Consumer Rights

TOPIC:
Consumer Affairs

Objectives:

Identify the technological devices that are used by consumers to conduct business

Explain how the devices are used.

Word Bank
E-commerce:
Any trading or other business transaction that is completed solely through an electronic process; for example, the ing and selling of products and services by businesses and consumers or the making of a hotel or airline reservation over the internet.

An electronic transfer:
Any transfer of funds from one account to another that occurs electronically between an individual’s various accounts, from an individual’s account to a business’s account or automatic recurring bill payments, or by swiping a credit or debit card at a retail outlet to pay for a purchase.

Activity # 1
Complete the following.
Define the terms:
A. E-commerce
B. Electronic transfer
C. Electronic banking
D. Telephone banking
E. Mobile banking
F. Internet/online banking

What does ATM allow a client to do?

Technological Transactions
Electronic banking
 
Electronic banking (e-banking) is the process by which a customer may perform banking transactions electronically without visiting a bank or having face-to –face contact with bank staff. Electronic banking services include the following.
An automated banking machine (ABM) allows clients of a bank or other financial institution to perform financial transactions in a public space without the need for a bank teller.
Telephone (tele-) banking is the use of a telephone to perform certain banking tasks.
Internet banking/online banking is the use of a computer to perform certain banking tasks online.
Mobile banking is the use of a smart phone or other cellular device to perform similar online banking tasks to those which may be performed on a computer. Mobile banking is the extension of online banking to smaller hand-held devices.

What e-banking allows consumers to do?
The above e-banking services allow consumers to:
Access all their banking information, such as account balances and transaction history.
transfer funds between accounts
view and print bank statements (except telephone banking)
request cheque books
stop payment of a cheque
pay utility and other bills
Obtain information about the bank and its products and services.
Customers must register with their banks in to access these services and also register the specific accounts. The service may be offered at a fee.
Customers using these services are given a bank card and a personal identification number (PIN) which they must use to access these services.

What is e-commerce?
E-commerce
Consumers also use the Internet to and pay for goods. They visit the seller’s website, view the product and online. They then supply their payment information (name, credit or debit card number, and expiry date) to the merchant’s server. The information is accepted and sent across the Internet to the consumer’s bank or a payment services provider for payment. Goods bought on the Internet may also be paid by bank drafts or money transfers through a bank or any other financial institution that specializes in money transfers.

Objective:
Outline the advantages/disadvantages of using technology to conduct transactions

Benefits/advantages of using modern technology to conduct transactions

E-banking and other online services offer consumers the following benefits:
 
1.They provide consumers with unlimited and convenient access to their banking information at any time, from anywhere in the world- 24 hours a day, every day of the week.
 
2.They are easy to use. Consumers must follow the prompts over the phone or on the bank’s website.
 
3.They offer consumers more choices for conducting their banking and commercial transactions.
 
4.They save time because there is no need to queue at banks to do simple non-cash transactions.

Advantages of modern technology continues…
They are reasonably secure, because the customer’s information can only be accessed using a PIN, which the customer can change frequently in to increase security.
 
6.Transactions are coded for ease of reference/retrieval.
 
7.The use of debit and credit cards reduces the need to carry cash.
 
8.Credit and debit cards provide easy access to goods and services.

Disadvantages of using modern technology
There are also a number of disadvantages to using e-banking and other online services:

Most transactions which utilize modern technology require that consumers share personal identification and banking information such as:
bank card and credit card numbers
name and contact information (address, telephone number, email address) income
National insurance (social security) and national registration numbers.

Disadvantages of using modern technology continues…

All or some of this information may be stolen by an identity thief and used to commit fraud or theft. An identity thief is one who, without someone’s knowledge, uses that person’s credit card, cell phone, or bank account (debit-checking), or misuses their personal information to open a new account, get a loan or commit some other crime in the person’s name.
1. There is no face-to-face contact between the parties to the transaction.
2. Obtaining redress, if the parties to the transaction may be based in different countries- consequently money may be lost. There is no way of finding out the quality of products ed before they are purchased.
3. Consumers may not be familiar with the use of technology and this may lead them to make costly mistakes or to be exploited.
 
4.The banks or online business’s customer database (customer information stored in a computer system) may be hacked, and the information may be used to commit Internet fraud.
 
5.The use of credit cards is the easiest ways to get into debt. The interest rate on the unpaid credit card balances is high and this can worsen the consumer’s debt situation.

Objective:
State the basic rights of the consumer.

Word Bank
Monopoly: A single producer who controls the supply of a good or service in a market. (e.g utility companies)

Key Ideas

Consumers have rights which guarantee them a measure of protection.
Consumers need to be aware of their rights and demand them.
Consumers may safeguard their rights, and act responsibly.
Consumers need to be aware of the ways in which their rights may be violated.
Consumers and businesses have conflicting aims.
Consumers have to be aware.
They want quality products at fair prices. Business people, on the other hand, want to earn the highest possible return on their investment and may violate consumer rights to achieve this.

Key Ideas Continues…

Consumer rights may be violated in several ways. Generally, consumers tend to depend on government to protect them, through legislation and the creation of consumer protection agencies. Nevertheless, the well-known historic principles “consumer be aware” implies that consumers have the main responsibility for protecting themselves, although this was overturned by the Sale of Goods Act of 1893. Individual consumers may protect themselves by simply being aware of and demanding their rights.

Consumer’s Rights
The world federation of consumer groups, Consumer International, has established the following eight basic rights for all consumers.
Right to safety: To be protected against products, services and production processes that are hazardous to health or life.
Right to choose: To be able to select from a range of products and services, offered at competitive prices with an assurance of satisfactory quality.
Right to be informed: To be given the facts needed to make an informed choice, and to be protected against dishonest or misleading advertising and labeling.
Right to be heard: To have consumers’ interests represented in the making and execution of government policy and in the development of goods and services.

Consumer’s Rights

Right to consumer education: To acquire the knowledge and skills needed to make confident, informed choices about goods and services, while being aware of basic consumer rights and responsibilities and how to act on them.
Right to satisfactions of basic needs: To have access to basic, essential goods and services- adequate food, clothing, shelter, health care, education, public utilities, water and sanitation.
Right to consumer redress: To receive a fair settlement of just claims, including compensation for misrepresentation, shoddy goods, or unsatisfactory services.
Right to a healthy environment: To live and work in an environment that is non-threatening to the wellbeing of presents and future generations.

Violation of Consumers’ Rights
Consumers need protection for several reasons.
There are too many similar products on the market at different prices and this makes it difficult for consumers to choose.
Advertisers create too many false impressions in their advertisements, which influence consumers to goods they later discover do not adequately satisfy their needs.

Violation of Consumers’ Rights continues…

Goods which are not available are advertised to lure consumers who are then offered a substitute in place of the advertised good. This is known as “bait and switch”. Consumers are tricked into spending money on goods which were not their preference.
Consumers are either unaware or unable to keep abreast of the sales tactics which are used.
Some businesses use their dominant position to exploit consumers. For example, credit terms and conditions are not usually negotiated. Consumers either must take the terms and conditions offered, particularly when dealing with commercial banks, or not bother with the loan.

Objective:
State the responsibilities of the consumer

Consumer Responsibilities
Just as consumers have rights, they also have responsibilities. They should therefore exercise their responsibilities in to protect their rights. ‘Without partnership between rights and responsibilities, consumers cannot operate efficiently.

Consumers’ responsibilities include:
To complain about violations of their rights
Consumers need to ensure that they know when, where and to whom to complain to in to get redress.
They should also report breaches of consumer protection legislation to the correct authorities
To be wise
Consumers should read contracts and have terms explained before signing them.
All correspondence (letters, cheques stubs, warranties etc.) should be kept in a safe place for future reference.
Managing their personal identification and other information against identity theft.

Consumers’ responsibilities continue…

To compare prices before purchasing
Consumers should shop around and not right away
Avoid conspicuous consumption
Good management of debt/credit helps to avoid goods being repossessed.
To inform themselves
Be aware of their rights under the law
Inquire about a desired product or service before ing it.
Join consumer protection organizations
To carry out the necessary checks/getting your money’s worth
Ensure that all products purchased are of acceptable quality and necessary.
Ensure that the amount and type of product or service purchased is received
Ensure that person hired to carry out a particular job is competent to do the job.
Persons should also inquire about the return and exchange policies on items before purchasing them to avoid any disagreement or disappointment.
Consumers should also find out about the business’s privacy policy to ensure that they are not dealing a company that shares consumer’s private information to others, protecting consumers from unsolicited advertisements and offers.

Objectives:
State the responsibility of government to the consumer.
Explain the role of the agency of consumer affairs in protecting the consumer
Explain how the Bureau of Standards helps in educating and protecting the consumer

Word Bank
Government- is a body of people with the authority to govern a country or state.
Consumer legislation- is the practice of safeguarding ers of goods and services, and the public against unfair practices in the marketplace.
Laws- these are intended to prevent businesses from engaging in fraud or specified unfair practices in to gain an advantage over competitors or to mislead consumers.
Breach- the act of breaking or failing to observe a law, agreement, or code of conduct.
Gazette- an official journal, a newspaper of record, or simply a newspaper.

Key Ideas
The role of government and other agencies in educating and protecting consumers.
The objectives of governments’ consumers protection policies include; protecting consumers from wasting their money; protecting their health and safety; and safeguarding the economic prosperity of the country as a result.

Governments’ Responsibilities
Governments have the responsibility to protect consumers.
Governments protect consumers mainly through legislation and education.
Government consumer protection agencies complement the work of each other.
Sellers and producers are fewer in number than consumers but may be more powerful.
The absence of strong national consumer protection groups in some countries makes it necessary for government to protect consumers.

Consumer Legislation
Some of the oldest and best-known examples of consumers legislation include:
The Sale of Goods Act
The Trade Descriptions Act
Hire Purchase Act.

Sale of Goods Act

Under the Sale of Goods Acts the seller guarantees that the good is of ‘acceptable quality’. In other words, it is fit for the purposes it might be commonly used for and it is safe and durable. It will do whatever the seller says it will and it is the same as any demonstration model, sample, or description of it. With respect to services, the seller guarantees that the service will be carried out with reasonable care and skill and it will be fit for purpose.

Consumer Acts continue…

The Trade Descriptions Act protects consumers by prohibiting producers and sellers from deliberately making false or misleading statements about their products.
The Hire Purchase Act stipulates that consumers must be given information about the cash and credit price of the good and the terms and conditions of the agreement. It also gives the consumer the right to withdraw from the agreement. The er does not become the owner of the item until the full contract price is paid.

Government consumer protection agencies and their functions:
Government ministries which are involved in consumer protection include:
Ministry of Consumer Affairs
Ministry of Commerce
Ministry of Industry
Ministry of Trade
Ministry of Health
Ministry of the Environment

Functions of the Ministries
These ministries have a number of agencies or departments attached to them, created by acts of parliament, and responsible for specific consumer protection measures. These agencies perform the following functions:
Monitor and regulate business activities
Monitor and enforce compliance with consumer legislation and deal with breaches.
Initiate consumer legislation
Educate consumers about their rights and how to protect themselves
Certify the safety and quality of products
Deal with consumers’ complaints

List of Government-sponsored consumer protection agencies

Government-sponsored consumer protection agencies in some Caribbean countries include the following.
The Fair Trading Commission
The role of the Fair-Trading Commission in consumer protection include:
Educating consumers about their rights and responsibilities
Receiving, investigating and resolving consumer complaints
Regulating the rates charged for utilities such as water, telephone and electricity, in to endure that they are fair, in some Caribbean countries this function is carried out by the Public Utilities Board.

Other functions of Fair-Trading Commission
Monitoring the standard of service supplied by electricity and telephone service providers.
Monitoring and investigating the conduct of service providers and other business enterprises in to promote and maintain fair competition.
Safeguarding the interests of both consumers and businesses in trading matters.

Government sponsored consumer protection agencies continue…
The Public Health Division of the Ministry of Health safeguards that public’s health by setting and monitoring regulations for the preparation, serving, storage, and sale of food and drink for consumption at public events.

Government sponsored consumer protection agencies continue…
The Food and Drugs Division of the Ministry of Health certifies the fitness of drugs and food products for human consumption by testing the before approving them.

Government sponsored consumer protection agencies continue…
The weights and Measures Divisions checks instruments used for measuring in business places to ensure that they are measuring accurately; this helps to guarantee that consumers get the amount they pay for.

Government sponsored consumer protection agencies continue…
The Prices Commission has the authority to monitor and control prices by fixing the legal maximum percentage wholesale and retail mark-up on price-controlled items. The objective is to ensure that certain basic food items and basic consumer durables can be purchased by the average consumer. The controlled prices are publicized in the official gazette and the mass media and monitored by price control officers who may prosecute those who exceed them.

Government sponsored consumer protection agencies continue…
The Ministry of Consumer Affairs initiates action for consumer legislation and coordinates the work of other consumer protection agencies. It also undertakes similar functions to those of the Fair Trading Commission.

Government sponsored consumer protection agencies continue…
The Financial Services Commission regulates the activities of all non-bank financial institutions, such as insurance companies and credit unions, to ensure that customers’ deposits are safe.

The Bureau of Standards functions:

The Bureau of Standards:
Tests goods for quality and safety and certifies goods which are of acceptable quality, this gives consumers confidence that the product they are ing meets specified requirements for quality and safety.
Issues guidelines about the amounts, quality, and types of materials which manufacturers should use in their products to meet international standards.
Issues guidelines for the labelling and packaging of goods which may include:
Brand name of the product
Name and address of the manufacturer
Size, weight and ingredients of the product
Health risks associated with the use of the product
The name and address of the business’s consumer complaints department.

Objectives:
Explain the role of other non-government agencies in education and protecting the consumer.

Word Bank:
What do these term mean?

1. Non-governmental agency

2. Privacy Policy

2. Refund Policy

ANSWERS:

Organizations that are independent of any government’s involvement are called Non-governmental organizations.
Privacy Policy- A privacy policy is a statement or a legal document that discloses some or all the ways a party gathers, uses, discloses, and manages a customer or client’s data.
Refund policy is exactly as it sounds – a policy that dictates the terms of any refunds or returns which may be offered by the website or eCommerce store.

What are the functions of
non-governmental Agencies?

Non- governmental Consumer Agencies include:

Voluntary consumer associations are registered non-profit organizations

They inform consumers of their rights and help to enforce those rights ·

They publish consumer magazines and report on products and services available in the market so consumers can make informed choices ·

Their members are ordinary consumers from across the country.

How businesses protect consumers?

Protection by businesses ·
They create customer service charter which indicates the type of service customers can expect · A consumer service charter is a written policy that communicates your business’s commitment to doing business with others. When writing a charter, you want to define the purpose, scope and standards of your business’s commitment to customer so that both employees and customers know what to expect.
Voluntarily recall defective products when consumers complain.
They provide consumers with up to date and reliable information on products, services, privacy policies, guarantees and refund policies ·
Have a specialized department to deal with complaints

Closing Activity
Define the terms:
a. non-governmental agencies
b. privacy policy
c. refund policy
Describe the functions/roles of non-governmental agencies.
Explain how businesses protect consumers?

Homework

Identify THREE non-governmental agencies in the BVI.

Describe the functions.

Explain the services provided by each agency.

Topic: Thrift and Budget

Objectives:

Explain the difference between thrift and budget

Outline the benefits of shopping wisely

Word Bank

Thrift- the wise and careful use of money and other resources in to avoid wastage.

Budget-an estimate of an individual’s or household’s income and expenses over a specified future period of time.

Recycling- converting (waste) into reusable material.

Thrift

Thrift is NOT only associated with penny pinching

It is the practice of managing money and other resources wisely

Most consumers have limited income and unlimited needs and wants,

Hence they avoid wasting their income and resources in to satisfy these needs

Consumers who adopt to thrift as a way of life usually do the following:
 
1) Budget
– Persons would make a plan in which they estimate their personal income, household income and expenses over a specified period
– A budget informs person on what they can afford allowing them to prioritize their needs and wants
– It encourages persons to shop around and avoid impulse ing

2) Shop wisely- Budgeting helps consumers stretch their hard-earned money by shopping wisely

In to shop wisely persons must;

Prepare a shopping list and stick to it in to avoid unnecessary spending

Prepare

Shop around for the best quality and prices to get their money’s worth

Shop around

Purchase items in bulk to benefit from reduced prices

Purchase

quality items even though they are expensive

Avoid impulse ing

Avoid

produce in season

Examine all items before purchasing

Examine

Keep receipts and warranties as proof of purchase

Keep

Consumers who adopt to thrift as a way of life usually do the following:
 

1) Save Regularly
– Saving is an important part of budgeting
– Thrift consumers who are able tries to avoid spending
2) Three R’s (reduce, reuse and recycle)
– Through recycling valuable items may be able to be reused by consumers or others
– Items may be used beyond its original intended use
-Recycled items may be used to create new products
3) Use possessions wisely and carefully
– The wise and careful use of items within the household and other possessions helps to ensure that they last and reduce spending money.

Consumers Benefit from thrift
Consumers who practice thrift can enjoy benefits.

They learn to save well through budgeting and prioritizing their needs and wants

The money in which they save from not spending on unwanted items gives them a sense of achievement and self-worth

A development in creative skills and abilities from learning to reduce, reuse and recycle waste

The buildup of savings helps person to reduce credit transactions and improves their standard of living.

Continuous sacrifices allow persons to able to live through economic crisis more than a person who does not practice thrift.

How can consumer benefit from thrift?
Thrift Shop
Thrift shops are in a building or have a formal setting.

Flea Market
Flea markets are often located in a parking lot and other open spaces in a community.

Countries Benefit from thrift

The country can save money (economic prosperity)

Gathered savings become available to government, businesses and individuals for investment

Reduction in land pollution through consumers practice of the three R’s

Consumer reduce demand for products which are not essential, this in turn conserves the countries natural resources.

Objectives:
State the reasons people save

State the benefits of individuals saving

Word Bank

Saving- the act of setting aside money for future use

Savings- Money which has been set aside for future use

Investment- The act of putting money into a financial institution or business with the expectation of earning interest or making a profit

Withholding tax- tax levied on income from interest and dividends

Saving is an economic activity which takes place in most communities

Persons reasons and ways of saving vary from person to person

People save for short-term and long-term goals

Persons’ ability to save depends on

Amount of disposable income

Their expenses (rent, utilities etc.)

Government’s taxation

Persons’ level of discipline and commitment

Reasons People save

To provide for their needs after retirement due to no flow of income

To provide emergency funds for unexpected expenses (unemployment or sickness)

For future expenses (paying for a house or send kids to college)

To open a business

To enjoy life (luxurious vacations)

To provide collateral for loans

To take advantage of investment plans

To leave assets for children when they die

Benefits of saving to individuals

To have a source of money to spend in the future

To be comfortable knowing that expenses can be met

To have a sense of control/achievement knowing that finances are being managed

To provide an extra income through proper investment.

Topic: Forms of saving.

Objective:
State the various forms of saving.

How do people save?
People can save in many ways from traditional to modern saving.
 

What are some traditional ways of saving?
Other terms used in place of traditional are:
Normal
Regular
Standard
Customary
Common

Traditional ways of saving:

Piggy bank- a money box, typically one shaped like a pig.
Sou-sou (meeting turn) – this is an informal traditional way of saving. Groups of individuals contribute money to a fund in intervals, members take turn in receiving funds
Some individuals simply put aside cash amounts at home which may be the least complicated but is vulnerable to theft and attracts no interest.

Some modern ways of saving:

Savings accounts- a service designed by financial institutions for small amounts of cash which can be used for meeting future planned or unplanned expenditures. Consumers can withdraw at any time getting back what they deposit with interest
Term deposits- a set amount of money is deposited for a set period of time (one-ten years) with an interest rate that increases with the amount of money and length of term. If the depositor breaks the agreement by withdrawing the money early no interest would be added.

Some modern ways of saving:

Retirement savings plan- these are tailored to suit people seeking additional income for their retirement. Regular deposits are made to this account. Persons may also save by contributing to pension plans at work.
Endowment plans- these are saving plans designed to pay out a lump sum at the end of the term of savings. These are usually part of a life insurance contract which pays out a lump sum in the event a saver dies before the term is up.

Modern ways of saving:

Mutual fund- these are collective investments schemes in which money from a number of investors is pooled professionally, managed and invested on their behalf.

Difference between Mutual Funds and a Life Insurance.
Mutual funds are a rewarding investment to meet your long-term financial goals, be it for education, purchasing a property, starting a business, etc. A life insurance policy involves a lesser amount of risk as compared to mutual funds. There is a guaranteed death benefit.

Objective:
State the benefits of saving to a country and region

Saving benefits a country in the following ways:

The habit of saving promotes thrift which can be passed on to future generations

When individuals save it reduces the pressure on the government resources.

It helps in reducing the demand for imported goods allowing the country to save in foreign exchange

Financial institutions use their customer’s savings to provide credit to government and entrepreneurs for economic development of the country.

Savings benefits a country in the following ways:

Individuals make their savings available to government directly …