DECEPTION AND FRAUD

CH. 3.3 & 3.4

DECEPTION AND FRAUD

DECEPTION: when advertising purposefully misleads you

FRAUD: deliberate deception, designed to secure an unlawful gain

Who is this guy

TYPES OF DECEPTION AND FRAUD Trading up:

The practice of pressuring consumers to buy a more expensive productEX: you go to Best Buy to purchase a DVD

player, and the salesman gets you to buy a better brand with more functions

Loss Leader: The practice of raising the normal price, and

then lowering it in order to call it a “sale”EX: Finish Line raises a pair of Jordan’s to $120,

that is normally $100, then puts them back to $100 and calls it a sale

TYPES OF DECEPTION AND FRAUD Sale price:

A sale is a sale only if the price is below the regular price.

Can be deceptive: if the store raises the price for a day or two then lowers it and calls it a sale

Suggested Retail price: A manufacturer’s suggested price is usually

higher than any retailer expects to actually get for a product.

Ex: Cars!

TYPES OF DECEPTION AND FRAUD Bait and Switch:

The practice of baiting consumers with an advertised, but nonexistent bargain and then switching them to a more expensive product.

My example at office depot – shredder –

Pyramid Schemes: A type of financial fraud in which people pay to

join an organization in exchange for the right to sell memberships to others

Pyramid scheme

TYPES OF DECEPTION AND FRAUD Internet and Telephone fraud:

The many different methods of scheming people out of money over the phone

http://www.youtube.com/watch?feature=player_embedded&v=G3p79-M0lHY.com

Some things to look out for when an offer is made to you online or over the phone:

1. Too good to be true www.lookstoogoodtobetrue.gov

2. Asked for your social security card or credit card number

3. Must buy something to get something else of greater value for free

TYPES OF DECEPTION AND FRAUD CONTINUED…

1. Not offered a written contract or sales agreement

2. You are supposed to act immediately or the offer will expire quickly

3. No method is offered to contact the organization

4. No information about the organization’s business record is available

TOO MANY FACES OF FRAUD Here are some scenarios that should

bring out the skeptic in you:1. Healthcare products that promise to cure

incurable diseases HEALTHY CEREAL?

2. Home-improvement contractors who want you to pay most of the cost before they do the work Holmes on homes

TOO MANY FACES OF FRAUD

1. Vacation clubs that require you to send money to join with the promise of inexpensive 1st class vacations later

2. Repair work offered at well below the going rate

3. Weight-loss programs that promise unrealistic results.

Lets talk about any scams that you have encountered… or your parents.

Were they similar to these? How were they resolved? How about internet fraud? Have any of you tried to deceive anyone…

we are all friends here…

SCAMS AND FRAUDhttp://www.cbsnews.com/video/watch/?id=7398476n

SCAMS AND FRAUD Follow the money

HOMEWORK

Read the “ID Thieves’ New Tricks: Cybercriminals

are getting smart. You can too” packet and be prepared to discuss it.

HOMEWORK

Re-Read pages 108-112Write the 1 page complaint letter

RESOLVING CONSUMER PROBLEMS HOW TO RESOLVE THE PROBLEM

Wait approximately 3 days to ‘cool down’Use facts, no emotions, to solve the

problemKeep your receipt!Decide what you want before you complain

RESOLVING CONSUMER PROBLEMS THE COMPLAINT PROCESS

Take it slowStart with the Seller

Go to the storeTalk to the manager

Email / write the manufacturerContact a consumer group or professional

organizationMedia help

Check online, sometimes there is a way to resolve problems through the website

RESOLVING CONSUMER PROBLEMS Government Involvement

LawsuitYou may contact a lawyer and take the claim

to courtSmall Claims court

Different states have different maximums ($1000-$10,000)

You do not need a lawyer for this court If you lose, you have to pay the fees of the person

you are suing