6 Consumer Purchasing

and Wise Buying

Strategies

3 Steps to Financial Literacy . . .

Avoiding Unplanned Spending

1 Research products, shopping locations,

brands, and prices for purchases that
meet your needs.
App: PriceGrabber

2 Develop a specific shopping list to guide

your daily purchasing decisions.
App: AnyList

3
Make a commitment to buy only items on
your list of identified needs.
Website: [Link]

Avoiding impulse buying can help to

reduce overuse of credit and improve
your personal financial situation. At the
end of the chapter, Your Personal Finance
Road Map and Dashboard will provide
­additional information on unplanned
spending.

gstockstudio/123RF
CHAPTER 6 LEARNING OBJECTIVES
In this chapter, you will learn to:
LO6.1 Identify strategies for effective consumer buying.
LO6.2 Implement a process for making consumer purchases.
LO6.3 Describe steps to take to resolve consumer problems.
LO6.4 Evaluate legal alternatives available to consumers.

YOUR PERSONAL FINANCIAL PLAN SHEETS

18. Consumer Purchase Comparison
19. Used-Car Purchase Comparison
20. Buying versus Leasing a Vehicle
21. Legal Services Cost Comparison

Consumer Buying Activities LO6.1

Buy now: cash or credit? Or save and buy later? Which path is for you? Daily buying deci- Identify strategies for
sions involve a trade-off between current spending and saving for the future. Economic, effective consumer buying.
social, and personal factors affect your daily buying habits. These factors are the basis for
spending, saving, investing, and achieving financial goals. In very simple terms, the only
way you can have long-term financial security is to not spend all of your current income. In
addition, overspending leads to misuse of credit and financial difficulties.
ACTION ITEM
Practical Purchasing Strategies I stay informed on wise
buying strategies.
Comparison shopping is the process of considering alternative stores, brands, and prices.
In contrast, impulse buying involves unplanned purchasing, which can result in financial Agree Disagree
problems. Several buying techniques are commonly suggested for wise buying.

TIMING PURCHASES Certain items go on sale the same time each year. You can
obtain bargains by buying winter clothing in mid- or late winter, or summer clothing in
mid- or late summer. Many people save by buying holiday items and other products at
reduced prices in late December and early January.

PURCHASE LOCATION Your decision to use a particular retailer is probably influ-

enced by location, price, product selection, and services available. Competition and tech-
nology have changed retailing with superstores, specialty shops, and online buying. This
expanded shopping environment provides consumers with greater choice, potentially
 218 Chapter 6 Consumer Purchasing and Wise Buying Strategies

lower prices, and the need to carefully consider buying alter-

money minute focus natives. The availability of online shopping can easily result in
overspending and financial difficulties.
Financial difficulties occur when you believe
that something is a NEED when it is actually a BRAND COMPARISON Food and other products come in
WANT. Actual needs involve food, air, water, various brands. National-brand products are highly advertised
shelter, health care, clothing, and maybe Internet items available in many stores. Store-brand and private-­label
access. Your time online can result in unneeded products, sold by one chain of stores, are low-cost alterna-
purchases. Avoid shopping as a social activity, and tives to famous-name products. Since store-brand products are
do not let anxiety influence your buying. Further, frequently manufactured by the same companies that produce
[Link] suggests: brand-name items, these lower-cost alternatives can result in
• Don’t buy an item right away. Delay a purchase to extensive savings. The use of a product comparison app or web-
consider the value. site can assist you when comparing brands.
• Review delayed purchases in a month to
­determine if the urge still exists, and if money LABEL INFORMATION Certain label information is helpful;
is available. other information is nothing more than advertising. Federal law
• Return items, as allowed, when an item does not requires that food labels contain certain information. Product
meet expectations. labeling for appliances includes information about operating
• Put a reminder note in your wallet: “Do you costs to assist you in selecting the most energy-efficient mod-
REALLY need this?” els. Open dating describes the freshness or shelf life of a per-
ishable product. Phrases such as “Use before May 25, 2022” or
“Not to be sold after October 8” appear on most food products.
However, these labels can be confusing. Most expiration dates
relate to quality, not safety. Items used after the “sell by” date are likely to still be safe for
consumption. Canned and packaged food items, if not opened, will usually be safe beyond
the expiration date.

PRICE COMPARISON Unit pricing uses a standard unit of measurement to compare the
prices of packages of different sizes. To calculate the unit price, divide the price of the item
by the number of units of measurement, such as ounces, pounds, gallons, or number of sheets
(for items such as paper towels and facial tissues). Then compare the unit prices for various
sizes, brands, and stores. Apps for bar code scanning may be used to quickly compare prices.

EXAMPLE: Unit Pricing

To calculate the unit price of an item, divide the cost by the number of units. For e
­ xample,
a 64-ounce product costing $8.32 would be calculated in this manner:
Unit price = $8.32 ÷ 64
= $0.13, or 13 cents an ounce

Coupons and rebates also provide better pricing for wise consumers. A family saving
about $8 a week on their groceries by using coupons will save $416 over a year and $2,080
over five years (not counting interest). A rebate, a partial refund of the price of a prod-
uct, can also save you money. Many websites and apps are available with money-saving
coupons and rebates. When searching for ones you might use,
be sure to read reviews to avoid possible scams and deceptive
money minute focus promotions.
When comparing prices, remember that:
Minimalists and frugal people buy store brands;
avoid shopping for pleasure; avoid waste; plan ahead; • More store convenience (location, hours, sales staff)
shop for used items first; take advantage of free and usually means higher prices.
low-cost leisure activities; buy based on utility and • Ready-to-use products have higher prices.
reliability; and attempt to repair broken items. • Large packages are usually the best buy, but compare
using unit pricing.
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 219

• “Sale” may not always mean saving money.

• The use of online sources and shopping apps can save time and money.
Exhibit 6–1 summarizes techniques that can assist you in your online buying decisions.

Exhibit 6–1 Wise Online Buying Activities

1. Conduct online research.

Compare brands and features
Use label and warranty information
Use product testing reports to
assess quality, safety, nutrition

2. Compare stores.
4. Plan for future purchases. Consider both stores and online
Keep receipts, other documents Evaluate price, service, product
Know return, complaint process quality, warranties, shipping cost
Watch e-mails for special offers and time, return policy
Determine reputation, location
Evaluate time, effort involved

3. Make purchase.
Use secure buying website
Seek discounts, coupons
Select payment method based
on security, fees, other factors

(1) [Link]; (2) [Link], Inc.; (3) Paypal; (4) Groupon, Inc.
 220 Chapter 6 Consumer Purchasing and Wise Buying Strategies

Warranties
warranty A written Most products come with some guarantee of quality. A warranty is a written guarantee from the
guarantee from the manufacturer or distributor that gives the conditions under which the product can be returned,
manufacturer or distributor replaced, or repaired. An express warranty, usually in written form, is created by the seller or
of a product that specifies
manufacturer and has two forms: the full warranty and the limited warranty. A full warranty
the conditions under which
the product can be returned,
states that a defective product can be fixed or replaced during a reasonable amount of time.
replaced, or repaired. A limited warranty covers only certain aspects of the product, such as parts, or requires
the buyer to incur part of the costs for shipping or repairs. An implied warranty covers a
product’s intended use or other basic understandings that are not in writing. For example,
an implied warranty of title indicates that the seller has the right to sell the product. An
implied warranty of merchantability guarantees that the product is fit for the ordinary uses
for which it is intended: A toaster must toast bread, and an MP3 player must play music or
other recorded files. Implied warranties vary from state to state.

USED-CAR WARRANTIES The Federal Trade Commission

FinTech for $ (FTC) requires used car dealers to use a buyer’s guide sticker
telling if a vehicle comes with a warranty and, if so, what protec-
Financial Literacy tion is included. If no warranty is offered, the car is sold “as is,”
and the seller assumes no responsibility for any repairs, regard-
Retailing technology trends include: less of any oral claims. FTC used-car regulations do not apply to
• AmazonGo stores allow shoppers to pay with an vehicles purchased from private owners.
app using just walk out technology. While a used car may not have an express warranty, most states
• Shopping personalization uses an app to suggest have implied warranties to protect used-car buyers. An implied
a store ­movement pattern based on frequently warranty of merchantability means the product is g­ uaranteed to do
­purchased items. what it is supposed to do. The used car is guaranteed to run—at
• V-commerce (using virtual reality) allows trying on least for a while!
products or using an item in a cyber setting.
• The Internet of Things (IoT) connects a smart NEW-CAR WARRANTIES New-car warranties provide buy-
refrigerator to order needed groceries. ers with an assurance of quality. These warranties vary in the
• Omnichannel marketing integrates online, social time, mileage, and parts they cover. The main conditions of a
media, in-store, data access, catalog, and delivery new-car warranty are (1) coverage of basic parts against defects;
for the information search, purchase, and after- (2) power train coverage for the engine, transmission, and drive
sale phases of shopping. train; and (3) the corrosion warranty, which usually applies only
to holes due to rust, not to surface rust. Other important condi-
tions of a warranty are a statement regarding whether the war-
ranty is transferable to other owners of the car and details about the charges, if any, for
major repairs in the form of a deductible, an amount paid by the car owner.

service contract An SERVICE CONTRACTS A service contract is an agreement between a business and a
agreement between a consumer to cover the repair costs of a product. Frequently called extended warranties,
business and a consumer to they are not warranties. For a fee, these agreements insure the buyer for the cost of certain
cover the repair costs of a
repairs and other issues. Beware of service contracts that offer coverage for three years but
product.
really only cover two since the item may have a manufacturer’s one-year warranty.
Automotive service contracts can cover repairs not included in the manufacturer’s war-
ranty. Service contracts range from $400 to more than $1,000 but do not always include
everything you might expect. These contracts usually cover engine cooling system failure
but might exclude coverage if the failure is caused by overheating.
Because of costs and exclusions, service contracts may not be a wise financial decision.
Minimize concerns about expensive repairs with a special emergency fund. Then, if you
need repairs, the money will be available.

Research-Based Buying
Major buying decisions should be based on a planned decision-making process, which
may be viewed in four phases.
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 221

PHASE 1: PRESHOPPING ACTIVITIES

Start the buying process with actions that include:
• Problem identification to set a goal and focus your purchasing activities.
• Information gathering to benefit from the buying experiences of others.

PHASE 2: EVALUATING ALTERNATIVES

With every decision, consider various options:
• Attribute assessment with a comparison of product features.
• Price analysis including consideration of the costs at various buying locations.
• Comparison shopping activities to evaluate shopping locations.

PHASE 3: SELECTION AND PURCHASE

When making your final choice, actions may include:
• Negotiation activities to obtain lower price or added quality.
• Payment alternatives including use of cash and various credit plans.
• Assessment of acquisition and installation that might be encountered.

PHASE 4: POSTPURCHASE ACTIVITIES

After making a purchase, several actions are encouraged:
• Proper maintenance and operation.
• Identification and comparison of after-sale service alternatives.
• Resolution of any purchase concerns that may occur.

Sheet 18 Consumer Purchase

PRACTICE QUIZ 6–1 Comparison

1. What types of brands are commonly available to consumers?

2. In what situations can comparing prices help in purchasing decisions?

3. How does a service contract differ from a warranty?

4. Match the following descriptions with the warranties listed here. Write your answers in the spaces provided.

express warranty limited warranty

full warranty service contract

implied warranty
a. _____ Covers only aspects of the item purchased.
b. _____ Is commonly referred to as an extended warranty.
c. _____ Usually is in a written form.
d. _____ Covers a product’s intended use; it may not be in writing.
e. _____ Covers fixing or replacement of a product for a set time period.

Major Consumer Purchases: LO6.2

Buying Motor Vehicles Implement a process for
making consumer purchases.
To make wise decisions in purchasing a vehicle, the steps in Exhibit 6–2 are
recommended.
222 Chapter 6 Consumer Purchasing and Wise Buying Strategies

Exhibit 6–2 A Research-Based Approach for Purchasing a Motor Vehicle

4
Postpurchase Activities
1
Preshopping Activities
Automobile operation costs Problem identification
Motor vehicle maintenance Information gathering

Purchasing a
Motor Vehicle

3
3
Determining Purchase Price
Evaluating Alternatives
Used-car price negotiations
Price bargaining for new cars
Comparing financing
2 Selecting vehicle options
Comparing used vehicles
Leasing a vehicle
alternatives

Phase 1: Preshopping Activities

First, define your needs and obtain relevant product information. These activities are the
foundation for buying decisions to help you achieve your goals.
ACTION ITEM
PROBLEM IDENTIFICATION Effective decision making should start with an open
I carefully plan major mind. Some people always buy the same brand when another brand at a lower price would
purchases with research
also serve their needs or when another brand at the same price may provide better quality.
and comparison
A narrow view of the problem is a weakness in problem identification. You may think the
shopping.
problem is “I need to have a car” when the real problem is “I need transportation.”
Agree Disagree
INFORMATION GATHERING Information is power. The better informed you are, the
more effective you will be in making good decisions. Some people spend very little time
gathering and evaluating information. At the other extreme are people who spend much
time obtaining consumer information. While information is necessary for wise purchasing,
too much information can create confusion and frustration. The most useful information
sources include:
1. Personal contacts allow you to learn about product performance, brand quality, and
prices from others.
2. Business organizations offer advertising, product labels, and packaging that provide
information about price, quality, and availability.
3. Media information (websites, apps, television, magazines) can provide valuable
information with purchasing advice.
4. Independent testing organizations, such as Consumers Union in its monthly
Consumer Reports, provide information about the quality of products and services.
5. Government agencies, local, state, and federal, provide publications, toll-free
telephone numbers, websites, and community programs.
6. Online reviews can provide buying guidance and shopping suggestions. Be cautious
since some may be fictitious postings.
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 223

Basic information about car buying may be obtained at www.

[Link], [Link], [Link], money minute focus
[Link], and [Link]. Consumers Union
([Link]) offers a computerized car cost data Older car. . .wealthier you! People who drive older
service. Car-buying services, such as [Link] and vehicles on average save more for retirement.
[Link], allow you to order your vehicle online. Instead of making a monthly payment, that
amount is saved for long-term financial security.
The average monthly loan payment for a new
Phase 2: Evaluating Alternatives car is over $500, and nearly $400 for a used car.
Every purchasing situation will likely have several acceptable Keeping a vehicle well after it is paid for allows you
alternatives. Ask yourself: Is it possible to delay the purchase to invest these amounts, even if you need to set
or to do without the item? Should I pay for the item with cash aside money for repairs and upkeep. Also consider
or buy it on credit? Which brands should I consider? How do buying a less expensive vehicle, especially one
the price, quality, and service compare at different stores? Is it that will be reliable for 200,000 miles or more.
possible to rent the item instead of buying it? Considering such Remember, cars are not an investment; they are an
alternatives will result in more effective purchasing decisions. expense for providing transportation.
Research shows that prices can vary for all types of products.
For a phone, prices may range from under $100 to well over
$500. The price for 100 tablets of 325 mg aspirin may range
from less than $1 to over $3. While differences in quality and CAUTION!
attributes may exist among the phones, the aspirin tablets are
equivalent in quantity and quality. To avoid scams of online used-car sellers:
Many people view comparison shopping as a waste of time. • Research the seller’s reputation and background.
Although this may be true in some situations, comparison shop- • Do a title check to confirm the seller’s name and
ping can be beneficial when (1) buying expensive or complex to make sure the car is not stolen; the “seller”
items; (2) buying items that you purchase often; (3) shopping may not actually own the vehicle being sold.
can be done easily, such as with ads, catalogs, or online; (4) dif- • Beware of vehicle photos with tempting low prices.
ferent sellers offer different prices and services; and (5) product • Check any recalls and the safety record of the
quality or prices vary greatly. vehicle.
• Don’t buy a car if you’re not allowed to have a
SELECTING VEHICLE OPTIONS Optional equipment for mechanic inspect it.
cars may be viewed in three categories: (1) mechanical devices
to improve performance, such as power steering, power brakes,
and cruise control; (2) convenience options, including power
seats, air conditioning, audio systems, power locks, rear window defoggers, and tinted
glass; and (3) aesthetic features that add to the vehicle’s visual appeal, such as metallic
paint, special trim, and upholstery.
High-tech safety features help to avoid crashes. Forward-collision warning (FCW) systems
alert drivers of a potential crash. Automatic emergency braking (AEB) senses a collision and
begins braking. Blind-spot warning (BSW) reminds drivers of vehicles not in their vision
line. Adaptive cruise control (ACC) adjusts speed based on traffic. Lane-keeping assist (LKA)
and lane-departure warning (LDW) offer warnings when drifting. Vehicle features for older
drivers and others include larger mirrors, swivel-seat cushions, pedal extenders, and left-foot
accelerators. The Figure It Out! feature covers the net present value of buying a hybrid car.

COMPARING USED VEHICLES The average used car costs about $10,000 less than
the average new car. Common sources of used cars include:
• New-car dealers offer late-model vehicles and may include a warranty. Prices will
be higher than at other sources.
• Used-car dealers usually have older vehicles. Warranties, if offered, will be limited.
Prices are usually lower than at new-car dealers.
• Individuals selling their own cars can create a bargain purchase opportunity if the
vehicle was well-maintained. Since few regulations apply to private-party sales,
caution is suggested.
Figure It Out!
Net Present Value of a Consumer Purchase: Is a Hybrid Car Worth
the Cost?
The time value of money (explained in Chapter 1) may be used not going out is like money coming in). The cost difference
to evaluate the financial benefits of a consumer purchase. For between a hybrid and a fuel-version vehicle would be the cur-
example, when deciding to buy a hybrid car, the money saved rent cash outflow. If the car has an expected life of eight years,
on gas would be considered a cash inflow (since money the net present value calculations might be as shown here:

Step 1: Estimate the Step 2: Calculate the Step 3: Subtract the

annual savings on gas present value (PV) of a difference in cost of
(for example, 8,000 miles series using either the hybrid car compared
at $3 a gallon), with a time value of money with a gasoline-powered
vehicle getting 50 miles tables (Chapter 1 car.
per gallon rather than Appendix) or a financial
25 miles per gallon. calculator. Assume a 2
percent interest rate,
eight years.

Annual gas savings PV of annual savings Vehicle cost difference

$960 $7,032 –
$6,000

The result: $1,032 is a positive (favorable) net present value of the savings from a hybrid car
compared to a gasoline-powered car. A negative net present value would indicate that the
financial aspects of the purchase are not desirable.

This analysis for buying a hybrid car (or electric vehicle) will also be influenced by personal attitudes and social factors. This
vary based on other factors, such as vehicle maintenance costs, calculation format may be used to assess the financial benefits
miles driven per year, and gas prices. Hybrid car cost calcula- of other consumer purchases by comparing the present value
tors are also available online. Remember that this decision will of the cost savings over time with the price of the item.

• Auctions and dealers sell automobiles previously owned by businesses, auto rental
companies, and government agencies.
• Banks, credit unions, and other financing organizations have repossessed vehicles
for sale.
• Used-car superstores, such as CarMax, offer a large inventory of previously owned
vehicles, often with the convenience of online sales.
Certified preowned (CPO) vehicles are nearly new cars that come with the original manu-
facturer’s guarantee of quality. The rigorous inspection and repair process means a higher price
than for other used vehicles, usually an extra $1,500 to $2,500. CPO programs were originally
created to generate demand for the many low-mileage vehicles returned at the end of a lease.

WHAT WOULD YOU DO? You are considering the purchase of one of these
vehicles: Vehicle 1: A three-year-old car with 45,000 miles, costing $16,700 and
requiring $1,385 of immediate repairs. Vehicle 2: A five-year-old car with 62,000 miles,
costing $14,500 and requiring $1,760 of immediate repairs. Based on financial and
opportunity costs, which of the following do you believe would be the wiser purchase?

224
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 225

The appearance of a used car can be deceptive. A well-maintained engine may be

inside a body with rust; a clean, shiny exterior may conceal major operational problems.
Therefore, conduct a used-car inspection as outlined in Exhibit 6–3. Have a trained and
trusted mechanic of your choice check the car to estimate the costs of potential repairs.
This service will help you avoid surprises.

LEASING A MOTOR VEHICLE Leasing is a contractual agreement with monthly pay-

ments for the use of an automobile over a set time period, typically three, four, or five
years. At the end of the lease term, the vehicle is usually returned to the leasing company.
Leasing offers several advantages: (1) Only a small cash outflow may be required for
the security deposit, whereas buying can require a large down payment; (2) monthly lease
payments are usually lower than monthly financing payments; (3) the lease agreement pro-
vides detailed records for business purposes; and (4) you are usually able to obtain a more
expensive vehicle.
Leasing also has drawbacks: (1) You have no ownership interest in the vehicle; (2) you must
meet requirements similar to qualifying for credit; and (3) additional costs may be incurred for
extra mileage, certain repairs, turning the car in early, or even moving to another state.

Exhibit 6–3
Checking Out a
Used Car
Issarawat Tattong/Getty Images
Checking Out a Used Car
Outside the Car The Engine
Look for major dents and Check for leakage of fluids
signs of accidents. and overheating.
Inspect the trunk and spare Check oil level and for signs
tire. of leaks.
Check tire tread wear. Check radiator cap, radiator
Observe smoothness of springs for cracks and repairs, and for
and shocks when pushing oil in coolant.
down on car. Check battery and cables.
Check operation of doors and Expect a smooth, clean start.
windows.
Look for leaking fluids under The Road Test
vehicle. Let vehicle warm up.
Test-drive car on a road with
Inside the Car which you are familiar.
Look for wear on pedals and Listen for smoothness of
steering column. acceleration and transmission
Check for operation of dash (forward and reverse).
lights and accessories. Check brakes at different
Check instrument panel for speeds.
operation of gauges. Check ease of steering and
Start engine and check vehicle control.
operation of power accessories
such as radio, wipers, and
heater.
Figure It Out!
Buying versus Leasing a Motor Vehicle
To compare the costs of purchasing and leasing a vehicle, use the following framework.

Your Your
Purchase Costs Example Figures Leasing Costs Example Figures

Total vehicle cost, including Security deposit ($300)

tax, title, license ($20,000)
Monthly lease payments:
Down payment (or full $295 × 48-month length of lease $14,160 $
amount if paying cash) $2,000 $
Opportunity cost of
Monthly loan payment: security deposit: $300 security
$385 × 48-month length of deposit × 4 years × 3 percent 36 
financing (this item is zero if
End-of-lease charges* (if applicable) 800 
vehicle is not financed) 18,480
Total cost to lease $14,996 $
Opportunity cost of down payment
(or total cost of the vehicle if it is
*Such as charges for extra mileage.
bought for cash): $2,000 × 4 years of
financing/ownership × 3 percent 240 
Less: Estimated value of vehicle at
end of loan term/ownership period –6,000 
Total cost to buy $14,720 $

Avoiding Lease Traps

When considering a lease agreement for a motor vehicle, beware of these common pitfalls:
• Not knowing the total cost of the agreement, including the cost of the vehicle, not just the monthly payment.
• Making a larger up-front payment than is required or paying unnecessary add-on costs.
• Negotiating the monthly payment rather than the capitalized cost of the vehicle.
• Not having the value of any trade-in vehicle reflected in the lease.
• Signing a contract you don’t understand.
Compare monthly payments and other terms among several leasing companies. People have been known to pay over
$24,000 to lease a vehicle worth only $20,000 at the start of the lease agreement. Comparison of leasing terms is available
at websites such as [Link], [Link], and [Link].

When leasing, you arrange for the dealer to sell the vehicle through a financing com-
pany. As a result, be sure you know the true cost, including:
1. The capitalized cost, which is the price of the vehicle. The average car buyer pays
about 92 percent of the list price for a vehicle; the average leasing arrangement has
a capitalized cost of 96 percent of the list price.
2. The money factor, which is the interest rate being paid on the capitalized cost.
3. The payment schedule, which is the amount paid monthly and the number of
payments.
4. The residual value, or the expected value of the vehicle at the end of the lease.
After the final payment, you may return, keep, or sell the vehicle. If the current market
value is greater than the residual value, you may be able to sell it for a profit. However,
if the residual value is more than the market value (which is the typical case), returning
the vehicle to the leasing company is usually the best decision. The Figure It Out! feature
provides an example comparing buying and leasing a motor vehicle
226
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 227

Phase 3: Determining Purchase Price

Once you’ve done your research and evaluations, other activities and decisions may be appro-
priate. Products such as real estate or automobiles may be purchased using price negotiation.
Negotiation may also be used in other buying situations to obtain a lower price or additional
features. Two vital factors in negotiation are (1) having all the necessary information about
the product and the buying situation, and (2) dealing with a person who has the authority to
give you a lower price or additional features, such as the owner or store manager.

USED-CAR PRICE NEGOTIATION Begin to determine a fair price by checking ads

in newspapers and online for the prices of comparable vehicles. Other sources of current
used-car prices are Edmund’s Used Car Prices and the Kelley Blue Book.
Various factors influence the price of a used car, such as the number of miles it has been
driven along with features and options. A low-mileage car will have a higher price than a
comparable car with high mileage. The condition of the vehicle and the demand for the
model also affect price.

PRICE BARGAINING FOR NEW CARS An important new-car price information

source is the sticker price label, printed on the vehicle with the suggested retail price.
This label presents the base price of the car with costs of added features. The dealer’s
cost, or invoice price, is an amount less than the sticker price. The difference between the
sticker price and the dealer’s cost is the range available for negotiation. This range is larger
for more expensive vehicles; less expensive cars usually do not have a wide negotiation
range. Information about dealer’s cost is available from sources such as Edmund’s New
Car Prices and Consumer Reports.
Set-price dealers use no-haggling car selling with the prices presented to be accepted
or rejected as stated. Car-buying services are businesses that help buyers obtain a spe-
cific new car at a reasonable price. Also referred to as auto brokers, these businesses offer
desired models with options for prices ranging between $50 and $200 over the dealer’s
cost. First, the auto broker charges a small fee for price information on desired models.
Then, if you decide to buy a car, the auto broker arranges the
purchase with a dealer near your home.
To prevent confusion in determining the true price of the new money minute focus
car, do not mention a trade-in vehicle until the cost of the new car
has been settled. Then ask how much the dealer is willing to pay for Electric vehicles (EVs) are increasing in popularity
your old car. If the offer price is not acceptable, sell the old car on as a result of being environmentally beneficial,
your own. A typical negotiating conversation might go like this: nearly silent engine sound, potential tax credits,
lower maintenance costs, and smartphone apps
1. Customer: “I’m willing to give you $25,600 for the car.
to program charging times and to heat or cool the
That’s my top offer.”
cabin in advance of driving. Concerns associated
2. Auto salesperson: “Let me check with my manager.” After with EVs include the higher initial cost, short
returning, “My manager says $26,200 is the driving ranges for some models, slow charging
best we can do.” time, charging station availability, and loss of cargo
3. Customer (who should be willing to walk out at this space for the battery pack. The two main EV types
point): “I can go to $25,650.” are battery electric vehicles (BEVs) only running
4. Auto salesperson: “We have the car you want, ready to go. on electricity, and plug-in hybrid electric vehicles
How about $25,700?” (PHEVs) that use electricity for a limited distance
before switching to a gas-electric hybrid mode.
If the customer agrees, the dealer receives $100 more than the
Some models have an onboard generator for
customer’s “top offer.”
greater driving distances.
Other sales techniques you should avoid include:
• Lowballing, quoted a low price that increases when
add-on costs are included.
• Highballing, offered a high amount for a trade-in vehicle; the extra amount is made
up by increasing the new-car price.
 Digital Financial Literacy with. . .
Since 1936, Consumers done by a panel trained by experts in food science, nutri-
Union, a nonprofit orga- tion, statistics, and psychology.
nization, has published The Consumer Reports Auto Test Center covers more
Consumer Reports to pro- than 300 acres in rural Connecticut. Each year, about 50 cars
vide information and advice on product safety, food, health and trucks are pushed to their limits, being driven hundreds
care, and financial services. Before each monthly issue is of thousands of miles. To maintain independence, every
published, more than 100 experts work in over 40 labs to vehicle tested is purchased from a dealer with the style and
test, analyze, evaluate, and rate the performance, safety, options most often bought by consumers. Subscribers to the
reliability, and value of products. Consumers Union does not magazine also provide reliability and satisfaction survey data.
accept product samples or advertising, and will not allow its More than 50 items are assessed on the auto test track,
name to be used to promote products it has evaluated. including acceleration, braking, emergency handling, emis-
Appliances and other products for testing are purchased sions, fuel economy, headlights, ride comfort, safety fea-
by staff shoppers or anonymous “secret shoppers.” Over tures, trunk and cargo space, and off-road capability for
$27 million is spent each year buying the items to be tested vehicles designed for that type of driving. In addition to test-
and rated. When testing food, Consumers Union staff make ing cars, nearly 600 child safety seats are crash-tested. And,
use of very sensitive instruments, such as a liquid chromato- each year, more than 50 tire models are tested and evalu-
graph to measure the caffeine in coffee. Food tasting is ated for 14 safety and performance factors.

ACTION STEPS FOR. . .

. . .Information Literacy . . .Financial Literacy . . .Digital Literacy

Locate an article related to testing Select a product you Based on an article related
of appliances, food, or another use ­regularly. Search to the testing of appliances,
product at [Link]. [Link] for food, or another product at
Explain the process to another information about that item. [Link], create
person, and have them comment Describe how your findings might a visual (photo, poster) or brief
on how the testing procedures change your buying behavior for video to report the testing
might be improved. that product. procedures.

• The question “How much can you afford per month?” Be sure to also ask how
many months.
• An offer to hold the vehicle for a small deposit only. Never leave a deposit unless
you are ready to buy a vehicle or are willing to lose your deposit.
• Unrealistic statements, such as “Your price is only $100 above our cost.” Usually,
hidden costs have been added in to get the dealer’s cost.
• Sales agreements with preprinted amounts. Cross out numbers you believe are not
appropriate for your purchase.
• Attempts to upsell vehicle features and services, such as clear coating, fabric
treatment, window tinting, audio-video upgrades, and service agreements.
• Efforts to inflate the loan interest rate or lengthen the term of the loan.
• Not informing you of dealer rebates or price-matching offers.

COMPARING FINANCING ALTERNATIVES While you may pay cash, many people
buy cars on credit. Auto loans are available from banks, credit unions, consumer finance
companies, and other financial institutions. Many lenders will preapprove you for a certain
loan amount, which separates financing from negotiating the car price. Until the new-car
price is set, you should not indicate that you intend to use the dealer’s credit plan.
The lowest interest rate or the lowest payment does not necessarily mean the best credit
plan. Also consider the loan length. Otherwise, after two or three years, the value of your
228
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 229

car may be less than the amount you still owe; this situation is referred to as upside-down
or negative equity. If you default on your loan or sell the car at this time, you will have to
pay the difference.

EXAMPLE: Upside Down

A $26,000 vehicle is purchased with an initial loan of $18,000. After a period of time,
the vehicle may only be worth $12,000 while you still owe $15,000. To avoid this sit-
uation, make a large down payment, have a short loan term (less than five years), and
pay off the loan faster than the value of the vehicle declines.

Automobile manufacturers frequently present opportunities for low-interest financing.

They may offer rebates at the same time, giving buyers a choice between a rebate and a
low-interest loan. Carefully compare low-interest financing and the rebate. Special rebates
are sometimes offered to students, teachers, credit union members, real estate agents, and
other groups.

Phase 4: Postpurchase Activities

Start by submitting the manufacturer registration by mail or online, if appropriate. Next,
consider maintenance and ownership costs associated with major purchases. Proper opera-
tion will usually result in improved performance and fewer repairs. When you need repairs
not covered by a warranty, follow a pattern similar to that used when making the original
purchase. Investigate, evaluate, and negotiate various service options.
In the past, when major problems occurred with a new car and the warranty didn’t solve
the difficulty, many consumers lacked a course of action. As a result, all 50 states and the
District of Columbia enacted lemon laws that require a refund for the vehicle after the owner
has made repeated attempts to obtain servicing. These laws apply when four attempts are
made to get the same problem corrected or when the vehicle has been out of service for
more than 30 days within 12 months of purchase or the first 12,000 miles. The terms of the
state laws vary. You can find additional information about “lemon laws” online.

AUTOMOBILE OPERATION COSTS Over a lifetime, most people will spend more
than $200,000 on automobile-related expenses. Driving costs will vary based on two main
factors: the size of your automobile and the number of miles you drive. These costs involve
two categories:

1. Fixed Ownership Costs 2. Variable Operating Costs

Depreciation Gasoline and oil

Interest on auto loan Tires

Insurance Maintenance and repairs

License, registration, taxes, and fees Parking and tolls

The largest fixed expense associated with a new automobile is depreciation, the loss in
the vehicle’s value due to time and use. Since money is not paid out for depreciation, many
people do not consider it an expense. However, this decreased value is a cost that owners
incur. Well-maintained vehicles and certain high-quality, expensive models, such as BMW
and Lexus, depreciate at a slower rate.
Costs for gasoline, oil, maintenance, and tires rise with increased driving, unexpected
trips, and vehicle age. For determining vehicle ownership costs, search online for the
“Edmunds True Cost to Own” calculator.
230 Chapter 6 Consumer Purchasing and Wise Buying Strategies

Exhibit 6–4 • Get regular oil changes. • Flush radiator and service transmission every
Extending Vehicle 25,000–30,000 miles.
Life with Proper • Check fluids (brake, power steering, • Keep lights, turn signals, and horn in good
transmission). working condition.
Maintenance
• Inspect hoses and belts for wear. • Check muffler and exhaust pipes.
• Get a tune-up (new spark plugs, fuel filter, air • Check tires for wear; rotate tires at regular
filter) every 25,000–30,000 miles. intervals.
• Check and clean battery cables and • Check condition of brakes.
terminals.
(NOTE: Service times will vary based on type and age
• Check spark plug wires after 50,000 miles. of vehicle as well as driving habits.)

MOTOR VEHICLE MAINTENANCE People who sell, repair, or drive automobiles for
a living stress the importance of regular vehicle care. While owner’s manuals and articles
suggest mileage or time intervals for certain servicing, more frequent oil changes or tune-
ups can minimize major repairs and maximize vehicle life. Exhibit 6–4 suggests mainte-
nance areas to consider.

AUTOMOBILE SERVICING SOURCES The following businesses offer automobile

maintenance and repair service:
• Car dealers have service departments with a wide range of car care services. Service
charges at a car dealer may be higher than those of other repair businesses.
• Service stations and independent auto repair shops can service your vehicle at fairly
competitive prices. Since the quality of these repair shops varies, talk with previous
customers.
• Retailers, such as Walmart, may emphasize sale of tires and batteries as well as
brakes, oil changes, and tune-ups.
• Specialty shops offer brakes, tires, automatic transmissions, and oil changes at a
reasonable price with fast service.
To avoid unnecessary expenses, be aware of common repair frauds (Exhibit 6–5).
Remember to work with reputable auto service businesses. Be sure to get a written, detailed
estimate in advance and a detailed, paid receipt when the service is complete. Auto repairs
are consistently reported as one of the top consumer complaints. Some people avoid prob-
lems and minimize costs by working on their own vehicles.

Exhibit 6–5 Most automobile servicing sources are fair and honest. Sometimes, consumers
Common Automobile waste dollars when they fall prey to unethical actions such as:
Repair Frauds • When checking the oil, the attendant puts the dipstick only partway down and then shows you
that you need oil.
• An attendant cuts a fan belt or punctures a hose. Watch carefully when someone checks under
your hood.
• A garage employee puts some liquid on your battery and then tries to convince you that it is
leaking and you need a new battery.
• Removing air from a tire instead of adding air to it can make an unwary driver open to buying a
new tire or paying for an unneeded patch on a tire that is in perfect condition.
• The attendant puts grease near a shock absorber or on the ground and then tells you your
present shocks are dangerous and you need new ones.
• You are charged for two gallons of antifreeze with a radiator flush when only one gallon was
put in.
Dealing with reputable businesses and a basic motor vehicle knowledge are the
best ways to avoid deceptive repair practices.
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 231

Sheet 19 Used-Car Purchase Comparison

PRACTICE QUIZ 6–2 Sheet 20 Buying versus Leasing a Vehicle

1. What are the major sources of consumer information?

2. What actions are appropriate when buying a used car?

3. When might leasing a motor vehicle be appropriate?

4. What maintenance activities could increase the life of your vehicle?

Resolving Consumer Complaints LO6.3

Most customer complaints result from defective products, low quality or short product Describe steps to take to
lives, unexpected costs, deceptive pricing, and poor repairs. Federal consumer agencies resolve consumer problems.
estimate annual consumer losses from fraudulent business activities at $10 billion to $40
billion for telemarketing and mail order, $3 billion for credit card fraud and credit “repair”
scams, and $10 billion for investment swindles.
While you may not anticipate problems with purchases, you should be prepared for
them. To minimize consumer problems before making a purchase: (1) obtain recommen-
dations from friends, family members, and online reviews; (2) verify company affiliations,
certifications, and licenses; and (3) understand the sale terms, return policies, and warranty
ACTION ITEM
provisions. If you encounter a consumer problem, consider the process for resolving com- I am well informed on
plaints shown in Exhibit 6–6. how to take action on a
Before starting this process, know your rights and the laws that apply to your situation. consumer complaint.
Information on consumer rights is available online and through apps. For example, several apps Agree Disagree
are available that allow airline passengers to monitor the status of their flights. Information on
delays, cancellations, and other situations can be submitted to keep airlines accountable.
To help ensure success when you make a complaint, keep a file of receipts, names of
people you talked to, dates of attempted repairs, copies of letters and e-mails, and costs
incurred. These documents can help resolve a problem in your favor. An automobile owner
kept detailed records and receipts for all gasoline purchases, oil changes, and repairs. When

STEP 1. Initial Communication Exhibit 6–6

Return to place of purchase or contact online retailer.
Provide a detailed explanation and the action you desire.
Resolving Consumer
Be pleasant yet persistent in your efforts to obtain a resolution. Complaints

STEP 2. Communicate with the Company

Send an e-mail with the details of the situation (Exhibit 6−7).
Post your concerns on the company's online social media sites.
Comment on a blog or a consumer review website.

STEP 3. Consumer Agency Assistance

Seek guidance from a local, state, or federal consumer agency.
Determine if any laws have been violated in the situation.
Consider the use of mediation or arbitration.

STEP 4. Legal Action

Consider bringing your case to small claims court.
Determine if a class-action suit is appropriate.
Seek assistance from a lawyer or legal aid organization.
 232 Chapter 6 Consumer Purchasing and Wise Buying Strategies

a warranty dispute occurred, the owner was able to prove proper

money minute focus maintenance and received a refund for the defective vehicle.
Perseverance is vital since companies might ignore your request
Common consumer complaints and fraud involve (1) or delay their response.
debt collectors and fake checks; (2) impostor scams,
a person pretending to be from a government
agency; (3) identity theft; (4) telephone and mobile Step 1: Initial Communication
services; (5) banks and lending organizations; Most consumer complaints are resolved at the original sales loca-
(6) prizes, contests, and sweepstakes; (7) online tion. As you talk with the salesperson, customer service person,
scams; (8) text message or e-mail link for a fake or store manager, avoid talking loudly, threatening a lawsuit, or
package, requesting personal or bank information; demanding unreasonable action. A calm, rational, yet persistent
(9) home and auto repairs; (10) work at home, approach is usually most effective. For online purchases, call or
starting your own business, phony training courses, contact the retailer by e-mail.
employment scams; (11) diets, health claims, such
as COVID-19 scams; (12) phony charities; (13) high-
return investments, multilevel marketing. Beware of Step 2: Communicate with the Company
websites not ending in .com, .gov. or .org.
If a problem is not resolved at the local level, express your con-
cern to customer service at the corporate level. Call or use a
letter or e-mail such as the one in Exhibit 6–7. You can obtain
contact information for companies through an online search or at [Link]. This
information is also commonly included on product packages.

mediation The attempt Step 3: Consumer Agency Assistance

by an impartial third party
to resolve a difference If you do not receive a satisfactory result for your complaint from the company, organiza-
between two parties through tions are available to assist with automobiles, appliances, health care, and other concerns.
discussion and negotiation. Mediation involves the use of a third party to settle grievances. An impartial person—the

Exhibit 6–7 Name of Contact Person (if available)

Title (if available)
Sample Complaint Company Name
Consumer Complaint Division (if you have no specific contact)
E-mail
Dear (Contact Person or Organization Name):
NOTE: Keep copies of your e-mail,
letters, and related documents. Re: (account or transaction number, if applicable)
Describe your
Source: Consumer Action Name product,
purchase. On (date), I (purchased, leased, rented, or had repaired) a (name of the
Handbook ([Link]/ serial or model
product, with serial or model number, or service performed) at (location number, or
handbook). and other important details of the transaction). service.
State
Unfortunately, your product (or service) has not performed well (or the Indicate date,
problem.
service was inadequate) because (state the problem). I am disappointed location of
because (explain the problem: for example, the product does not work purchase, other
properly, the service was not performed correctly, I was billed the wrong details.
amount, something was not disclosed clearly or was misrepresented,
Give history
etc.).
of problem. Ask for specific
action.
To resolve the problem, I would appreciate your (state the specific action
you want—money back, charge card credit, repair, exchange, etc.)
Attached are copies (do not send originals) of my records (include
receipts, guarantees, warranties, canceled checks, contracts, model and Attach copies
serial numbers, and any other documents). of documents.
State
reasonable I look forward to your reply and a resolution to this situation, and will wait
time for action. until (set a time limit) before seeking help from a consumer protection
agency. Please contact me by e-mail or by phone.

Sincerely,

Your Name
Phone
E-mail
 Chapter 6 Consumer Purchasing and Wise Buying Strategies 233

mediator—tries to resolve a conflict between a customer and a

business through discussion and negotiation. Mediation is a CAUTION!
nonbinding process. This action can save time and money com-
pared to other dispute settlement methods. The Federal Trade Commission warns students
Arbitration is the settlement of a difference by a third party— of these scholarship and financial aid scams:
the arbitrator—whose decision is legally binding. After both “The scholarship is guaranteed,” “You can’t get
sides agree to arbitration, each party presents its case. Arbitrators this ­information anywhere else,” “I just need your
are selected from volunteers trained for this purpose. Most major credit card or bank account number to hold this
automobile manufacturers and many industry organizations have ­scholarship,” “We’ll do all the work. You just pay
arbitration programs to resolve consumer complaints. a processing fee,” “You’ve been selected” by a
A network of government agencies is available. Problems “national foundation” to receive a scholarship—or
with local restaurants or food stores may be handled by a city “You’re a finalist” in a contest you never entered.
or county health department. Every state has agencies to han- Also beware of offers for student loan forgiveness
dle problems involving deceptive advertising, fraudulent busi- and requests for your username and password to
ness practices, banking, insurance companies, and utility rates. help repay loans. For guidance on ­financing your
Federal agencies are available to help with consumer concerns education, see the Chapter 5 Appendix.
(see Chapter 6 Appendix). When uncertain about which agency
to contact, conduct an online search to guide you.
arbitration The settlement
of a difference by a third
WHAT WOULD YOU DO? Each day, hundreds of people are victims of party whose decision is
scams and frauds. What actions do you take to avoid losing money to legally binding.
deceptive business activities? If you had a friend who was a victim of fraud, what
steps would you recommend to that person?
small claims court A court
that settles legal differences
Step 4: Legal Action involving amounts below
a set limit and employs a
The Legal Options for Consumers section considers various legal alternatives available to process in which the litigants
resolve consumer problems. usually do not use a lawyer.

PRACTICE QUIZ 6–3

1. What are common causes of consumer problems and complaints?

2. How can most consumer complaints be resolved?

3. How does arbitration differ from mediation?

Legal Options for Consumers LO6.4

If the actions discussed previously fail to resolve your complaint, what would you do next? Evaluate legal alternatives
One of the following options may be appropriate. available to consumers.

Small Claims Court

In small claims court, a person may file a claim involving amounts below a set dollar limit.
The maximum varies from state to state, ranging from $500 to $25,000; most states have
a limit of between $2,500 and $10,000. The process usually takes place without a lawyer, ACTION ITEM
although in many states attorneys are allowed in small claims court. To effectively use I know the legal actions
small claims court, experts suggest that you: to take for consumer
problems.
• Become familiar with court procedures and filing fees (usually from $5 to $50).
Agree Disagree
• Observe other cases to learn about the process.
 234 Chapter 6 Consumer Purchasing and Wise Buying Strategies

• Present your case in a polite, calm, and concise manner.

• Submit evidence such as photographs, contracts, receipts, and other documents.
• Use witnesses who can testify on your behalf.
For additional details about small claims court, see the Financial Literacy in Practice feature.

Class-Action Suits
class-action suit A legal Occasionally, a number of people have the same complaint. A class-action suit is a legal action
action taken by a few taken by a few individuals on behalf of all the people who have suffered the same alleged injus-
individuals on behalf of tice. These people are represented by one or more lawyers. Once a situation qualifies as a
all the people who have
class-action suit, all affected parties are notified. At this point, a person must decide whether to
suffered the same alleged
injustice.
opt in or opt out. Nonrespondents will not be part of the complaint. If a plaintiff chooses not to
participate in the class-action suit, the person may select to file an individual lawsuit.
If the court ruling is favorable to the class, the funds awarded may be divided among the
class members, used to reduce future rates, assigned for government use, or donated to charity.
Past examples of class-action suits include auto owners who were sold unneeded replacement
parts, investors who sued a brokerage company for unauthorized transactions resulting in high
commission charges, and consumers who were charged unfair fees by an online ticket seller.

Using a Lawyer
CAUTION In some situations, you may seek the services of an attorney.
Buying fake and counterfeit products can be
Common sources of lawyers are referrals from friends, online
dangerous. A fake purse or watch may not cost
research, and the local division of the American Bar Association.
much money, but other products can cost lives.
Straightforward legal situations such as appearing in small
Counterfeit prescription medications may not
claims court, renting an apartment, or defending yourself on a
be effective, or a knockoff airbag used as a
minor traffic violation will usually not need legal counsel. More
­replacement part in a vehicle after an accident may
complicated matters such as writing a will, settling a real estate
not deploy properly. Carefully investigate purchases
purchase, or suing for injury damages will likely require the ser-
for your personal safety.
vices of an attorney. Websites such as LegalZoom, Nolo, and
Rocket Lawyer are available to assist with basic legal documents.
When selecting a lawyer, consider several questions: Is the
lawyer experienced in your type of case? Will you be charged
on a flat-fee basis, at an hourly rate, or on a contingency basis? Is there a fee for the initial
consultation? How and when will you be required to make payment for services?

WHAT WOULD YOU DO? While using a hair dryer you recently purchased,
you receive a burn on your hand. What actions might be taken related to this
situation? How would you determine if legal action is appropriate? What steps would
you take if you needed to hire a lawyer?

Other Legal Alternatives

legal aid society One Legal services can be expensive. A legal aid society is one of a network of community law
of a network of publicly offices that provide legal assistance to people who cannot afford their own attorney. These
supported community law community agencies provide this assistance at a minimal or no cost.
offices that provide legal
Prepaid legal services provide unlimited or reduced-fee legal assistance for a set fee.
assistance to consumers
who cannot afford their
Some programs provide basic services, such as telephone consultation and preparation
own attorney. of a simple will, for an annual fee. Prepaid legal programs are designed to prevent minor
troubles from becoming complicated legal problems.
Financial Literacy in Practice
How to File a Suit in Small Claims Court
In every state, small claims courts are available to handle legal Step 5. Next, a hearing date will be set. Prepare evidence
disputes involving minor amounts. While specific procedures with a clear and concise presentation of (a) the details of
vary from state to state, these actions are usually involved: what happened and when; (b) evidence, such as contracts,
Step 1. Notify the defendant to request a payment for leases, receipts, canceled checks, credit card statements, or
damages with a deadline, such as within 30 days. Note in your photographs; and (c) the testimony of people who witnessed
letter that you will initiate legal action after that point in time. aspects of the dispute or who are knowledgeable about the
Step 2. Determine the appropriate location for filing type of situation. If both parties decide to settle before the
the case. Also, decide if your type of case is allowed in hearing, be sure that you receive payment before the case
small claims court in your state and if the amount is within is dismissed.
the state limit. (Information on state limits is available at Step 6. At the hearing, be as clear and concise as pos-
[Link]/legal-encyclopedia/[Link].) sible, and bring supporting documentation with you. A sub-
Step 3. Obtain and complete the required filing docu- poena may be needed requiring witnesses whom you wish
ments. These forms can be obtained at the courthouse or present at the hearing to appear in court.
may be available online. The petition will include the plain- Step 7. Once you receive a favorable judgment, you still
tiff’s name (you), the defendant (person or organization have to collect the funds. While the court does not collect
being sued), the amount being requested, a detailed and the money for you, the party may pay when the judgment is
clear description of the claim with dates of various actions, rendered. If not, a letter from you or an attorney may result
and copies of any pertinent documents (contracts, receipts). in payment. Or more formal debt collection actions might be
Step 4. File the documents and pay the required fee. The necessary.
petition will be served to the defendant notifying that per- Every state has different procedures and regulations
son of the suit. After being served, the defendant is usually related to small claims court. Conduct a web search to
required to file a written response, denying or not contest- obtain information for your specific location. Careful and
ing the claim. If the defendant does not respond, a default detailed preparation of your case is the key to a successful
judgment will most likely be entered. small claims court case.

Personal Consumer Protection

While many laws, agencies, legal tools, and online sources are available to protect your
rights, none will be of value unless you use them. Consumer protection experts suggest
that to prevent being taken by deceptive business practices, you should:
1. Do business only with reputable companies with a record of satisfying customers.
2. Avoid signing contracts and other documents you do not understand.
3. Be cautious of deals that seem too good to be true—they probably are!
4. Compare the cost of buying on credit with the cost of paying cash; also, compare
the interest rates the seller offers with those offered by a bank or a credit union.
5. Avoid rushing to get a good deal; successful con artists depend on impulse buying.

Sheet 21 Legal Services Cost

PRACTICE QUIZ 6–4 Comparison

1. In what types of situations would small claims court and class-action suits be helpful?

2. Describe situations in which you might use the services of a lawyer.

3. For the following situations, identify the legal action that would be most appropriate to take.
a. A low-income person wants to obtain the services of a lawyer to file a product-liability suit.
b. A person is attempting to obtain a $150 catering deposit that was never returned.
c. A consumer wants to settle a dispute out of court with the use of a third party whose decision will be legally binding.
d. A group of telephone customers were overcharged by $1.10 a month over the past 22 months.

235
 Road Map to financial literacy

Wise Buying Strategies

You Are Here

Checkpoint

Maintain spending diary to

Create plan for saving, avoiding monitor spending activities
unneeded spending Learn wise buying and
Checkpoint comparison-shopping strategies
Save for purchase of expensive
items to avoid credit costs Develop research skills for
Teach wise buying to household buying
members

Update spending based

on changing household needs
Consider the sale or Checkpoint
donation of unneeded items Financial Security
Plan spending changes for
retirement years

TE F IN
UA AN
EQ C
AD IA
LL
6
Y

7 5
SE

8 4
S

CU
OU

9 3
RE
ER

10 2
DANG

11 1
12

UNPLANNED SPENDING PERCENT

0
your personal finance dashboard

Unplanned Spending Percent

Unplanned spending, called impulse buying, prevents good financial planning. While people may spend to feel good
about themselves, that often results in budget problems, high debt levels, and greater financial stress. Controlling
unplanned spending contributes to financial progress. Careful spending results in lower debt, more savings, and achiev-
ing financial goals.

YOUR SITUATION: Are you able to minimize your unplanned purchases? Are there areas of spending you might
reduce? A low unplanned spending ratio can result in improved financial security.

236
 Chapter
LO6.1 Timing purchases, comparing LO6.3 Most consumer problems can be Summary
stores and brands, using label information, resolved by following these steps: (1) return
computing unit prices, and evaluating war- to the place of purchase; (2) contact the com-
ranties are common strategies for effective pany’s main office; (3) obtain assistance from
purchasing. a consumer agency; and (4) take legal action.
LO6.2 A research-based approach to LO6.4 Small claims court, class-action
consumer buying involves (1) preshopping suits, the services of a lawyer, legal aid soci-
activities, such as problem identification eties, and prepaid legal services are legal
and information gathering; (2) evaluating means for handling consumer problems that
alternatives; (3) determining the purchase cannot be resolved through communication
price; and (4) postpurchase activities, such with the company involved or with help
as proper operation and maintenance. from a consumer protection agency.

Key Terms
arbitration 233 mediation 232 small claims court 233
class-action suit 234 service contract 220 warranty 220
legal aid society 234

Self-Test
1. An item bought on credit with a $60 down payment and monthly payments of $70 for Problems
36 months. What would be the total cost of the item?
2. A food package with 32 ounces costs $1.76. What is the unit cost of the package?
Solutions
1. 36 × $70 = $2,520 plus the $60 down payment for a total of $2,580.
2. $1.76 ÷ 32 = 5.5 cents an ounce.

Financial Planning
1. An online buying club offers a membership for $300, for which you will receive a Problems
10 percent discount on all brand-name items you purchase. How much would you
have to buy to cover the cost of the membership? (LO6.1)
2. John Walters is comparing the cost of credit to the cash price of an item. If John
makes an $80 down payment and pays $35 a month for 24 months, how much more
will that amount be than the cash price of $685? (LO6.1)
3. Calculate the unit price of each of the following items: (LO6.1)
a. Motor oil—2.5 quarts for $1.95 cents/quart
b. Cereal—15 ounces for $2.17 cents/ounce
c. Canned fruit—13 ounces for 89 cents cents/ounce
d. Facial tissue—300 tissues for $2.25 cents/100 tissues
4. A service contract for a video projection system costs $80 a year. You expect to use
the system for six years. Instead of buying the service contract, what would be the
future value of these annual amounts after six years if you earn 3 percent on your
savings? (LO6.1)
5. A work-at-home opportunity is available in which you will receive 3 percent of the
sales to customers you refer to the company. The cost of your “franchise fee” is $600.
How much would your customers have to buy to cover the cost of this fee? (LO6.1)
6. What would be the net present value of a microwave oven that costs $159 and will
save you $68 a year in time and food away from home? Assume an average return
on your savings of 4 percent for five years. (Hint: Calculate the present value of the
annual savings, then subtract the cost of the microwave.) (LO6.1)
237
 7. If a person saves $62 a month by using coupons and doing comparison shopping,
(a) what is the amount for a year? (b) What would be the future value of this annual
amount over 10 years, assuming an interest rate of 4 percent? (LO6.1)
8. Based on the following data, prepare a financial comparison of buying and leasing a
motor vehicle with a $24,000 cash price:
Down payment (to finance vehicle), $4,000 Down payment for lease, $1,200
Monthly loan payment, $560 Monthly lease payment, $440
Length of loan, 48 months Length of lease, 48 months
Value of vehicle at end of loan, $7,200 End-of-lease charges, $600
What other factors should a person consider when choosing between buying and
leasing? (LO6.2)
9. Based on the data provided here, calculate the items requested: (LO6.2)
Annual depreciation, $2,500 Annual mileage, 13,200
Current year’s loan interest, $650 Miles per gallon, 24
Insurance, $680 License and registration fees, $65
Average gasoline price, $3.50 per gallon Oil changes/repairs, $370
Parking/tolls, $420
a. The total annual operating cost of the motor vehicle.
b. The operating cost per mile.
10. Based on the following, calculate the costs of buying versus leasing a motor
vehicle: (LO6.2)
Purchase Costs Leasing Costs
Down payment, $1,500 Security deposit, $500
Loan payment, $450 for 48 months Lease payment, $450 for 48 months
Estimated value at end of loan, $4,000 End-of-lease charges, $600
Opportunity cost interest rate, 4 percent
11. A class-action suit against a utility company resulted in a settlement of $1.4 million
for 62,000 customers. If the legal fees, which must be paid from the settlement, are
$300,000, what amount will each plaintiff receive? (LO6.4)

To reinforce the content in this chapter, more problems are

®

provided at [Link].

FINANCIAL LITERACY PORTFOLIO. . .

PLANNING A CONSUMER PURCHASE
Competency. . .
(1) Researching a consumer purchase; (2) Avoiding unwise spending and consumer fraud.

Action Research. . .
(1) Based on Chapter 6, online research, and store or car dealer visits, complete Your
Personal Financial Plan Sheet 18 or 19 for a major consumer purchase or used car pur-
chase. (Excel files for these two sheets are available on Connect.) (2) Based on Chapter 6
and online research, select a recent scam or unwise spending action.
238
Outcome. . .
(1) Report the findings and conclusion of the comparison shopping research with the use
of an audio file, video, PowerPoint presentation, storyboard, or other visual format. (2)
Create a warning to inform and educate others regarding this fraud or poor spending habits
using one or more of these formats: print advertisement, audio file/podcast, video, smart-
phone app, storyboard, or photo essay.

REAL LIFE PERSONAL FINANCE

ONLINE CAR BUYING

With a click of the mouse, Mackenzie She obtained more than one price quote by
enters the auto “showroom.” In the past using various online sources. She then pre-
few months, she had realized that the repair pared an overview of her online car-buying
costs for her 11-year-old car were acceler- experiences.
ating. She thought it was time to start shop- Mackenzie’s next step was to make her final
ping for a new car online and decided to decision. After selecting what she planned
start her search for a vehicle by looking at to buy, she finalized the purchase online
small and mid-sized SUVs. and decided to take delivery at a local
Her friends suggested that Mackenzie dealer.
research more than one type of vehicle. They While the number of motor vehicles being
reminded her that comparable models were sold online is increasing, car-buying experts
available from various auto manufacturers. strongly recommend that you make a per-
In her online car-buying process, sonal examination of the vehicle before tak-
Mackenzie next did a price comparison. ing delivery.

Online Car-Buying
Action Online Activities Websites Consulted

Information gathering • Review available vehicle models and [Link]

options. [Link]
• Evaluate operating costs and safety [Link]
features. [Link]

Comparing prices • Identify specific make, model, and fea- [Link]

tures desired. [Link]
• Locate availability and specific price in [Link]
your geographic area. [Link]

Finalizing purchase • Make payment or financing [Link]

arrangements. [Link]
• Conduct in-person inspection. [Link]
• Arrange for delivery. [Link]

Questions
1. Based on Mackenzie’s experience, what 3. What do you consider to be the benefits
benefits and drawbacks are associated and drawbacks of shopping online for
with online car buying? motor vehicles and other items?
2. What additional actions might Mackenzie 4. What actions might a car buyer take if a
consider before buying a motor vehicle? lemon is purchased?
239
 CONTINUING CASE

CONSUMER PURCHASING STRATEGIES AND WISE BUYING OF

MOTOR VEHICLES

It sputtered and squeaked, and with a small hesitation followed by an exaggerated shudder,
it was finally over. Ol’ Reliable, the car Jamie Lee had driven since she first earned her
driver’s license at the age of 17, completed its last mile. Thirteen years and 140,000 miles
later, it was time for a new vehicle.
After skimming the Sunday newspaper and browsing the online advertisements, Jamie Lee
was ready to visit car dealers to see what vehicles would interest her. She was unsure if she
would purchase a new car or used and how she would pay for the car. “No money down and
only $219 a month,” Jamie Lee read, “with approved credit.” It sounded like an offer she
would be interested in. Jamie Lee knew she had a good credit rating, as she made sure she
paid all of her bills on time each month and had kept a close eye on her credit score ever
since she was the victim of identity theft several years ago. The more she thought about
the brand-new car, the more excited she became. That new car fit her personality perfectly!
As Jamie Lee inquired about the advertised vehicle with the salesperson, her excitement
quickly turned to dismay. The automobile advertised was available for $219 a month with
no money down, based on approved credit, but Jamie Lee unexpectedly found that there
were further qualifications in order to get the advertised price. The salesman explained that
the information in the fine print of the newspaper advertisement stated that the price was
based on all of the following criteria: being active in the military, a college graduate within
the last three months, a current lessee of the automobile company, and having a top-tier
credit score, which, he noted, was above 800. If Jamie Lee did not meet all of the qualifica-
tions, she would not receive the price advertised in the promotion. He could get her in that
vehicle, but it would cost her an additional $110 per month. Jamie budgeted a maximum of
$275 for her monthly car payment. She could not afford the vehicle.
Jamie Lee had to start over from scratch. She decided that she must fully research the vehi-
cle purchase process before browsing at another dealership. She felt she was getting caught
up in the moment and vowed to do her research before speaking with another salesperson.

Questions
1. Jamie Lee is considering a used vehicle but cannot decide where to begin her search.
Using Your Personal Financial Plan Sheet 19, name the sources available to Jamie Lee
for a used-car purchase. What are the advantages and disadvantages of each?
2. Jamie Lee is attracted to the low monthly payment advertised for a vehicle lease. She
may well be able to afford a more expensive car than she originally thought. Jamie Lee
really needs to think this through. What are the advantages and disadvantages to leas-
ing a vehicle?
3. Jamie Lee sat down with a salesperson to discuss a new vehicle and its $24,000 pur-
chase price. Jamie Lee has heard that “no one really pays the vehicle sticker price.”
What guidelines may be suggested for negotiating the purchase price of a vehicle?
4. Jamie Lee has decided to purchase a certified preowned vehicle. What might she
expect as far as reliability and a warranty on the used car?

240
“USING THE DAILY SPENDING DIARY HAS HELPED ME CONTROL Spending
IMPULSE BUYING. WHEN I HAVE TO WRITE DOWN EVERY AMOUNT, Diary
I’M MORE CAREFUL WITH MY SPENDING. I CAN NOW PUT MORE IN
SAVINGS.”

Directions Start (or continue) your Daily Spending Diary or use your own format to
record and monitor spending in various categories. Most people who have participated in
this activity have found it beneficial for monitoring and controlling their spending habits.
The Daily Spending Diary sheets are located at the end of Chapter 1 and in Connect Finance.

Questions
1. What daily spending items are amounts that might be reduced or eliminated to allow
for higher savings amounts?
2. How might a Daily Spending Diary result in wiser consumer buying and more saving
for the future?

241
18 Name: Date:

Consumer Purchase Comparison

YOUR PERSONAL FINANCIAL PLAN

Purpose: To research and evaluate brands and store services for a major consumer purchase.
Financial Planning Activities: When considering the purchase of a major consumer item, use ads,
catalogs, an online search, store visits, and other sources to obtain the information below. This sheet
is also available in an Excel spreadsheet format in Connect Finance.
Suggested Websites: [Link], [Link], [Link]

Product
Exact description (size, model, features, etc.)

Research the item in consumer periodicals and online for information regarding your product.
Article/Periodical ____________________________________ Website ____________________________
Date/Pages _________________________________________ Date _______________________________

What buying suggestions are presented in the articles?

Which brands are recommended in these articles? Why?

Contact or visit two or three stores that sell the product to obtain the following information:

Store 1 Store 2 Store 3

Company

Address

Phone/website

Brand name/cost

Variation from the description

above (if any)
Warranty (describe)

Which brand and at which

store would you buy this
­product? Why?

What’s Next for Your Personal Financial Plan?

• Which consumer information sources are most valuable for your future buying decisions?
• List guidelines to use in the future when making major purchases.

242
Name: Date:
19
Used-Car Purchase Comparison

YOUR PERSONAL FINANCIAL PLAN

Purpose: To research and evaluate different types and sources of used vehicles.
Financial Planning Activities: When considering a used-car purchase, use advertisements, online
sources, and visits to new- and used-car dealers to obtain the information below. This sheet is also
available in an Excel spreadsheet format in Connect Finance.
Suggested Websites: [Link], [Link], [Link]

Automobile
(year, make, model)

Name/source

Address

Phone

Website (if applicable)

Cost

Mileage

Condition of auto

Condition of tires

Radio

Air conditioning

Other options

Warranty (describe)

Items in need of repair

Inspection items:
• Rust, major dents?

• Oil or fluid leaks?

• Condition of brakes?

• Proper operation of Suggested

heater, wipers, other App:
• KBB
accessories?

Other information

What’s Next for Your Personal Financial Plan? McGraw Hill

• Maintain a record of automobile operating costs.

• Prepare a plan for regular maintenance of your vehicle.

243
 20 Name: Date:

Buying versus Leasing a Vehicle

YOUR PERSONAL FINANCIAL PLAN

Purpose: To compare costs of buying or leasing an automobile or other vehicle.

Financial Planning Activities: Obtain costs related to leasing and buying a vehicle.
This sheet is also available in an Excel spreadsheet format in Connect Finance.
Suggested Websites: [Link], [Link]/buy-vs-lease-calculator

Purchase Costs
Total vehicle cost, including sales tax ($ ____________)
Down payment (or full amount if paying cash) $ ____________________
Monthly loan payment: $ ____________ times ______ month loan $ ____________________
(This item is zero if vehicle is not financed.)
Opportunity cost of down payment (or total cost of the vehicle if bought
for cash):
$ ____________ times number of years of financing/ownership times ______
percent (interest rate that funds could earn) $ ____________________
Less: estimated value of vehicle at end of loan term/ownership $ ____________________

Total cost to buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Leasing Costs
Security deposit $ ___________________
Monthly lease payments: $ ____________ times ______ months $ ___________________
Opportunity cost of security deposit: $ ____________ times years
times ______ percent $ ___________________
End-of-lease charges (if applicable)* $ ___________________

Total cost to lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 

*WITH A CLOSED-END LEASE, CHARGES FOR EXTRA MILEAGE OR EXCESSIVE WEAR AND TEAR; WITH AN OPEN-END LEASE, END-OF-LEASE PAY-
MENT IF APPRAISED VALUE IS LESS THAN ESTIMATED ENDING VALUE.

What’s Next for Your Personal Financial Plan?

Suggested
App: • Prepare a list of future actions to use when buying, financing, and leasing a car.
• Rodo
• Maintain a record of operating costs and maintenance actions for your vehicle.

McGraw Hill

244
Name: Date:
21
Legal Services Cost Comparison

YOUR PERSONAL FINANCIAL PLAN

Purpose: To compare cost of services from various legal assistance sources.
Financial Planning Activities: Contact various legal services (lawyer, prepaid legal service, legal
aid society) and online sources to compare costs and available services. This sheet is also available
in an Excel spreadsheet format in Connect Finance.
Suggested Websites: [Link], [Link]

Type of legal service

Organization name

Address

Phone

Website

Contact person

Recommended by

Areas of specialization

Maximum initial deposit

Cost of initial consultation

Cost of simple will

Cost of real estate closing

Cost method for other

­services—flat fee, hourly
rate, or contingency basis
Suggested
App:
Other information • Ask a
Lawyer

What’s Next for Your Personal Financial Plan?

McGraw Hill
• Determine the best alternative for your future legal needs.
• Maintain a file of legal documents and other financial records.

245
 Chapter 6 Appendix:
Consumer Agencies
and Organizations
Government agencies and other organizations are available to assist when you want to:
• Research a financial or consumer topic.
• Obtain information for planning a purchase decision.
• Seek assistance to resolve a consumer problem.
Section 1 of this appendix provides an overview of federal, state, and local agencies and
other organizations you may contact related to financial planning and consumer topics.
Section 2 covers state consumer protection offices that can assist you in local matters.

Section 1
Most federal agencies may be contacted online; websites are noted below. In addition,
consumer information from several federal government agencies may be accessed at www.
[Link]/consumer.
Information on additional government agencies and private organizations available to
assist you may be obtained in the Consumer Action Handbook, available at no charge at
[Link]/handbook.

Exhibit 6–A Federal, State, and Local Agencies and Other Organizations

Topic Area Federal Agency State, Local Agency; Other Organizations

Advertising
False advertising Federal Trade Commission State Consumer Protection Office c/o
Product labeling 1-877-FTC-HELP State Attorney General or Governor’s
Deceptive sales practices ([Link]) Office (see Section 2)
Warranties
National Fraud Information Center
([Link])

Air Travel
Air safety Federal Aviation Administration International Airline Passengers
Airport regulation 1-800-FAA-SURE Association
Airline routes ([Link]) 1-800-527-5888
([Link])

Appliances/Product Safety
Potentially dangerous products Consumer Product Safety Commission Council of Better Business Bureaus
Complaints against retailers, 1-800-638-CPSC 1-800-955-5100
manufacturers ([Link]) ([Link])

246
 Chapter 6 Appendix Consumer Agencies and Organizations 247

Topic Area Federal Agency State, Local Agency; Other Organizations

Automobiles
New cars Federal Trade Commission National Automobile
Used cars 1-877-FTC-HELP Dealers Association
Automobile repairs ([Link]) 1-800-252-6232
Auto safety ([Link])
National Highway Traffic Safety
Administration Center for Auto Safety
1-800-424-9393 (202) 328-7700
([Link]; ([Link])
[Link])

Banking and Financial Institutions

Checking accounts Federal Deposit Insurance Corporation Credit Union National Association
Savings accounts 1-877-275-3342 (608) 232-8256
Deposit insurance ([Link]) ([Link])
Financial services
Comptroller of the Currency American Bankers Association
(202) 447-1600 (202) 663-5000
([Link]) ([Link])
Federal Reserve Board Treasury Direct U.S. Savings Bonds
(202) 452-3693 1-800-US-BONDS
([Link]) ([Link])
National Credit Union Administration
(703) 518-6300
([Link])

Career Planning
Job training Coordinator of Consumer Affairs State Department of Labor or State
Employment information Department of Labor Employment Service
(202) 219-6060
([Link])

Consumer Credit
Credit cards Consumer Financial Protection Bureau Clearpoint Credit Counseling
Deceptive credit advertising (855) 411-2372 1-800-251-2227
Truth-in-Lending Act ([Link]) ([Link])
Credit rights of women, minorities
Federal Trade Commission National Foundation for Credit
1-877-FTC-HELP Counseling
([Link]) (301) 589-5600
([Link])

Environment
Air, water pollution Environmental Protection Agency Clean Water Action
Toxic substances 1-800-438-4318 (indoor air quality) (202) 895-0420
1-800-426-4791 (drinking water safety) ([Link])
([Link])

Food
Food grades U.S. Department of Agriculture Center for Science in the Public Interest
Food additives 1-800-424-9121 (202) 332-9110
Nutritional information ([Link]) ([Link])
Food and Drug Administration
1-888-463-6332
([Link])

Funerals
Cost disclosure Federal Trade Commission National Funeral Directors Association
Deceptive business practices 1-877-FTC-HELP 1-800-228-6332
([Link]) ([Link])
248 Chapter 6 Appendix Consumer Agencies and Organizations

Exhibit 6–A (continued)

Topic Area Federal Agency State, Local Agency; Other Organizations

Housing and Real Estate

Fair housing practices Department of Housing and Urban National Association of Realtors
Mortgages Development (HUD) 1-800-874-6500
Community development 1-800-669-9777 ([Link])
([Link]) ([Link])
HUD - Tenant’s Rights Tenant Advocacy Project
([Link] ([Link]/programs/
rental_assistance/tenantrights) tenant-advocacy)

Insurance
Policy conditions Federal Trade Commission State insurance regulator (see Section 2)
Premiums 1-877-FTC-HELP American Council of Life Insurance
Types of coverage ([Link] ) ([Link])
Consumer complaints
National Flood Insurance Program Insurance Information Institute
1-888-CALL-FLOOD 1-800-331-9146
([Link]) ([Link])

Investments
Stocks, bonds Securities and Exchange Commission Investment Company Institute
Mutual funds (202) 551-6551 (202) 293-7700
Commodities ([Link]) ([Link])
Investment brokers
Commodity Futures Trading Commission Financial Industry Regulatory Authority
(202) 418-5000 (301) 590-6500
([Link]) ([Link])
National Futures Association
1-800-621-3570
([Link])
Securities Investor Protection Corporation
(202) 371-8300
([Link])

Legal Matters
Consumer complaints Department of Justice American Arbitration Association
Arbitration Office of Consumer Litigation (212) 484-4000
(202) 514-2401 ([Link])
([Link]/civil/
consumerprotection-branch) American Bar Association
1-800-285-2221
([Link])

Internet/Mail Order
Damaged products Internet Crime Complaint Center Direct Marketing Association
Deceptive business practices ([Link]) (212) 768-7277
Illegal use of U.S. mail ([Link])
U.S. Postal Service
1-800-ASK-USPS
([Link])

Medical Concerns
Prescription medications Food and Drug Administration American Medical Association
Over-the-counter medications 1-888-463-6332 1-800-336-4797
Medical devices ([Link] ) ([Link])
Health care
Public Health Service Public Citizen Health Research Group
1-800-621-8335 (202) 588-1000
([Link]) ([Link])
 Chapter 6 Appendix Consumer Agencies and Organizations 249

Topic Area Federal Agency State, Local Agency; Other Organizations

Retirement
Old-age benefits Social Security Administration AARP
Pension information 1-800-772-1213 (202) 434-2277
Medicare ([Link]) ([Link])

Taxes
Tax information Internal Revenue Service State revenue department (see Section 2)
Audit procedures 1-800-829-1040 The Tax Foundation
1-800-TAX-FORM (202) 464-6200
([Link]) ([Link])
National Association of Enrolled Agents
1-800-424-4339
([Link])

Telemarketing
Deceptive phone calls Federal Communications Commission National Consumers League
Robocalls 1-888-225-5322 (202) 835-3323
([Link]) ([Link])
Federal Trade Commission
1-877-FTC-HELP
([Link] )

Utilities
Cable television Federal Communications Commission State utility commission (in your state’s
Utility rates 1-988-225-5322 capital city)
([Link])

Section 2
State, county, and local consumer protection offices provide consumers with publications,
online information, and assistance for complaint handling. In addition, agencies regulating
banking, insurance, securities, and utilities are available in each state; these may be located
with an online search.

Consumer Action Handbook [Link]/handbook

State consumer offices National Association of Attorneys General ([Link]) or search “(state) consumer
­protection agency”

State departments of insurance [Link]/state_web_map.htm

State tax departments [Link]/state-tax-agencies

[Link]/research/externallinks/[Link]

To save time, call or e-mail the office before sending in a complaint. Determine if the
office handles the type of complaint you have or if online complaint forms are available.