Life Skills Development/Unit Four/Consumerism
Contents
UNIT 2:Consumerism.
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.
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You will be able to
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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 deposit 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 responsibility 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 unforeseen 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 remains 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 determine by life insurance for example; automobiles, health, and home owner polices. Payments are to 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
- Consumer shopping guidelines
- Loans and hire purchase
- Insurance
- 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. The following activity can assist you to focus on some key questions when making a purchase.
Consumer guidelines:
Help Lineo make her choice. What issues would you consider? Consumer Tips (place link) suggest the following issues to consider before making a purchase:
Now you select an item to purchase. Can you come up with a list of guidelines to help you make a proper purchase? Use the Bureau of Standards in your community/country to generate a list of guidelines.
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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:
a. Affinity fraud
- The con artist gains the trust of a certain group of people (i.e. religion, race, gender etc) and when the time is right, will take advantage of the group.
b. Insurance fraud
- The con artist tricks by intentionally causing damage or injury to fraudulently collect the insurance policy.
c. Pitiful fraud
- A con artist tells pitiful lies about his or her family in order to get you to feel sorry and not to call the police.
d. Email fraud
- Items are offered in advance to get the victim credit card information. Delivery is never made because it is not a legitimate 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 charge 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 reimbursement. The merchant later learns that they will not be paid, or the payment they received will be reclaimed by the card's issuing bank
| Fraudulent Practices to avoid
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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 how you responded. Discuss if you would respond differently in the future.
| # | FRAUD | 4 | 3 | 2 | 1 |
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| 1 | I recalled to my friend my experience of an attempt to defraud me, | ||||
| 2 | And reflected on the total and long but untrue story I was told. | ||||
| 3 | I included in my written reflections
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| TOTAL |
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:
How to make a complaint:
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 properly describe the problem in chronological order.
When complaining:
- 1.Ensure that you give a clear description of the problem: the Facts, Cause and Effect of the problem and Solution
Facts: when, where, when Cause: the reason, how it happened Effect: the impact of what happened to your life Solution: your suggestions and demands e.g. finance and other details. Clearly state the form of redress you require. State a deadline for a resolution of your matter
- 2.Keep a copy of your letter - a record and documentary evidence
- Enclose/ present photocopies of receipts, warranties or other relevant documentation, not originals.
- Give a phone number where you can be reached
When complaining by letter:
My address full date:
Title of the person you are writing to
Name of the company
Address of the company
Dear Ms. Smith, or Sir/ Madam (if you do not know the name of the person)
First paragraph: Aim of the letter - the reason for the letter and outcome you want Second paragraph: Helpful information: FACES Last paragraph: Polite ending: If you need to be very serious, "If I do not get redress, I will be forced to seek legal action"
Final salutation - Yours sincerely, or Yours truly signature
When complaining by person
- Take your letter along to remind of the details
- Get the name of the person with whom you are speaking
- Jot down the date and time and what you said
- Keep calm even in the midst of provocation.
Template:ACTIVITY You have bought an appliance you saw in a store. When you got home, the sealed box contained an appliance that was not as modern as the one you chose and with less features.
4. Read the following letter of complaint and with your friend, evaluating it using the directions above.
Payless Ltd
Main Street
St. James
Dear Sir/ Madam,
I wish to inform you that a pair of shoes was bought on Tuesday 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 wedding. 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
| Make a face to face complaint about poor service and not what you had paid for in a hotel. Use F.A.C.E.S.
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| Role play with your friend the oral complaining.
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View the Role Play of consumer Altercationand write in the dialogue you imagine in the dialogue boxes.
You may want to act this out to your peers. Discuss what is good consumer and employer relations and behaviour and what was not so good in this slide/comic.
Role Play of consumer Altercation
Topic 2: Loans, Hire Purchase and Credit Unions
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 consists 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:
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Sam can obtain a loan from a bank for $10 0000 over a two year period at a rate of 5%. What is his interest? What is his total payback to the bank? Feedback: Interest can be found using this simple mathematics formula: Interest$ = 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.
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Hire Purchase is a way of financing items from stores when not purchasing with cash. You may have seen famous furniture stores advertising hire purchase options of 3 month, no down payment 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 down payment ,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:
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Lapana can purchase a television set costing $4800 from an appliance store using two HP options: 1. no down payment, installment $300 every month for 18 months 2. $1000 down payment, 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 down payment = $4000 + $1000 = $5000 Did you notice that
Lapana will need to weigh whether he prefers to pay less or pay over a shorter time.
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Credit Unions are cooperative financial institution, owned and controlled by people who use it services. They serve groups that are common in interest e.g. their work or where they live. These organizations are non-profitable and exist as a safe, convenient place to save money and get loans at a reasonable interest.
Advantages of Credit Union
- Owned by their members
- Offer competitive interest rates compared to Banks
- Services are much more reliable and better, especially in terms of the knowledge given to its clients
- It is cheaper to open accounts
Disadvantages of Credit Union
- There are few branches available to the members
- They do not facilitate the use of ATM machines.
Topic 3. Insurance.
Insurance can be described as a form of risk management, it is a strategy used by you to protect yourself against any unforeseen events. There are two types of life insurances, namely permanent life insurance and term life insurance. Permanent life insurance caters for coverage through life time; however you have to make premium payments. With regard to the term life insurance, it provides coverage for a stipulated period of time, you also have to make monthly payments.
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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 and 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 your 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.
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Topic 4. Advertising.
Advertising is a means of marketing goods and services. Advertisements can be either in print or electronic forms. Advertisements are usually placed anywhere the public can easily access them. They are paid for by the consumer in most instances, however in certain circumstances they are provided free. Advertising is considered as very essential for promoting economic growth.
Do you think the ad is appealing? How clear is the information? Is the information accurate? Write a short report on your findings. Advertisements use colour, font size and graphics to be more appealing and attractive to consumers. They aim to make the product or service desirable to the target audience.
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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. 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.
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Self and peer assessment of your work on consumerism
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Checklists of Performance Task
| # | RUBRIC of performance criteria | V.Well done | Well Done | OK | Not Ok- Will redo by …. |
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| 1 | I completed the comparative shopping exercise and considered the advantages and disadvantages based on :
a) availability of brands b) price of choices c) shipping time d) colour selection e) fit of choice f) type of materials |
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| 2 | I completed a list of guidelines for making proper purchase;
a)Shopping guidelines b)Referred to my local Consumer Affairs Authority |
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| 3 | Identify various components of loans and hire purchase plans
a)Listed the components of different loans b)Types of hire purchase c)Compare the benefits and limitations of different loans d)Limitations of hire purchase |
| # | RUBRIC of performance criteria | V. Well Done | Well Done | OK | Not Ok- Will redo by |
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| 4 | Loans and Hire purchase;
a) Calculation and answers
b) I did the calculations for obtaining a bank loan
c) I calculated interest on a loan of 2.5 years
interest
total payback
e.g. (P X & x I) divide by 100
($2000 x 10 x 5)divide by 100
= 5 divide 2
=
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| 5 | I completed the calculations and purchased a TV set using 2 Hire Purchase options. | ||||
| 6 | I wrote a letter of complaint that included;
a) my address and full date b) title, name of company, address and salutation c) first paragraph with the aim of the letter d) second paragraph with helpful information-FACES e) polite ending, even when seeking legal action f) final salutation. |
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| 7 | I prepared for a delayed face complaint with my friend using FACES
F A C E S |
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| 8 | I viewed the RP on consumer alterations and wrote in the dialogue I imagined in dialogue boxes using FACES. | ||||
| 9 | I checked and evaluated the cost of insurance sold by two companies in my community and wrote a short report giving,
a) reasons why I recommend specific product for myself and family b) coverage c) risk coverage d) income replacement e) tax deductions f) making funds accessible |
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| 10 | I evaluated ads. and wrote a short report including;
a)ad appeal b)clarity of information c)accuracy of information |
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| 11 | I designed my own ad to sell my car/house. |
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