consumer affairs notes

8/2/2019 Consumer Affairs Notes.

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y Consumer- Any individual or institution that uses goods and servicesy Budget A plan/ statement outlining a consumers income and expenditure for a

specific period.

y Budgeting The process of balancing income with expenditure

y Saving the unused portion of the income of an individual, business or governmenty Goods Any product that can be used to satisfy some desire, needs or wants.y Services Intangible products that are not goods such as Education, Medical

Treatment, Transportation, Banking etc...y Demand The amount of goods which consumers are prepared to buy at a given

price at any given time.y Supply The quantity of goods and services which sellers put on the market at a

given pricey Disposable Income the money remaining for an income earner to spend on

goods and services after taxes and other compulsory payments have beendeducted.

y Income The payment one receives for ones services, labour, property orinvestments.

y Investment The act or process of using ones money to buy bonds, shares,

mutual funds, stocks, life insurance, and land in an attempt to make a profit in thefuture.

y Bonds Long-term loans to a government or businessy Ownership Exclusive right to enjoy, occupy, possess, rent, sell, use, or even

destroy an item or propertyy Pricing Fixing a money value to a thing to be bought or sold.y Marketing The act of engaging in activities that educates consumers about goods

and services in order to persuade them to buy them.

y Thrift the wise and careful use of money and possessions in order to get themaximum benefits from them.

y Credit union a financial institution owned and controlled by its members with thepurpose of providing credit/loans at competitive rates and offering other financialservices to its members.


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y Black market A system used by people to illegally buy and sell goods that areotherwise scarce, banned or difficult to get hold of.

y Hire purchase A system or method of buying goods through making regularinstallments while enjoying the use of the goods. However, ownership of the goodsdoes not pass to the buyer until full payment of the loan.

y Dumping the act of a manufacturer in one country pricing a product below its costof production in another country.

y Electronic Commerce (E-commerce) transactions in which consumers andbusinesses order and pay for goods and services on the internet.

y Securities are usually negotiable financial instruments representing financialvalue, for example, bonds, common stocks, shares and treasury bills.

y Dividend A share of profits issued to share- holders

y Exchange rate The value of the money of one country compared to the money ofanother country.

y Devaluation an official reduction or substantial drop in the exchange value of acurrency by lowering its value relative to the currencies of other countries.

y Inflation The persistent


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Goods can be categorized as free, economic, consumers orproducers goods.

Free goods -These are goods that are available in unlimited quantities and do notcommand a price; sunlight, air, rain, water are all examples.

Personal Loans Loans are sums of money that has to be repaid in regular installmentswith interest. Loans most time takes the form of cash, but also may be in the form ofoverdraft. Loans are usually obtained from institutions such as banks, finance corporation orcredit unions. Note however that there are some basic criteria that one must satisfy in orderto be qualified for a personal loans, the varying institutions usually draft their own criteria.


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Credit Card A small plastic card issued by a financial institution which enables theconsumer to purchase goods and services or pay bills electronically without paying cash ora cheque at the point of purchase. All credit cards are so designed that when swiped in amachine, it is instantly linked by a telephone line to the card holders bank. Each card holderis entitled to a specific amount of credit from the bank, hence, if the credit limit is exceeded,the card will automatically declined. If the card is accepted at the point of transaction, astatement will be issued, requiring the holder of the card to sign receipt of the credit. Thevalue of the purchase will then be automatically credited to the sellers account. It isimportant that one be aware that interest will be charged to the credit card holder if themonthly balance on the account is not paid on or before the due date.

Hire purchase agreement This is a contractual agreement between two parties;a) the hirer the person who takes the goods for useb) the owner the person who lends or rent the goods.Under this arrangement, the consumer hires a good for a fixed period of time by paying adeposit on the good and agrees to pay the balance of the purchase price with the interest inregular installments over a period of time. The goods become the property of the hirer uponfull payment for them.

Factors which Influence Consumer Demand for Goods and Services

y Size of income: It is no surprise that the size of the consumers income willinfluence the demand for goods and services. There is direct co-relation between anincrease in the level of income and an increase in the demand for goods andservices. The consumers disposable income plays a major role in determining whatto buy and in what quantity. As a consumer income rises, the result will more than

often be a rise in consumption as the consumer will be able to buy more.y Taste patterns: demand heavily rely on the taste patterns of people. A change in

taste will bring about a change in the demand for goods and services. In Jamaica,many of the people has a overwhelming taste for jerk chicken, if the consumersdevelop a greater taste for barbecued chicken, then the demand for jerk chicken willdecrease and an increase for barbecued chicken. Hence, the taste patterns of theconsumers heavily influence the demand for goods and services.


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y Savings:A consumer who is committed to savings will always think twice beforespending. It is therefore safe to surmise that ones saving pattern affects his/herdemand for goods and services. A consumer committed to savings will be more atuned to buying the necessities needed for everyday survival , rather than spendingrandomly.

y Credit facilities and conditions: The presence of credit facilities will influence thecustomer buying decision and afford him /her the opportunity to purchase goods andservices on credit without having to consider his/her financial constraints or lowincome.

y Fluctuations in supply: Expectations of consumers regarding the supply of goodsalso influence their demand. If consumers anticipate a shortage in supply due tosome reason, the demand for the goods will rise. Contrarily, if consumers expect anincrease in supply, the demands for the good will fall.

y Pricing:Pricing is one of those most important factor that influences demand forgoods and services. It is a general attitude for the demand for a particular good orservice to increase when the price falls, contrastingly, if the same price for the saidgoods and services increases, the demand for the commodity contracts. This ishowever not a general rule as it relates to pricing and consumer demands.

y Advertising: Advertising provides information to consumers particularly through themass media. Consumers are therefore treated to an array of choices about goodsand services. Advertisement therefore increases the demand for goods and servicesthrough its persuasive nature and creates demand for new products on the market

by providing valuable information to the public. Advertising is one of the mosteffective tools used by manufacturers/producers to increase the demand for theirgoods and services.

y ConsumerExpectations:Consumers expectation, regarding future prices of goodsand services influence their demand to a large extent. If consumers anticipate anincrease in the prices of goods and service due to some reasons, the demand forthose goods and services will rise to avoid more prices in the future.


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How Consumers use Modern Technology to Conduct Transactions.

Consumers use the following modern technology to conduct business transactions: Tele-banking; ATM; E-commerce; Internet banking; Debit and credit cards.T

ele-ba

nking:Some customers cannot be bothered with going into a financial institution totransact businesses, instead, they make use of the telephone to check on account balances

and last transactions, transfer funds between accounts, make credit card payments andmake payments of bills. This service offered by financial institutions constitutes.ATM automated teller machine.These are computerized telecommunications devices that make it possible for the clients offinancial institutions to perform financial transactions in public space twenty four hours a daywithout the need for a bank teller or cashier. ATMs are also called automatic bankingmachines (A.B.M).

Individuals who hold an ATM card issued by their banks are identified by inserting theplastic ATM card with a chip that contains a unique card number with security information.The user upon inserting the card into the machine will be required to enter his / herPersonal Identification Number(PIN) which will then allows the user to access his/heraccount. The ATM affords the customer the following benefits upon accessing their bankaccounts:

y Cash withdrawalsy Deposit money to accounty Credit card cash advancesy Purchase pre-paid cell phone credity Check in on account balances


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E- commerce: This has become and becoming a booming trend in todays society.Electronic commerce is not merely confined to financial and commercial transactions ofbuying and selling products or services over the internet and other computer networks. Itsgoes much further to include the processes of developing, marketing, selling, delivering ,servicing and paying for products and services over electronic systems internet and othercomputer devices.Consumers are making extensive use of this modern technology because of its 24-houravailability and global reach, right inside their home.

Internet banking: This is a system that allows customers to conduct financial transactionson a secure website operated by their virtual bank, building society or credit union.

There is a steady increase in internet/online banking because customers can:y Check their balance this allows for the customer to check on his/her account

balance at any time, making him/her aware of how much money is at his/herdisposal. This service is made available to members of financial institutions aftersigning up with the institution for online banking.

y Transfer funds: Some customers open different types of accounts connected withtheir online banking services. They may have a checking account and a savingsaccount. Here the customer can transfer funds between the accounts at anytimewithout interference from the human resource (bank teller). The customers navigate

through the accounts and select the transfer button which will open up an applicationthat will lead the customer through the process.

y Pay Bills: Online banking presents a great convenience for customers to set upaccounts and add the relevant account numbers and addresses of their respectivebillers so that they can send whatever amount they owe.

y Pay credit card bills:Customers sometimes make use of the online banking serviceto pay their credit card bills in an effort to circumvent the process of going into thebank.

Debit Cards: These are plastic cards issued by financial institutions to their customers foreasy access to their bank accounts. Debit cards allow for instant withdrawal of cash, usuallyfrom a automated teller machine located in public places. These cards are also used tomake purchase of goods and services by swiping the card in a machine at the retailer;unlike the credit cards, the goods or services paid for using debit card is transferredimmediately from the card holders account.


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The Role of Government and other Agencies in Protecting and Educating

Consumers

Bureau ofStandards: This organization is primarily concerned with setting standards thatwill benefit and serve the best interests of the consumers. Some of those standards include,but not limited to:

THE COMPULSORY

standards for labelling and packaging of goods outlined by the Bureau of standards include: Label must be in English; Brand name of product clearly identifiable; Indicate size, weight; Show contents or composition of the product; Name and address of the manufacturer.

The Bureau of standards seek to protect the unsuspecting consumers by making checks onproducts that are sub-standard entering the country, resulting in hundreds of products beingdisposed of before reaching the shelves.


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There are varying devices used by manufacturers or suppliers to exploit consumers. Thefollowing are some of those devices and knowing about them will reduce the likelihood ofsuch to happen to you:

y False Claims on Advertisement Manufacturers will do just about anything to havetheir products sold, advertisement is one sure way of luring customers to theirshelves. This they do by making claims in the advertisement that is very enticingsuch as making their products more that what they actually are. The customer whofalls to such advertisement eventually realize that all the claims mentioned in theadvertisement is far from the truth. This constitutes false claims on advertisement.

y False Sales This scheme is devised with the intention of having the consumerspurchasing goods or services that they do not really need. This is done by offeringreduced prices on goods and services, when the sale price might still be higher thanthe price before the sale was announced.

y Black Marketing This is an unfair act where goods with ceiling prices establishedby law are sold above the control price.

y Hoarding In a situation where goods are in short supply, sellers remove the scarcegoods from the shelves and sell to consumers who are willing to buy above certainamount. This practice sometimes influences price increase.

y Bait-and-switch Consumers suffer exploitation when sellers intentionally advertisegoods at a low low price and upon enquiry of the said goods, are informed that theyare no longer in stock, thus giving the seller an opportunity to persuade the

consumer to buy a substitute, usually at a higher price.

CONSUMERRIGHTSANDRESPONSIBILITIESRIGHTS RESPONSIBLITIES

Right to safety- protection fromproducts and services that can proveharmful to the consumers health

The consumer has the responsibility to usethe products and services safely, following allnecessary instructions and guidelines

Right to Choose to access a varietyof goods and services at competitiveprices

The customer has the responsibility to choosewisely

Right to be informed the right toinformation that ensures that all productstatements are accurate and truthful

The customer has the responsibility foranalyzing and using information aboutproducts wisely


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Right to consumer education tohave access to programs andinformation that help make betterbuying decisions.

The customer has the awesome responsibilityof learning about the changing nature ofproducts

The right to be heard

-bygovernment in the creation of laws

and regulations that may affect theconsumer

The consumer has the responsibility ofexpressing concerns to those who can help

Right to a healthy environment- tolive and work in an environment thatdoes not endanger their health

The consumer has the responsibility of makingchoices that minimize the environmentalimpact of their purchase on others.

Shoppingwisely for goods and services

Caribbean families have adopted good shopping and spending practices in order to becomeshifty. Good spending and shopping habits will go a far way in helping the consumers to getthe maximum benefit from their money. Let us go shopping!

y Distinguish between needs and wants;y Before going shopping, make a list of the goods you need so as to avoid impulsive

buying;y Make a budget and carry a pencil and or calculator to ensure that you remain within

your budget;y Avoid shopping too late , instead shop early in the morning so as to get the best in

perishable foods;y If possible, buy items in bulk;y Check carefully the weighing and measuring equipment to ensure you get the

quantity that you paid for;


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y Watch the cash register at the check out counter and take time to count your changeproperly;

y Ensure that you collect your receipts and warranties on goods in the even t that thegood is faulty and you want redress;

y Check expiry dates on goods before purchasing them;y Compare prices;y Avoid too much credit as a result of impulsive buying;y Carefully examine goods and their packaging to ensure that they have not been

damaged or tampered with;y Ensure that as you shop, you save a portion of your income for unforeseen

expenditure.Remember, a thrifty consumer save more, get value for their money become moreresponsible and enjoy a better standard of life.

Use and Care ofPossessions

A thrifty consumer understands the concepts of using wisely and caring for possessions; thelack thereof will lead to continuous replacement and depletes the disposable incomeavailable. Hence, consumers are advised to use and maintain possessions properly by

following the manufacturers instructions for the care and use of the items.

Conservation and Recycling

Conservation and recycling are two very important tools employed by thrifty consumers. Infact, every unique member of the family, children and parents, ought to exploreconservation and recycling strategies at home and in their neighborhood to avoid wastage.The following are strategies that can be employed in and around the home:In the Kitchen

y Use cloth napkins and table cloths instead of paper;y Use leftover foods to create tasty dishes and fabrics to make dcor;y Reduce wastage of utilities by ensuring that pipe taps are properly secured, turning

off taps when not in use and unplugging electrical wires when out of use;


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y Buy a set of plastic cups and dishes for outdoor so you dont have to buy paperplates and cups for outdoor parties;

In the Bathroom

y Purchase and use toilet paper that is made from recycled content;

y Install a showerhead and toilet that conserve water;y Depends on what you are doing, if washing, use a container to hold the water so as

to avoid wastage.Dining/Living/Family Room

y Use scrap paper or waste paper to write notes or take message;y If you are printing or copying something for personal use, which does not have to be

clean and immaculate, consider using the flip side of an old document or letter yougot in the mail;

y If you are writing a research paper, letter or some other important school paper, doyour proof reading and spell check on the screen before printing the document. Thisis a sure way of avoiding wastage of material;

y Purchase recycled paper and office supplies such as toners which can be refilledinstead of buying a completely new one;

y Pass on used clothing to younger siblings;y Maintain possessions in the room by properly following the manufacturers manual

for care and service.On the Streets

y Drive your car at or below the speed limit to conserve fuely Check to ensure your car tires are filled to the appropriate pressure as stipulated by

the manufacturers or user manual.y

Service vehicle as recommended by the car specialist


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The following strategies could be pursued in an effort to deal with the problem:y Home gardening produce more of their own food rather than purchasing

everything.

yExplore self employment such as identifying and offering a needed good or servicein their neighbourhood or community lawn maintenance, baby sitting, smallbusiness, etc.

y Reduce expenditure to this speaks to purchasing things that are necessary needs, as opposed to buying that which is wanted (something you can do without).

y Practice recycling of household products/items.


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THE EFFECTS OF GLOBALIZATION AND TRADE LIBERALIZATION

The effects of globalization and trade liberalization can prove advantageous as well asdisadvantageous for consumers. The two terms/issues are interrelated. Globalization ishighly facilitated by technology across the world. One would therefore agree to the following

as being vehicles for globalization:y Internety Musicy Televisiony Fads and fashion

Consumers have a major role to play if they intend on reaping the benefits of globalization.The responsible consumer should:

y Seek information on globalization and trade liberalization;y Be informed and educated on responsible consumerismy Examine dominant foreign cultures and traditions and strive to preserve and

maintain aspects of their own

y Consume in a sustainable manner


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HOW CONSUMERS CAN CONTRIBUTE TO THE SUSTAINABLE DEVELOPMENT OF THE REGION

The consumers have a very important role to play in the sustainable development of theCaribbean region. The following are ways in which the common person can play his/herrole:

Every man, woman, boy or girl has a unique role to play in the integration process. It is inthis regard that being informed on the importance of cooperation within the region becomesparamount. Therefore, an informed citizen will see to the achievement of regionalintegration especially as it relates to sustainable developments.

An external factor in the integration process is the challenges of trade liberalization. Thishas allowed the floodgate to be opened for extra-regional imports to the Caribbean, in thisregard, the Caribbean people must therefore and is required to support regional producersin order to ensure their survival and the economic development of the region.

As a concerned citizen of the Caribbean community, it is ones role to foster the continueddevelopment of local and regional businesses by investing time and capital. Such facilitatesthe development of the region.


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Every individual has a key role to play in the conservation process of our region. TheCaribbean is blessed with precious resources inclusive of land, water, sunlight, minerals,fauna and flora, among others, but there has been a steady decline in its correct usage. It isdependent upon this generation to ensure the sustainable development of our preciousresources.

Other ways in which the consumer can contribute to sustainable development in the regionincludes

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