Students will understand threats to financial security. OBJECTIVE 2.02
Dec 16, 2015
ESSENTIAL QUESTIONS
What consumer behaviors can threaten a person’s financial security and lead to financial losses?
What scams and schemes can lead to financial losses?
How can a consumer communicate caution and report incidents of fraud?
THREATS
Threats from within are:
the result of consumers behaviors that lead to financial problems
often the result of lack of knowledge
YOU must be your own best ADVOCATE!
How? Educate yourself in financial matters
How? Use your brain. If it seems too good to be true…it probably is!
Threats from without are:
the result of deceitful, sometimes even fraudulent, scams and schemes designed to manipulate or trick consumers in ways that lead to financial loss.
YOU must be your own best ADVOCATE!
What is FRAUD? A material misrepresentation with intent to take advantage of another party
Threats to personal and family financial security come from within
the consumer and without (outside).
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Failure to plan Not comparing job offers carefully in light of
expected expenses
Shopping without a list, which often leads to impulse buying
Spending without using a spending plan (budget), which often leads to overspending
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Examples: Failure to plan Judy accepted a great modeling job in NY City. Her
apartment rent in Charlotte was $800, but the shared cost of a smaller apartment is over $2000 monthly. She is having trouble making ends meet.
Meg and her two children took $300 to shop for back to school clothes. Purchases included a new basketball and 2 video games for her sons.
Tony and Lana charged $300 in restaurant bills on their weekend anniversary fling because they stayed at a 4 star hotel that used up their cash.
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Failure to protect Making personal information available that can lead
to identity theft
Not securing life, health, and property to minimize risks of crimes and emergencies
Not following Internet safety practices
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Examples: Failure to protect Fran dumped old credit card statements and other bills
into her garbage can without shredding any of them.
Neta parked her car in the parking garage after work. She did not lock the car. When she returned her cd player, cds, and a wedding present she had purchased had been stolen.
Sarah used a simple pass code and did not change it for over 5 years. She was surprised when a hacker accessed her computer and got personal banking information.
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Failure to be informed Not reading the fine print in sales agreements,
product labels, contracts
ALWAYS read and understand contracts BEFORE signing
Not researching sales offers in depth before making a commitment
Not separating facts from opinions in considering advertisements
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Examples: Failure to be informed Kevin and Nate are friends. Kevin got a new cell phone. Nate wanted
a new cell phone like it. He signed the 2 year contract without reading it. When the first bill came, he found he only had 100 free text messages per month. All texts over 100 cost $.15 EACH. His first bill was over $300.
Nate realized that he should have shopped several companies and reviewed various plans to find one that would meet his texting needs.
Kevin bragged to Nate that his phone would access internet and 50 other apps for free. Nate tried the apps and there were minimum monthly fees for each one. Kevin did not know the cost because his mom still paid his bill.
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Failure to communicate Not asking sufficient appropriate
questions to inform financial decisions
Not discussing financial decisions with all parties/family members involved
Not taking enough time to make a careful decision because of sales pressure
Not saying “no” when needed
video link- Grover's high pressure sale
CONSUMER BEHAVIORS THAT LEAD TO FINANCIAL LOSSES
Examples: Failure to communicate Tom forgot to ask about the truck’s warranty and
thought it was 100,000 miles. It was only 70,000 mile and excluded the 4WD components.
When Tom arrived at home with the new truck, his wife was very upset that monthly payments would be over $300. Their agreed upon budget was only $250.00.
Tom told his wife that the salesman was so helpful and nice that he just could not say no after taking up his time. Can you say “no”?
The salesman said he had another customer wanting this truck and if Tom really wanted it he should commit before the other buyers returned later that day.
TYPES OF DECEITFUL, FRAUDULENT SCAMS THAT LEAD TO FINANCIAL LOSSES
Vague offers---e.g., expecting you to pay up front in order to receive full information about a product or service
Television infomercials to order cd’s or books and make a lot of $!
Lotteries---prizes awarded by chance after purchase of ticket; very small chance of winning
Earn-money-at-home offers---
on the condition that you purchase software;
once paid for, nothing arrives
Television infomercials to order cd’s or books
TYPES OF DECEITFUL, FRAUDULENT SCAMS THAT LEAD TO FINANCIAL LOSSES
Winning bid in auctions---you pay the bid amount, but never receive the item bought
Identity theft---stealing one’s personal information in order to commit theft or fraud
Sweepstakes letter---states that you have won a valuable prize, but need to pay a processing fee to claim the prize
Wide variety of other unsolicited online offers
video link How-To-Prevent-Identity-Theft
video link - id theft fbla national winner
video link to citibank theft commercial
video link - ftc.gov identity-theft
TYPES OF DECEITFUL, FRAUDULENT SCAMS THAT LEAD TO FINANCIAL LOSSES
Lying--e.g., accepting money for a stated purpose, then using it for a different purpose;
Selling a product or service that will not perform as promised
video - charlotte sales scam-BBB "F"
Concealing information---e.g., sellers not willing to state their physical addresses, only POBoxes or Internet sites
TYPES OF DECEITFUL, FRAUDULENT SCAMS THAT LEAD TO FINANCIAL LOSSES
Deals that are too good to be true---e.g., a pyramid scheme, an illegal scheme that influences people to contribute money based on the false promise that they will get rich quickly; the pyramid collapses and money is lost, not gained
Chain letter---a variation of the pyramid scheme that involves postal correspondence, also illegal
High-pressure sales approaches---e.g., claiming the offer is only good for one day, or if you call in the next 15 minutes, or stay with you until you purchase
Video link: Is this a high pressure car sale?
video clip- how ponzi scheme works
WHAT TO DO ABOUT SCAMS?
Use available communication media---live conversation, telephone, texting, emails, etc.
Contact the local media to get attention to the topic
Be specific, include key details
Report to government agencies and other consumer advocates
Go to the Federal Trade Commission (FTC) website; complete a Consumer Complaint Form
Communicate or report deceitful/fraudulent scams and schemes to fellow consumers
THE FEDERAL TRADE COMMISSION
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.
The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.
video link- filing a claim with FTC
WHAT TO DO ABOUT SCAMS?
Call or visit the website of the National Fraud Information Center of the National Consumers League
Contact local consumer protection agency
Contact Better Business Bureau Contact State Attorney General’s office
Contact the post office if you receive a fraudulent offer by mail
Communicate or report deceitful/fraudulent scams and schemes with fellow consumers