Life Skills Development/Unit Four/Consumerism/Lesson

Introduction
Today we are bombarded by the ethic of excessive consumption. As learners, we need to think critically and make informed decisions to spend our money wisely. This unit will expose you to a range of appropriate strategies to employ when making decisions about spending.

Definition

 * Hire Purchase: System for financing the purchase of any equipment where the ownership is vested with the lender until final payment is made. The borrower is required to place a desposit and make periodic, usually monthly repayment at a flat rate of interest.


 *  Warranty: A promise about a product by a manufacturer or a seller about the durability of any product purchased.


 * Guarantee: To accept responsiblity and have obligation to compensate if any purchase product does not meet the expected standards.


 * Insurance: Promise of reimbursement in the case of loss paid to people or companies.
 * A Life Insurance: is an investment that is made to ensure a form of security and financial compensation when an unforseen circumstances such as death occurs.
 * Permanent Life Insurance:Provides coverage throughout your life as long as the premium payments are paid on time and you do not cancel the policy. The premium of permanent insurance policy remain relatively level while the policy is in force.
 *  Term Life Insurance:Provides a coverage during a specified period of time as long as the premium payment are paid on time.
 *  General Insurance: Insurance that is not detemine by life insurance for example; automoblies, health, and home owner polices. Paymens are provide for the benefits covered.
 * Advertising: It is making known or calling public attention to a product, service or company by paid promotion.

Sub-Topics

 * 1) Consumer shopping guidelines
 * 2) Loans and hire purchase
 * 3) Insurance
 * 4) Advertising

Topic 1: Consumer Shopping Guidelines

Shoppers today have a large variety of shopping alternatives. Whether you are downtown or in the mall or even on the Internet, getting value for money is always a best practice.

Consumer guidelines:

CONTENT

Beware of Fraud when you shop or pay your money

How to identify someone who wants to defraud you.
 * Contact you without permission by phone, email or in person
 * Well spoken and friendly when they come to your door
 * Well informed and approached you with professionalism
 * Your decision making is often forced
 * You are encouraged and enticed
 * Payment is required before transaction is completed

Types of Fraud:

Types of Fraud:

a. Affinity fraud
 * The con artist gains the trust of certain indiividual or group of people(i.e. religion, race, gender etc) when the time is right will take advantage of the individual or group, usually for money or material goods.

b. Insurance fraud
 * The con artist tricks intentionally cause damage or injury to fraudulently collect money from your insurance policy.

c. Pitiful fraud
 * A con artist tells pitiful lies about his or her self or family in order to get you to feel sorry and give him money.He or she is well dressed and not a beggar.

d. Email fraud
 * Items are offered in advance to get the victim credit card information. Delivery is never made because it is not a legitmate offer in the first place.

e.Credit card fraud There are several types of credit card fraud.


 * A credit card of another person is used to charged for a purchase on that card up until the card is cancelled..


 * A[merchant]] (business, service provider, seller, etc.) is "tricked" into releasing merchandise or rendering services, believing there would be reenburshment.The merchant later learns that they will not be paid, or the payment they received will be reclaimed by the card's issuing bank.

Discuss with a friend, a time when an attempt was made to defraud you in one of the ways mentioned above or in another way. Share what was so convincing about this person and his / her offering and how you responded. Discuss if you would respond differently in the future.

Getting justice after fraud:
 * What to do if you are ripped off
 * Fight Back: Do not let anyone get away with fraud, always take action.
 * Become an informed consumer
 * Work with the police and warn others to help prevent these crimes

Letter of complaint:

State the facts of the complaint using the Prevatt acroymn- F.A.C.E.S

F: Facts

A: All the facts

C: Cause (of the complaint)

E: Effect, (what is the impact)

S: Solution

Write a letter of complaint, asking for the specific redress you would like for a faulty purchase, that was very different from the one you had asked to purchase and that you had expected to be in the sealed box you received. Use the format to assist you to write the letter.

Your address Date

Title of person e.g. The Manager

Name of institution/store

Address

Dear Sir/ Madam / or the name if you know it e.g Mr. Akong

First paragraph Write the aim of your letter of complaint - what you want to achieve by this communication.

Second and other paragraphs Write all supporting information. Use F.A.C.E.S

Final paragraph Close politely, and restate exactly what you want the companyto do for you.If you want to add a very serious note, you amywnt to put something like: if you fail to address my complaint within this month, I will be forced to take legal action. I am hoping it will not come to this as I had a cordial customer relationship with your company until this problem arose.

Close Your sincerely, or Yours truly,

Your signature

You can make a complaint in person, in writing, or by telephone to the company, stating the problem that you are experiencing with the item. Even if you complain in person or by telephone, it is always best to document your complaint in writing. Making a written complaint helps you be consistent in describing the problem in detail chronological order.


 * Ensure that you give a clear description of the problem and the redress you are asking for.
 * Read the copy of your letter(written above)to refresh your memory and keep it as documentary evidence.
 * Have handy, photocopies(not originals) of receipts, warranties or other relevant documentation.
 * Give a phone number where you can be reached
 * State a deadline for a resolution of your matter.
 * Get the name of the person with whom you are speaking
 * Jot down the date and time and what you said
 * Remain calm at all costs.

Look at the letter of complaint that Sandra has written. Look at it closely with your friend and note ways it could be improved.Rewrite the letter in paragraphs, according to the guidelines below.


 * Writer's address and full date
 * Title of specific Manager in the Company, its address, and greeting e.g. Dear Ms. Fulani
 * Aim
 * Helpful information
 * F: Facts
 * A: All the facts - where, when and details of what
 * C: Cause of the complaint - how and why
 * E: Effect, (what is the impact)
 * Polite Close

Pretend that you are the Manager of Payless Ltd.Discuss with your friend how you would respond to this letter of complaint. Give reasons in your response of a few lines.

Payless Ltd

Main Street

St. James

Dear Sir/ Madam,

I wish to inform you that a pair of shoes was bought on Tuesaday 16th March 2007 and it was defected. When I arrived home, one side of the shoe heel was not attached. Also when I tried the other shoe, I discovered that the heel was loose. As a result I was unable to attend my daughter's weddimg. I am requesting reimbursement for the shoe I purchased at your store on Tuesday 16th March. I hope I will be reimbursed by 30th March 2007.

Respectfully Yours

Sandra Rammath

}}

Topic 2: Loans and Hire Purchase

Loans from banks, credit unions or other financial institutions can assist a buyer in providing cash. Many items such as cars, homes, vacation or tertiary education cannot be personally financed. Selecting a loan can be difficult especially with hidden charges and different rates. A loan consist of a principal, an interest rate % and a time period in years to payback. A financial advisor can assist you in making a wise decision.

The following activity can assist you to focus on some key questions when selecting a loan:

{{Activity| Sam can obtain a loan from a bank for $10 0000 over a two year period at a rate of 5%. What is his interest? What is his total payback to the bank?

Feedback Interest can be found using this simple mathematicsl formula: Interest$ = Principal$ x rate x time (years) / 100 Interest = $10 000    x 5    x 2 /100 = $1 000 TOTAL to be paid = Principal$ + Interest$ = $10 000   + $1000                 = $ 11 000 Did you notice that the total to be paid to bank after two years is $1000 more than the original sum borrowed. This is the interest you owe the bank for the lending facility.

Now you can find the interest to be paid on a loan for $15000 at a rate of 8% over a 21/2 year period.

Hire Purchase is a way of financing items from stores when not purchasing with cash. You may have seen famous furniture stores advertisng hire purchase options of 3 month, no downpayment and 12 month plans. Selecting a hire purchase plan can be tricky as you can pay back much more than you planned. It is important to work out each option and the total payback before making your choice A hire purchase plan consists of a downpayment ,a principal, an installment and a time period in years.

The following activity can assist you to focus on some key questions when selecting a hire purchase plan:

{{Activity| Lapana can purchase a television set costing $4800 from an appliance store using two HP options: 1. no downpayment, installment $300 every month for 18 months 2. $1000 downpayment, installment $200 every month a bank for 20 months. Which plan should Lapana choose?

Feedback HP1: installment$ = $300 number of months= 18 total = $300 x 18 = $5400

HP2: installment$ = $200 number of months= 20 total = $200 x 20 plus downpayment = $4000 + $1000           = $5000 Did you notice that Lapana will need to weigh whether he prefers to pay less or pay over a shorter time.
 * 1) plan 2 is less than plan 1
 * 2) plan 2 takes longer than plan 1

}}

'''Topic 3. Insurance.'''

List and describe various types and costs of insurance.

Check the costs and benefits of different types of insurance, sold by at least 2 companies in your community. Include the following: Life insurance Term insurance General insurance: car, home(with or without contents) Health insurance Indemnity insurance

With one of your friends, evaluate the insurance schemes in terms of the Health insurance Does it cover 80% of your medical bills?

Critical illness policy Does it replace your income while you recover from a critical illness, and assists with the     20% of your medical bills that your Health insurance does not cover.

Term and Life Insurance Does it replace your income adequately? General Insurance Does it put you back in a position before your loss or liability? Indemnity Insurance Is you risk covered adequately? Your Finance company may cover 80% of your mortgage, you cover 10% and they put the rest of the risk with an Indemnity Insurance Company.

Retirement  Is your insurance plan registered or unregistered? Do you have an annuity plan ( registered the Government) which allows tax deduction but can only be accessed by age 50 (other wise you get a penalty)? Do you have an unregistered one, from which you can access funds at any time? In a short report, give reasons why you would recommend any specified one for you or your family.

'''Topic 4. Advertising.'''

Advertising is a very important part of marketing goods and services. Advertising media include both print and electronic. Print media include newspapers, flyers, brochures, posters, banners, signs. Electronic media include television, radio, Internet, Electronic signs etc.

Advertisements are usually prepared by professional teams or agencies. They use a combination of fonts, colours, graphics and text. They are designed for various target audiences for example an advertsiement of baby diapers is geraed to mothers of babdies/toddlers but not necessarily to teenagers.

Sometimes an advertiser may distort the facts in order to promote a product.While this is ethically wrong, many viewers do not easily distinguish between fact and fiction. When reading an advertisement, it is important to ask yourself the following: {{Activity| Don't be fooled by advertisements}}
 * 1) who/what is the source of the information
 * 2) what is the nature of the claim?
 * 3) Is the claim plausible?


 * 1) Examine and discuss with a friend, newspaper and television advertisements about household goods, vacations, purchasing a house/condo and investigate the accuracy ot the information and claims.

Write a short report on your findings.

Include the extent of the appeal to the emotions and how this is done

the factual content

the clarity of information

Portfolio Contents

 * 1)  A list of consumer guidelines for a particular product
 * 2)  A comparison between two selected loans, two hirepurchase plans for the same product, two insurance plans.
 * 3) A set of at least two recent fraudulent activities - one local/regional and the other international
 * 4) A set of advertisements from both the print( newspaper, brochure, flyer) and electronic media ( Internet web page, banners, television).

Summary
At the end of this unit, the learner will have been exposed to consumer guidelines and will be able to follow and make informed decisions when deciding to purchase any items. You would have also increased your awareness of fraudelent activities and how to avoid them or minimise risk. You have also looked at various loans types and hire purchase plans and how to calculte th etotal to be paid back to the financial institution. Various types of insurances have been discussed with a view to assist the learner to make informed decisions when opting to take any type of insurance. Finally you looked critically at a variety of advertisements both in the print and electronic media.

Checklists of Performance Task
1. Shopping Guidelines  1.|I wrote consumer guidelines for one product e.g. a shoe|||| 2.|I wrote the information I researched at my local Consumer Affairs Authority|||| 3.|I recalled and reflected on an experience of almost /being defrauded.|||| 4.|I identified any other ways that I or my friends and family were /almost were defrauded e.g. credit card fraud.|||| 2. Identify various components of loans and hire purchase plans  1.|I listed the components of different loans|||| 2.|I listed the components of different hire purchase plans|||| 3.|I compared the benefits and limitations of at least two different comparable loans|||| 4.|I compared the benefits and limitations of at least two different hire purchase plans for a product I wished to purchase|||| 3. Reflections on insurance plans best suited for my individual needs or that of my family.  1.|I researched various insurance firms in my community for credibility|||| 2.|I researched various insurance plans|||| 3.|I distinguished among various life insurance plans|||| 4. Reflections on advertising.  1.|I identified common components of at least three advertisements|||| 2.|I made judgements on the accuracy and appeal of advertisements|||| 3.|I made an advertisement on my own||||
 * RUBRIC of performance criteria|V. Well Done|Well Done|OK|Not Ok- Will redo by ….
 * RUBRIC of performance criteria|V. Well Done|Well Done|OK|Not Ok- Will redo by ….
 * RUBRIC of performance criteria|V. Well Done|Well Done|OK|Not Ok- Will redo by ….
 * general insurance
 * health insurance
 * life and term insurance
 * annuities
 * RUBRIC of performance criteria|V. Well Done|Well Done|OK|Not Ok- Will redo by ….

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