Category Chapter 8

Sep 14 2024

Government Impersonation Scammers

New Federal Trade Commission data reveals that government impersonation scammers are targeting consumers for payments in cash, with the amount of cash reported lost to these scams nearly doubling from 2022 to 2023.

The FTC data shows that consumers reported losing $76 million when paying cash to government impersonation scammers in 2023, up from $40 million in 2022, an increase of 90 percent. In just the first quarter of 2024, consumers have reported losing $20 million to government impersonation scams when paying with cash.

The median loss for consumers who reported paying cash to government impersonation scammers in the first three months of 2024 was $14,740 – far higher than for any other method of payment. Consumers have reported mailing cash as well as handing cash to drivers sent to collect the money.

Scammers frequently impersonate government agencies, from local police to federal agencies, and while details of the pitch may vary, a common element is that the consumer they are targeting needs to send or transfer money to address an urgent issue or serious problem. This news is usually accompanied with a combination of dire warnings or threats designed to put their target in a state of mind where the urgency of the moment bypasses any doubts they have.

The key fact is this: government agencies will never call, email, text, or message you on social media to ask for money or personal information, and they will never demand a payment. Only a scammer will do that.

The FTC recently put into effect a new rule that gives the agency stronger tools to combat and deter scammers who impersonate government agencies and businesses, enabling the FTC to file federal court cases seeking to get money back to injured consumers and civil penalties against rule violators.

Consumers who are targeted by a government impersonation scam should report it to the FTC at ReportFraud.ftc.gov. More data about government impersonation scams is available on the FTC’s data dashboards.

For more information, click here.

Teaching Suggestions

·         Ask students if someone they know has been scammed by government impersonation scammers. If so, what was their experience?

·         Ask students to prepare a list of actions they might take if a government impersonation scammer approaches them.

Discussion Questions

1.      What can governmental agencies do to stop these impersonators?

2.      Once apprehended, should the perpetrators be fined or sent to prison? Any other penalties?

3.      What should you do if you are targeted by a government impersonation scammer?

Aug 3 2024

SHRINKFLATION AND SKIMPFLATION

Over the years, companies have raised prices through shrinkflation, in which the price of an item stays the same while the package size is reduced. A sports drink bottle is now 28 ounces instead of 32 ounces, or the “half gallon” ice cream carton is now 1.5 quarts or smaller. However, the price has stayed the same or perhaps increased. 

Other examples of companies downsizing products without downsizing prices include air-filled chip bags, smaller soup cans, and reduced size detergent packages. This marketing strategy is not new.  One of the first examples was years ago when a coffee company reduced its one-pound can to 13 ounces.

Similarly, skimpflation occurs when lower-quality materials are used in products like paper towels or cheaper ingredients in microwave dinners and restaurant meals, while prices remain unchanged. This also occurs when a hotel reduces the frequency of room cleaning or offers fewer food options for the complimentary breakfast.

While shrinkflation can be measured in government cost-of-living statistics, skimpflation is much harder to compute. If a paper towel roll costs the same with fewer sheets (shrinkflation) that will show up as a unit cost increase (inflation). However, if the paper towel roll is the same size but with inferior material quality (skimpflation), this change is not reflected in inflation statistics.

To get the best value for your money, consumers are encouraged to: (1) continue to use unit pricing to compare package sizes; (2) compare prices at several stores; (3) search online for digital coupons and rebates; and (4) read reviews of other consumers for information on changing product quality.

For additional information on shrinkflation, click here.

Video link: click here.

Teaching Suggestions

  • Have students find examples of shrinkflation and skimpflation for various products and services.
  • Have students create a visual (poster or slide presentation) that compares examples of shrinkflation and skimpflation.

Discussion Questions 

  1. Describe actions a person might take to stay aware of shrinkflation and skimpflation.
  2. How can a person assess changes in product or service quality to continue to make wise consumer choices?
Jun 22 2024

BEWARE OF FAKE ONLINE STORES

Careless online shopping can result in lost money and identity theft. Many fake companies attempt to attract and scam online customers.

To determine the legitimacy of an online store

  • Examine the URL for spelling errors, strange characters, and confirm you are on the correct website.
  • Look over the website design for poor grammar and low-quality images.
  • Click the padlock icon in the address bar; the dropdown box will tell if the site is secured with a digital certificate.
  • Use a website checker such as UrlVoid.com to inform you of any warning signs for the site.
  • Keep your browser and antivirus software updated to help identify unsafe sites.
  • Read reviews from multiple sources to confirm the credibility of the seller.

Each day, scammers create new ways to trick browsers and shoppers. Following these suggestions can help you reduce the chance that you will be a victim of an online scam.

For additional information on fake online stores, go to:

How To Spot a Fake Online Store in 6 Easy Steps

Video link:

Teaching Suggestions

  • Have students talk with others to learn about any experiences with fraudulent online shopping sites.
  • Have students create a recorded podcast with information on how to avoid fake online sellers.

Discussion Questions 

  1. What features of a shopping website have you observed that might be considered suspicious for a scam?
  2. Of the actions listed, which have you taken to prevent identity theft and online shopping scams?   
May 25 2024

Dark Patterns to Trick Consumers

“Click to verify your free trial and subscription.”  Dark patterns are online designs to fool a person into buying items or giving up privacy. These deceptions include disguised ads, hiding junk fees, difficult to cancel subscriptions, pre-checked boxes, hard-to-find disclosures, and tricks to get you to share personal data.

A recent Federal Trade Commission study reported that companies are using more and more sophisticated practices to trick and trap consumers. The study “examined how dark patterns can obscure, subvert, or impair consumer choice and decision-making and may violate the law.”  The report highlighted four digital dark pattern tactics:

  1. Disguised ads to mislead consumers. These deceptive ads include promotional information designed to look like independent, editorial content.  Comparison shopping sites claiming to be neutral, but rank companies based on advertising fees paid. Countdown timers are used to get consumers to believe they only have a limited time to purchase an item.
  • Difficult to cancel subscriptions or charges. Companies attempt to trick consumers into buying items.  A deceptive subscription seller may persist with ongoing charges for an item a person never intended to buy. The company will likely make it very difficult to cancel free trials and subscription plans. Consumers may be required to navigate a confusing and lengthy cancellation website path. As they click through several pages of promotions and links, they may be directed away from the cancellation path. 
  • Hidden key terms, junk fees.  Some dark patterns hide key product limitations among extensive terms of service documents, which may also conceal junk fees. Companies advertise only part of the total price to lure consumers; other mandatory charges are not mentioned until late in the buying process.
  • Personal data sharing trickery.  Presented as a choice for privacy settings or sharing data, a website will steer consumers to an option that gives away personal information. In one situation, a company used default settings to collect and share a person’s viewing activity with third parties; consumers were only provided a brief notice that could easily be missed.

Awareness of these tricks can help consumers avoid being scammed.  Victims of these deceptive tactics may file a complaint with the Federal Trade Commission at ReportFraud.ftc.gov.

For additional information on dark patterns, click here:

Article #1

Article #2

Teaching Suggestions

  • Have students talk to others to learn about their experiences with deceptive online buying.
  • Have students create a visual summary (poster or slide presentation) to warn consumers of dark patterns.

Discussion Questions 

  1. What are possible examples of the tactics discussed in the article that might be used to deceive consumers?
  2. Describe actions a person might take to avoid deceptive online marketing tactics.
May 11 2024

THE BEST TIME TO BUY A CAR   

Car prices and availability are still being affected by the COVID-19 pandemic. Money management experts continue to recommend keeping your current vehicle. Even if repair costs are higher than what you owe on the vehicle, it may be worth getting it fixed to avoid the high prices.

However, if you plan to buy a car, to get the best deal consider the following:

  • Try to purchase a vehicle early in the week. Sunday has been the best day for a purchase, with an average savings of 10 percent off the manufacturers suggested retail price. In states that restrict auto sales on Sunday, Tuesday is the best day. Research indicates that Thursday is the worst day to buy a car.
  • Buying a vehicle closer to the end of the month may have advantages. Salespeople may be trying to make their monthly quota. View potential purchases between the 16th and the 20th of the month, and then negotiate your purchase the last two or three days of the month.
  • Some holidays that occur earlier in the month (President’s Day, Independence Day, and Labor Day) may result in better deals.
  • Some of the best car deals may be obtained at the end of each quarter of the year (March, June, September, December), especially at year end. Discounts are traditionally highest in December. The last quarter of the year can be the best time to buy a car, both new and used. December 31 can be the day to get the best deals.

Be aware that the calendar will only get you so far when obtaining the best deal. Doing online and in-person research is vital. Seek out incentives for vehicles in which you are interested. Also important, if buying on credit, is being pre-approved for a loan.

For additional information on the best time to buy a car, click here.

Teaching Suggestions

  • Have students talk to others about actions they have taken when buying a car.
  • Have students create and role play a car buying negotiation situation based on their experiences and research.   

Discussion Questions 

  1. How might a person reduce the automobile and transportation costs in their budget?
  2. Describe actions a person might take before meeting with a car salesperson? 
Feb 17 2024

BETTER CUSTOMER SERVICE

Every purchase experience is enhanced by strong customer service. When unsatisfactory service is encountered, the following actions are suggested:

  • Be brief, clear, and concise about the problem and be reasonable about what actions you would like.
  • Consider posting your concern on the company’s social media site.  Many companies monitor social media for customer dissatisfaction.
  • If your complaint involves a bank, credit card company or other financial service provider, file a complaint with the Consumer Financial Protection Bureau at ConsumerFinance.gov/complaints. For other complaints, especially from local companies, the Better Business Bureau might be of assistance.
  • Elliott Advocacy, a nonprofit organization, provides resources and suggests actions to resolve issues. Their website (www.elliott.org/company-contacts) has the names and contact information for customer service managers of most major companies.
  • Another nonprofit advocacy organization is the Consumer Action Center (https://clark.com/about-consumer-action-center/), which helps with consumer problems for free. Phone number is 636-492-5275.
  • For more extensive problems, especially those related to real estate or motor vehicles, Karens for Hire (www.karensforhire.com) is a paid service usually costing less than $100.

When seeking action, be sure to avoid these behaviors to obtain better customer service:

  • Do not communicate anger or hostility, which can result in you being viewed as the problem rather than your legitimate concern.
  • Do not contact the CEO; instead, consider a manager or vice president at the operational level.
  • Do not threaten with not doing business with the company in the future. Saying that could remove the incentive for the organization to address your complaint.

You may need to use an array of tactics to obtain the satisfaction you desire. Remember, not every action will be effective in every situation. Most important, to improve your chances of success, be kind even when you are frustrated. “Polite persistence” is the key. 

For additional information on obtaining better customer service, click here.

Teaching Suggestions

  • Have students talk to others to learn about actions they have taken to resolve consumer problems.
  • Have students create a video, poster, or slide presentation with recommendations for wise shopping and to avoid consumer problems.

Discussion Questions 

  1. What actions do you believe are most effective for obtaining strong customer service when encountering a consumer problem?
  2. Describe a potential consumer problem situation. What actions would you suggest to resolve this concern?    
Dec 23 2023

Global Consumer Protection

In late 2023, the Federal Trade Commission (FTC) signed a cooperation agreement with the consumer protection authorities of the four Latin American countries–Chile, Colombia, Mexico, and Peru– to combat fraud both inside and outside the United States.

The Multilateral Memorandum of Understanding (MMOU) promotes cooperation across Latin America, including information-sharing to further investigations and policy development, as well as other types of assistance on cross-border enforcement matters.

Low-cost online communications allow scammers to target consumers regardless of where they live. The increasingly global nature of commerce—and fraud—poses an enforcement challenge for consumer protection authorities around the world. From 2019 to 2022, fraud reports against companies in Chile, Colombia, Mexico and Peru more than doubled, from 6,103 to 12,869. At the same time, total losses reported by consumers skyrocketed—from $39.4 million in 2019 to $237.9 million in 2022. Reports about online shopping were the top complaint during this same period, with losses increasing from $3.8 million in 2019 to $49.5 million in 2022. Social media was the top contact method consumers cited at 41 percent of reports in 2022. These four countries represent about 225 million people and combined make up the eighth biggest economy in the world.

In signing the MMOU, the FTC and consumer protection authorities in these countries agreed to cooperate in investigations related to violations of consumer protection laws. Specifically, the MMOU encourages participants to:

  • Share complaints submitted by consumers;
  • Provide investigative assistance, with appropriate safeguards, including sharing of information relating to defendants, their assets and/or their deceptive conduct;
  • Coordinate enforcement actions against cross-border violations of law;
  • Provide other practical case assistance, where appropriate, in the enforcement of consumer protection laws, such as gathering evidence;
  • Participate in econsumer.gov, which allows consumers from around the world to report fraud and provides consumer protection agencies around the world with access to important data about potential violations;
  • Cooperate on non-investigatory matters such as exchanging approaches to consumer protection policy issues and participating in staff exchanges, joint training programs and workshops.


For More Information, click here.

Teaching Suggestions:

  • Ask students to debate the issue “Should governmental agencies be involved in protecting consumers”? Why or why not?
  • Ask students to make a list of national and international consumer protection agencies where they can report international and national scams and to learn about other steps they can take to combat fraud.

Discussion Questions:

  1. What actions can consumers take to protect themselves from national and international scams?
  2. How can your complaints help consumer protection agencies around the world to spot trends and work together to prevent international scams?
Dec 17 2022

Personal Finance Simulations for Budgeting and Investing

Question:  What is a Personal Finance simulation? 

Answer:  A Personal Finance simulation allows students to fine-tune their decisions when they encounter real-life scenarios while taking a Personal Finance course. 

The authors of Personal Finance, 14e and Focus on Personal Finance, 7e have partnered with StockTrak.com to provide students with an interactive learning experience before they leave the classroom.   

The simulation that accompanies the Kapoor Personal Finance texts includes two components–a personal budgeting simulation and an investing simulation.

The Budgeting Simulation

  • Students assume the role of a full-time employee or part-time employee living on their own.
  • Over a virtual 12-month period, students review their estimated income and expenses, create monthly budgets and savings goals, and try to build an emergency fund. Each month takes about 20 minutes to complete.
  • Each month students manage their checking, savings, and credit card accounts as they deal with life’s expected and unexpected events that affect their budget.  
  • Within the simulation, additional personal finance tutorials are available to make sure students are learning about budgeting, banking, credit, employment, taxes, insurance, and more.
  • A class ranking based on net worth, credit score, and quality of life keep the students fully engaged and professors informed of each student’s progress.

The Investing Simulation

  • Students receive a virtual $25,000 in a brokerage account.
  • They can research U.S. stocks, ETFs, bonds and mutual funds and create their own investment portfolio.
  • All investment trades are based on real-time market prices.
  • Within the simulation, interactive tutorials help students get started and provide additional information during the simulation.
  • Students can monitor their performance versus their classmates.  At the same time, professors can track each student’s progress.

And BEST of ALL, with the new partnership between Stock-Trak and McGraw Hill, classes using the Kapoor Personal Finance textbook get a 50% savings when students register for the simulation – only $9.99 per student instead of retail price of $19.99.

Teaching Suggestions

  • Visit StockTrak.com/kapoor to learn more about the Personal Finance Budgeting and Investing Simulation.  You can learn even more by watching a short video or accessing the Kapoor demo materials located toward the bottom of the above site. 
  • It’s easy to get started.  All you need to do is access the above site, register your classes for Spring 2023, and indicate the dates you want your student to have access to the Personal Finance Simulation.  The site will generate a unique link for you to give to your students.
Jun 4 2022

Conned on Social Media? It’s not just you

In 2021, more than 95,000 Americans told the Federal Trade Commission that they’d been scammed with a con that started on social media. In fact, more than one in four people who reported to the FTC that they lost money to any scam said the transaction started with a post, an ad, or a message on a social media platform. And the losses amounted to about $770 million.

Americans reported losing the most money to investment scams (particularly those involving bogus cryptocurrency investments) and romance scams. More than a third of the Americans who lost money to romance scams said it started on Facebook or Instagram.

The largest number of reports came from people who lost money trying to buy something they saw marketed on social media. Most said they didn’t get what they paid for, while some reported ads that impersonated a real online retailer. Reports of social media fraud increased for all age groups in 2021, but people 18 to 39 were more than twice as likely to report losing money than older adults.

Scammers trying to get your money are always looking for new ways to reach people. And they’ll use whatever they know about you to target their pitch. Here are a few actions you can take to protect yourself, no matter which social media platform you use:

  • Try to limit who can see your posts and information on social media. Of course, all platforms collect information about you from your activities on social media, but visit your privacy settings to set some restrictions.
  • Check if you can opt out of targeted advertising. Some platforms let you do that.
  • If you see urgent messages from a “friend” asking for money, stop. It could be a hacker behind that post pretending to be your friend.
  • Don’t deal with a vendor that requires payment by cryptocurrency, gift card, or wire transfer. That’s sure to be a scam.

If you see or experience scam on social media, report it to ReportFraud.ftc.gov.

For More Information, click here.

Teaching Suggestions

  • Ask students if they, their friends or relatives have been scammed on social media.  If so, what have been their experiences?
  • Ask students to make a list of actions they might take to protect themselves from social media scams.

Discussion Questions

  1. Why do many people fall victims to scammers?  What can they do to protect themselves?
  2. What can the federal, state, and local governments do to protect consumers from scams?
Mar 12 2022

Gift Card Scams

Someone might ask you to pay for something by putting money on a gift card, like a Google Play or iTunes card, and then giving them the numbers on the back of the card. If anyone asks you to do this, they’re trying to scam you. No legitimate business or government agency will ever insist you pay them with a gift card. Anyone who demands to be paid with a gift card is a scammer.

What Gift Card Scams Look Like

Gift cards are for gifts, not for payments. But these cards are popular with scammers because gift cards are easy for people to find and buy, and cards have fewer protections for buyers compared to some other payment options. Gift cards are more like cash: once you use the card, the money on it is gone. Scammers like this.

If someone calls you and demands that you pay them with gift cards, you can bet that a scammer is behind that call. Once they have the gift card number and the PIN, they have your money. Scammers may tell you many stories to get you to pay them with gift cards, but this is what usually happens:

  1. The caller says it’s urgent. The scammer says you have to pay right away or something terrible will happen.
  2. The caller usually tells you which gift card to buy. They might say to put money on an eBay, Google Play, Target, or iTunes gift card. They might send you to a specific store — often Walmart, Target, CVS, or Walgreens. Sometimes they tell you to buy cards at several stores, so cashiers won’t get suspicious. And, the caller might stay on the phone with you while you go to the store and load money onto the card. These are all signs of a scam.
  3. The caller asks you for the gift card number and PIN. The card number and PIN on the back of the card let the scammer get the money you loaded onto the card. And the scammer gets it right away.

 For more information, click here.

Teaching Suggestions:

  • How do scammers convince you to pay with gift cards?  Make a list of common gift card scams and schemes, and share it with others.
  • Ask if anyone has paid someone with a gift card.  If so, what was their experience?

Discussion Questions:

1.  What are signs of a gift card scam and how can one spot a gift card scammer?

2.  What steps should you take if you paid a scammer with gift cards?