Chapter 4 Review

There are many economic, social, and personal factors that affect our buying habits.

Economic factors include: prices, interest rates, supply and demand, and warranties.

Social factors include: interests, hobbies, culture, and advertisements.

Personal factors include: gender, age, income, education, and geographic region.

Phase 1: Before You Shop - in this phase you identify your needs, gather information, and become aware of the marketplace.

Phase 2: Weighing the Alternatives - in this phase you identify what is important to you, compare prices, and comparison shop.

Phase 3: Making the Purchase - in this phase you decide between using credit or cash, negotiate the price if possible, and know the real price of the product or service.

Phase 4: After the Purchase - in this phase you take care of any additional costs or tasks or return/replace any item you are unsatisfied with.

Credit is a type of loan that is paid back in monthly installments that often include additional fees or interest.

Before using credit, determine the down payment – a portion of the total cost of an item that must be paid at the time of purchase.

The advantage of paying cash is that you do not have to pay extra fees or make continuing payments. However, you lose the opportunity to earn interest and the money is no longer available for emergencies.

Timing of purchases

Store selection

Brand comparison

Label Information research

Price comparison

Warranty evaluation

Open dating is a labeling method that indicates the freshness, or shelf life, of a perishable product.

Impulse buying is purchasing items on the spur of the moment.

A rebate is a partial refund of the price of a product.

A cooperative is a nonprofit organization owned and operated by its members for the purpose of saving money on the purchase of goods and services.

A warranty is a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired.

An implied warranty is an unwritten guarantee that a product is fit for its intended use.

An express warranty is usually written and can be a full warranty or a limited warranty.

A full warranty states that a defective product will be fixed or replaced at no charge during a reasonable amount of time. 

A limited warranty only covers only certain aspects of the product, such as parts.

Return to the place of purchase

Contact company headquarters

Consumer agency assistance

Dispute resolution

Taking legal action

Fraud is dishonest business practices that are meant to deceive, trick, or gain an unfair advantage. Common types include:

• Telephone and mail scams that offer phony free prizes

• Work-at-home schemes

• Investment opportunities

• Fraudulent diet products and other remedies that attract consumers with phrases such as “scientific breakthrough” or “miraculous cure”

Consumer agencies include national organizations that deal with issues such as nutrition and automobile safety, and local organizations that handle complaints, do surveys, and provide legal assistance. 

The Better Business Bureau is an example of a private consumer protection agency. 

The Federal Trade Commission (FTC) is a Federal consumer protection agency mandated by the United States Government.

Mediation is an attempt by a neutral third-party to resolve a conflict between a customer and a business. A decision made in mediation is not legally binding.

Arbitration is an attempt by a neutral third-party to resolve a conflict between a customer and a business. A decision made in arbitration is legally binding.

Small claims court is a court that deals with legal disputes that involve amounts below a certain limit.

The cost of this type of legal action is a relatively low as cases usually do not involve juries or lawyers. Courts often rule in your favor and it usually only takes a few weeks.

However, you have to present your own case and evidence, awards have predetermined limits, and the judge's decision is final.

A class-action suit is a legal action on behalf of all the people who have suffered the same injustice.  These people are called a “class” and are represented by one lawyer or a group of lawyers.

An individual may decide to file a separate lawsuit instead. 

If the court rules in favor of the class-action, the money awarded is divided among the claimants or put into public funds.

Legal aid societies are a network of community law offices that provide free or low-cost legal assistance.

They are supported by public funds and provide a variety of legal services.

Not everyone is eligible for help from a legal aid society. Your income must fall below a certain amount to qualify, which varies from state-to-state.

Seek the services of a lawyer. If possible, get a referral from someone you know. Make sure that the lawyer you choose has experience in handling your type of case. Ask about fees and payment policies as lawyers can be expensive. 

Visit a legal clinic. These businesses can offer basic assistance with advice and filling out paperwork.  Some private attorneys offer their services at reduced rates and work part-time and legal clinics.