YEAR 9/10 COMMERCE
CONSUMER AND FINANCIAL DECISIONS: REVISION
BEING A CONSUMER
1. Define:
a) Consumer: A consumer is a person who buys goods and services to satisfy their needs and
wants.
b) Good: A good is a tangible object that is made or grown, these goods can be seen used or
touched. They have a specific quantity or amount to be used.
c) Service: A service is nontangible. A service is the action of helping or doing work for
someone, provided by a producer.
d) Need: A need is something necessary that you cannot survive without like, shelter, water,
food, warmth, basic clothes etc.
e) Want: A want is a desire, but you can survive without it, like a car, branded shoes, watches,
laptop etc.
f) Caveat emptor: Caveat emptor means that you are purchasing the goods at your own risk.
It is a legal term and in Latin it means ‘’let the buyer beware’’ as the seller does not need to
tell you everything about the goods for sale, so you are purchasing at your own risk and
hold the main responsibility.
g) Impulse shopping: Impulse buying is buying something because of a trigger and is
unplanned. It is a desire that you need the product, it does not have much forethought of
the purchase, and usually bought because the shopper is enticed and think that they
deserve it and not think logically about the later consequences like their financial issues.
For example, a person sees a bracelet on a shelf, and desires its possession, so they buy
with thinking about the price or if they really need it to survive. No price comparison is
done with impulse buying.
h) Comparison shopping: Comparison shopping is has more thought before purchase, and
price comparison.
i) Wholesaler: A seller that buys the goods in bulk directly from the manufacturer and sells
the goods to the retailer or sometimes directly to the consumers.
j) Referral selling: Referral selling is when a business persuades a consumer to buy goods or
services with the promise of a rebate, commission or other benefit when the consumer
provides information that helps the business sell to others, and that information results in
sales.
k) Durable and non-durable goods: A durable good is one that can be used many times, such as
a car or television.
- Non-durable goods are those that can be used only once, such as a sandwich or a litre of petrol.
2. Create a list of scams and briefly explain them.
- Credit card scams: Scammers steal the credit card details and use the money for their benefit.
- ATO scam: Scammers act like an Australian Taxation Office calling people on their phone numbers
threatening about jail term if they do not pay ransom.
- Phone scam/Email Scam: Scammers steal phone numbers and email IDs to hack into consumer’s
account + bank accounts and steal money, data, PII (personal identifiable information).
- Product quality scam: When the consumer does not get the expected or mentioned quality of the
product.
3. Outline the advantages and disadvantages of the following payment methods:
a. Credit Card:
Avoid the necessity to carry around large amounts of cash
Are a convenient payment method for online and telephone purchases
Help you establish a good credit history
Offer cheap use of funds, provided you always pay your balance in full.
- Make it easy to overspend and consequently build up your debt
- Be more expensive than other forms of credit such as a personal loan
- Damage your credit rating if you continually make late payments.
b.
c. After Pay
Instant online approval and no application fees
No annual fees, and no extra payments if you pay on time
The purchaser receives the good or service immediately.
- The main disadvantage of After pay is that significant fees are charged if
you miss a payment. After pay charges a standard $10 late fee per missed
payment, and a further $7 if the payments are not received within seven
days.
4. List 5 different types of payment methods.
- Credit card
- Cash
- After pay
- Layby
- Book up
5. Describe reasons for online shopping (advantages/disadvantages)
Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services
from a seller over the Internet using a web browser or a mobile app. There are advantages and disadvantages
when it comes to online shopping.
The advantages of online shopping:
Purchase things from the comfort of your home
Easily being able to price compare against different online sellers
Easily being able to find discounts, promo codes, etc
You have more options in online shopping
The disadvantages of online shopping:
You can get scammed easily since your important credentials can get into the wrong hands online
very easily
You must wait to receive the goods via shipping
You might need to pay shipping charges
Your goods may get lost or stolen during shipping
Returning and refunds for the goods may be more difficult online
Online shopping is less time consuming for consumers however it may take longer to arrive and have a higher
potential to get scammed. Online shopping is beneficial if you don’t need the goods straight away as you have a
higher chance to get a good deal/discount online; however, online shopping is not efficient if you need it
straight away or want to physically see the product before purchase. Therefore, online shopping has its
advantages and disadvantages.
6. Select an ad (poster of an ad) and explain who the target market is.
a. which age group/gender/personal interests are they aiming the product at?
7. Describe the main Legislations and acts regarding consumer law:
Competition and Consumer Act 2010 (Cwth): This is a federal act introduced in 2010. This applies to all
consumers and businesses across Australia. The Competition and Consumer Act is administered and
enforced by the Australian Competition and Consumer Commission (ACCC), each State and Territory’s
consumer agency, and the Australian Securities and Investments Commission (ASIC) with respect to
financial services.
Fair Trading Act 1987 (NSW):
- The Act establishes the NSW Offices of Fair Trading which seek to protect the rights of consumers
and advises business and traders on fair practice by setting the rules for fairness in transactions
between consumers and traders. NSW Fair Trading has the power to investigate and prevent unfair
practices and for some industries in NSW have a licensing system in place to ensure only qualified
and appropriate people perform such work within the industry.
- The also give licence to tradies etc.
8. Explain the role of the following:
a. ACCC (Australian Competition and Consumer Commission): This commission operates
nationally for the enforcement and administration of the Competition and Consumer Act, and
acts as a watchdog on the pricing of goods and services. The ACCC is obligated to inform the
public so that they are aware of their rights and responsibilities under the law.
- NSW Fair Trading: The Act establishes the NSW Offices of Fair Trading which seek to protect the
rights of consumers and advises business and traders on fair practice by setting the rules for
fairness in transactions between consumers and traders. NSW Fair Trading has the power to
investigate and prevent unfair practices and for some industries in NSW have a licensing system in
place to ensure only qualified and appropriate people perform such work within the industry.
- The also give licence to tradies etc.
b. CHOICE: CHOICE aims to provide consumers with information and guidance about
goods and services. By providing this information, it helps consumers protect
themselves and encourages them to lobby for their rights to adequate information,
and to adequate resolution where products are unsatisfactory. By helping to
educate the public, as well as making consumers aware of their rights, CHOICE is
assisting consumers to get better value for money.
9. Outline the elements of a contract. The elements of a contract include Offer (the offer or proposal
to the other party) - (usually made by the seller), Acceptance (When the person agrees to the
seller – usually the buyer), and consideration (final feature required to form a valid contract. It
requires each party to give up (consider) something of value e.g., money paid or promise to do
something).
10. Outline the 4 legal rights of a consumer
1. Safe products. Directions for proper use are provided and products are tested by the manufacturer
to ensure product quality.
2. Accurate product information and descriptions. Ingredients are clearly labelled on food containers.
3. Full disclosure of the terms of sale. The full price is always displayed, especially on any credit
contracts.
4. Consumer guarantees and warranties are honoured. Customers can expect a refund or exchange if
the product is faulty.
11. Outline your consumer responsibilities: Caveat Emptor, buy the product legally, make sure to buy
the correct product, staying informed, reading and following instructions, using products and
services properly, speaking out against wrongdoing and lawfully purchasing goods and services.
12. Explain why it is important for consumers to understand Caveat Emptor when purchasing a
product online. It is important to understand caveat emptor when purchasing a product since they
are the most responsible for their purchase even if there might be legislations or acts to protect
consumers. Since the seller might not tell the consumer everything the consumer may be
scammed but sometimes it will be their responsibility for believing or not buying their product
with full awareness.
Define Opportunity Cost: What an individual gives up in order to satisfy a need or want is known as
opportunity cost. For example, say Jack got a part-time job helping at a local cafe. With his first pay cheque of
a $100, he had to decide whether to purchase a new video game or to put the money
towards buying a car when he left school. After much thought, he decided to put the money towards a car. His
opportunity cost of doing this was the purchase of the video game. (What is sacrificed or given up).
13. List the steps of consumer redress.
1.
Make a Complaint (Contact the seller or service provider)
Contact the trader either by phone or in person. You may be required to put your complaint in
writing. Explain the problem in a calm, logical, but assertive manner. ‘Losing your cool’ tends to
make a situation worse.
There are some important points to remember when making a complaint:
• If using the phone, always get the name of the person you are talking to.
• Keep a written record of all conversations and copies of letters and emails.
• File any receipts, dockets or credit accounts to show proof of purchase.
• Return the faulty good promptly.
• If you leave the good with the trader, request a receipt.
• Check your guarantee to determine whether it covers the problem being experienced.
2. Seek Advice from NSW Fair Trading
If you have tried to redress the problem and are still not satisfied, then your next course of action is to
contact your local NSW Fair Trading office and seek advice. This will be an informal conversation
where you explain the circumstances of your problem.
If you wish to take it further, you must lodge a formal written complaint and ask the office to negotiate
or mediate on your behalf. The office personnel will ask you to provide certain information and copies
of any relevant documents. The office will make contact with the trader and attempt to reach an
amicable solution. The office will then contact you and inform you of the outcome.
3. Take Legal Action
If you are still not satisfied the problem has been redressed, you can lodge a claim with the NSW
Civil an Administrative Tribunal (NCAT).This tribunal was formed in 2014 and deals with a broad and
diverse range of matters, including consumer claims, tenancy issues, building works, equal
opportunity and administrative review of government decisions. It can generally hear claims up to the
value of $40 000.
This tribunal has the power to make the following orders to resolve a dispute:
• order that money owed does not have to be paid
• order for goods or services to be provided
• order faulty goods be fixed or replaced
• order a refund and goods to be returned.
What is legislation?
Legislation is the law made by Parliament. Legislation has other names, it can be called an “Act”of
Parliament, Statute, or Statute Law.
Legislation is always written and always named using the same set format:
o Act Name YEAR (Jurisdiction)
Jurisdiction is where the law applies. For us, jurisdiction will either be:
- Federal / Commonwealth, written in the Act name as “(Cwth)”
- State, written in the Act name as “(NSW)”
Examples of Protective legislation
Competition and Consumer Act 2010 (Cwth)
- Replaced the Trade Practices Act 1974 (Cwth)
Prices Surveillance Act 1983 (Cwth)
Fair Trading Act 1987 (NSW)
