A. Influences on Consumers I. CONSUMER LAW

1. Consumer= one who buys goods and services from a seller

2. Contract = Legal agreement to pay for goods or services

3. Caveat emptor = “Let the buyer beware”a. In the old days consumers had no protections

from unscrupulous sellers 4. Advertising= information provided by the

seller regarding their products (can be useful, but also can be

misleading)

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B. How Laws Protect the Consumer1. Federal laws

a. Prohibit misleading ads, prices and labelsb. Set standards for safety and qualityc. Create agencies to enforce standardsd. Create laws to regulate marketplacee. Protect those with disabilities

2. State lawsa. Similar to federal laws b. Terms:

class action= more than one plaintifftakes a defendant to court

remedy= making up for harm donecease and desist order= court orders a company to stop an illegal practicerestitution= having to repay money that

was illegally obtained

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C. Protecting Your Rights as a Consumer1. What to do before buying a product

a. Research products (Consumer Reports)b. Compare pricesc. Consider a store’s reputation

-service/delivery charges?d. Read the warrantye. Read the contract (if applicable)

2. What to do after buying a producta. Inspect the product (save receipts)b. Read the instructionsc. If there’s a problem:

-contact seller first (be polite but firm)-contact the manufacturer-contact a government agency

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3. Consumer protection agenciesa. Consumer groups b. Business and trade associationsc. Media (publicity)d. Professional associationse. State and local governmentf. Federal government

4. Taking your case to courta. Criminal court

fraud= salesmen who knowingly lie inorder to make a sale

b. Civil courtdamages= money won as a result of an

injury or lossrescission and restitution= court orders

contract cancelled and money refunded

specific performance= the seller isforced to carry out the contract

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Way advertisers “get” you Buy our product receive what you

see Pop ups on the internet Puffing “World’s Best Fries” Fine print, fast talking

D. Deceptive Sales Practices1. Door-to-door and telephone sales a. Be very wary to give your credit card

number on the phone b. donotcall.gov – good for 5 years

2. Phony contest and referral sales3. Advertising and the consumer

a. Some ads are illegal(tobacco ads on tv, radio.)

b. Can be helpful/informativec. Ads must be truthful

-except “puffing” (opinion statements)d. Bait and switch

-luring customers into a store and then trying to sell them more expensive items

e. Mail order sales-companies must ship products quickly-read the contract carefully

f. Repairs and estimates-always get a written estimate

E. CONTRACTS1. Elements of a contract

a. Offerb. Acceptancec. Consideration= something of value must

be exchanged (usually money)2. Minors and contracts

a. Minors may enter contracts, but generally can’t be forced to carry them out

-generally they must have a cosigner3. Written and oral contracts

a. Either type are legal-the law favors written contracts

4. Illegal contractsa. Contracts contrary to the law (drugs, etc.)b. Unconscionable contracts

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F. Warranties1. Warranty= a guarantee from the seller as to the

quality of the producta. Breach= if the seller does not live up to

the conditions of the warranty2. Types of warranties

a. Express warranty= statements of factsabout a products performance

b. Implied warranty= the law says that allproducts should do what they’re supposed to do

-applies to stores/dealers only-only if product is used properly

c. Disclaimer= a seller’s attempt to limit theirresponsibility

-ie. “as is” or “with all faults”

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G. Credit1. Credit= buying things, promising to pay in

the futurea. Creditors= those who lend money

(banks, loan sharks, etc.)b. Debtors= those who borrow money

c. Finance charge= money paid by debtors for the right to borrow money

2. Types of credita. Unsecured credit= money borrowed with

only the promise to repay (no collateral)b. Secured credit= debtor must provide

collateral to obtain loanc. Default credit= if debtor does not make

payments they lose their collateral (pawn shops)

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3. Credit cards and charge accountsa. Credit cards make it easy to borrow money

to purchase items-APR= Annual Percentage Rate

b. If you lose your card, just report it missingc. Debit cards= look/act like credit cards, but

money comes directly out of onesbank account

4. When should you use credit?a. Using credit makes the item cost more, so

use it sparingly (home, education, business and possibly car)

b. If possible pay credit card bills in full each month

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5. The cost of credita. Interest rates- very high on credit cardsb. Loan sharking- very, very high interest ratesc. Balloon payments= the last payment is

much largerd. Acceleration clause= if one payment is

missed the entire loan comes due immediately

e. Bill consolidation= all bills are combined into one payment (often costs the consumer more than original loans)

6. Truth in lending a. Creditors must provide the debtor with

accurate information-must be in writing

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7. What to do if you’re denied credita. Ask the creditor why you were turned downb. Check your credit file

H. Default and collection practices1. Default= when a debtor can’t make his payments

a. How to avoid default- put yourself on a budget- ask the creditor for more time- get financial counseling- get help from family or friends

b. Bankruptcy -if you’re out of choices, declaring

bankruptcy may be best option-it will be on your credit report for

10 years!!

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2. Buying a used cara. Always have a mechanic check it out b. Some used cars come with warranties

3. Financing a cara. Shop around for the lowest ratesb. Read the contract carefullyc. Consider the costs of owning a car

-insurance, gas, repairs/maintenance, licenses, registration

Cars and the Consumer1. Buying a new car- things to consider

a. Safety (airbags, design strength, etc.)b. Pricec. Qualityd. Warrantye. Fuel economy

Checking Accounts 8 parts to an actual check

1. Number of check2. Your name3. Date of check4. Payee’s name5. Amount of check written in numerals6. Amount of check written in words7. Your signature8. Number of your checking account

Two types of Checking Accounts

Service Charge No interest being

charged to you but… $.50 a month and $.10

each check written are charged to you

Free Checking You’re checking

account is free if you stay above a minimum number of dollars in your account

Mechanics of Checking Balance – amount in your account Deposit – putting money into your

account Withdrawal – taking money out of

account Canceled Checks – checks that

people (the payees) have turned in in order to get cash

Mechanics of Checking cont Statement – bank’s sheet telling you

how much is in your account, service charges, # and amount of checks written for that particular month, etc

Checkbook- contains your checks and….

Check Register – an organized way to keep your balance right on the spot and compare your balance to your banks balance

4 more… Overdraft – when you spend more

than what’s in your account Bounces – when you write a check

larger then what’s in your account Cover – re-writing a check to the

receiver of the bounced check Stop-payment – letting the bank

know not to let a check be cashed

Differences between the Plastic Debit- a plastic card in the form of

checks, all payments are subtracted from checking account

Charge- a plastic card in which you defer all payments until the end of each month– Pay each month in full

One more…credit card Credit- Plastic cards make it easy to

borrow money to purchase items, unpaid credit gathers interest– APR= Annual Percentage Rates

In any case, if you lose one of these cards, call the provider and cancel it!!!

Default and collection practices1. Default= when a debtor can’t make his payments

a. How to avoid default- put yourself on a budget- ask the creditor for more time- get financial counseling- get help from family or friends

b. Bankruptcy -if you’re out of choices, declaring

bankruptcy may be best option-it will be on your credit report for

10 years!!

C. Creditor collection practices-calls and letters may not be harassing

-repossession= creditor takes the purchased item back

-court action= creditor takes the debtor to court-garnishment= court orders a creditor be paid by taking money directly from a debtor’s pay check

Savings – Methods Saving Accounts- accounts maintained

by retail financial institutions that pay interest but cannot be used directly as money

CD’s- a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions.

1 more method Bonds- Certificates that represent money

a government or corporation has borrowed from other entities

More on Savings

Why save? Emergency

Take advantage of opportunities

Reach financial goals

Pay yourself first Save to reach goals

From each paycheck – save 1st, spend 2nd

Vocab – last one of Consumer Law

26 – corrective advertising 27 – cease and desist orders,

restitution, FTC, FDA 28 – none! 29 – tenant, landlord, lease, warranty

of habitability, sublease clause, right to quiet enjoyment

What’s collected Friday 12 bell ringers between 4/25-5/12

– 6pts

Notes on Warranties, Checking, Credit, and Savings/Investment– 8pts

Contracts 3 things that make up a contract Minors and contracts What makes voids a contract Identify parties of contract

Warranties Express Warranties Implied Warranties

– Merchantability– Fitness for a Particular Purpose– Title

Checking Accounts Parts of a check Types of checking accounts Mechanics of Checking

More concepts Credit

– Types of Plastic– Bankruptcy– Collection practices

– Savings Accounts – Banks, CD’s, Bonds

More concepts Housing

– Tenant, landlord, lease, sublease, right to quiet enjoyment

– Identify a Lease Cars

– Things to look at before buying, what resources to look at, Interest Rates on loans

2 more concepts DSP

– What we went over today in class

Basic Consuming– FTC, FDA, Angie’s List, Consumer

Reports, Nutrition Facts