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Trading up

Chapter 3 Section 3.3 Deception & FraudPages 101-107~People sometimes buy products that don’t meet their needs.~Products that thequality is not good.~Advertising is deceptive if it is misleading.~Most advertising provides accurate information.~Salespeople usually try to help you finda product that meets your needs.~Exaggerated claimsand misleading pricesare deceptive practices.

Trading up

You’ve seen a product advertised.

~You go to the store and the salesperson tells

you the product isn’t good….that you

REALLY WANT to buy the more

expensive product….this is TRADING UP.

~It is not illegal.

~Salespeople make more money if you purchase

this “better” product.

Sales price

~a sale is a sale ONLY if the price is below the

usual price.

~Sometimes sales prices are deceptive.

Suggested retail price

~Prices can be deceptive.

~Manufacturer’s suggested retail price is

sometimes HIGHER than any retailer

EXPECTS to actually get for the product.

~Beware of claims of lowest prices in town

Loss leader

~Sometimes stores GET YOU TO COME TO

THEIR STORE by attracting you with a

product priced below cost.

~Store will lose money on this product


~Items prices below cost to attract you to the

store are called a LOSS LEADER.

~This is legal…BUT…beware that the OTHER

PRODUCTS aren’t priced HIGHER then



~Deliberate deception

~Designed for unfair or unlawful gain.

~Cheating the consumer

~A statement is fraud when it meets

2 conditions:

~person making the statement knowsthe statement is false.

~purpose of statement must be to cause others to give up property that has

value (usually money).

~proving fraud can be difficult

~without written evidence or witnesses, fraud is hard to prove.

~Best protection against fraud is to AVOID IT.

~Need to learn the difference between honestanddishonest offers.

~When an offer seems to good to be true…it may be fraud.

Bait and switch

~If you arrive at a store to buy an

ADVERTISED product and it is OUT OF STOCK or SOLD OUT…the salesperson tries to get you to buy a “better” “more expensive” AVAILABLE product.

~Baiting consumers with an advertised BUT non-existent bargain and then switching

them to purchase a more expensive product (similar to the advertised product but with more features “to meet their needs”)

~Don’t just buy the more costly item because

you came to the store ready to buy

Pyramid scheme

~Example Chain letter that asked you to mail

$1 to the person on the top of the letter

and sent copies to 10 friends…telling you

that you will receive LOTS OF MONEY

~Pyramid scheme is a type of FINANCIAL FRAUD in which people PAY to

join an organization orparticipate in a financial “sure thing” money maker.

~People are PROMISED lots of money.

~In the end, the only people who make money

are the people on the TOP

Telephone fraud

~You can’t see them

~They can tell you they are calling from

a legitimate business…but are they!?

~Can’t see their body language to judge

if they are telling you the truth.

Telephone fraud clues to look for
Telephone Fraud Clues To Look For


~Offer a deal too good to be true.

~Ask for your credit card orSocial Security Number to VERIFY your identity.

~You must BUY SOMETHING to get something of a greater value.

~They refuse to send you a written copy of a sales agreement…or what they are offering BEFORE you buy.

~They demand you ACT NOW or the offer will expire.

~They refuse to provide a TELEPHONE

NUMBER of ADDRESS of their


~Telephone fraud tries to PLAY ON YOUR


~They have SCRIPTS to tell them what to

do to respond to ANY SITUATIONS

they may encounter when talking to

potential customers.

How to protect yourself from deception and fraud
How To Protect Yourself From Deception and Fraud

~How to Protect Yourself From Deception & Fraud:

~Recognize it when you see it.

~Check out unfamiliar companies BEFORE purchasing anything.

~Ask questions about offers that seem too good to be true.

~Know the product or service you are buying.

~Make decisions with your head, not your emotions.

~Use your decision-making process to evaluate your options.