4.1 Deceptive advertising techniques

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4.1 Deceptive advertising techniques

  1. 1. Personal Finance
  2. 2. • After today, you will be able to: – Identify some types of deceptive advertising techniques that are used on consumers, – List the signs of fraud – Take the proper steps to report instances of fraud to the authorities.
  3. 3. • Advertising that is likely to mislead consumers through false statements, omitted information, or other unfair means. • It is ILLEGAL! • It can be stopped by the Federal Trade Commission (FTC). • What are some examples that you can think of right off hand?
  4. 4. • Bait & Switch: – A sales tactic in which a bargain-priced item is used to attract (bait) customers who are then encouraged to purchase a more expensive similar item.
  5. 5. • Bait & Switch – Example – “Come in today and get a 2010 Chevrolet Corvette for the low monthly payment of $250.” – When you arrive to buy, they “can’t find” the car in the advertisement, and steer you to a higher priced alternative.
  6. 6. • False Promise of a Free Gift – If a store promises a “free gift,” it must actually be free, with no strings attached. – If you must purchase something to receive the gift, they must use phrasing like “Free gift with purchase.” – Example: • “If you attend our sales demonstration, you will receive a free vacation.”
  7. 7. • Deceptive Pricing – Advertising a “sale” price that is actually no better than the product’s normal price – If a business claims that it has lower prices than it’s competitor, it must show proof. – Example: A store advertises a sale on toothpaste, when in reality, it is the normal price. – Why would they do this?
  8. 8. • Hidden Catches – Extra fees – Hidden restrictions – Surcharges – If there are any requirements to get a certain price, then that must be clearly disclosed. • Example: An airline offers a “Bargain Spring Break Airfare” package. After booking your tickets, you find out that you must pay a fee for seat selection, baggage, etc.
  9. 9. • The deceitful conduct designed to manipulate another person for some gain. – Lying – Repeating something that you know is false – Concealing a fact that might save the other party from being cheated
  10. 10. • Pyramid Schemes – A person is asked to pay for the ability to sell a particular item. – Mass-Marketing is legal, but must have a valid product to sell. – The difference is that in a Pyramid Scheme, you focus more on recruiting than selling.
  11. 11. $ $ $ $ $ $ $ $ $ $ $ $ $
  12. 12.  Chain Letters  “Send $5 to the person who sent this letter to you and send the letter to 5 other people or something bad will happen.”  Sweepstakes  Earn Money at Home  Online Auctions  Someone asking for personal info through email or text.
  13. 13. • No address, or a temporary address • High Pressure Sales Tactics • Asking you to pay up front • If it sounds too good to be true, it probably is… – There is no such thing as a free lunch!
  14. 14. • If you suspect fraudulent behavior: – Report to the Federal Trade Commission – Contact the Better Business Bureau • www.bbb.com
  15. 15. • After today, you will be able to: – Identify some types of deceptive advertising techniques that are used on consumers, – List the signs of fraud – Take the proper steps to report instances of fraud to the authorities.
  16. 16. • Visit http://tinyurl.com/fraudresearch • Research one of the types of fraud • Complete 4.1 Fraud Project

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