Test Bank + Answers Ch8 Consumer Purchasing Strategies and

Personal Finance, 13e (Kapoor)

Chapter 8 Consumer Purchasing Strategies and Legal Protection

1) The first phase in the buying process involves information gathering.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

2) Advertising is a type of consumer information commonly provided by business organizations.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

3) Government agencies provide education programs and complaint hotlines to assist consumers in gathering information to make wise buying decisions.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

4) The most consistent quality is usually found with national-brand products.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

5) Open dating information provides consumers with information about the freshness of a perishable product.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

6) Service contracts are usually free and included in the cost of appliances and other high-priced items.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

7) Mediation involves a legally binding decision by a third party to solve a consumer complaint.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

8) Representation by a lawyer is usually required in small claims court.

Difficulty: 1 Easy

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

9) A class-action suit is a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

10) Unit pricing uses a standard unit of measurement to compare the prices of packages of different sizes.

Difficulty: 1 Easy

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

11) A limited warranty covers all aspects of the product and does not require the buyer to incur any of the costs for shipping and repairs.

Difficulty: 1 Easy

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

12) One way to gather information about a product is to use an independent testing organization like Underwriters Laboratories (UL).

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

13) An example of an economic factor that influences buying decisions would be:

A) family size.

B) inflation.

C) advertising.

D) hobbies.

E) lifestyle.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

14) Which one of the following is the best example of a personal opportunity cost associated with a consumer purchase?

A) Enjoyment derived from owning an item

B) Taxes paid on purchases

C) Money spent by stores on advertising

D) Time and effort spent on comparison shopping

E) Efforts by the government to prevent consumer fraud

Difficulty: 1 Easy

Topic: Opportunity costs

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

15) The first phase of the consumer buying process involves:

A) comparing alternatives.

B) evaluating alternatives.

C) identifying the problem.

D) researching alternatives.

E) selecting the buying location.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

16) Which organization tests products for electrical and fire safety to assure items meet safety standards? 

A) Consumers Watch

B) Better Business Bureau

C) Consumer Product Safety Commission

D) Underwriters Laboratories

E) Federal Trade Commission

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

17) The main purpose of Consumers Union is to:

A) report the quality of products and services.

B) reduce fire hazards of home appliances.

C) handle consumer complaints from government workers.

D) represent the government in consumer complaint hearings.

E) provide environmental information on automobiles.

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

18) A cooperative is designed to:

A) solve consumer complaints.

B) test consumer products for quality.

C) sell products or services to members at reduced prices.

D) obtain brand-name items for less than wholesale cost.

E) lobby for changes in consumer protection laws.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

19) ________ are nonprofit organizations organized by member-owners to save money on various products and services. Their prices are usually lower than at other retailers. 

A) Cooperatives

B) Warehouse stores

C) Factory outlets

D) Catalog showrooms

E) Hypermarkets

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

20) Cooperatives are commonly organized to sell:

A) service contracts.

B) furniture.

C) auto repair service.

D) food.

E) information processing service.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

21) Impulse buying refers to:

A) evaluating alternatives.

B) gathering information.

C) comparison shopping.

D) selecting the least desirable alternative.

E) unplanned purchasing.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

22) The items produced for a specific retail chain of stores are commonly sold under a ________ brand.

A) store

B) government

C) regional

D) local

E) national

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

23) Which of the following information is required on food labels?

A) Ingredients

B) Unit pricing

C) Generic name

D) Common product name

E) Brand name

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

24) Private label products are those that:

A) are sold as government surplus.

B) require nutritional labeling information.

C) provide freshness information on the package.

D) are distributed by all national chain stores.

E) are sold by one chain of stores.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

25) Open dating provides information on:

A) freshness.

B) pricing.

C) nutrition.

D) common product use.

E) government inspection.

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

26) A 64-ounce package selling for $3.20 would have a unit price of: 

A) $3.20 per ounce.

B) $2.00 per pound.

C) $0.05 per ounce.

D) $20.00 per quart.

E) $20.48 per ounce.

Explanation: $3.20 / 64 = $0.05.

Difficulty: 2 Medium

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

27) What type of warranty indicates that the seller has the right to sell a product?

A) Express warranty

B) Full warranty

C) Implied warranty of title

D) Warranty of merchantability

E) Limited warranty

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

28) Howard Ramsell recently became aware of implied warranties that exist for consumer purchases. An implied warranty exists as a result of:

A) a stated intent of the seller.

B) actions by consumers.

C) the intended use of a product.

D) rulings of federal consumer agencies.

E) a written statement from the manufacturer.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

29) Which one of these statements best describes a criticism of automobile service contracts?

A) Repair companies provide poor service.

B) Service contracts are included in the initial price of the product and thus are not optional.

C) The government regulation of service contract companies is weak.

D) The contracts do not always include everything you might expect.

E) There are a limited number of authorized repair facilities.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

30) The purpose of a service contract is to:

A) prevent legal action due to a defective product.

B) protect a product owner from the high costs of certain repairs.

C) reduce the chance of needing repairs.

D) obtain regular maintenance on a product.

E) have legal assistance for consumer complaints.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

31) Most consumer complaints are resolved by:

A) legal action.

B) assistance from a government agency.

C) contacting a company's headquarters.

D) returning to the original sales location.

E) obtaining help from an action line.

Difficulty: 1 Easy

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

32) Pam McNally is planning to use the services of the Better Business Bureau. A major purpose of the BBB is to help:

A) recommend reputable companies in an area.

B) resolve consumer complaints with local merchants.

C) lobby for improved consumer protection laws.

D) evaluate products and services for quality.

E) represent business in government hearings.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

33) The process of resolving conflicts between a customer and a business with the use of a third party whose recommendations are nonbinding is called:

A) mediation.

B) arbitration.

C) a class action suit.

D) a product lawsuit.

E) a small claims court hearing.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

34) ________ is the settlement of a difference by a third party whose decision is legally binding.

A) Negotiation

B) Mediation

C) Arbitration

D) Servicing

E) Cooperative action

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

35) Arbitration differs from mediation in that arbitration:

A) involves government officials.

B) requires the use of a lawyer.

C) is only available in certain states.

D) allows compromise through negotiation.

E) is legally binding.

Difficulty: 3 Hard

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

36) The purpose of small claims court is to:

A) regulate fair business activities.

B) provide hearings on proposed consumer protection laws.

C) allow consumers with similar complaints to take action as a group.

D) handle legal disputes involving minor amounts.

E) assist low-income consumers who need legal help.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

37) Small claims courts:

A) hear only class-action suits.

B) are located in every state.

C) have no minimum dollar limit on claims.

D) require the use of an attorney.

E) require that claims be in excess of $100,000.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

38) Recently, Jim Walker was on a bus tour in a mountainous area. The bus broke down forcing the group to stay overnight. Group members had to pay for their own hotel bills. Jim believes that the hotel cost for the group should be paid by the tour company. Which legal action would be most appropriate?

A) Small claims court

B) Mediation

C) Legal aid society

D) Arbitration

E) Class-action suit

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

39) For a situation to qualify as a class-action suit, it must:

A) involve several people who have suffered the same problem.

B) involve a national retail store.

C) be a case that would not be handled by an attorney.

D) involve low-income individuals.

E) be a legal problem against a government agency.

Difficulty: 3 Hard

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

40) Which of the following statements about a legal aid society is not true?

A) It provides legal assistance to people who cannot afford their own attorney.

B) It is part of a network of community law offices.

C) It provides legal assistance at minimal cost or without charge.

D) It is a branch of the American Bar Association.

E) It is a publicly supported organization.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

41) Federal Trade Commission (FTC) regulations require that:

A) all used cars be sold with a warranty.

B) used car buyers be informed of whether or not the vehicle comes with a warranty.

C) used cars with over 100,000 miles be sold only by the individual owner, not by a dealer.

D) major repairs must be made on all used cars prior to being offered for sale.

E) the seller of a defective used car pay half the cost of the required repairs.

Difficulty: 2 Medium

Topic: Buyer protection - laws and plans

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

42) An implied warranty that comes with a used car is that:

A) major repairs are the responsibility of the seller.

B) government agencies will repair safety defects.

C) the vehicle is guaranteed to run for a while.

D) hidden defects will be repaired at no cost to the buyer.

E) the vehicle will be serviced free of charge for one year.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

43) A used car sold "as is" has:

A) a limited warranty.

B) an implied warranty of merchantability

C) a 30-day guarantee.

D) a full warranty on parts but not labor.

E) a 90-day guarantee.

Difficulty: 3 Hard

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

44) Most used cars bought from private owners have:

A) no implied warranties.

B) a 30-day return privilege.

C) a limited warranty.

D) no express warranty.

E) a government-supported repair guarantee.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

45) The main purpose of the Edmund's Used Car Prices is to:

A) monitor safety problems of existing vehicles.

B) provide current used-car prices.

C) reduce sales of stolen vehicles.

D) list cars available for sale from government agencies.

E) provide VIN numbers for vehicles.

Difficulty: 2 Medium

Topic: Vehicle prices and negotiation

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

46) The sticker price of a car refers to:

A) the amount of government taxes on a new car.

B) the cost of repairing a used car which is for sale.

C) the list of optional equipment that may be added to a car.

D) the suggested retail price of a new car.

E) a comparison of costs and performance of comparable cars.

Difficulty: 1 Easy

Topic: Vehicle prices and negotiation

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

47) The purpose of the invoice price is to inform customers of the:

A) sales tax on the vehicle.

B) suggested retail price.

C) sticker price.

D) charge for optional extras.

E) dealer's cost.

Difficulty: 3 Hard

Topic: Vehicle prices and negotiation

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

48) An automobile service contract can:

A) reduce operating costs of the vehicle.

B) cover regular maintenance.

C) provide automobile insurance at a discount.

D) cover repairs not included in the manufacturer's warranty.

E) help the buyer stay informed of government safety recalls.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

49) A disadvantage of leasing an automobile would be the:

A) relatively high cost of the security deposit.

B) the higher monthly payment as compared to a purchase.

C) poor expense records for tax purposes.

D) additional costs for turning the car in early.

E) responsibility for fuel expenses.

Difficulty: 2 Medium

Topic: Vehicle leases

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

50) Mike Jacobs is planning to lease an automobile. In an effort to minimize the price of the vehicle being leased, Mike should compare the ________ at different leasing companies.

A) down payment

B) capitalized cost

C) money factor

D) residual value

E) number of payments

Difficulty: 2 Medium

Topic: Vehicle leases

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

51) Which of the following is the largest fixed expense associated with a new automobile?

A) Insurance

B) Gasoline

C) Registration, license, and fees

D) Parking

E) Depreciation

Difficulty: 2 Medium

Topic: Vehicle operating costs

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

52) ________ is considered a variable operating cost of an automobile.

A) Depreciation

B) Interest on auto loan

C) Insurance

D) Registration fee

E) Repairs and maintenance

Difficulty: 1 Easy

Topic: Vehicle operating costs

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

53) Greg Rossman likes to play golf. This hobby would be an example of a(n) ________ factor that influences his purchasing decision.

A) economic

B) social

C) personal

D) global

E) financial

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

54) Paul Spoon has noticed that interest rates have risen in recent months. He is worried that this may make it more difficult for him to finance the purchase of a car. This would be an example of a(n) ________ factor that influences his purchasing decision. 

A) economic

B) social

C) personal

D) global

E) career

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

55) The Sears Kenmore dishwasher is an example of a:

A) national brand.

B) store brand.

C) generic brand.

D) local brand.

E) regional brand.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

56) A Whirlpool dishwasher is an example of a:

A) national brand.

B) store brand.

C) generic brand.

D) local brand.

E) regional brand.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

57) Margaret Wilson has a piece of paper that she can mail in to the manufacturer of the product that she just purchased. It allows her to get part of her purchase price back. What is she most likely using?

A) Coupon

B) Rebate

C) Warranty

D) Indenture

E) Service contract

Difficulty: 2 Medium

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

58) Brian Williams has a piece of paper that he gives to the cashier when he purchases a grocery item that saves him a dollar off the cost of that item. What is he most likely using?

A) Coupon

B) Rebate

C) Warranty

D) Receipt

E) Promissory note

Difficulty: 2 Medium

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

59) Brad Hayden has a piece of paper that guarantees the conditions, under which he can return, replace, or repair an item that he has purchased. What is it he most likely has?

A) Coupon

B) Rebate

C) Warranty

D) Rain check

E) Class action suit

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

60) Stephanie Johns is a member in a store that is a nonprofit organization that buys grocery items in bulk. The savings on these bulk purchases are passed on to the members in the form of lower food prices. Stephanie is most likely shopping in which type of store?

A) Department store

B) Specialty store

C) Discount store

D) Convenience store

E) Cooperative

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

61) Gina Raffetto's car broke down on the way to work, and her mechanic has told her that the car cannot be fixed. Gina drives 30 miles one way to work each day. There is no reliable bus or train transportation that goes anywhere near her work. Gina decides she needs a car for reliable transportation to work. What step in the purchasing process is Gina carrying out?

A) Problem identification

B) Comparing financing alternatives

C) Evaluating alternatives

D) Determining the purchase price

E) Post-purchase activities

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

62) Hector Ramirez has decided he needs a new car so that he has reliable transportation to work. He is getting recommendations from his friends as to what might be a good car to purchase. He is also looking at the Consumer Reports magazine to determine what they recommend as a safe, low maintenance car, and he has searched some websites on the internet as well. What step in the purchasing process is Hector carrying out?

A) Problem identification

B) Information gathering

C) Selecting vehicle options

D) Determining the purchase price

E) Post-purchase activities

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

63) Sally Nash has decided she needs a new car. After doing some research, she has settled on a midsized four door sedan. She likes the Honda Accord and is exploring the features she needs and wants on this car. She is also trying to decide whether she would be better off purchasing a new car, a used car, or leasing a car. She knows that if she purchases it new it would likely last her for many, many years. On the other hand a used car would be a lot cheaper. She is not sure a lease is for her because of the mileage requirements. What step in the purchasing process is Sally carrying out?

A) Problem identification

B) Information gathering

C) Evaluating alternatives

D) Determining the purchase price

E) Post-purchase activities

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

64) Lorenzo Cunningham has settled on purchasing a new Honda Accord and has found that the suggested retail price is $23,600 and that the dealer's invoice price is $21,500. It is time for him to go to a dealer and negotiate the price he will pay for his new car. What step in the purchasing process is Lorenzo carrying out?

A) Problem identification

B) Information gathering

C) Evaluating alternatives

D) Determining the purchase price

E) Post-purchase activities

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

65) Damian Walker just purchased a new vehicle. He is reading his owner's manual to know when he needs to take it in for its regular servicing at the dealer. He wants to make sure this car lasts a while. What step in the purchasing process is Damian carrying out?

A) Problem identification

B) Information gathering

C) Evaluating alternatives

D) Determining the purchase price

E) Post-purchase activities

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

66) Which of the following would be an advantage of leasing a vehicle?

A) Automatic ownership interest in the car

B) Unlimited mileage on the car

C) No need to meet credit requirements

D) Lease payments are likely to be lower than loan payments

E) Additional costs to turn the car in early.

Difficulty: 3 Hard

Topic: Vehicle leases

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

67) The price that is paid for a vehicle in a lease is called the:

A) residual value.

B) unit price.

C) capitalized cost.

D) deductible.

E) premium.

Difficulty: 2 Medium

Topic: Vehicle leases

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

68) Tiffany Parrish has purchased a new car. Since then she has had to make six trips to the dealer in four weeks to fix several major problems without much luck. She knows that she is entitled to a refund. What type of law gives her the right to ask for a refund?

A) Lemon Law

B) Truth in Lending

C) Truth in Saving

D) Fair reporting

E) Consumer Credit Act

Difficulty: 1 Easy

Topic: Buyer protection - laws and plans

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

69) An online buying club requires an annual fee of $45 in order to qualify for a 15 percent discount on purchases. What amount would a person have to buy in order to save enough to cover the cost of the membership?

A) $15

B) $67

C) $165

D) $300

E) $450

Explanation: (15%)(x) = $45; x = $45/0.15 = $300.

Difficulty: 2 Medium

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

70) A credit purchase with 24 monthly payments of $87 and a down payment of $120 would have a total cost of:

A) $1,200.

B) $1,287.

C) $2,088.

D) $2,208.

E) $2,880.

Explanation: (24 × $87) + $120 = $2,208.

Difficulty: 2 Medium

Topic: Price computations and comparisons

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

71) Isabel would spend $200 per week on groceries for her family if she did not use coupons. Her coupons save her 8 percent of that amount. She puts the amount saved into her savings account. How much will she have in her savings account at the end of the first year? Ignore interest earnings.

A) $16

B) $200

C) $416

D) $832

E) $10,400

Explanation: $200 × 0.08 = $16; $16 × 52 weeks = $832.

Difficulty: 2 Medium

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

72) A motor vehicle has annual depreciation of $1,600; oil changes cost $140, automobile insurance $700 annually, and license plates costs $100. What is the annual amount of the total fixed operating cost for this vehicle?

A) $1,600

B) $1,740

C) $2,300

D) $2,400

E) $2,540

Explanation: Fixed costs = $1,600 + $700 + $100 = $2,400.

Difficulty: 2 Medium

Topic: Vehicle operating costs

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

73) Emily is trying to decide whether to lease or buy a car. Which one of the following is not a factor necessary in making the comparison?

A) Down payment

B) Monthly lease payments

C) Gasoline costs

D) Residual value

E) Mileage overage charges

Difficulty: 2 Medium

Topic: Vehicle lease versus buy comparisons

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

74) Proper vehicle maintenance is essential to extending the life of your car. Regular oil changes should occur every ________ miles, depending on recommendations for the vehicle.

A) 6,000

B) 3,000 - 5,000

C) 6,000 - 10,000

D) 2,000 - 3,000

E) 10,000

Difficulty: 2 Medium

Topic: Vehicle operating costs

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

75) A scam that uses e-mail spam or pop-up messages to deceive you into revealing your credit card number, bank account information, social security number, passwords, or other personal information is called:

A) pharming.

B) phishing.

C) Internet pyramid scheme.

D) bogus "campus card" scheme.

E) foreign scam.

Difficulty: 2 Medium

Topic: Fraud prevention

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

76) Which of the following is least likely to assist you in timing purchases to help you obtain bargains?

A) Changing economic conditions

B) Time zones

C) Weather reports

D) Political conflicts around the world

E) Crop failures

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

77) Sloane owes $2,450 on her car loan. According to Edmund's Used Car Prices, her car is valued at $1,850. The term used to refer to this situation is:

A) residual value.

B) pre-approval.

C) capitalized cost.

D) upside-down.

E) money factor.

Difficulty: 2 Medium

Topic: Vehicle purchases

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

78) The expected value of a vehicle at the end of a lease is called the:

A) residual value.

B) unit price.

C) sticker price.

D) capitalized cost.

E) money factor.

Difficulty: 2 Medium

Topic: Vehicle leases

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

79) A scam that involves malicious software or an e-mail attachment that places a virus or worm in the user's computer or in a server that directs traffic on the Internet is called:

A) a foreign scam.

B) a bogus campus card scheme.

C) pharming.

D) an internet pyramid scheme.

E) phishing.

Difficulty: 2 Medium

Topic: Fraud prevention

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

80) Which of the following is not a social factor that would influence a consumer buyer's decision?

A) Lifestyle

B) Hobbies

C) Marital status

D) Culture

E) Peer group

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

81) What type of 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?

A) Limited warranty

B) Full warranty

C) Implied warranty

D) Warranty of title

E) Express warranty

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

82) Consumer information necessary for wise purchasing decisions, such as websites or radio, is commonly provided by:

A) government agencies.

B) personal contacts.

C) independent testing organizations.

D) media sources.

E) business organizations.

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

83) Which type of purchasing strategy involves comparing unit prices?

A) Timing purchases

B) Price comparison

C) Label information

D) Brand comparison

E) Store selection

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

84) Which type of government agency provides educational programs to assist consumers with buying decisions?

A) Federal

B) Consumers Union

C) Underwriters Laboratories

D) Consumer Reports

E) National Highway Traffic Safety Administration

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

85) Which of the following is not a national brand?

A) Green Giant

B) Nabisco

C) Kraft

D) Samsung

E) Great Value

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

86) Which of the following is usually not in written form?

A) Express warranty

B) General warranty

C) Product warranty

D) Implied warranty

E) Specific warranty

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

87) Which of the following is a social factor that would influence a consumer's buying decision?

A) Hobbies

B) Inflation

C) Tax rates

D) Gender

E) Marital status

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

88) An example of a financial services cooperative is a:

A) credit union.

B) sports store.

C) grocery store.

D) pawnshop.

E) payday loan company.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

89) Which of the following is a store-brand product?

A) Bayer aspirin

B) Walgreen's aspirin

C) Tylenol

D) Advil

E) Aleve

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

90) An example of open dating that appears on grocery items is:

A) use by tomorrow.

B) expires in 5 days.

C) use before May 6, 2018.

D) good for 1 month.

E) fresh for 5 days.

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

91) An implied warranty of merchantability guarantees that:

A) the buyer must pay for all warranty repair costs.

B) the manufacturer must cover all warranty repair costs.

C) a toaster must toast bread.

D) a used car must come with a radio.

E) a new car must come with a MP3 player.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

92) Federal law requires food labels to contain:

A) advertising phrases

B) the company website

C) unit price information

D) ingredients and nutrients

E) None of these

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

93) When comparing prices, remember that:

A) less store convenience usually means higher prices.

B) ready-to-use products have higher prices.

C) large packages are always the best buy.

D) "sale" always means saving money.

E) unit pricing can be ignored.

Difficulty: 1 Easy

Topic: Price computations and comparisons

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

94) To avoid the financial difficulties that occur when people try to convince themselves that things they WANT are things they NEED, 20SomethingFinance.com suggests:

A) buy an item right away.

B) delay a purchase to consider how much you could save.

C) review delayed purchases after six months to see if the money is available.

D) do not return items even if the purchase does not meet expectations.

E) review delayed purchases after a month to see if the urge to buy still exists.

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

95) Which of the following is true of automobile service contracts?

A) Automobile service contracts are warranties.

B) Automobile service contracts can cover repairs not included in the manufacturer's warranty.

C) Automobile service contracts are free.

D) Automobile service contracts are always a wise financial decision.

E) Automobile service contracts usually cost less than $200.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

96) Which of the following allows a consumer to easily change to a different car in a "negotiation-free" way for a monthly fee that covers the car payment, insurance, maintenance, and roadside assistance?

A) Car lease

B) Car purchase

C) Car subscription

D) Car loan

E) Car trade

Difficulty: 3 Hard

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

97) To determine the true cost of credit for a new car, consider both the finance charge and the:

A) APR.

B) promotional gifts.

C) free snacks in the show room.

D) warranty period.

E) customer service.

Difficulty: 1 Easy

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

98) Sarah Wilson wants to purchase a package of shredded cheese at a local store for taco night. Is it better for her to pay $2.72 for 16 ounces or $3.84 for 24 ounces of this product? Explain your answer.

Unit price of 16 ounce product: $2.72 / 16 ounces = $0.17 per ounce

Unit price of 24 ounce product: $3.84 / 24 ounces = $0.16 per ounce

Using the unit price information, it is more cost effective for Sarah to purchase the 24 ounce package of shredded cheese. As long as she will use the entire contents of the larger package before it expires, it is the better choice.

Difficulty: 2 Medium

Topic: Purchasing strategies

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

99) What factors influence most people's buying decisions?

Difficulty: 2 Medium

Topic: Purchasing decisions and implications

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

100) What are the common sources of consumer information to assist consumers in making wise buying decisions?

Sources of information for use when making buying decisions include personal contacts (family and friends), business organizations (advertisements, product labels, and packaging), media sources (newspapers, magazines, television, websites, and radio), independent testing organizations, and government agencies.

Difficulty: 2 Medium

Topic: Purchase decisions and implications

Learning Objective: 08-02 Implement a process for making consumer purchases.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

101) Steve Franklin recently purchased a stereo system. After a few weeks it overheated, causing a small fire and some minor damage. What actions would you recommend to Steve to resolve his consumer complaint?

The steps that are commonly suggested to resolve consumer complaints are (1) return to the place of purchase, (2) communicate with the company, such as sending an e-mail with the details of the situation, (3) obtain assistance from a consumer agency, and (4) take legal action such as small claims court or using a lawyer.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

102) What legal options are available when assistance is needed to resolve a consumer complaint?

Difficulty: 3 Hard

Topic: Purchases - consumer complaints

Learning Objective: 08-04 Evaluate legal alternatives available to consumers.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

103) Distinguish between an implied warranty and an express warranty.

Difficulty: 2 Medium

Topic: Warranties and service contracts

Learning Objective: 08-01 Identify strategies for effective consumer buying.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

104) Explain the difference between arbitration and mediation.

Difficulty: 2 Medium

Topic: Purchases - consumer complaints

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

105) List three examples of common (or not so common) Frauds and describe each.

Foreign Scams. Do not reply to a letter or e-mail from a Nigerian "bank" or another foreign source promising all or part of a large sum of money. The letter requests the recipient's bank account number so the money can be transferred. The "Pentagono" or "Future Strategies International" plan tells consumers that they could receive up to $116,000 for an initial investment of about $120. Participants purchase three certificates and sell those to three other people. This is a type of pyramid scheme. For everyone to profit, there would need to be a never-ending supply of potential and willing participants.

Disaster-Related Fraud. A variety of scams surface after tragedies and natural disasters, such as hurricanes. Phony charities solicit funds for families of the victims.

Credit Repair. Companies offer to clean up the credit reports of consumers with poor credit histories. After paying hundreds of dollars, consumers find out these companies did nothing to improve their credit reports. Also beware of student-loan forgiveness scams.

Employment Scams. Unemployed workers are targets of fraudulent opportunities for résumé preparation that guarantee a job, work-at-home schemes, assistance to obtain "special" unemployment benefits, and fees for specialized training or employment services that assure employment.

Crowdfunding Scams. Avoid funding projects that are already on the market elsewhere in the world. Conduct online research to determine the background of the person requesting funds and make sure many others are supporting the project.

Fraudulent Diet Products and Health Claims. Fraudulent diet products have claims such as "The Amazing Skin Patch Melts Away Body Fat," "Lose Weight While You Sleep," and "Lose All the Weight You Can for Just $99." Be cautious of phrases such as "scientific breakthrough," "miraculous cure," "exclusive product," "secret ingredient," or "ancient remedy."

Romance Scams. While romance scammers usually focus on single, older people, anyone is a target. While this scam can happen in person, it more often occurs through social media, dating websites, and apps. Avoid giving a new friend access to credit cards, bank accounts, or other financial assets. Beware of Cupid’s arrow striking your wallet instead of your heart!

Scholarship and Financial Aid Scams. The Federal Trade Commission warns students to avoid college financing programs that use these hooks: “The scholarship is guaranteed,” “You can’t get this information anywhere else,” “I just need your credit card or bank account number to hold this scholarship,” “We’ll do all the work. You just pay a processing fee,” “The scholarship will cost some money,” “You’ve been selected” by a “national foundation” to receive a scholarship, or “You’re a finalist” in a contest you never entered. For guidance on financing your education, see the Chapter 7 Appendix.

Phishing. This scam uses e-mail spam or pop-up messages to obtain credit card numbers, bank account information, Social Security numbers, passwords, or other personal information. These e-mails look official, as coming from a financial institution, government agency, or a website such as PayPal or LinkedIn. This fraud also occurs by phone (live or automated calls), referred to as “vishing,” and by cell phone text message, called “smishing.” Never click on the link in these e-mails or disclose personal data to an uncertain source.

Pharming. Pharming involves computer viruses or worms. Malicious software or an e-mail attachment places the virus or worm in the user’s computer or in a server that directs traffic on the Internet. Even if you type in the correct web address, the software sends you to a bogus website. Computer users are encouraged to have updated antivirus and anti-spyware programs.

The “Yes” Scam. This deception involves being asked some legitimate-sounding questions related to a credit card account. The questions are designed to get the victim to say the word “yes” or some other affirmative response. This positive answer is recorded and later used to bill the victim. The recorded affirmative response is used to support the claim that this is a valid transaction.

Fake Checks. Despite increased use of online banking and apps, an extensive number of fake check scams occur each year; for information, go to www.fakechecks.org. 

Difficulty: 2 Medium

Topic: Fraud prevention

Learning Objective: 08-03 Determine steps to take to resolve consumer problems.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual