Unit 12 Part 3 - Rights and Responsibilities of Buyers and Sellers

buyers take on all the risks in buying a product

principle of “let the buyer beware”

illegal deception for the purpose of financial gain

fraud

year FTC was established

1914

protect consumers against unfair and predatory business practices, often requires companies to provide accurate and honest information about a good/service

purpose of consumer rights laws

guarantee (promise) that a product being sold is as the seller described it

warranty

written or verbal statements about the product’s quality and reliability, can include a promise to repair or replace if it turns out the be defective

expressed warranty

assumption that a product will work

implied warranty

north Carolina’s lemon law requires car defects to be fixed if… (short answer)

it affects the value of the car, is within the first 24 months or 24,000 miles

set limits on how a company can collect and use information about its customers

privacy term (policy)

contains embedded (hidden) links that track your information

targeted marketing ad

• enacted in 1967

• gave FDA and FTC the power the regulate labels

• requires all labels to identify the product, name and location of manufacturer or distributor, contents in both metric and US customary units

fair packaging and labeling act

• passed in 1968

• requires lenders to show potential borrowers the APR and total costs of the loan (applies to mortgages, car loans, and credit cards)

• stops credit-card companies from charges late fees that are too high

truth in lending act

• to stop companies from selling alternative protein products as meat

• requires manufacturers to provide user instructions and warning as needed for their products, several food-labeling laws

truth in labeling laws

• passed in 1970

• law requiring all three credit companies each give a person a free copy of their credit report once a year

• requires consumers to be told if their credit report caused them to be denied credit, a job, or insurance

• gives consumers the right to dispute information, freeze their credit report so that lenders can’t see it and to opt out of credit offers so they do not get them in the mail

fair credit reporting act

• blocks telemarketers from calling from 9pm to 8am

• bans calls to a consumer who has asked not to be called again

• requires telemarketers to clearly identify the company they work for and that they are making a sales call

telemarketing sales rule

prevents debt collectors from using threats and harassment, can’t call from 9pm to 8am or threaten with arrest, passed in 1977

fair debt collection act

requires banks and other financial institutions (payday lenders and universities) to protect personal information about their customers

Gramm leach-bliley act

controls what information can be collected from websites for children under age 13, took effect in 2000

children’s online privacy protection act

only adults (people 18 and older) can participate in a legally-binding contract, FTC gives consumers 3 days to cancel a contract for purchases made of $25 or more that was made through door-to-door sales (not at retail store or online)

right to cancel a contract

signing someone else’s name to a document or check

forgery

loans at such a high interest rate that they are almost impossible to repay

predatory loans

scammers promise to lower someone’s interest rate on a credit card for a fee

deceptive interest rate deduction

any type of fraud involving an investment

securities fraud

investment scam that focuses on gaining new investors to pay the returns to existing investors, promises investors that their funds will go into investments with guaranteed high returns and little risk, schemers rely on looking for more and more investors to pay its old investors, tends to collapse due to little or no actual earning coming in

ponzi scheme

looks like a pyramid, with the initial recruiter at the top, recruiter asks another person to invest money, which the recruiter receives, to make back the money the second person must recruit more people and get them to invest, investors make money from new recruits directly instead of from a promised investment, people above the new recruits all get a cut of the money, with the person at the top getting the most, eventually runs out of recruits and collapses, illegal in the US

pyramid scheme (multi-level marketing)

involves stealing from people who think they are dealing with legitimate businesses

consumer fraud

happens when a scammer gets someone to send them a fee or money in advance of receiving something else of greater value

advanced fee

lying to the mortgage lender, can be done by people who want to buy homes or bank officials and appraisers to steal money or equity

mortgage fraud

scammer pretends to be collecting a debt

debt collection fraud

use mail, phone, or internet communication across state lines, federal crime

mail/wire fraud

unauthorized use of credit cards, cardholder has not given permission for the person to use the card, charges can be disputed within 30 days, must be reported as soon as it is discovered otherwise the bank could charge fees or you lost part/all of the money

credit card fraud

ATM is rigged with a camera to record pin number being typed in, uses a device that “skims” a card’s information when it is entered

skimming

uses emails to try to get people to provide their credit or bank account information to scammers who pretend to be from legitimate companies

phishing

occurs when someone uses your personal information to open accounts, purchase, things, or get a tax refund

identity theft

• Bills for goods/services you didn’t buy

• Unfamiliar withdrawals from your bank account

• Calls from collection agencies for unfamiliar debts

• Unfamiliar accounts on your credit report

• Notices from the IRS about unpaid taxes

warning sighs of identity theft

• State attorney general’s office

• North Carolina secretary of state

• Consumer financial protection bureau

government agencies that can help protect consumers