Section 1.4

Recognizing Deception and Fraud

Read Articlehttp://www.legalzoom.com/legal-articles/pepsi-

accuses-coke-deceptive-advertising.html

Answer:What is Pepsi accusing Coke of doing?

Why?

Deceptive Advertising

• Definition: Advertising that is likely to mislead consumers through false statements, omitted information, or other unfair means.– It is illegal.– FTC empowered to stop it

Examples of Deceptive Advertising• Bait and Switch: Retailer advertises a product but

has no intention of selling it. They just want to persuade the customer to come into the store and there they can persuade them to buy another product at a higher price. – Example:

• False promise of free gifts: A store advertises a free gift but should have no strings attached. Stores need to say “Free gift with purchase”. – Example:

Example of Deceptive Advertising (cont)• Deceptive Pricing: When a retailer advertises

a sale price that is not any better than the everyday price of that particular item. – Example:

• Hidden Catches: This happens when hidden charges and fees aren’t advertised. You think you’re getting a good deal but when all is said and done, the fees have added up. – Example:

Dell and Deceptive Advertising

• http://blogs.moneycentral.msn.com/topstocks/archive/2008/05/28/dell-in-hot-water-for-deceptive-advertising.aspx

What type of deceptive advertising is this?

Who is Bernie Madoff?

• Sesame Street explains a Ponzi Scheme

• Ballad of Bernie Madoff using FreeCreditReport Song

All about Bernie

• News clip about Bernie Madoff

Fraud

• Deceitful conduct designed to manipulate another person for some gain. – Lying– Concealing facts– Repeating something that ought to have been

known to be false– Example:

Types of Fraud

• Pyramid Schemes:

• Chain Letters:

Fraud and Technology

• Chain letters via email• Email Notifications of Winning Lotteries• Earn Money at Home Opportunities

Reporting Deception and Fraud

• Report Suspicions even if you haven’t fallen victim; save someone else

• Contact the FTC or get on their website for a Consumer Complaint Form

• Contact the National Fraud Information Center

• Contact BBB

Check your understanding:• Explain the strategy behind the bait and

switch tactic.

• What are two signs that a sales offer may be fraudulent?

• How can you report suspected cases of fraud?

Complete:

How to Spot a Scam Handout

Due tomorrow