Consumer Responsibilities, Rights, and Protectionism

BRHS Business Education

Consumer Buying Decisions

A consumer is a person who selects, purchases, uses, and disposes of goods and services.

When buying goods and/or services, consumer must make 4 decisions:

1. What to buy?2. When to buy?3. Where to buy?4. How much to pay?

Deciding What to Buy

Once consumers have chosen what product to buy, consumers will decide to buy a Brand name or Generic name

Brand Name refers to the “trade name” for a product or service produced by a particular company.

Buyers typically associate quality with brand names

Generic Name refers to plainly labeled, store-brand products that are sold at lower prices than brand-name goods.

Generally, same quality as brand names

Taste Test – Generic vs. Brand

Deciding When to Buy

Prices for many items change during different times of the year so postponing or planning can sometimes save you money.

I.E. You’d probably save your business more money if you bought an Air Conditioner in the fall vs. the summer.

Deciding Where to Buy

Three factors affect a consumer’s decision on where to shop:

1. The kinds of goods and services sold

2. Prices

3. Convenience

Deciding How Much to Pay

Comparison shopping is comparing the prices and the characteristics of competing brands or stores

Important to do when making a big purchase

Remember, the highest price doesn’t always mean the highest quality

Preparing to Shop

Consumers have to decide what a bargain is to them and can become a smart consumer by planning in advance. Before making a purchase, a smart consumer should: study advertisements read consumer publications shop at sales use shopping lists read labels and warranties

Study Advertisements

To be a wise consumer, you must learn how to read ads for information that will be helpful. Most ads are one of two types: Rational Advertising attempts to convince consumers

with facts and information. It tries to persuade buyers to choose a specific product because

it is the best one for their purposes.

Emotional Advertising appeals to people’s feelings. I.E. it might suggest that if consumers buy a particular car, they

will be popular.

Emotional One, Emotional Two

Partner Activity

In groups of two, create two separate advertisements on a sheet of notebook paper for our new sports energy drink, “Hustle.” One advertisement should be a “rational” one

and the other advertisement should be an “emotional” one.

15 minutes

Read Consumer Publications

Consumer magazines examine and rate products ranging from bottled iced teas to travel agenciesPublications such as Consumer Reports and

Consumers’ Research Magazine give detailed information about goods that have been tested and rated.

Shopping at Sales

A promotional sale is one that offers a special buy on a new product or a product that is in season. Usually held when consumer purchases are down, such

as after holidays A clearance sale is a sale to clear out goods that

are going out of season or are no longer profitable Usually, these sales make room for new merchandise

Loss leaders are advertised products that sell at a loss to bring customers into a store The low price is intended to attract more customers into

the store to hopefully buy more profitable goods

Why Use Shopping Lists

Shopping lists cut down on unplanned buying of goods and services Impulse buying is the act of making unplanned

purchases and can ruin a consumer’s budget I.E. why do you think most convenience store have

candy and/or gum at the front of the store?

It can also save you money because you can decide in advance what to buy and how much to spend

Read Labels and Warranties

Always read a product’s label before you buy You’d be surprised at what companies are required to

state on the label by federal law – it might make you put the product down

Many items come with a Warranty – meaning a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired

Consumer Rights

Basic Consumer Rights

In 1962, President John F. Kennedy outlined what he called the Consumer Bill of Rights. The bill stated that every person has four basic Consumer Rights:

1. Right to be informed

2. Right to choose

3. Right to safety

4. Right to be heard

Right to Be Informed

As a consumer, you have the right to receive accurate information. Businesses are required to provide certain details about their products.

I.E. Drug companies must list the complete contents of every medicine.

Right to Choose

Consumers have the right to choose from a wide variety of goods and services. Businesses compete with each other to sell their products to consumers – competition provides choices.

Federal government has the power to use Antitrust laws to break up monopolies or keep them from forming.

Right to Safety

You have the right to products that are safe to use. Product Liability is the legal responsibility that manufacturers have to make a safe product. Federal laws ensure that clothing, food, toys, and other items will not harm consumers.

I.E. Tools and appliances must include safety devices for your protection

CPSIA – Good or Bad

Right to Be Heard

Consumers who have complaints about products or services have a right to be heard. You have the right to let the company know you’re not happy. Businesses rely on customer satisfaction.

Basic Consumer Rights Extended

Over the years, three other rights were added:

1. Right to have problems corrected

2. Right to consumer education

3. Right to service

Right to Have Problems Corrected

When products don’t work properly after they’re purchased, consumers have the right for the products to be fixed. Either the business from which the product was bought or the manufacturer from which the product was made should fix the problem.

Right to Consumer Education Consumers have the right to learn how a

market system works. You should know how to get the best value and satisfaction for your money.

Some businesses might not operate in the best interest of the consumer. Some might try a tactic know as a Bait and Switch – a sales tactic in which buyers are tempted by an advertised bargain but are then persuaded to buy a more expensive item instead.

Carpet Cleaning Scam

Right to Service

Customers have a right to be treated in a respectful and courteous manner. You have the right to expect prompt delivery of goods or services that meet the standard of quality a business claims. You also have the right to be served without discrimination on the basis of your race, gender, income, or age.

Consumer Protectionism

Development of Consumer Protection Law

Years ago, smart shoppers understood the Latin phrase, caveat emptor, which means, “let the buyer beware.”

Laws have changed, and the phrase that now guides consumer transactions is caveat venditor, which means, “let the seller beware.”

Consumer Protectionism

Many laws have been enacted to regulate and restrict business practices to preserve competition and protect consumers. These laws protect against dishonest sellers, unreasonable credit terms, unsafe products, and mislabeling of products.

Consumer Credit Protection Act: Requires those who give credit to reveal all the terms and conditions of their credit agreement.

Consumer Protectionism Laws Price Discrimination Laws: Price

discrimination is the act of charging more than one price for the same product or service in different markets or to different customers.

The Fair Packaging and Labeling Act: Requires manufacturers’ labels to truthfully list all ingredients and raw materials used in production.

Consumer Protectionism Laws

The Cooling-off Rule: When you buy something at a location that is not the seller’s permanent business location, you have 3 business days to cancel contracts for most purchases. I.E. A Mary Kay “makeup” party

Consumer Protectionism Laws

Truth-in-Advertising Laws: Under these laws, advertising must be truthful and non-deceptive, and advertisers must have evidence to back up their claims.The FTC (Federal Trade Commission)

regulates false advertising on the national level and has the power to issue a cease and desist order.

These orders are legally binding orders to stop a practice that would mislead the public.

Shopping by Mail, Phone, Fax, and/or Internet

The FTC has established rules to protect consumers shopping by mail, phone, fax and/or internet. Sellers must ship goods within the time they promise in

their catalogs or advertisements. If not time is stated, sellers must ship goods within 30 days after receiving an order.

Sellers must notify you of any delay in shipment and give you a postcard or other free means of responding to the delay.

You have the right to cancel orders and get your money back if time limits are not met.

The Uniform Commercial Code

A group of laws that regulate commercial business transactions. The UCC protects the economic interests of buyers and sellers in contracts. It also regulates sales warranties: Express Warranty: Is explicitly stated (in writing or

verbally) and specifies the conditions under which the product can be returned, replaced, or repaired.

Full Warranty: A purchase found to be defective within the warranty period will be repaired or replaced at no cost to the purchaser.

Limited Warranty: Covers only certain parts of the product or requires the customer to bear some of the expense in case repairs are needed.