources of information.

(Question 6b)• Does not think product ratings from consumer magazines are useful sources of information.

(Question 6c)• Does not think Better Business Bureaus or consumer protection agencies are useful sources

of information. (Question 6d)• Believes none or almost none of 15 businesses in Question 7a-o try to take advantage of

consumers.• Answered “don't know” about more than half of the businesses listed in Question 7a-o when

asked whether those businesses take advantage of consumers.• Completely trusts one or more of the six businesses mentioned in question 24a-f to keep

his/her personal information confidential.• Has cashed a check at a check-cashing outlet. (Question 28b)• Has pawned a personal item for cash or credit. (Question 28c)• Does not know that consumers have the right to see their credit report if it has been used to

deny them credit, insurance or housing. (Question 29)• Does not know that a no-load mutual fund involves fees even though there are no sales

charges. (Question 35)• Does not know that the FDIC will not cover losses in a mutual fund invested in at a bank.

(Question 36)• Does not know that diversifying investments reduces investment risk. (Question 37)• Does not know that full-service brokers and financial planners are compensated based on the

amount and type of investments they sell to clients. (Question 38).

The lowest possible score on the index is zero, indicating the respondent answers none ofthe questions in a manner that would denote vulnerability. Theoretically, the highest possiblescore is 29, meaning the respondent answers every single question to indicate vulnerability. Theactual range of scores was zero to 19.

As Figure 1 shows, only about one in nine consumers (13%) rate as very low in

vulnerability to unfair or deceptive business practices, meaning they score 0 to 2 on the index.About two in five rate low and nearly the same proportion rank medium. Eight percent are themost vulnerable, rating high by scoring 10 or higher on the index. 7

Three major demographic factors stand out when looking at vulnerable consumers: age,education and income. First, older consumers are more vulnerable. Specifically, 21 percent ofpeople aged 75 and older rate highly vulnerable on the index. By comparison, only half as manyconsumers aged 65 to 74 (11%) rate as high on the index and far fewer under age 65 (6%) rate asthis vulnerable. 8 Forty-six percent of the oldest consumers are in the category of mediumvulnerability, with 28 percent in the low category. Only five percent of consumers aged 75 andolder are not vulnerable on the scale. In addition, fewer consumers aged 65 to 74 (9%) are verylow in vulnerability, compared with consumers under age 65 (15%). Consumers in these two agegroups, however, are equally likely to rate low or medium on the vulnerability scale.(See Table 1.)

7 This study's Vulnerability Index was broken into the four categories in the same manner as the 1993

Vulnerability Index. But the differences between the components used to create the 1993 Vulnerability Indexand this study’s Vulnerability Index are sufficient to make direct comparisons between the proportions ofconsumers with specific ratings of vulnerability inappropriate. Nonetheless, general observations about thecharacteristics of vulnerable consumers are appropriate and such comparisons are included.

8 Throughout this report, differences are noted only if they meet the criterion of statistical significance at the95% level of confidence.

FIGURE 1: 1998 Consumer Vulnerability Index

13%

41%38%

8%

Very low (0-2) Low (3-5) Medium (6-9) High (10+)

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Table 1: Consumer Vulnerability Index by Important Demographics

Very low(0-2)

Low(3-5)

Medium(6-9)

High(10-19)

Total 13% 41% 38% 8%

Age/SexMale 18-49 14% 44% 36% 6%Male 50-64 18% 38% 39% 4%Male 65-74 9% 40% 40% 11%Male 75 and older 4% 32% 45% 19%

Female 18-49 16% 43% 37% 5%Female 50-64 14% 43% 33% 10%Female 65-74 6% 40% 43% 10%Female 75 and older 5% 25% 47% 23%

EducationLess than high school complete 10% 39% 38% 13%High School Complete and Technology 10% 38% 43% 9%Some college 16% 43% 35% 6%College graduate 19% 48% 28% 5%

IncomeUnder $20,000 7% 34% 45% 14%$20,000 - $39,999 15% 42% 36% 7%$40,000 - $59,999 9% 54% 36% 1%$60,000 and over 26% 46% 23% 5%

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Second, consumers with more formal education are less vulnerable. Among those whograduated from college, 67 percent are low or very low in vulnerability and only 5 percent arehighly vulnerable. In contrast, among those with less than a high school education, only 49percent rank low or very low in vulnerability and 13 percent are highly vulnerable. The surveyreflects the strong relationship between age and educational attainment. Specifically, people aged65 and older are more likely than those age 50 to 64 as well as those under age 50 to reporthaving less than a high school education (31%, 19% and 10%, respectively). Conversely, olderpeople are least likely to say they have attended college (32% aged 65 and older have somecollege vs. 42% of those aged 50 to 64 and 52% of those under 50). Still, even after controllingfor age, education remains a major factor in consumer vulnerability and creates a disadvantage formore older consumers than it does for younger consumers.

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Third, income is also a key determinant of vulnerability. Of those making less than$20,000 a year, 14 percent are highly vulnerable and 45 percent are somewhat vulnerable. Bycomparison, among those with household incomes of more than $60,000 a year, only five percentare highly vulnerable and 23 percent are somewhat vulnerable. (See Table 1.) Like education,income is strongly related to age. More people aged 65 and older report annual incomes of lessthan $20,000, compared with those under age 65 (26% vs. 16%). In contrast, almost one in fiveyounger people (19%), compared with fewer than one in 20 older people (4%), say they make$60,000 or more a year. But like education, income remains a key factor even when age is takeninto account, and it creates a disadvantage for more consumers over age 65 than it does foryounger consumers under the age of 65.

While the 1993 research showed a link between gender and consumer vulnerability, thisstudy indicates no such relationship when other demographic characteristics are taken intoaccount.

CONSUMER EXPERIENCES

Dissatisfaction With Services Or Products

Three-quarters of those in the study (74%) report that they had at least one bad experiencewhen buying a product or service in the year preceding the interview. However, older consumersare less likely than their younger counterparts to indicate that they have had any such badexperiences when buying a product or service. Even though six out of 10 older consumers saythey had a bad buying experience in the past year, more of those age 50 to 64 (72%) and morestill of those under age 50 (80%) say they had a bad experience when buying a product or serviceduring this time period.

Of the five specific types of problems included in the survey, the most common consumercomplaints during the year studied involve defective products (53%) or items or services thatwere not delivered when promised (33%). Relatively fewer note that they had at least oneexperience in which they were given false information about a product, were presented with afinal bill for repair work that turned out to be much higher than the written estimate, or werestuck with a product warranty or guarantee that the issuing company would not honor. (SeeTable 2.)

AArepproin

Table 2: Specific Types of Consumer Complaints

Percent Who ExperiencedIn the Past Year

TotalAge

18-49Age

50-64Age65+

% % % %Total of any bad buying experiences 74 80 72 60A product was defective or didnot work properly

53 59 51 34

A product or service was not received in thetime it was promised

33 36 34 21

Given false information about a product 29 34 26 20Given a written estimate for repair work, butfinal bill much higher than estimate

29 32 28 19

A product warranty or guarantee was nothonored by the company

17 17 20 12

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Only one of these measures of consumer complaints shows major change since the 1993RP Survey of Older Consumer Behavior. While the overall proportion of consumers whoort at least one bad buying experience is unchanged (75% in 1993 and 74% in 1998), theportion who say that they bought a defective product increased substantially from 42 percent

the 1993 study to the 53 percent in 1998. Otherwise, equal proportions of consumers over the

years had complaints about timely delivery of a product or service (31%), false information abouta product (27%), a misleading written estimate (25%) and a product warranty or guarantee(14%).

As Table 2 shows, for each specific type of consumer complaint asked about in the survey,people aged 65 and older report fewer instances of dissatisfaction than younger people do. Forexample, more than half (56%) of younger consumers say that in the past year they bought adefective product, while only a third (34%) of consumers aged 65 and older make this complaint.

The survey reveals that older consumers are also more likely than their youngercounterparts to say that they have never had any kind of dissatisfying consumer experience.Specifically, a third of those aged 65 and older (31%), compared with about one in five of thoseaged 50 to 64 (19%), say they have never felt taken advantage of or misled when purchasing aproduct or service. Furthermore, only 13 percent of those under age 50 report that they havenever had such an experience.

This finding is consistent with the 1993 AARP Survey of Older Consumer Behavior. Inthat study, 27 percent of people aged 65 and older, compared with 10 percent of those under age65, said they had never felt taken advantage of or misled when purchasing a product or service.

Discontentment With Home Repairs And Improvements

The National Association of Consumer Agency Administrators and the Consumer Federationof America report that nationally, in 1997, complaints about home improvement contractorsranked number two, second only to complaints regarding auto sales.9 This survey provides anestimate of the magnitude of the problem, taking into account those who have, and those whohave not, made formal complaints. About one in five consumers (21%) say they have had a badexperience related to home repairs at some point in time. That group makes up 26 percent of thesmaller segment of the population who report ever having a bad buying experience.

More consumers age 50 to 64 (26%), compared with those under age 50 or those aged 65and older (20% and 19%, respectively), say they have had problems related to home repair. Thisis not surprising since consumers age 50 to 64 are most likely to own their own homes. Evenwhen age is taken into account, homeownership and income, however, are also related to thelikelihood one has had a bad experience with home repair. More homeowners than people whorent or have some other living arrangement say they have had a bad experience as a result ofhiring a contractor to make repairs or improvements to their home (25% vs. 14%). In the sameway, people whose annual income is at least $60,000 are more likely to say they have had anunsatisfactory experience with a contractor. Practically one-third of consumers in this incomebracket (32%), compared with 18 percent who earn $20,000 to under $60,000 and 13 percentwho have annual incomes under $20,000, say they have had this type of bad experience.

9 Seventh Annual NACAA/CFA Consumer Complaints Survey Report. Washington, DC: NACAA/CFA,

November 24, 1998, p.1.

20

Many consumers (44%) who report such problems in the past year say they found outabout the contractor through a family member or friend. Far fewer say they relied on promotionalmaterials or advertisements (19%) or the yellow pages (14%) for a contractor. Almost none ofthose who had a bad experience related to home repairs say they found out about the person orcompany responsible for the unsatisfactory work through a salesperson who came to their homeor who called on the phone (6% and 3%, respectively).

Experiences with Major Frauds or Swindles

Considering all the consumer experiences they have ever had, about one in six (17%)included in the study feel they have been the victim of a major consumer fraud or swindlecompared with 14 percent of consumers in the 1993 study10 felt victimized to this extent. While itis impossible to determine the exact cause for this increase in perception about personalvictimization, it is reasonable to speculate that there is generally a heightened awareness amongthe public about their rights concerning scams, telemarketing fraud in particular, due to relativelyrecent legislation such as the Federal Trade Commission’s Telemarketing Sales Rule adopted in1995 and the subsequent increased media coverage of such fraudulent activities. People maysimply have a better understanding of what constitutes major fraud and are therefore able tocharacterize their own experiences more accurately. Substantially more consumers in this study,in comparison with the 1993 research, say that they have an excellent or good understanding ofconsumer rights and protections (60% vs. 49%). In any case, among those in this study who saythey have been fraud victims, 35 percent say the incident occurred in the year preceding theinterview, 31 percent say it happened two to three years prior to the interview and the remaining33 percent say it happened four or more years earlier.

As with the more ordinary consumer complaints described above, people under age 65 aregenerally more likely than older people to report being a victim of a major consumer fraud orswindle (19% vs. 8%). But it is people aged 50 to 64 who are most likely to feel they have hadsuch an experience. Specifically, 23 percent of consumers in this age group, compared with 18percent of those under age 50 and eight percent aged 65 and older, say they feel that they havebeen a victim of a major fraud or swindle. In addition, a detailed analysis shows that age is theonly demographic characteristic strongly related to one’s perception that he or she has beenvictimized in this way.

It was noted in the report of the 1993 AARP Survey of Older Consumer Behavior, inwhich a similar difference between younger and older consumers was documented, that moreyounger people reported being a victim of a major fraud even though older people had beenconsumers longer and, presumably, have been exposed to more situations in which they mighthave been victimized. But perhaps the disparity between younger and older consumersconcerning major fraud victimization is not so much related to the number of times one has beenin a position to be seriously taken advantage of, but rather how engaged one is in the process ofbeing a consumer at a given point in time. Findings in this study suggest that people under age65, in comparison to older people, tend to be more actively engaged in many aspects of

10 The difference is not statistically significant at the 95% level.

21

consumerism and are also more discerning consumers. Specifically, younger people generally usemore sources of information to help them make buying decisions, are more aware of consumerprotections and, perhaps as a result of these two factors, are more dissatisfied with their buyingexperiences and more likely to complain about their dissatisfaction or feel they have beendefrauded.

During the interview, victims briefly described the nature of the fraud they experienced.Though they recounted a myriad of situations, about one in six victims (17%) mention incidentsrelated to automobile purchases or repairs and about one in 10 say they were grossly overchargedfor a product or service (9%), or misled by false advertisement (8%). Fewer describe situationsrelated to any of the following: credit card scams (6%), home contractors and vacation scams,(5%, each), mail order or Internet scams (4%), bogus extended warranties (3%), insurance,telephone scams and bad food products (2% each), computer purchases, or charitable donationsscams (1% each).

Responses to Experiences with Major Fraud and Faulty Home Repairs

Fully eight in 10 people who felt they were subject to a major fraud or swindle soughtrestitution or took some other action. The survey suggests that just as many older victims asvictims under age 65 take action in response to these serious offenses.11 Fewer people who had abad experience related to home repairs—though still a majority—say they sought redress.Specifically, 52 percent describe some action they took in response to problems with a contractorhired to make repairs or improvements to their home. Still, 38 percent say they did nothing.Older and younger consumers are equally likely to say they took some action in response to faultyhome repairs or improvements (53% of those under age 65 and 59% of those aged 65 and older).

Among consumers who feel they have been a victim of a major fraud, 28 percentcomplained to the salesperson, manager or company that sold the product or service and 18percent initiated legal action. About one in 10 say they stopped buying from the company, sevenpercent complained to the Better Business Bureau, and five percent asked for a refund orreplacement. Fewer than two percent mentioned any other specific responses, includingcomplaining to a state Attorney General office or a federal agency such as the Federal TradeCommission.

Consumers who had a bad experience with a person or company hired to do home repairsor improvements employed similar strategies, although they are much less likely than those whowere defrauded to say they took legal action in order to rectify the situation (6%). The mostcommon response was to complain to the person or company that did the work (22%). Peoplewho were taken advantage of by contractors hired to work on their homes also stopped

11 Sixty-eight percent of older victims and 75 percent of victims under age 65 report taking action in response to

their victimization. However, only those respondents who indicated that they were victims of a major fraud orswindle and had not had a bad experience with home repair were asked if they took action in response to beingdefrauded. Thus, the total number of interviews was reduced to 128 among those aged 18 to 64 and only 26among those aged 65 and older, for whom results may not be reliably projectable.

22

patronizing the company (9%), asked for a refund or replacement (5%), complained to the BetterBusiness Bureau (4%), or took some other action (6%).

A majority of those who feel they were victims of a major fraud or were taken advantage ofby a contractor say they were very (27%) or somewhat (29%) satisfied with the outcome of theirefforts to be compensated for losses or inconveniences resulting from these experiences. Still,more than one in three say they were not too (13%) or not at all (22%) satisfied with the way thesituation turned out after they took some action.12

Efforts to Resolve Other Bad Buying Experiences

Six in 10 consumers (60%) say they took at least one action as a result of their most recentbad experience purchasing a product or service. However, those under age 65 are more likelythan older consumers (66% vs. 46%) to report a specific action that was taken in response tothese situations. Rather than describe a course of action, many people aged 65 and older say theydo not know what their specific response was to this most recent bad buying experience (20% vs.10% of those under 65).

Altogether, three in 10 dissatisfied consumers report that they complained to the salesperson,manager or company that sold the product or service, and 12 percent say that they asked for areplacement or refund. A third (32%) of dissatisfied consumers under age 65, compared with aquarter (23%) of their older counterparts, complained to a company representative in response totheir most recent bad buying experience. In comparison, it is only the oldest consumers (thoseaged 75+) who are less likely than consumers in any other age group to say they asked for arefund or replacement as a way to resolve the situation. Only one in 20 consumers aged 75 andolder say that they asked for a refund, compared with 14 percent of those aged 65 to 74, and 13percent of those under age 65.

In their efforts to get satisfaction, a few consumers took other measures such as initiatinglegal action (7%) or complaining to the Better Business Bureau (4%) or Consumer ProtectionAgency (1%). Others took matters into their own hands and stopped buying from the company(4%), hired someone else to do the job (1%), refused payment (1%), or wrote letters of complaint(1%).

Regardless of which specific means they chose, the majority of consumers who took someaction in response to their most recent bad buying experience report that they were very (36%) orsomewhat (31%) satisfied with the outcome. Still, 29 percent say they were at least somewhatdissatisfied with the results, including 17 percent who say they were not at all satisfied.

12 The 1993 Older Consumer Survey did not include questions specifically about bad experiences with

contractors hired to do home repairs or improvements, so this question about satisfaction was asked only ofthose who identified themselves as victims of a major fraud or swindle, as there were no respondents askedabout faulty home repairs. When restricted to victims of a major fraud, levels of satisfaction with the outcomeof actions taken to resolve the fraud were much lower. Half were not too (12%) or not at all (38%) satisfiedwith how things turned out. Thirty-one percent were very satisfied and another 13 percent were somewhatsatisfied.

23

Actions Taken Over Time

Practically all consumers (94%) report that they tried at least one of the nine specific actionsincluded in the survey at some point in their lives. As many as eight in 10 say they havecomplained directly to a company or a salesperson (85%), stopped buying from a company(81%), or asked for a refund or replacement (80%), and almost as many told friends and othersnot to buy from the company again (76%). Far fewer stopped payment or refused to pay (33%),or sought assistance from the Better Business Bureau (34%), the state Attorney General office(19%), or an arbitrator (12%). Only one in 20 consumers say they have ever complained to afederal agency like the Federal Trade Commission. As Figure 2 shows, fewer older people thanyounger people have taken each of the specific actions, except for complaining to a state orfederal agency or seeking arbitration.

FIGURE2: ACTIONS EVER TAKEN AS RESULT OFBAD BUYING EXPERIENCE

5

12

18

36

33

80

85

84

91

5

12

22

32

42

76

81

84

84

6

10

17

20

29

57

62

69

65

0 10 20 30 40 50 60 70 80 90 100

Complained to a federalagency

Sought arbitration

Complained to State AttorneyGeneral

Stopped payment or refusedto pay

Complained to BetterBusiness Bureau

Told friends not to buy fromcompany

Asked for a refund orreplacement

Didn't buy from companyagain

Complained to sales person

Percent Who Took Action by Age18-49 50-64 65+

24

On average, consumers have taken four of these specific actions as a result of a badexperience in buying a product or service. However, the older the consumers are, the more likelythey are to report having taken fewer than the average number of actions. Specifically, 57 percentof consumers aged 75 and older have taken three or fewer actions as a result of a bad buyingexperience, including 11 percent who have not taken any actions. By comparison, fewer than halfof consumers aged 65 to 74 (45%), and even fewer (26%) of those under age 65, have taken this

limited number of actions. In addition, only two percent of those in these age groups have nottaken any of the actions included in the survey. In contrast, 26 percent of consumers under age65 and 20 percent aged 65 to 74 have used six or more of these actions in response to a situation.Only 12 percent of consumers aged 75 and older have used this many.

College education is related to the number of actions that consumers have ever taken as aresult of a bad buying experience, even when age is taken into account. 13 Over a third (34%) ofconsumers who have not attended college, compared with about a quarter (25%) of those with atleast some college education, have taken three or fewer of the actions asked about in the survey.Conversely, more consumers who have attended college, compared with those who have not,have taken six or more of these actions as a result of a bad buying experience (28% vs. 19%).

13 As noted earlier in this report, people aged 65 and older are less likely than younger people to have attended

college.

25

CONSUMERS IN THE EXPANDING MARKETPLACE

Potentially Risky Borrowing and Buying

Certain business transactions are more unfriendly than others because of the increasedpotential for exposure to high fees and/or interest rates, or unfair business practices. The surveyasked about six types of transactions that, depending on the financial situation of the consumerand the terms and conditions of the contract involved, can expose a consumer to potential risk orhigh fees. It reveals that the majority of consumers have not engaged in transactions that exposethem to potential risk, such as those involving check-cashing outlets, pawnbrokers or rent-to-ownstores. Still, while the proportion of consumers who have engaged in such transactions isrelatively small, it represents millions of consumers who have engaged in these activities whichexpose them to potential risk or high fees.

Thirty-one percent say they have taken out a home improvement or home equity loan froma bank or other institution. Somewhat fewer consumers say they have borrowed money from afinancial institution to be used for home repairs or cashed a check at a check cashing outlet.Fewer than one in five consumers report ever engaging in any of the other transactions askedabout in the survey. (See Table 3.)

Table 3: Consumer Involvement in Transactions thatExpose Them to Potentially High Costs

Percent Who Say Yes

TotalAge

18-49Age

50-64Age65+

% % % %Have you ever . . .Taken out a home improvement or equity loanfrom a bank or other institution

31 26 50 29

Taken out other type of loan from a financialinstitution to pay for home repairs

22 22 30 15

Cashed a check at a check-cashing outlet 21 26 19 10Leased a car or other vehicle instead of buying 17 16 21 12Pawned a personal item for cash or credit 17 22 13 9Rented furniture or an appliance 15 19 12 7

26

Younger consumers are more likely to engage in each of these activities, except for takingout a home equity loan. More Americans aged 50 to 64 (50%) say they have done this than thoseunder age 50 (26%) or over age 64 (29%). But, as Table 3 shows, fewer people aged 65 andolder have ever cashed a check at a check-cashing outlet, pawned a personal item, or rentedfurniture or an appliance—transactions that are most likely to expose consumers to potential riskor high fees. Nevertheless, the actual numbers represented by these percentages are substantial.

But not all consumers choose these options over others. Certain segments of thepopulation are more likely to use these businesses depending on where they live or because theyhave limited financial resources. For example, 32 percent of those with annual incomes under$20,000, compared with 20 percent who have higher incomes, have used a check-cashing outlet.People with low incomes are also more likely to have pawned a personal item for cash or credit(25% with incomes under $20,000 vs. 16% of those with incomes of $20,000 and over). Inaddition, 27 percent of urban residents have cashed a check at a check-cashing outlet. Only 19percent of those living in suburban or rural areas have ever done this. Difference by communitytype (urban, suburban or rural) persists even when income is taken into account.

Renting furniture or appliances, and using a check-cashing outlet or pawn shop appearrelated to race or ethnicity, but this relationship diminishes when income and community type aretaken into consideration.

The Virtual Marketplace

Since 1994, surveys have shown an increase in the percentage of Internet users in the U.S.who are at least 50 years old.14 Altogether 40 percent of those included in the study say they goonline to access the World Wide Web or to send and receive e-mail. The balance say they do notgo on line. Fully half of those under age 50 (51%) go online, as do a third (34%) of those aged50 to 64. In contrast, only nine percent of those aged 65 or older ever use this relatively newtechnology.

While there are many uses for the Internet, the U.S. Federal Trade Commission notes thatthe Net has “arrived” as a medium for commerce—a medium that is particularly difficult to policefor fraudulent business practices. People who go online are often subjected to large amounts ofunsolicited cyber-advertising and many unwittingly find themselves viewing web sites in whichthey have no interest. Among Internet users included in the study, 62 percent say they havereceived unwanted e-mail trying to sell something (commonly referred to as “spam”) or trying toget them to visit a particular web site. Thirty-seven percent have not had this experience. Usersaged 50 or older are no more likely than their younger counterparts to report this nuisance.

By comparison, purchases via the Internet are limited. Only a third (34%) of those whogo online, or 14 percent of all consumers included in the survey, say they have ever purchased aproduct or service through the Internet, World Wide Web or other online service. The likelihoodthat one shops online does not vary by age.

Dealing With Telemarketers

Practically all consumers (93%) think it is okay to hang up on telephone sales people whocontinue trying to sell even after consumers say they are not interested. Only six percent do notshare this attitude. Older and younger people are equally likely to have the dominant point ofview. And, people’s attitudes about this practice have not changed. In the 1993 AARP Survey of

14 "The Internet News Audience Goes Ordinary", Pew Research Center, January 1999. Also “Guess Who’s Going

Online,” Amy Harmon, The New York Times, March 26, 1998

27

Older Consumer Behavior, 91 percent of consumers said it was okay to hang up on insistenttelemarketers and only seven percent said it was not.15

15 One of the main findings of the 1993 AARP Survey of Older Consumer Behavior was that consumers were

bombarded with all forms of direct personal marketing, especially telemarketing. This finding coupled withgovernment estimates that consumers lost, at that point in time, about $40 billion in telemarketing fraud eachyear, led to AARP commissioning a study among telemarketing fraud victims. (“A telephone survey among745 telemarketing fraud victims conducted by Princeton Survey Research Associates on behalf of AARPduring April and May of 1995.”) The fraud victims’ study revealed that one of the distinguishingcharacteristics of those most vulnerable to this type of deception was their inability to hang up ontelemarketers. Since even most fraud victims said it is okay to hang up on people who call trying to sell things(though many of them couldn’t actually do it), the attitude that it is not okay to hang up is an importantmeasure of consumers’ ability to handle this frequent, and potentially risky, interaction.

28

29

FINANCIAL SECURITY

The reality is that some businesses providing services and products to financiallyvulnerable consumers such as those with limited incomes or high amounts of personal debt,charge extraordinarily high fees for these services and often engage in unfair or deceptivepractices as well. While many older people live on limited incomes, the survey reveals that it isyounger people who tend to report having high amounts of debt in excess of $2,000. In eithercase, establishing the greatest degree of financial stability possible with the means available tothem is an effective way for people to avoid many consumer pitfalls.

A Financial Base

Having a checking or savings account with a traditional financial institution such as acommercial bank, credit union, or savings and loan means that people are less vulnerable to theoftentimes costly business practices of alternatives such as check-cashing outlets. Accounts withinstitutions also enable consumers to take advantage of convenient options such as direct deposit,which typically means they can draw on deposits in a shorter period of time and avoid carryinglarge amounts of cash.

A large majority of consumers (89%) have a savings or checking account with a financialinstitution. Only 11 percent do not have any type of account. However, more older people thanyounger people report that they do not have any such accounts (16% vs. 10%), which impliesthey are more susceptible to the potentially risky situations described above.

Some consumers take advantage of the opportunity to have funds deposited directly into theirsavings or checking account, but far from a majority. Specifically, 34 percent say they receivedirect deposited funds from an employer. In addition, a fifth (20%) say that they receive fundsfrom a government agency using direct deposit. While age is not related to use of direct depositas a way to receive funds from an employer, older people are far more likely than younger peopleto receive government funds this way (51% vs. 14%).

Covering Routine Bills and Emergency Expenses

Most Americans say they have enough money to cover their monthly bills (69%) and haveenough insurance on their homes in case of a disaster (63%). But the majority indicate that theydo not have enough money put aside for retirement, emergency expenses, or major home repairs.(See Table 4.)

As Table 4 illustrates, younger people feel less equipped to handle each type of expenseincluded in the survey. For expenses such as retirement, it is logical that younger people wouldlag behind their elders. People aged 50 to 64 are less likely than those under age 50 to say theydon’t have enough money set aside for this expense (55% of those aged 50 to 64 vs. 70% ofthose under age 50). Other surveys have shown that people in the 50 to 64 age group haveturned their attention to their looming retirement and have focused their savings on that goal.16

Table 4: Money for Routine Bills and Emergency Expenses

Percent Who Say Don’t Have Enough or None at All

Total Age18-49

Age50-64

Age 65+

% % % %Do you have enough . . .Money set aside for retirement/to live on in retirement

59 70 55 36

Money set aside for emergency expenses 55 62 54 41Money set aside to pay for major home repairssuch as replacing the roof

53 62 49 35

Insurance on your home to protect against lossin case of fire or other disaster

27 32 19 17

Income to pay monthly bills such as electricity,telephone and grocery bills

24 26 24 17

Not surprisingly, people with annual incomes of $60,000 or more are least likely to feel thatthey are unprepared for retirement and unexpected expenses. In contrast, those with incomes ofless than $20,000 per year are more likely than all others to say they do not have enough or haveno money at all for each of the five types of expenses asked about in the survey. For example, 46percent of those making less than $20,000 a year say they do not have any money set aside forretirement. Far fewer people with incomes of $20,000 up to $60,000 (23%) or those with incomeof $60,000 or more (7%) say they are in this position. As another example, 36 percent ofconsumers in the lowest income bracket, compared with 19 percent of those in the moderate

income bracket and only four percent of the most affluent consumers, say they do not have anymoney set aside for emergency expenses.

16 See “Public Perceptions of Social Security: Putting the Budget Surplus on the Table,” a national telephonesurvey of 1,000 adults aged 18 and older. This survey was conducted during February of 1999 byPrinceton Survey Research Associates on behalf of Americans Discuss Social Security.

30

Long-term Savings and Investments

While most Americans say they have enough money to cover their current expenses, farfewer have the long-term or growth investments that can help provide a safety net in emergenciesand ensure a comfortable lifestyle in the future.

A pension or retirement plan is the most common type of investment for long-termsavings. Fully half of consumers (51%) say they have an account specifically for this purpose orparticipate in a pension plan. Far fewer report having stocks in individual companies (29%), amutual fund account (29%), or bonds (23%).

than ahave ninformyounga diffewiselyaccouhelp th(53%)have a

FIGURE 3: PERSONAL SAVINGS AND INVESTMENTS

48%

13%

39%

53%

16%

30%

41%

22%

37%

0%

10%

20%

30%

40%

50%

60%

Savings and investments otherthan retirement account or plan

Only retirement account or plan No investments/undesignated

Per

cent

age

18-49 50-64 65+

31

Altogether, 47 percent of all consumers own some type of long-term investment other retirement account, but 16 percent only have a retirement savings account and 37 percentone of the four types of investments included in the survey or refuse to give thisation (6%). As Figure 3 shows, people aged 65 and older are somewhat more likely thaner people to limit their long-term investing to retirement accounts. This may simply reflectrence in the life cycle. That is, older people are more likely to be retired already and are keeping their money in the most conservative types of long-term savings such as retirement

nts. Still, four in 10 older people (41%) have at least one other type of investment that mayem stretch their savings further into the future. In addition, more people aged 50 to 64

and those under age 50 (48%), who are presumably farther away from retirement, say theyt least one other type of investment in addition to a retirement account.

32

Income, education, and age are the factors that influence whether consumers have anylong-term savings or investments. The lower a consumer’s annual income, the more likely it isthat he or she has no long-term savings. Specifically, more than half of consumers whose annualincome is under $20,000 (53%) and more than three in 10 whose income is $20,000 to under$40,000 (32%) have no such savings. In comparison, about two in 10 of those with a yearlyincome of $40,000 to under $60,000 (22%), and only about half as many consumers with incomesof $60,000 or more (12%) do not have any long-term savings. Similarly, 39 percent of those witha high school diploma or less education do not have any of the four types of savings included inthe survey, compared with 27 percent of those who have at least some college education and 16percent of college graduates. Again, the confluence of income and education generally rendersolder consumers, who overall have lower incomes and less formal education, more vulnerable.

The prevalence of savings increases with age. The youngest consumers aged 18 to 49 aremore likely than all other age groups not to have any long-term savings or investments. Morethan one in three (35%) of those under age 50, compared with about one in four aged 50 to 64(26%) and those aged 65 and older (24%) disclose that they have no such savings. The differenceby age notwithstanding, one in four older consumers have no financial safety net, which meansthey are more vulnerable to financial setbacks.

Consumer Debt

Most Americans say they have enough money to cover their monthly bills (69%)and haveenough insurance on their homes to protect against loss in case of fire or other disaster (63%).But a majority state that they do not have enough money set aside for retirement (59%), foremergency expenses (55%), or to repair their homes (53%). Half of consumers say that they havemore or about as much personal debt as they can handle. Only 16 percent say that they do nothave personal debt at all.

Older people are much more likely than younger people to volunteer that they are debtfree (42% vs. 10%). Conversely, more younger people than older people, report that they are inover their heads (16% vs. 9%). Not including mortgages, younger people also carry higheramounts of debt, even when the number of people who will not disclose the amount of debt thatthey have or volunteer that they do not have any debt is taken into account. Specifically, 55percent of the younger group report that they owe at least $2,000, including 29 percent who owe$5,000 or more. In comparison, only 36 percent of older consumers owe as much as $2,000.

Factors other than age, however, predict whether consumers have personal debt of at least$2,000, not including mortgages. Income, education and gender surface as importantcharacteristics. More affluent people have larger amounts of debt. For example, 26 percent ofthose whose annual income is $60,000 or more owe at least $5,000. Only 14 percent of thosewhose income is under $20,000 a year owe this much. However, this amount constitutes at leastone-quarter of these consumers’ annual earnings, but a far smaller percentage of the affluentconsumers’ yearly income. Similarly, those who attended college are more likely than those whodid not (34% vs. 21%) to have at least $2,000 in personal debt. In addition, more women thanmen (31% vs. 22%) report that they have at least $2,000 in personal debt, excluding mortgagepayments.

33

Ten percent of all consumers have used a credit counseling service. Only six percent ofconsumers over the age of 65 have used such a service. Differences by age for use of this servicemay be explained by changes in Americans’ lifestyles and some of the consumer options that havedeveloped with these changes. There was less need for credit counseling 20 years ago beforecredit card debt soared nationwide. In fact, consumers who admit they have more personal debtthan they can handle are twice as likely as all others to say they have used a counseling service(18% vs. 8%).

34

CONSUMER KNOWLEDGE

Basic knowledge of the legal protections available for consumers may be a key indicatorof a person's ability to be a savvy consumer in today's environment. Americans perceivethemselves to be knowledgeable about rights and the laws that protect consumers. In reality,however, their understanding about certain rights and obligations is lacking.

Fully six in 10 consumers included in the study rate their understanding of consumer rightsas excellent (11%) or good (49%). Fewer say they have fair (33%) or poor (6%) understandingof such issues. As noted earlier in this report, this self-rating of consumer knowledge hasincreased substantially since the 1993 study, when about a half of consumers rated theirknowledge excellent (8%) or good (41%).

Almost two-thirds of college graduates (64%) think they have at least a goodunderstanding of consumer rights. By contrast, half (49%) of those who did not complete highschool rate their knowledge as fair or poor. However, despite the fact that older people are lesslikely to have graduated from high school, older and younger consumers are equally likely toreport an excellent or a good understanding of consumer rights.

Actual Knowledge of Consumer Rights and Regulations

Credit Reports

Obtaining a copy of one’s credit report is an important step available to consumers tomake certain they are treated fairly in the marketplace. Federal law guarantees everyone the rightto see their credit report if it has been used in a decision that denied the consumer credit,insurance or housing. Most Americans under age 65 (91%) are aware of this legal right. (SeeFigure 4.) Six percent mistakenly say that the right does not exist. Three percent say they do notknow. By contrast, among adults aged 65 and older, a smaller percentage aged 65 to 74 (83%)and even fewer aged 75 and older (75%) are aware that they can see their credit report. Thebalance of those aged 65 to 74 either mistakenly believe they do not have the right to see theircredit report (9%) or say they do not know (8%). Slightly more consumers aged 75 and olderanswer incorrectly (12%) or say they do not know (13%).

Ampropay

Th

thatheAnthefee

do banreqknoreq

loaamdo

FIGURE 4: KNOWLEDGE OF RIGHT TO SEE PERSONAL CREDIT REPORT

92%

8%

90%

10%

78%

22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Have the right Don't have the right/Don't know

Per

cent

age

18-49 50-64 65+

35

Homeowner and other types of loans are among the biggest financial decisions that faceerican consumers. But some, particularly older consumers, are not aware of the legaltections that are available for them or of the consequences of failing to make timely loanments.

e Federal Truth in Lending Act

The Federal "Truth in Lending Act" provides a range of consumer protections by requiringt banks and other financial institutions disclose a variety of important facts about a loan before consumer is committed to the debt. For example, the bank must inform the consumer of thenual Percentage Rate (APR) to be charged on the loan. The financial institution must also tell customer the total amount of all finance charges on the loan and the total amount of any others that the customer must pay.

Many consumers are aware of these protections, but more than a third of older consumersnot know of them. For example, 78 percent of all adults know that they must be told by thek of the loan's APR, with seven percent thinking (incorrectly) that the disclosure is notuired and 15 percent saying they do not know. But among older consumers, only 66 percentw of the requirement, seven percent are incorrect in thinking that the disclosure is notuired, and 27 percent do not know of the requirement.

A similar pattern exists for knowledge of the two other key pieces of information aboutns. Three-quarters (75%) of consumers know that the bank must tell them the total dollarount of finance charges for the loan, while 10 percent say that is not required. Fifteen percentnot know. Again, knowledge is lower among the older consumers: 64 percent know of the

36

law's requirement, while 11 percent say the disclosure is not required. One-quarter (25%) do notknow.

Other fees that a financial institution can charge on a loan can add up to substantial sumsand those fees must be disclosed. Seventy-six percent of consumers know this, but one in nine(11%) incorrectly say there is not such a legal requirement. And 13 percent say that they do notknow. Again, among older consumers, about two-thirds (65%) know of the law, 11 percent saythere is no such requirement, and 23 percent say they do not know.

Home Equity and Improvement Loans

But what happens when the homeowner cannot make the payments on a loan secured byhis or her home? Consumer knowledge of the substantial consequences of failing to makepayments on a home improvement loan or home equity loan can be as important as understandingthe terms of the loan. This latest survey finds consumers are now more aware of theseconsequences than they were in 1993.

Three-quarters of all consumers (74%) know that they can be sued in court by the bankfor the value of any missed payments on a home loan. Fifteen percent say the bank cannot sueand 11 percent are not sure. This level of knowledge is higher than that in the 1993 survey, when65 percent correctly said that the bank can sue in court.

Four out of five consumers (81%) correctly answer that a bank can take ownership of thehome if the consumer fails to make loan payments. Twelve percent say the bank cannot take thehome and seven percent are not sure. In the 1993 survey, 76 percent of consumers correctlyidentified this consequence.

Consumers are substantially less aware that the loan payments can be deducted from thehomeowner's paycheck (usually after a court hearing and a court order). Forty-three percent saysuch automatic deductions are possible, while just about as many (42%) disagree. Fifteen percentare not sure. Even this lower level of knowledge shows an increase from 1993: only 33 percentgave the correct answer on this matter in the earlier study.

As Table 5 shows, older consumers have a substantial level of knowledge about theimpact of missing loan payments, although they are somewhat less knowledgeable than youngerconsumers.

Table 5: Knowledge About Home Improvement and Equity Loans

Percent Who Know This Can Happen

TotalAge

18-49Age

50-64Age 65+

% % % %If a homeowner takes out a home equity orimprovement loan and then does not makepayments as required, then . . .The homeowner can be sued in court for thevalue of the missed payments

74 77 78 63

The bank or finance company can take overownership of the home itself

81 84 80 75

The payments can be deducted automaticallyfrom the homeowners paycheck

43 46 41 38

37

Knowledge About Investment Issues

With the stock market soaring over the past few years, financial investments haveattracted more attention and participation from many Americans. But financial investments arecomplicated, contain more possible pitfalls, and are harder to understand than a simple savingsaccount. This survey asked a series of basic questions about financial investment issues to seehow knowledgeable Americans are about these matters:

• Whether the Federal Deposit Insurance Corporation (FDIC) covers mutual funds sold bybanks;

• Whether no-load mutual funds involve sales charges or other fees;• Whether diversification increases or decreases the risk of the investments;• Whether full-service brokers and financial planners are compensated on the quality of their

advice or on the amount and type of investments they sell to clients.

From these four questions, a Investment Knowledge Index was created, measuring howmuch accurate information the respondents have by adding up the number of correct answers andsubtracting the number of incorrect answers. The values of the index range from –4 (meaning allfour questions were answered incorrectly) to +4 (meaning all four questions were answeredcorrectly). The index was then grouped into those most knowledgeable (those who scored +3 or+4); knowledgeable (those who scored +1or +2); somewhat knowledgeable (those who scoredfrom -2 to 0); and little or no knowledge (those getting a -3 or -4). This index is not meant to,nor does it, provide a definitive portrait of the public’s investment knowledge. It does, however,provide a summary of the public’s knowledge about some basic and important informationpertaining to investing.

The unfortunate news is that not many consumers are knowledgeable about investments.Only 11 percent rank as very knowledgeable, having answered all four questions correctly, andabout one in four (25%) rank as knowledgeable, having correctly answered three out of the four.The majority, however, have only some knowledge (46%) or little or no knowledge (18%) aboutbasic investment issues.

As Figure 5 illustrates, older consumers overall, are less knowledgeable about investmentissues than their younger counterparts.

acrossor othincorrinvolvtypes not haterms.

substareducesay thdiversOnly ano dif

Little or no knowledge

Some knowledge

Knowledgeable

Very knowledgeable

14%16%

26%

46%45%

50%

28%26%

18%

12%13%

6%

0% 10% 20% 30% 40% 50% 60%

Little or no knowledge

Some knowledge

Knowledgeable

Very knowledgeable

FIGURE 5: INVESTMENT KNOWLEDGE INDEX BY AGE

18-49 50-64 65+

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On one specific issue—no-load mutual funds—the lack of information was widespread all age groups. When asked if no-load mutual funds are funds that include no sales chargeser fees, only 37 percent of Americans, younger or older, know that this description isect. Among older consumers, 24 percent mistakenly answer that no-load mutual fundse no fees of any kind and 45 percent say they do not know what the terms are for theseof funds. Among younger consumers, a quarter (25%) incorrectly say that no-load funds dove sales fees or other charges and a third (34%) volunteer that they are not familiar with the

On the basic issue of diversifying one's investments, the lack of knowledge wasntial. Among older consumers, only 26 percent correctly say diversifying one’s investmentss financial risk. Twenty-one percent say it would increase the risk and nearly half (49%)

at they do not know. Among younger consumers nearly four in 10 (38%) correctly sayification reduces investment risk, but nearly one-third (32%) say the risk would increase.bout a quarter (26%) say that they do not know. In both groups, the remainder say it made

ference or did not answer.

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More consumers are able to give correct answers about the basis on which moststockbrokers and financial planners are paid and FDIC insurance coverage of mutual funds.Specifically, 63 percent correctly state that most full-service brokers and financial planners arepaid mainly based on the amount and types of investments they sell to their clients. Just 16percent mistakenly answer that these professionals are paid based on the quality of the advice theyoffer and how much their clients earn, and about as many (19%) say they do not know whatdetermines their compensation. Similarly, over half of consumers (52%) indicate that they knowthe FDIC does not cover losses if one loses money in a mutual fund offered by a bank. About asmany either think such losses are covered by the FDIC (23%) or do not know the terms for FDICcoverage for such funds (24%).

A higher percentage of older people than younger people admit they do not know theanswers to these two questions. Thirty-five percent of those aged 65 and older, compared with21 percent of younger consumers, say they do not know if the FDIC covers one’s losses for amutual fund invested in at a bank. In the same way, more than one in three older consumers(35%) say they do not know the basis on which most brokers and financial planners are paid.Only half as many younger consumers (15%) say they do not know this.

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SOURCES OF INFORMATION AND ASSISTANCE

American consumers can turn to many sources of product information for help in makinginformed decisions when purchasing an expensive product or service and for help in resolvingcomplaints about unsatisfactory purchases. Most people have found one or more of these sourcesuseful at some point, though older and younger consumers tend to take advantage of differentkinds of sources.

Sources of Information on Products and Services

In preparation for making a purchase, consumers say the most useful sources of productinformation are the sources that are the most likely to be unbiased—a Better Business Bureau,ratings from a consumer magazine and other articles and books about a product. For example,when thinking about making an expensive purchase, six in 10 say they have found the BetterBusiness Bureau a useful source, including 37 percent who say it has been very useful. Only onein nine (11%) say it has not been useful, although 27 percent volunteer that they have never usedit. Three-quarters (75%) say articles or books about products and services have helped themmake purchasing decisions, and two-thirds (68%) have found product ratings in consumermagazines useful in this regard. In addition, at least a third say ratings (35%) and writtenmaterials (33%) are very useful.

Fewer consumers have found advertising and promotional materials, presumably createdby the manufacturers or retailers, to be very useful sources to help make purchasing decisions.(See Table 6.) Still, about half (47%) say the ads and other material have been of some use, and30 percent say they have not been of any help.

Table 6: Sources of Information for Products and Services

Percent Who Say Source Very UsefulTotal Age 18-49 Age 50-64 Age 65+

% % % %Have you personally found this source tobe very useful, somewhat useful, or notuseful?Better Business Bureau orConsumer Protection Agency

37 36 36 43

Product ratings from consumer magazines 35 37 40 26Articles or books about a product or service 33 36 33 21Advertising and promotional materials 22 24 21 18

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More older people than younger cite the Better Business Bureau as a very usefulinformation source (44% vs. 36%). By comparison, older consumers are less likely than theiryounger counterparts to have found either of the written sources asked about in the survey veryuseful. Only 21 percent of older people, compared with 36 percent of younger people, say booksor articles about products have helped them make a purchasing decision. And fewer older peoplehave found product ratings very useful (26% vs. 38%). Perhaps the good news is that olderpeople don’t think highly of promotional materials. A quarter of people aged 65 and older (24%),compared with a fifth of those younger (17%), say such materials have not helped them at allwhen deciding to buy an expensive product or service.

Altogether, 34 percent of consumers say they have not found any of the four sources ofinformation inquired about very useful in making a major purchasing decision. Among consumersunder age 65, those who never attended college are more likely than those who did (38% vs.28%) to say they have not found any of the sources very useful. However, among older people,consumers of all educational levels are equally likely to say none of the sources have been veryuseful to them.

Sources of Financial Advice

The survey also explored where people turn for help with decisions about savings andinvestments. A majority of Americans (68%) say they have gotten information about moneymatters from family members or friends. Somewhat fewer—but still as many as a third—havegotten financial advice from a bank representative, magazines or books about money matters, alawyer, an insurance agent or accountant, and television programs, radio shows or newspapercolumns that cover financial trends and give advice. Stockbrokers and financial planners are lesscommon sources of financial information, and very few consumers say they have used the Internetto get such information. (See Table 7.)

Table 7: Sources of Financial Advice

Percent Who Say YesTotal Age 18-49 Age 50-64 Age 65+

% % % %Have you ever gotten advice from . . .Family members or friends 68 78 60 46Someone at your bank 41 39 44 41Magazines or books about money matters 34 37 38 22A lawyer 33 30 33 37An insurance agent 33 35 33 27An accountant 33 31 41 27TV programs, radio shows or newspapercolumns that cover financial trends andgive advice

32 35 35 17

A stockbroker 27 23 36 29A financial planner 27 26 31 22The Internet 11 13 9 5

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People aged 65 and older are the most likely to say they have sought financial advice froma lawyer, though it is Americans aged 50 to 64 who are most likely to get information aboutsavings and investments from other professionals. For example, four in 10 of those aged 50 to 64compared with three in 10 older or younger adults say they have gotten financial advice from anaccountant. As another example, 36 percent of Americans in this middle age group have talkedabout investments with a stockbroker, compared with fewer than three in 10 older or youngerconsumers. Insurance agents are the only professionals from whom more younger people thanolder people have gotten financial advice (34% vs. 27%).

Consumers under age 65, on the other hand, are more likely to rely on published andbroadcast media sources for information about savings and investments. For example, consumersunder age 65 are twice as likely as older consumers to say they have gotten financial informationfrom television programs, radio shows or newspaper columns that cover financial trends and giveadvice. And, not surprisingly, twice as many younger people say they have used the Internet as asource for financial information (12% vs. 5%).

Among older people, the extent to which men and women use some sources of financialinformation differs. More men than women say they have gotten advice about savings from mediasources such as specialty TV programs, radio shows and newspaper columns (24% vs. 12%), orfrom magazines or books (29% vs. 16%). Older men are also more likely than women their ageto report getting financial advice from a lawyer (42% vs. 34%) or an insurance agent (34% vs.21%).

Sources of Help for Resolving a Complaint

Just over half of consumers (52%) say they would go straight to the source when theyhave a complaint about a product or service—the sales person or store that sold the product orservice. A third (34%) say they would report the company to the Better Business Bureau, whilefewer than one in five (17%) say they would contact the product manufacturer or companyheadquarters directly. Notably fewer say they would involve a state agency such as the stateAttorney General office (7%) or call a professional such as a lawyer (7%) to help with theproblem. Very few indicate that they would contact their consumer affairs office (3%). Notably,eight percent say they do not know what they would do if they had a complaint.

While complaining to the sales person or store is still the most common methodconsumers cite in seeking to resolve complaints, consumers are less likely now than in the past tochoose this route (52% vs. 63%). And they are slightly more likely to contact the manufacturerdirectly than in 1993. (See Table 8.)

Table 8: Sources of Help for Resolving a Complaint Over The Years1998 1993

% %Where would you turn for help?Sales person or store that sold product or service 52 63Better Business Bureau 34 28Product manufacturer or company corporate headquarters 17 8State Attorney General office 7 16Lawyer, or other professional advisor 7 7Consumer affairs 3 NAMisc. other sources 2 12

Don't Know/Refused/None mentioned 8 7Note: Answer coding varied slightly year to year.

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As Table 9 shows, older consumers are more likely than consumers under age 65 tocontact a government agency such as the state Attorney General (11% vs. 5%). In contrast,younger people are more likely to contact non-profit organizations such as the Better BusinessBureau (35% vs. 29% of older consumers). Older and younger people mention other sources ofhelp to the same extent. They are also equally likely to say they would not know what to do (8%of younger consumers and 9% of older consumers).

Table 9: Sources of Help for Resolving a Complaint By Groups

Percent Who Name SourceTotal Age 18-49 Age 50-64 Age 65+

% % % %Where would you turn for help?Sales person or store that sold product/service 52 54 52 51Better Business Bureau 34 35 36 29Product manufacturer/company headquarters 17 17 20 14State Attorney General office 7 4 10 10Lawyer or other professional advisor 7 5 9 11Consumer Affairs 3 3 2 3

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CONSUMER TRUST IN SERVICE AND RETAIL INDUSTRIES

Perceptions About Unfair and Deceptive Business Practices

Consumers give widely varying ratings when asked how often different types of businessestry to take advantage of consumers. The survey included questions on 15 types of businesses,asking consumers to rate each on whether those businesses are more likely than not to mislead ortake advantage of consumers. For each category, consumers were asked if “almost all,” “most,”“about half,” “some,” or “almost none” of those types of businesses try to take advantage ofconsumers.

Consumers are most suspicious of used car dealers and companies that sell products overthe phone. Three-quarters say at least half of the used car and telemarketing sales businesses(75% and 72%, respectively) try to mislead or take advantage of consumers. Indeed, more than athird of consumers believe that almost all car dealers (36%) and telemarketers (34%) try to takeadvantage of consumers. Close to six in 10 think this about the majority of telephone companiesand contractors that do home repairs. (See Table 10.)

Table 10: Consumers’ Perceptions About the Honesty of Specific Industries

Percent Who Think Half or More Mislead Consumers

TotalAge

18-49Age

50-64Age65+

% % % %Used car dealers 75 80 71 65Companies that sell products over the phone 72 73 73 68Contractors that do home repairs 60 62 58 53Telephone companies 59 59 71 50Finance Companies 56 59 59 49Stores that rent furniture & appliances 56 58 57 46Pawn shops 54 61 49 37Check-cashing outlets 49 53 48 42Funeral Homes 39 36 43 48Banks, credit unions, & savings and loans 37 37 42 35Companies that sell products over the Internet 37 44 31 21Stock brokers or brokerage firms 37 38 33 36Cemeteries 33 32 36 34Drug stores 30 28 39 27Places that sell hearing aids 29 25 32 38

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As Table 10 shows, the majority of consumers also view finance companies, stores thatrent furniture and appliances, and pawn shops as the types of industries in which at least half ofthe businesses take advantage of consumers. Fewer think that one out of two check-cashingoutlets, funeral homes, banks and other financial institutions, companies on the Internet,

46

brokerage firms, cemeteries, drug stores and places that sell hearing aids generally try to takeadvantage of people.

A number of the industries asked about in this study were also evaluated in the 1993AARP Survey of Older Consumer Behavior, including drug stores, banks and other financialinstitutions, finance companies, places that sell hearing aids, telemarketing companies, contractorswho do home repairs, and telephone companies. Of the seven industries that are repeated in thissurvey, only home repair contractors and telephone companies receive notably differentevaluations from consumers. Specifically, 22 percent of consumers in this study think that almostall contractors who do home repairs try to mislead or take advantage of consumers. Only 14percent of consumers in 1993 felt deceptive business practices were this pervasive amongcontractors. Similarly, 25 percent of consumers in this study perceive almost all telephonecompanies as businesses that mislead or take advantage of consumers, compared with 19 percentin the 1993 study.

As the list above indicates, many of the specific industries asked about serve special orrelatively small segments of the public and, not surprisingly, many consumers say they are notfamiliar enough with such industries to rank them. Companies that sell over the Internet andthose that sell hearing aids are least familiar to the public. For each one, 38 percent of consumerssay they don’t know enough to rate these businesses. About a quarter of the public feels asuninformed about pawnshops (25%), cemeteries (23%), check-cashing outlets (23%), brokeragefirms (22%), and funeral homes (19%).

As a result of this, the rankings of industries serving relatively small segments of the publicshift when only the responses of people who felt they could evaluate them are considered. And,for each one, the wariness among consumers increases, in some instances dramatically. Forexample, 71 percent of those who are familiar enough with pawnshops to rate them think half ormore of such stores try to mislead or take advantage of consumers. Without this recalculation,this percentage decreases to 54 percent. Similarly, 64 percent of those who can rate check-cashing outlets and 60 percent who can do so for companies that sell over the Internet are equallyskeptical about the business practices of these industries. As the accompanying table shows, thesepercentages are also much smaller when based on all respondents. Places that sell hearing aids arealso scrutinized more by those who have experience with them (47%). The relative rankings ofmore familiar industries, including used car dealers, telemarketers, telephone companies,contractors, finance companies and drug stores, stay the same, however.

Older people are less likely to give a rating for the overall honesty of different types ofcompanies. For 10 of the 15 industries they were asked to assess, more older people thanyounger people do not give an estimate of the proportion that try to take advantage of or misleadconsumers.

A similar pattern was documented in the report on the 1993 study. Older people may beless inclined to generalize about deceptive practices within an industry and are more comfortablebasing such evaluations on individual establishments. As a result, older consumers are less waryabout, and therefore more vulnerable to, deceptive business practices than younger consumers.Moreover, even when the proportion who say “don’t know” is taken into account, older people

47

still give more lenient evaluations of more than half of the industries including telephonecompanies, stores that rent furniture, check-cashing outlets, and used car dealers.

Consumer Privacy

In recent years there has been much public debate about issues related to consumerprivacy such as the confidentiality of people’s personal credit histories and medical records.Some consumers are concerned specifically with the exchange of their personal informationamong companies with which they do business. While consumers reveal a healthy amount ofskepticism for many industries when asked about them in general terms, they have a great deal oftrust in the businesses that they personally patronize in terms of personal privacy. Their trust,however, does not appear to be blind. Consumers are generally more likely to trust that abusiness will keep their personal information confidential if it is a business where they havepersonal interaction with salespersons or representatives.

When asked if they completely trust, mostly trust or do not trust six specific businesses tokeep their personal information confidential, eight in 10 consumers say they trust their primarybank to keep their personal information confidential, including 38 percent who say theycompletely trust their main financial institution. Somewhat fewer, but still a majority, at leastmostly trust their insurance companies (69%), supermarkets (69%), or credit card companies(52%) in this regard. Forty-four percent of consumers think they can completely or mostly trustthe catalog companies they use to keep personal information confidential, but only half as many(21%) feel the same about companies that provide information or services on the Internet.

Older people are more likely than younger people to say they completely trust each type ofcompany included in the survey to keep their personal information confidential, except companiesthat provide information or services over the Internet. (See Table 11.) However, almost threetimes as many older consumers as younger ones say they do not do business with such companies(54% vs. 19%). Still, this disparity in trust levels between the two age groups persists even whenconsumers’ use of each type of business is taken into account. For example, twice as many olderconsumers who have credit cards as younger credit card holders say they completely trust thecompany that issues their cards.

Table 11: Whom Do Consumers Trust To Keep Their Personal Information Private?

Percent Who Trust Completely

(based on those who use each type of business)

TotalAge

18-49Age

50-64Age 65+

% % % %Their primary bank or financial institution 41 37 38 54The insurance companies they use 30 28 25 39The supermarkets/grocery stores they buyfrom

22 21 18 29

The companies that issue their credit cards 17 14 15 32The catalog companies they order from 14 11 12 25Companies that provide information orserviceson the Internet

7 7 8 9

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Laws About Consumer Privacy

The confidence in their personal business affiliations notwithstanding, most Americans donot think the federal and state laws that regulate what information private businesses orcompanies can collect about consumers are strong enough to protect their personal privacy.Specifically, 73 percent say the laws are not strong enough to protect their privacy and only 19percent express the opposite view. In addition, eight percent admit they do not know. Youngerconsumers are more likely than their older counterparts to think the laws are inadequate (76% vs.63%), and more people aged 65 and older say they do not know if the laws are sufficient (13% vs.6% under age 65).

Not only do consumers think that their privacy is not sufficiently protected by existing laws,but they also believe, accurately, that businesses can get a great deal of personal informationabout them without their permission. The survey shows that majorities are aware that privatebusinesses can find out whether or not people pay their bills on time (80%), whether they shop bymail, telephone or over the Internet (70%), their Social Security number (69%), the types ofproducts or services they buy (67%), their medical history (53%), and how much money is in theirbank account (51%). For each of these specific types of personal information, fewer consumersaged 75 and older, compared with consumers under age 75, say that businesses can obtain suchinformation without their permission. Even among this older age group, the proportion of thoseaware that such information is obtainable never falls below half.

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CONCLUSION AND IMPLICATIONS

Consumers need help navigating today’s diverse and complex marketplace. Not only isthere a broad spectrum of industries, but the marketplace increasingly demands that consumerstake more control over their own interests, such as retirement savings and other investments,which used to be commonly handled by professionals. Also more business is conducted viarelatively new technology which is unfamiliar to many consumers. In addition, new laws andregulations are adopted with increasing frequency in an effort to keep up with the spread ofvarious deceptive and fraudulent business practices, adding a new and complicated dimension towhat it takes to be an informed consumer. The consumer vulnerability index, created to gaugehow well consumers manage in the marketplace, shows that while a small segment of the public isnot very vulnerable, the majority have attitudes or behaviors that suggest they are at adisadvantage in this current market and are susceptible to unfair or deceptive business practices.Eight percent of consumers are especially vulnerable.

Older consumers are disproportionately represented among the very vulnerable who aremost susceptible to unfair or deceptive business practices. Twenty-one percent of those aged 75and older rate highly vulnerable on the consumer vulnerability index, and only five percent ofconsumers in this age group rate very low in vulnerability. In addition, fewer consumers aged 65to 74 (9%) rate very low in this index compared with consumers under age 65 (15%). Olderconsumers’ susceptibility to unfair or deceptive business practices is compounded by the fact thatthey tend to have lower annual incomes and lower levels of educational attainment, the other twomajor factors in predicting a high level of consumer vulnerability.

Consumers would benefit from a “map of the marketplace,” in the form of informationabout what rules and regulations apply in each of the major sectors of industry, and guidance todetermine whether a business operates in a way that best serves the consumers’ interests. Thedesign of this map should take into account the special needs of consumers who are aged 65 andolder, have low annual incomes and low levels of education, as these groups consistently rank asthe most vulnerable of consumers. In addition, consumers should be able to count on businessesto do their part. Businesses have an obligation to use plain language, and define terms and offersin words that are clear. Businesses must be prepared to handle and resolve consumer complaintsexpeditiously and to the satisfaction of the consumer.

50

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APPENDIX

52

SURVEY METHODOLOGY

The survey findings are based on telephone interviews with a nationally representativesample of 1,504 adults, aged 18 and older living in telephone households in the continental UnitedStates. The interviews were conducted from November 18 through December 22, 1998.

Sample Design

We designed four samples for this survey to produce a representative sample of telephonehouseholds in the continental United States. Moreover, the sample was designed to over-represent older Americans. The first sample was used to interview respondents 18 to 39 yearsold. The second sample was used to interview respondents 40 years or older. The third samplewas used to interview respondents 50 years and older. The fourth sample was drawn from a listedsample of persons aged 75 years and older. The first three samples are random digit samples oftelephone numbers selected from telephone exchanges in the continental United States and weredrawn by Survey Sampling, Inc. of Westport, Connecticut using PSRA's specifications.

The random digit aspect of the sample is used to avoid “listing” bias. According to themost recent estimates from the Bureau of the Census, there are approximately 99 millionhouseholds in the continental United States, and roughly 94% of them contain one or moretelephones. Telephone directories only list about 73% of such “telephone households” andnumerous studies have shown that households with unlisted telephone numbers are different inseveral important ways from listed households. Moreover, nearly 15% of listed telephonenumbers are “discontinued” due to household mobility and directory publishing lag, and it isreasonable to assume that a roughly equal number are working residential numbers too new to befound in published directories.

In order to avoid these various sources of bias, a random digit procedure designed toprovide representation of both listed and unlisted (including not-yet-listed) numbers is used. Thedesign of the sample ensures this representation by random generation of the last two digits oftelephone numbers selected on the basis of their area code, telephone exchange (the first threedigits of a seven digit telephone number), and bank number (the fourth and fifth digits).

The telephone exchanges were selected with probabilities proportional to their size. Thefirst eight digits of the sampled telephone numbers (area code, telephone exchange, bank number)were selected proportionally by county and by telephone exchange within county. That is, thenumber of telephone numbers randomly sampled from within a given county is proportional tothat county's share of telephone numbers in the U.S. Only working banks of telephone numbersare selected. A working bank is defined as 100 contiguous telephone numbers containing three ormore residential listings.

© 1999, AARP

53

In order to contact the oldest respondents, some of the sample came from a list oftelephone numbers with a higher probability of contacting someone 75 years old or older. Of the302 interviews with people 75 years or older, 63% were from the listed sample. In both therandom digit sample and the listed sample, we asked respondents if their telephone number waslisted or not. The proportion of respondents 75 years or older who report having a listedtelephone number is nearly identical in the random digit sample and in the listed sample. Noweighting adjustment was needed to correct for over-representing seniors with listed telephonenumbers.

The sample was released for interviewing in replicates, which are random subsamples ofthe larger sample. Using replicates to control the release of sample to the field ensures that thecomplete call procedures are followed for the entire sample. The use of replicates also ensuresthat the regional distribution of numbers called is appropriate. Again, this works to increase therepresentativeness of the final sample.

At least 10 attempts were made to complete an interview at every sampled telephonenumber. The calls were staggered over times of day and days of the week to maximize thechances of making a contact with a potential respondent. All interview breakoffs and refusalswere re-contacted at least once in order to attempt to convert them to completed interviews. Ineach contacted household, interviewers asked to speak with the “youngest male 18 or older whois at home.” If there is no eligible man at home, interviewers asked to speak with “the oldestwoman 18 or older who lives in the household.” This systematic respondent selection techniquehas been shown empirically to produce samples that closely mirror the population in terms of ageand gender.

Weighting

Non-response in telephone interview surveys produces some known biases in survey-derived estimates because participation tends to vary for different subgroups of the population,and these subgroups are likely to vary also on questions of substantive interest. For example, menare more difficult than women to reach at home by telephone, and people with relatively loweducational attainment are less likely than others to agree to participate in telephone surveys.These data are also weighted to adjust for the over-sample of older people relative to youngerrespondents. In order to compensate for these known biases, the sample data are weighted in theanalysis.

The demographic weighting parameters are derived from a special analysis of the mostrecently available Census Bureau Annual Demographic File (from the March 1996 CurrentPopulation Survey). This analysis produced population parameters for the demographiccharacteristics of households with adults 18 or older, which are then compared with the samplecharacteristics to construct sample weights. The results have been weighted to adjust forvariations in the sample relating to region of residence, sex, age, race, and education. Theanalysis only included households in the continental United States where there is a telephone inthe household, for comparability to the sample design used for this survey.

54

The weights are derived using an iterative technique that simultaneously balances thedistributions of all weighting parameters. After an optimum sample balancing solution is reached,the weights were constrained to fall within the range of 1 to 10.83. This constraint is useful toensure that individual respondents do not exert an inordinate effect on the survey's overall results.

Statistical Tests

PSRA calculated the effects of the sample weights on the statistical efficiency of thesample design, so that an adjustment can be incorporated into tests of statistical significance whenusing these data. This so-called “design effect” or “deff” represents the loss in statisticalefficiency that results from systematically undersampling (through sample design and non-response) parts of the population of interest.

The square root of the design effect should be multiplied by the standard error of astatistic in computing tests of statistical significance. Thus the formula for computing the 95%confidence interval around a percentage is:

n

pp

unweighted

)1(effect design96.1

−××

The square root of the design effect for this sample is 1.21. Using this formula, wecalculate the 95 percent confidence interval for results expressed as percentages in this study asplus or minus 3 percentage points for results near 50% based on the total sample.

The formula for computing the 95 percent confidence interval around a difference betweenpercentages is:

2

22

1

11

unweighted

)1(2 groupfor deff

unweighted

)1( 1 groupfor deff96.1

n

pp

n

pp −×+

−××

The above formulas may be used to calculate the confidence interval around anypercentage or any difference between percentages for the results reported.

Data Collection

Due to technical difficulties in the computer-assisted telephone interviewing (CATI)program, it was necessary to call back respondents to collect answers to questions 24a through24f. A total of 94.6 percent of the respondents were contacted and re-interviewed on thosequestions. There does not appear to be an effect of asking these questions separately from thepreceding questions. However, all surveys are subject to potential sources of imprecision and biaswhich may be associated with the question wording and/or ordering, the context of the questions,and the response rate, for example, which could lead to somewhat different results from thepresent findings.

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Response Rates

The PSRA response rate equals the product of the contact, cooperation, and completionrates. The PSRA response rate does not correspond to one published in the AAPOR guideStandard Definitions: Final Dispositions of Case Codes and Outcome Rates for RDD TelephoneSurveys and In-Person Household Surveys. However, all of the elements of non-responseincluded in the AAPOR response rate calculations are included in the PSRA rate. The design forthis survey illustrates why the PSRA response rate calculations differ from those published byAAPOR. All households were screened for respondents in a certain age range and only a portionof contacted households included an eligible respondent. All of the AAPOR rates assume that allrefusals and non-contacts are eligible for the survey. This is obviously not the case in this survey.The PSRA response rate calculation assumes that the percent eligible among cases whoseeligibility status is known would also apply to the cases whose eligibility is unknown, includingthose refusing the interview before eligibility is determined. Moreover, presented below are theelements of non-response necessary to calculate an AAPOR response rate.

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Following is the full disposition of the first sample representing respondents 18-39 years

old.

Non-sample numbers:Telephone number not in service 511Business, fax, or modem number 276

787Potential non-sample numbers:

Telephone rings, but not answered 218Busy signal 20

238Households with unknown eligibility:

Call back another time 52Answering machine answers 104Language barrier 73

229

Households that refused interview: 322

Households with no eligible member:No person 18–39 years old 669

669Households with eligible member:

Incomplete interviews 8Complete interviews 300

308

Total telephone numbers 2,553

Of the residential numbers in the sample 73.6 percent were contacted by an interviewerand 75.2 percent agreed to cooperate with the screener questions. Thirty-two percent were foundeligible for the interview. Furthermore, 97.4 percent of eligible respondents completed theinterview. Therefore, the final response rate for this sample is 53.9 percent.

57

Following is the full disposition of the second sample representing respondents 40 years

or older.

Non-sample numbers:Telephone number not in service 1,046Business, fax, or modem number 490

1,536Potential non-sample numbers:

Telephone rings, but not answered 241Busy signal 32

273Households with unknown eligibility:

Call back another time 92Answering machine answers 295Language barrier 130

517

Households that refused interview: 1,098

Households with no eligible member:No person 40 years or older 979

979Households with eligible member:

Incomplete interviews 12Complete interviews 766

778

Total telephone numbers 5,181

Of the residential numbers in the sample 78.3 percent were contacted by an interviewerand 61.5 percent agreed to cooperate with the screener questions. Forty-four percent were foundeligible for the interview. Furthermore, 98.5 percent of eligible respondents completed theinterview. Therefore, the final response rate for this sample is 47.4 percent.

58

Following is the full disposition of the third sample representing respondents 50 years or

older.

Non-sample numbers:Telephone number not in service 512Business, fax, or modem number 193

705Potential non-sample numbers:

Telephone rings, but not answered 168Busy signal 26

194Households with unknown eligibility:

Call back another time 89Answering machine answers 167Language barrier 62

318

Households that refused interview: 376

Households with no eligible member:No person 50 years or older 874

874Households with eligible member:

Incomplete interviews 6Complete interviews 247

253

Total telephone numbers 2,720

Of the residential numbers in the sample 74.6 percent were contacted by an interviewerand 75 percent agreed to cooperate with the screener questions. Twenty-two percent were foundeligible for the interview. Furthermore, 97.6 percent of eligible respondents completed theinterview. Therefore, the final response rate for this sample is 54.6 percent.

59

Following is the full disposition of the fourth sample, which is a listed sample targeting

people 75 years or older.

Non-sample numbers:Telephone number not is service 298Business, fax, or modem number 147

445Potential non-sample numbers:

Telephone rings, but not answered 151Busy signal 23

174Households with unknown eligibility:

Call back another time 47Answering machine answers 134Language barrier 64

245Households that refused interview: 207

Households with no eligible member:No person 75 years or older 234

234Households with eligible member:

Incomplete interviews 4Complete interviews 191

195

Total telephone numbers 1,500

Of the residential numbers in the sample 60.3 percent were contacted by an interviewerand 67.5 percent agreed to cooperate with the screener questions. Forty-six percent were foundeligible for the interview. Furthermore, 97.9 percent of eligible respondents completed theinterview. Therefore, the final response rate for this sample is 39.8 percent.

60

The final response rate for the whole survey is a weighted response rate of the four sampleresponse rates. The final weighted response rate is 48.9 percent, as calculated below.

489.0

504,1

)398.0(191)546.0(247)474.0(766)539.0(300

44332211

=

+++=

+++=

n

RRnRRnRRnRRnRRtotal

Note on Methodology

The following note on methodology is suggested for all documents released to the publicconcerning this study:

For this survey, Princeton Survey Research Associates conducted telephone interviews with anationally representative sample of 1,504 adults during the period November 18 throughDecember 22, 1998. Special sampling techniques were used to ensure that a large number of theoldest consumers (age 65 and older) would be interviewed so that the experiences of older andyounger adults could be compared. The margin of sampling error is plus or minus threepercentage points for results based on the total sample. Results based on smaller subgroups aresubject to a larger margin of sampling error. In addition to sampling error, the practicaldifficulties of conducting telephone surveys can introduce error or bias into their results.

61

1998 CONSUMER BEHAVIOR SURVEYPRINCETON SURVEY RESEARCH ASSOCIATES FOR

THE AMERICAN ASSOCIATION OF RETIRED PERSONS

TOPLINE

February 11, 1999

Job #98076Total: n=1,504 adults age 18 or older

Margin of error: plus or minus 3 percentage pointsTotal 18-49: n=573

Margin of error: plus or minus 5 percentage pointsTotal 50-64: n=387

Margin of error: plus or minus 6 percentageTotal 65+: n=459

Margin of error: plus or minus 6 percentage

Note: The sum of the number of interviews for the age subgroups does not equal the total number ofinterviews due to respondents’ refusals when asked to give their exact age.

Dates of interviewing: November 18-December 28, 1998

INTRODUCTION FOR SAMPLE 1: Hello, I am ______________ calling for Princeton Survey Researchof Princeton, New Jersey. We are conducting a national opinion survey about some important consumer issues.It’s important that we get opinions from all kinds of people, so first I’d like to ask a few questions about yourhousehold . . .S1. Do you, yourself, ever use a computer at home, at work, or at school?

S2. Does your household include anyone age 17 or younger?

S3. And is there anyone age 18 to 39?

May I please speak with the youngest MAN, age 18 to 39 years old, who is now at home? (IF NO MALE,ASK: May I please speak with the oldest woman, age 18 to 39 years old, who is now at home?) IFRESPONDENT DID NOT ANSWER THE PHONE, REPEAT INTRODUCTION: Hello, I am______________ calling for Princeton Survey Research of Princeton, New Jersey. We are conducting anational opinion survey about some important consumer issues.INTRODUCTION FOR SAMPLES 2, 3 & 4: Hello, I am ______________ calling for Princeton SurveyResearch of Princeton, New Jersey. We are conducting a national opinion survey about some importantconsumer issues. I’d like to ask a few questions of a male household member, age 40 (50, 60) or older. (IFNO MALE, ASK: May I please speak with a female household member, age 40 (50, 60) or older? (CALLBACK IF AGE-ELIGIBLE HOUSEHOLD MEMBER IS NOT HOME)

FOR ALL SAMPLES: IF NECESSARY, EMPHASIZE THAT YOU ARE NOT SELLINGANYTHING: We are only interested in your opinions. We will not try to sell you anything during this calland we will not call you back later in order to sell you something.

S4. Before we begin, I just want to confirm that you are (SAMPLE 1: under age 40/SAMPLE 2-4:40/50/60 years old or older.) Is this correct?

62

MAIN INTERVIEW:D1. RECORD RESPONDENT’S SEX:

Age Age AgeTotal 18-49 50-64 65+

47 50 48 42 Male 53 50 52 58 Female100 100 100 100

1. How would you rate your own understanding of your rights as a consumer and the laws that protectconsumers? Would you say your understanding of consumer rights is excellent, good, only fair, or poor?

Age Age Age 1993Total 18-49 50-64 65+ Total

11 10 11 12 Excellent 849 48 49 49 Good 4133 35 31 31 Only fair 42

6 6 7 6 Poor 71 1 2 2 Don’t know/Ref 2

100 100 100 100 100

These next questions are about specific rules for businesses and consumers. If you are not familiar withsomething I mention just respond as best you can.

2. Suppose a homeowner takes out a home improvement or a home equity loan and then does not make loanpayments as required. Which of the following, if any, can happen: (READ AND ROTATE)

Yes, canhappen

No, can’thappen

DK Ref

a. The homeowner can be sued in court forthe value of the missed paymentsTotal: 74 15 11 *17 =100Age 18-49: 77 14 9 * =100Age 50-64: 78 13 9 0 =100Age 65+: 63 17 19 1 =1001993 Total 65 13 22 0 =100

b. The bank or finance company can takeover ownership of the home itselfTotal: 81 12 7 * =100Age 18-49: 84 10 6 0 =100Age 50-64: 80 15 5 * =100Age 65+: 75 12 12 1 =1001993 Total 76 11 13 0 =100

c. The payments can be deductedautomatically from the homeowner’spaycheckTotal: 43 42 15 * =100Age 18-49: 46 42 12 * =100Age 50-64: 41 43 15 1 =100Age 65+: 38 40 21 1 =1001993 Total 33 42 25 0 =100

17 An asterisk indicates a value of less than 1%

63

64

3. The Federal “Truth in Lending Act” requires financial institutions to provide a consumer who applies for aloan with certain information. As far as you know, does this law require financial institutions to provideany of the following information, or not? (READ AND ROTATE)

Yes,required

No, notrequired

DK Ref

a. The loan’s A-P-R or Annual Percentage RateTotal: 78 7 15 * =100Age 18-49: 80 7 13 * =100Age 50-64: 85 6 8 1 =100Age 65+: 66 7 27 * =100

b. The total dollar amount of the finance chargefor the loanTotal: 75 10 15 * =100Age 18-49: 77 9 14 0 =100Age 50-64: 78 10 11 1 =100Age 65+: 64 11 25 * =100

c. The total dollar amount of any additional feesthe consumer must payTotal: 76 11 13 * =100Age 18-49: 77 12 11 0 =100Age 50-64: 82 7 10 1 =100Age 65+: 65 11 23 1 =100

The next few questions are about some experiences you personally might have as a consumer . . .

4. If you had a complaint about a product or service you bought, where would you turn for help in gettingyour complaint resolved? (DO NOT READ)

Age Age Age 1993Total 18-39 50-64 65+ Total

52 54 52 51 Sales person or store that sold product or service 6334 35 36 29 Better Business Bureau 2817 17 20 14 Product manufacturer or company corporate headquarters 87 4 10 10 State Attorney General office 167 5 9 11 Lawyer, or other professional advisor 73 3 2 3 Consumer affairs N/A2 2 1 4 Misc. other sources 128 8 7 9 Don’t know/Ref/No one mentioned 7

Total exceeds 100% due to multiple responses

65

5. If a telephone sales person does not stop trying to sell to you when you have already said you’re notinterested, do you think it is okay or not okay to hang up on them?

Age Age Age 1993Total 18-49 50-64 65+ Total

93 92 95 93 Okay to hang up 916 7 5 6 Not okay 71 1 0 1 Don’t know/Ref 2

100 100 100 100 100

6. Now I am going to read a list of sources of information people sometimes use when they are thinking aboutbuying something that costs a lot of money, like a major appliance or home repair services. For each one,tell me if this is a source you personally have found to be very useful, somewhat useful, or not useful. If Iask about a source you haven’t used, just tell me. (READ AND ROTATE)

Very Somewhat Not Never DK/Useful Useful Useful Used Ref.

a. Advertising and promotional materials

Total: 22 47 18 12 1 =100Age 18-49: 24 50 15 11 * =100Age 50-64: 21 46 22 10 1 =100

Age 65+: 18 37 24 17 4 =1001993 Total: 23 53 16 5 3 =100

b. Articles or books about a product or service

Total: 33 42 9 14 2 =100Age 18-49: 36 43 7 13 1 =100Age 50-64: 33 41 13 12 1 =100

Age 65+: 21 36 15 21 7 =100Total 1993: 27 44 14 11 4 =100

c. Product ratings from consumer magazines

Total: 35 33 11 19 2 =100Age 18-49: 37 34 9 19 1 =100Age 50-64: 40 31 12 16 1 =100

Age 65+: 26 32 17 19 6 =1001993 Total: 35 31 12 16 6 =100

d. Better Business Bureaus or Consumer Protection Agencies

Total: 37 23 11 27 2 =100Age 18-49: 36 22 11 29 2 =100Age 50-64: 36 27 13 23 1 =100

Age 65+: 43 20 10 24 3 =1001993 Total: 38 28 9 22 3 =100

66

7. Now I want you to think about how often different kinds of businesses try to MISLEAD or TAKE ADVANTAGE of consumers. Use your own experience AND what you know about the experiences of other people. For each of the following, tell me how many businesses like this you think try to take advantage of consumers—almost all of them, most, about half, some, or almost none? (READ AND ROTATE)

Almost Almostall About none It DK/(or all) Most half Some (or none) depends Ref. n

Items a-g based on form 1 respondentsa. Drug stores

Total: 8 8 14 29 34 1 6 =100 (757)Age 18-49: 8 5 15 31 35 0 6 =100 (287)Age 50-64: 10 13 16 25 29 1 6 =100 (187)Age 65+: 10 9 8 22 38 4 9 =100 (238)1993 Total: 6 3 16 30 35 2 8 =100

b. Banks, credit unions andsavings and loan institutions

Total: 15 10 12 29 26 1 7 =100 (757)Age 18-49: 16 10 11 33 27 * 3 =100 (287)Age 50-64: 14 12 16 26 24 0 8 =100 (187)Age 65+: 16 7 12 19 29 1 16 =100 (238)1993 Total: 10 5 20 29 28 1 7 =100

c. Contractors who do homerepairs

Total: 22 15 23 29 5 1 5 =100 (757)Age 18-49: 21 16 25 31 4 0 3 =100 (287)Age 50-64: 19 16 23 31 5 2 4 =100 (187)Age 65+: 28 11 14 26 6 4 11 =100 (238)1993 Total: 14 15 27 28 5 * 11 =100

d. Telephone companiesTotal: 25 18 16 27 10 1 3 =100 (757)Age 18-49: 24 18 17 30 8 2 1 =100 (287)Age 50-64: 28 25 18 20 7 0 2 =100 (187)Age 65+: 24 11 15 22 19 2 7 =100 (238)1993 Total: 19 12 16 26 15 * 12 =100

e. Finance companiesTotal: 22 17 17 25 8 1 10 =100 (757)Age 18-49: 21 17 21 28 8 1 4 =100 (287)Age 50-64: 28 18 12 23 8 0 11 =100 (187)Age 65+: 21 14 13 16 7 1 28 =100 (238)1993 Total: 27 15 13 19 9 1 16 =100

67

7. Continued…

Almost Almostall About none It DK/(or all) Most half Some (or none) depends Ref. n

f. Companies that sell theirproducts over the Internet

Total: 15 8 14 18 5 2 38 =100 (757)Age 18-49: 17 9 19 21 4 * 30 =100 (287)Age 50-64: 14 5 12 15 6 3 45 =100 (187)Age 65+: 10 7 5 7 9 3 59 =100 (238)

g. Places that sell hearing aidsTotal: 9 9 11 19 13 1 38 =100 (757)Age 18-49: 6 8 11 20 14 1 40 =100 (287)Age 50-64: 13 10 9 19 12 1 36 =100 (187)Age 65+: 14 10 14 17 8 2 35 =100 (238)1993 Total: 11 11 9 9 6 1 53 =100

Items h-o based on form 2 respondentsh. Companies that sell their

products by calling peopleon the phone

Total: 34 22 16 15 5 1 7 =100 (757)Age 18-49: 34 21 18 18 6 1 2 =100 (287)Age 50-64: 38 20 16 10 4 2 10 =100 (187)Age 65+: 33 23 12 10 6 1 15 =100 (238)1993 Total: 35 22 15 13 5 * 10 =100

i. Pawn shopsTotal: 27 17 10 13 7 1 25 =100 (757)Age 18-49: 27 21 13 17 7 1 14 =100 (287)Age 50-64: 36 10 3 11 8 1 31 =100 (187)Age 65+: 20 9 7 9 7 1 47 =100 (238)

j. Stores that rent furnitureand appliances

Total: 28 14 14 21 9 1 13 =100 (757)Age 18-49: 30 14 14 24 10 1 7 =100 (287)Age 50-64: 32 14 11 17 9 2 15 =100 (187)Age 65+: 17 12 17 17 9 1 27 =100 (238)

k. Funeral homesTotal: 17 10 12 26 14 2 19 =100 (757)Age 18-49: 16 10 10 29 13 2 20 =100 (287)Age 50-64: 20 11 12 21 16 1 19 =100 (187)Age 65+: 22 8 18 21 14 2 15 =100 (238)

68

7. Continued…

Almost Almostall About none It DK/(or all) Most half Some (or none) depends Ref. n

l. CemeteriesTotal: 15 8 10 23 19 2 23 =100 (757)Age 18-49: 13 8 11 24 18 2 24 =100 (287)Age 50-64: 19 6 11 27 19 2 16 =100 (187)Age 65+: 15 7 11 16 23 3 25 =100 (238)

m. USED car dealersTotal: 36 23 16 16 3 * 6 =100 (757)Age 18-49: 38 25 17 15 2 0 3 =100 (287)Age 50-64: 42 14 15 19 5 * 5 =100 (187)Age 65+: 26 23 16 16 2 2 15 =100 (238)

n. Check cashing outletsTotal: 28 11 10 16 11 1 23 =100 (757)Age 18-49: 30 11 12 21 10 1 15 =100 (287)Age 50-64: 32 11 5 11 10 1 30 =100 (187)Age 65+: 19 12 11 10 10 1 37 =100 (238)

o. Stock brokers or brokeragefirms

Total: 13 10 14 26 14 1 22 =100 (757)Age 18-49: 13 11 15 31 12 1 17 =100 (287)Age 50-64: 11 8 14 24 18 0 25 =100 (187)Age 65+: 13 9 14 14 12 1 37 =100 (238)

69

8. In the past year or so, have any of the following things happened to you when you were buying any kind of product or service? (READ AND ROTATE)

YesNo DK/Ref.a. A product was defective, or

did not work properly?Total: 53 46 1 =100Age 18-49: 59 40 1 =100Age 50-64: 51 49 * =100Age 65+: 34 63 3 =1001993 Total: 42 57 1 =100

b. A product warranty or guaranteewas not honored by the company?

Total: 17 82 1 =100Age 18-49: 17 82 1 =100Age 50-64: 20 79 1 =100Age 65+: 12 85 3 =1001993 Total: 14 84 2 =100

c. You were given false informationabout a product?

Total: 29 69 2 =100Age 18-49: 34 64 2 =100Age 50-64 26 73 1 =100Age 65+: 21 77 2 =1001993 Total: 27 71 2 =100

THERE IS NO ITEM d

e. A product or service you bought wasnot received in the time it was promised?

Total: 33 66 1 =100Age 18-49: 36 63 1 =100Age 50-64: 34 65 1 =100Age 65+: 21 77 2 =1001993 Total: 31 68 1 =100

f. You were given a written estimate forrepair work, but the final bill turned outto be much higher than the estimate?

Total: 29 70 1 =100Age 18-49: 32 67 1 =100Age 50-64 28 71 1 =100Age 65+: 19 80 1 =1001993 Total: 25 74 1 =100

70

9. In the past year or so, have you had any other kind of bad experience when buying a product orservice?

Age Age Age 1993Total 18-49 50-64 65+ Total

26 31 22 15 Yes 1773 68 77 84 No 82

1 1 1 1 Don’t know 1100 100 100 100 100

10. Have you EVER had a bad experience when buying a product or service?

Age Age AgeTotal 18-49 50-64 65+

8 7 9 9 Yes17 12 18 30 No74 80 72 60 Had bad buying experience in the past year

1 1 1 1 Don’t know100 100 100 100

11. Have you EVER had a bad experience as a result of hiring a person or company to make repairs orimprovements to your home?

Based on those who have ever had a bad buying experience

Age Age AgeTotal 18-49 50-64 65+

26 23 32 27 Yes73 76 68 73 No

1 1 * * Don’t know100 100 100 100(1198) (497) (317) (318)

12. How did you find out about the person or company that did this work on your home? Was it from . . .

Based on those who have ever had a bad experience with home repairAge Age Age

Total 18-49 50-64 65+44 44 43 38 A friend or family member,19 21 16 22 Promotional materials or an advertisement,14 12 16 12 The yellow pages in the phone book3 2 6 1 A salesperson who called you on the phone, OR6 6 5 9 A salesperson who came to your door?13 15 12 15 Some other way (VOL.)1 0 2 3 Don’t know/Refused

100 100 100 100(356) (129) (108) (63)

71

13. And what action, if any, did you take as a result of your MOST RECENT bad experience? (DO NOTREAD)

Based on those who have ever had a bad buying experience

Age Age Age 1993Total 18-49 50-64 65+ Total

28 25 31 37 Did nothing17

30 32 31 23 Complained to salesperson, manager, or 35owner of company that sold product or service

12 14 10 9 Asked for a refund or replacement13

7 7 7 4 Took legal action 4

4 4 7 2 Stopped buying from company 9

4 4 4 5 Complained to Better Business Bureau 31 1 2 0 Fired person/Hired someone else

01 1 1 * Complained to consumer protection agency 11 1 1 1 Refused payment

31 1 1 1 Wrote letters

02 2 2 2 Other

012 11 10 20 Don’t know/Refused

19(1198)(497) (317) (318)Total exceeds 100% due to multiple responses

14. How satisfied were you with how this experience turned out after you took some action—very satisfied,somewhat satisfied, not too satisfied, or not satisfied at all?

Based on those who took some action as a result of bad buying experience

Age Age Age 1993Total 18-49 50-64 65+ Total

36 36 38 34 Very satisfied 4131 34 23 28 Somewhat satisfied 2612 12 10 12 Not too satisfied 917 15 23 21 Not satisfied at all 21

4 3 6 5 Don’t know 3100 100 100 100 100(691) (321) (194) (143) (448)

72

15. Thinking about all the bad experiences you have EVER had as a consumer, was there ever a time you feltyou were the subject of a MAJOR consumer swindle or fraud?

Based on those who have ever had a bad buying experience

Age Age Age 1993Total 18-49 50-64 65+ Total

21 21 28 12 Yes 1777 78 69 84 No 81

1 1 2 4 Don’t know 21 * 1 * Refused 0

100 100 100 100 100(1198)(497) (317) (318) (743)

16. When did this happen? Was it . . . (READ)

Based on those who feel they were a subject of major fraud or swindle

Age Age AgeTotal 18-49 50-64 65+

35 40 25 22 During the past year,31 34 27 23 Two to three years ago,11 9 14 14 Four to five years ago, OR22 16 34 37 More than five years ago?1 1 0 4 Don’t know/Refused

100 100 100 100(250) (108) (86) (42)

73

17. Can you tell me BRIEFLY what kind of fraud it was and anything else you think is important about thatexperience? RECORD VERBATIM RESPONSE

Based on those who feel they were a subject of major fraud or swindle

Age Age AgeTotal 18-49 50-64 65+

17 18 12 22 Car related/Sold a lemon9 8 9 13 Overcharged8 9 5 7 False advertisement6 6 8 2 Credit card scam5 3 10 3 House contractor5 7 3 2 Vacation scam4 6 2 0 Mail order/Internet scam3 4 3 0 Extended warranty not honored2 2 3 3 Insurance related2 1 3 5 Telephone scam2 2 2 2 Sold bad food product1 2 0 2 Sold bad computer1 0 3 4 Charitable donations scam1 1 0 0 Purchased item from a company that went out of business3 4 1 10 Other

31 27 39 27 Don’t know/Refused(250) (108) (86) (42)Total exceeds 100% due to multiple responses

18. What action, if any, did you take as a result of this bad experience? (DO NOT READ)

Based on those who were a subject of major fraud but not a bad experience with home repair

Age Age Age 1993Total 18-49 50-64 65+ Total

21 18 28 32 Did nothing 2628 31 16 24 Complained to Salesperson, manager, or owner 21

of company that sold product or service7 8 3 20 Complained to Better Business Bureau 65 4 5 8 Asked for a refund or replacement/Returned for exchange 3

10 9 14 3 Stopped buying from company 1218 19 19 14 Took legal action 1412 14 11 6 Other 71 0 4 0 This is the same experience already answered about (VOL.) 24 4 7 0 Don’t know/Refused 7

(159) (75) (53) (26) (145)Total exceeds 100% due to multiple responses

19. Think about the bad experience you had when you hired someone to work on your home. What action, if any, did you take as a result of that bad experience? (DO NOT READ.)

Based on those with a bad experience with a home repair

Age Age AgeTotal 18-49 50-64 65+

38 38 33 44 Did nothing22 20 26 20 Complained to Salesperson, manager, or owner of company that sold

product or service9 8 11 4 Stopped buying from company6 5 8 7 Took legal action4 4 4 3 Complained to Better Business Bureau5 7 3 4 Asked for a refund or replacement/Returned for exchange6 6 5 11 Other6 7 6 9 This is the same experience already answered about (VOL.)6 6 7 4 Don’t know/Refused

(356) (129) (108) (92)Total exceeds 100% due to multiple responses

20. How satisfied were you with how this experience turned out after you took some action – very satisfied,somewhat satisfied, not too satisfied, or not satisfied at all?

Based on those who took action as result of a major fraud or swindle or a bad experience with homerepair

Age Age Age 199318

Total 18-49 50-64 65+ Total27 25 28 27 Very satisfied 3129 31 30 19 Somewhat satisfied 1213 15 9 17 Not too satisfied 1222 21 24 24 Not satisfied at all 38

7 6 9 4 Same incident as most recent experience N/A19

2 2 0 9 Don’t know/Refused 7100 100 100 100 100(332) (140) (106) (66) (99)

18 In 1993, respondents answered only in reference to action taken as a result of experience with major fraud orswindle.

19 Not available for this question.

74

75

21. Which of the following actions have you EVER taken as a result of any bad experience buying a productor service? Have you ever…(INSERT ITEMS. ROTATE)?

Based on those who have ever had a bad buying experience

Yes No DK na. Stopped payment or refused to pay

Total: 33 66 1 =100 (1198)Age 18-49: 36 64 * =100 (497)Age 50-64: 32 67 1 =100 (317)Age 65+: 20 79 1 =100 (318)1993 Total: 31 68 1 =100 (957)

b. Decided not to buy from a company againTotal: 81 18 1 =100 (1198)Age 18-49: 84 16 * =100 (497)Age 50-64: 84 14 2 =100 (317)Age 65+: 69 28 3 =100 (318)1993 Total: 88 11 1 =100 (957)

c. Told friends and others not to buy from acompany againTotal: 76 23 1 =100 (1198)Age 18-49: 80 20 * =100 (497)Age 50-64: 76 23 1 =100 (317)Age 65+: 57 42 1 =100 (318)1993 Total: 79 20 1 =100 (957)

d. Asked for a replacement or refundTotal: 80 20 * =100 (1198)Age 18-49: 85 15 * =100 (497)Age 50-64: 81 19 * =100 (317)Age 65+: 62 37 1 =100 (318)1993 Total: 81 18 1 =100 (957)

e. Complained to the person or store that soldthe product or serviceTotal: 85 14 1 =100 (1198)Age 18-49: 91 9 * =100 (497)Age 50-64: 84 15 1 =100 (317)Age 65+: 65 34 1 =100 (318)1993 Total: 85 14 1 =100 (957)

f. Complained to a Better Business BureauTotal: 34 65 1 =100 (1198)Age 18-49: 33 67 * =100 (497)Age 50-64: 42 58 * =100 (317)Age 65+: 29 70 1 =100 (318)1993 Total: 33 66 1 =100 (957)

76

21. Continued…

Yes No DK ng. Complained to the state Attorney General

office or other state or local consumerprotection agencyTotal: 19 81 * =100 (1198)Age 18-49: 18 82 * =100 (497)Age 50-64: 22 78 * =100 (317)Age 65+: 17 83 0 =100 (318)1993 Total: 13 86 1 =100 (957)

h. Complained to a federal agency like theU. S. Federal Trade CommissionTotal: 5 94 1 =100 (1198)Age 18-49: 5 95 * =100 (497)Age 50-64: 5 94 1 =100 (317)Age 65+: 6 93 1 =100 (318)1993 Total: 4 96 * =100 (957)

i. Sought arbitrationTotal: 12 85 3 =100 (1198)Age 18-49: 12 85 3 =100 (497)Age 50-64: 13 82 5 =100 (317)Age 65+: 10 87 3 =100 (318)(Item i not asked in 1993)

77

On a slightly different topic . . .22. As far as you know, what information can private businesses or companies get about you even if the

companies don’t have your permission? Is it possible for private businesses or companies to know . . .(INSERT ITEMS. ROTATE)?

Yes, can getwithout No,permission cannot get DK Ref.

a. How much money is in your bank accountTotal: 51 41 8 * =100Age 18-49: 49 44 7 * =100Age 50-64: 58 35 7 * =100Age 65+: 51 37 11 1 =100

b. Your medical historyTotal: 53 39 8 * =100Age 18-49: 50 44 6 * =100Age 50-64: 61 31 8 0 =100Age 65+: 55 34 10 1 =100

c. The types of products or services you buyTotal: 67 26 6 1 =100Age 18-49: 68 28 4 * =100Age 50-64: 75 19 6 * =100Age 65+: 56 30 13 1 =100

d. Whether you shop by mail, telephone orover the InternetTotal: 70 23 6 1 =100Age 18-49: 74 22 4 * =100Age 50-64: 75 19 6 * =100Age 65+: 56 32 11 1 =100

e. Whether or not you pay your bills on timeTotal: 80 16 4 * =100Age 18-49: 80 16 4 * =100Age 50-64: 84 13 3 * =100Age 65+: 77 16 7 0 =100

f. Your Social Security numberTotal: 69 26 5 * =100Age 18-49: 70 25 5 * =100Age 50-64: 75 20 5 0 =100Age 65+: 63 30 7 * =100

g. Your annual incomeTotal: 65 29 6 * =100Age 18-49: 65 30 5 * =100Age 50-64: 72 23 5 0 =100Age 65+: 61 29 0 0 =100

78

23. Do you think the federal and state laws that regulate what information private businesses or companies cancollect about consumers are strong enough to protect your personal privacy?

Age Age AgeTotal 18-49 50-64 65+19 18 18 24 Yes73 76 76 62 No8 6 6 13 Don’t know* * * 1 Refused100 100 100 100

24. Please tell me how much YOU trust each of the following to keep your personal information confidential.(First/How about) . . . (INSERT ITEMS. ROTATE) How much do you trust them to keep yourinformation confidential? Do you completely trust them, mostly trust them or don’t you trust them at all?

-----------Trust them------------ NotNot Doesn’t DK/ desig-

Completely Mostly at all apply Ref. nateda. Your primary bank or financial institutionTotal: 38 43 11 1 1 6 =100

Age 18-49: 34 49 9 1 * 7 =100Age 50-64: 35 41 17 2 1 4 =100Age 65+: 50 33 9 2 3 3 =100

b. The insurance companies you useTotal: 26 43 19 4 2 6 =100Age 18-49: 24 45 19 3 1 8 =100Age 50-64: 23 48 21 3 1 4 =100Age 65+: 35 37 19 5 2 2 =100

c. The companies that issue your credit cardsTotal: 14 38 30 10 2 6 =100Age 18-49: 12 40 32 8 1 7 =100Age 50-64: 13 38 34 9 2 4 =100Age 65+: 25 30 22 17 3 3 =100

d. The supermarkets or grocery stores youbuy fromTotal: 20 49 20 3 2 6 =100Age 18-49: 19 51 19 2 2 7 =100Age 50-64: 16 52 23 3 2 4 =100Age 65+: 26 48 16 5 2 3 =100

79

-----------Trust them------------ NotNot Doesn’t DK/ desig-

Completely Mostly at all apply Ref. natede. The catalog companies you order from

Total: 10 34 31 18 1 6 =100Age 18-49: 9 38 33 11 1 8 =100Age 50-64: 9 33 32 21 1 4 =100Age 65+: 16 25 21 33 2 3 =100

f. Companies that provide information orservices on the InternetTotal: 5 16 44 26 3 6 =100Age 18-49: 5 20 50 15 3 7 =100Age 50-64: 5 14 43 31 3 4 =100Age 65+: 4 8 28 54 3 3 =100

Consumers now have many choices in terms of the products and services available. We’d like to know a littleabout the kinds of choices YOU make as a consumer. As you answer, please keep in mind that all of youranswers will be kept completely confidential . . .

25. Do you ever go online to access the Internet or World Wide Web, or to send and receive e-mail?

Age Age AgeTotal 18-49 50-64 65+

40 51 34 9 Yes59 48 66 89 No1 1 0 2 Don’t know/Refused

100 100 100 100

26. Have you ever received unwanted e-mail that tried to sell you something or tried to get you to visit aparticular site on the Internet?

Based on those who ever go online

Age Age AgeTotal 18-49 50-64 65+

62 64 59 43 Yes37 36 40 57 No

1 * 1 0 Don’t know/Refused100 100 100 100(510) (295) (145) (43)

80

27. Have you ever purchased a product or service through the Internet, World Wide Web or other onlineservice?

Based on those who ever go online

Age Age AgeTotal 18-49 50-64 65+

34 34 35 44 Yes65 66 65 50 No1 0 0 6 Don’t know/Refused

100 100 100 100(510) (295) (145) (43)

28. Please tell me if you have EVER done any of the following. If I mention something that you’ve never heardof, just say so. First, have you ever/How about . . . (READ AND ROTATE)?

Never heardYes No of/Not familiar DK

a. Rented furniture or an applianceTotal: 15 85 * * =100

Age 18-49: 19 81 * * =100Age 50-64: 12 88 0 * =100

Age 65+: 7 92 1 * =100

b. Cashed a check at a check-cashing outletTotal: 21 77 1 1 =100

Age 18-49: 26 72 1 1 =100Age 50-64: 18 81 * 1 =100

Age 65+: 10 89 1 * =100

c. Pawned a personal item for cash or creditTotal: 17 83 * * =100

Age 18-49: 22 78 0 * =100Age 50-64: 13 86 1 * =100

Age 65+: 9 90 1 * =100

d. Taken out a home improvement or homeequity loan from a bank, credit union orother institution

Total: 31 68 * 1 =100Age 18-49: 26 74 * * =100Age 50-64: 50 50 * * =100

Age 65+: 29 69 1 1 =100

81

28. Continued . . . Never heard

Yes No of/Not familiar DKe. Taken out some other type of loan from a

financial institution to pay for home repairsTotal: 22 77 0 1 =100

Age 18-49: 22 78 0 * =100Age 50-64: 30 69 0 1 =100

Age 65+: 15 85 0 * =100

f. Used a credit counseling serviceTotal: 10 88 1 1 =100

Age 18-49: 11 87 1 1 =100Age 50-64: 9 90 1 * =100

Age 65+: 6 92 1 1 =100

g. Leased a car, truck or other vehicleINSTEAD OF buying one

Total: 17 83 * * =100Age 18-49: 16 84 * * =100Age 50-64: 21 79 0 0 =100

Age 65+: 12 87 * 1 =100

29. As far as you know, do you have the legal right to see any credit report that might be used in a decision todeny you credit, insurance, or housing?

Age Age AgeTotal 18-49 50-64 65+

88 92 90 78 Yes, you have the right7 5 6 11 No, do not have the right4 2 4 11 Don’t know1 1 0 * Refused

100 100 100 100

Consumers also have to make many decisions about FINANCIAL products and services . . .

30. Who makes MOST of the financial decisions for your household? Financial decisions include decisionsabout loans, savings, and investments. Do YOU make these decisions, does SOMEONE ELSE make them,or do you SHARE these decisions with another person?

Age Age AgeTotal 18-49 50-64 65+

49 47 50 56 Respondent makes most decisions11 14 6 8 Someone else makes most decisions39 38 43 35 Shares decisions

1 1 1 1 Don’t know* * 0 * Refused

100 100 100 100

82

31. Do you have any type of savings or checking account with (INSERT ITEMS IN ORDER) . . . ?

YesNo DK Ref.a. A bank

Total: 83 12 1 4 =100Age 18-49: 84 14 * 2 =100Age 50-64: 86 11 * 3 =100

Age 65+: 81 9 1 9 =100

b. A credit unionTotal: 38 57 1 4 =100

Age 18-49: 42 56 * 2 =100Age 50-64: 42 53 1 4 =100

Age 65+: 24 67 1 8 =100

c. A savings and loanTotal: 21 75 * 4 =100

Age 18-49: 22 76 * 2 =100Age 50-64: 21 76 * 3 =100

Age 65+: 17 73 1 9 =100

32. Do you RECEIVE any funds from (INSERT ITEMS IN ORDER) using direct deposit, that is, automaticpre-authorized transfer directly into your bank account? And do you receive any funds from (INSERTSECOND ITEM) using direct deposit?

Don’t haveYes No bank account DK Ref.

a. An employerTotal: 34 47 17 1 1 =100

Age 18-49: 34 49 17 * * =100Age 50-64: 37 48 14 * 1 =100

Age 65+: 36 42 19 1 2 =100

b. A government agencyTotal: 20 61 17 1 1 =100

Age 18-49: 10 73 17 * * =100Age 50-64: 26 58 14 1 1 =100

Age 65+: 51 28 19 1 1 =100

83

33. And, which of the following accounts and investments, if any, do you own right now?

Yes No DK Ref.a. Bonds

Total: 23 70 1 6 =100Age 18-49: 22 74 1 3 =100Age 50-64: 26 70 * 4 =100

Age 65+: 24 62 1 13 =100

b. A mutual fund accountTotal: 29 63 2 6 =100

Age 18-49: 27 67 3 3 =100Age 50-64: 38 57 1 4 =100

Age 65+: 26 60 2 12 =100

c. Stocks in individual companiesTotal: 29 64 1 6 =100

Age 18-49: 28 68 1 3 =100Age 50-64: 35 59 2 4 =100

Age 65+: 25 62 2 11 =100

d. A pension or retirement planTotal: 51 43 1 5 =100

Age 18-49: 48 48 2 2 =100Age 50-64: 61 34 1 4 =100

Age 65+: 52 36 1 11 =100

84

34. As I read a list of different ways you can get financial advice, please tell me whether or not you have everused each one for information about savings or investments. (First,) have you ever gotten advice from ...(READ AND ROTATE)

Yes No DK Ref.a. Family members or friends

Total: 68 31 * 1 =100Age 18-49: 78 22 0 * =100Age 50-64: 60 40 * 0 =100

Age 65+: 46 53 * 1 =100

b. Magazines or books aboutmoney matters

Total: 34 65 * 1 =100Age 18-49: 37 63 * * =100Age 50-64: 38 62 0 0 =100

Age 65+: 22 77 * 1 =100

c. TV programs, radio shows ornewspaper columns that coverfinancial trends and give advice

Total: 32 67 * 1 =100Age 18-49: 35 64 * 1 =100Age 50-64: 35 64 1 0 =100

Age 65+: 17 82 * 1 =100

d. The InternetTotal: 11 88 * 1 =100

Age 18-49: 13 87 * * =100Age 50-64: 9 90 1 0 =100

Age 65+: 5 94 * 1 =100

e. A stockbrokerTotal: 27 72 0 1 =100

Age 18-49: 23 77 0 * =100Age 50-64: 36 64 0 0 =100

Age 65+: 29 69 0 2 =100

f. An accountantTotal: 33 66 * 1 =100

Age 18-49: 31 69 * * =100Age 50-64: 41 59 0 * =100

Age 65+: 27 71 1 1 =100

g. Someone at your bankTotal: 41 58 * 1 =100

Age 18-49: 39 60 * 1 =100Age 50-64: 44 56 * 0 =100

Age 65+: 41 57 * 2 =100

85

34. Continued…Yes No DK Ref.

h. An insurance agentTotal: 33 66 * 1 =100

Age 18-49: 35 65 * * =100Age 50-64: 33 66 1 * =100

Age 65+: 27 71 * 2 =100

i. A financial plannerTotal: 27 72 * 1 =100

Age 18-49: 26 74 0 * =100Age 50-64: 31 69 * 0 =100

Age 65+: 22 76 1 1 =100

j. A lawyerTotal: 33 66 * 1 =100

Age 18-49: 30 69 0 1 =100Age 50-64: 33 66 1 0 =100

Age 65+: 37 61 1 1 =100

The next few of questions are about specific issues related to financial products and services. If you are notfamiliar with something I mention just respond as best you can. It’s okay if you don’t know all of the answers.

35. Please tell me whether you think the following statement is true or false: A “no-load” mutual fund involvesno sales charges or other fees.

Age Age AgeTotal 18-49 50-64 65+

25 25 26 24 True37 41 36 30 False36 32 37 45 Don’t know2 2 1 1 Refused

100 100 100 100

36. As far as you know, if you lose money in a mutual fund you invested in at a bank, will the F-D-I-C, that isthe Federal Deposit Insurance Corporation, cover your losses?

Age Age AgeTotal 18-49 50-64 65+

23 22 24 21 Yes52 57 51 42 No24 20 25 36 Don’t know1 1 * 1 Refused

100 100 100 100

86

37. As far as you know, when an investor DIVERSIFIES his investments, does his RISK of losing money increase or decrease?

Age Age AgeTotal 18-49 50-64 65+

31 36 24 21 Increase35 38 40 26 Decrease3 2 4 2 Neither/Stays the same (VOL.)

30 23 32 50 Don’t know1 1 * 1 Refused

100 100 100 100

38. How do you think most full-service brokers and financial planners are paid? Are they mainly paid … (READ)

Age Age AgeTotal 18-49 50-64 65+

16 19 11 12 Based on the quality of the advice they offer and how much their clients earn,

OR63 67 68 50 Based on the amount and type of investments they sell to their clients?19 13 20 35 Don’t know2 1 1 3 Refused

100 100 100 100

87

39. For each of the following, please tell me if you think you have enough, have some, or have none at all. First/How about . . . (INSERT ITEMS. ROTATE)–do you have enough, some or none at all?

Have some HaveHave but not none Doesn’t

enough enough at all apply DK Ref.a. Income to pay monthly bills such as

electricity, telephone and grocery billsTotal: 69 20 4 1 1 5 =100

Age 18-49: 69 22 4 2 1 2 =100Age 50-64: 71 18 6 1 2 2 =100

Age 65+: 73 14 3 1 1 8 =100

b. Insurance on your home to protectagainst loss in case of fire or other disaster

Total: 63 15 12 4 2 4 =100Age 18-49: 59 18 14 5 2 2 =100Age 50-64: 75 10 9 2 2 2 =100

Age 65+: 70 10 6 5 3 6 =100

c. Money set aside to pay for major home repairs such as replacing the roofTotal: 34 25 28 6 2 5 =100

Age 18-49: 27 29 33 6 2 3 =100Age 50-64: 40 21 28 5 3 3 =100

Age 65+: 49 18 17 7 2 7 =100

d. Money set aside for retirement (IF SAYS ALREADY RETIRED, READ:Money to live on in retirement)

Total: 32 37 22 2 2 5 =100Age 18-49: 24 43 27 2 1 3 =100Age 50-64: 40 34 21 1 2 2 =100

Age 65+: 51 25 11 3 2 8 =100

e. Money set aside for emergency expenseTotal: 37 37 18 1 2 5 =100

Age 18-49: 33 42 20 1 2 2 =100Age 50-64: 40 36 18 1 2 3 =100

Age 65+: 49 28 12 1 2 8 =100

88

40. Think for a moment about your personal debt on which you currently make interest payments. I am talking about debts you partially pay off each month for things like mortgages, credit cards, personal loans or car loans. Would you say the amount of debt you currently have is . . . (READ)

Age Age AgeTotal 18-49 50-64 65+

15 17 15 9 More than you can handle financially,35 40 36 22 About as much as you can handle financially, OR that25 28 30 15 You could handle more debt than you currently have?16 9 13 42 Don’t have any personal debt (VOL.)3 3 3 4 Don’t know6 3 3 8 Refused

100 100 100 100

41. Still thinking about your personal debt on which you currently make interest payments, but NOT including anything you owe on a mortgage, would you mind telling me about how much personal debt do

you have now? Just stop me when I get to the right category. (READ)

Age Age AgeTotal 18-49 50-64 65+

14 16 14 11 Less than $2507 7 8 6 $250 to under $5007 8 8 3 $500 to under $1,0005 6 6 2 $1,000 to under $2,0009 13 7 3 $2,000 to under $5,000

17 21 18 6 $5,000 or more20 12 16 46 Don’t have any debt5 4 7 7 Don’t know

16 13 16 16 Refused100 100 100 100

DEMOGRAPHICS

Finally, I have just a few questions so we can describe the people who took part in our survey . . .D2. Are you now employed full-time, part-time, are you retired, or are you not employed for pay?

Age Age AgeTotal 18-49 50-64 65+

52 67 53 6 Employed full-time11 16 8 3 Employed part-time21 1 22 86 Retired9 12 9 2 Not employed2 1 5 1 Disabled (VOL.)2 2 3 1 Other (VOL.)* * 0 0 Don’t know3 1 0 1 Refused

100 100 100 100

89

D3. Are you married, living as married, widowed, divorced, separated, or have you never been married?

Age Age AgeTotal 18-49 50-64 65+

53 50 65 53 Married4 5 2 3 Living as married8 1 9 34 Widowed8 8 14 4 Divorced4 4 4 1 Separated

20 31 6 4 Never married3 1 * 1 Refused

100 100 100 100

D4. What is your age?

Age Age AgeTotal 18-49 50-64 65+

19 33 0 0 18 to 2919 32 0 0 30 to 3920 35 0 0 40 to 4915 0 73 0 50 to 595 0 27 0 60 to 647 0 0 41 65 to 74

10 0 0 59 75 or older5 0 0 0 Don’t know/Refused

100 100 100 100

D5. Are you (or is your husband/wife/partner) a member of A-A-R-P, the American Association of Retired Persons?

Based on those over age 50

Age Age AgeTotal 18-49 50-64 65+

48 0 48 55 Yes46 0 52 41 No6 0 * 4 Don’t know/Refused

100 100 100 100(902) (387) (459)

90

D6. Do you read A-A-R-P’s magazine called Modern Maturity regularly, sometimes, hardly ever, or never?

Based on AARP member households

Age Age AgeTotal 18-49 50-64 65+

50 0 43 59 Regularly34 0 35 32 Sometimes6 0 7 5 Hardly Ever9 0 13 4 Never1 0 2 0 Don’t know/Refused

100 0 100 100(469) (187) (264)

D7. Do you read A-A-R-P’s monthly newspaper called The Bulletin regularly, sometimes, hardly ever, or never?

Based on AARP member households

Age Age AgeTotal 18-49 50-64 65+

40 0 32 47 Regularly35 0 41 29 Sometimes7 0 6 9 Hardly ever

16 0 18 14 Never2 0 3 1 Don’t know/Refused

100 0 100 100(469) (187) (264)

D8. What is the last grade or class you completed in school?

Age Age AgeTotal 18-49 50-64 65+

16 10 19 31 Less than high school graduate (Grades 11 or less)33 35 36 31 High school graduate, Grade 12, or GED certificate3 3 3 4 Technical, trade, or business school AFTER high school

23 27 21 14 Some college or university work, but no 4-year degree14 16 13 12 College or university graduate (4-year degree received)8 9 8 6 Post graduate or professional schooling after college* 0 * * Don’t know3 * * 2 Refused

100 100 100 100

91

D9. Are you of Hispanic or Latino background, such as Mexican, Puerto Rican, or other Spanish background?

Age Age AgeTotal 18-49 50-64 65+

7 8 5 4 Yes91 91 95 95 No2 1 0 1 Refused

100 100 100 100

D10. What is your race? Are you white, black, Asian or some other race?IF R SAYS HISPANIC OR LATINO, PROBE: Do you consider yourself a WHITE (Hispanic/Latino) or a BLACK (Hispanic/Latino)?

Age Age AgeTotal 18-49 50-64 65+

82 80 86 94 White11 13 11 4 Black or African-American1 1 * * Asian3 5 1 1 Other or mixed-race* * 1 0 Don’t know3 1 1 1 Refused

100 100 100 100

D11. Do you own or rent your home?

Age Age AgeTotal 18-49 50-64 65+

65 57 83 83 Own26 34 15 12 Rent6 9 2 3 Other arrangement3 * * 2 Refused

100 100 100 100

92

D12. Approximately what is your total family income before taxes – just tell me when I get to the rightcategory.

Age Age AgeTotal 18-49 50-64 65+

7 5 9 11 Less than 10,00011 10 10 15 $10,000 to under $20,00012 13 9 15 $20,000 to under $30,00011 12 12 7 $30,000 to under $40,00014 17 15 6 $40,000 to under $60,00010 13 11 3 $60,000 to under $100,0005 6 7 1 $100,000 or over6 6 4 9 Don’t know

24 18 23 33 Refused100 100 100 100

END OF INTERVIEW: That’s the last question I have. Thank you very much for taking the time to answerthese questions—we really appreciate it. Have a nice day/evening.