Judges in the Classroom Lesson Plan

Unfair Or Deceptive Sales Practices

Source:

Written by the Institute for Citizen Education in the Law, Seattle, WA, and updated in 1999, from Street Law: A Course in Practical Law (6th ed.), Chapter 25. Staff at the Washington State Office of the Administrator for the Courts (OAC) edited the lesson. For more information, contact OAC Judicial Education, 1206 Quince Street SE, PO Box 41170, Olympia, WA 98504-1170.

Objectives:

1. Students will analyze hypothetical situations to evaluate whether a practice is fair or unfair.

2. Students will support their opinions with reasoning.

3. Students will compare their opinions with the state of the law in Washington.

4. Students will list sources in their community to find help for a consumer problem.

Grade Level:

Grades 8-12

Time:

One class period (approximately 50 minutes)

Materials:

One copy of Handout 1 (Fair or Unfair? Opinion Poll) for each student

Note: This lesson does not require that students have any prior knowledge about consumer law. The lesson is appropriate to introduce a unit about unfair or deceptive sales practices, as the opinion poll asks students for their opinions about what is fair and unfair. After expressing their opinions, they should be told what the state of the law is.

At the end of the lesson, judges should focus on resources in their particular community to assist consumers. If there is time, the judge could address the Small Claims Court in your community. Either before or after the lesson, teachers should address how a consumer would go about making a complaint, as described in pp. 316-317 of Street Law (6th ed.).

Procedures:

1. Begin the class by introducing yourself and telling a little bit about what you do, if this is your first class. Then tell students that today they will learn about unfair or deceptive sales practices.

2. Write "unfair" and "deceptive" on the board and ask for definitions.

Unfair: dishonest, unethical or unscrupulous

Deceptive: misleading or false

Ask if anyone has any examples of sales practices they think are unfair or deceptive.

3. After taking a few examples, tell students they will now look at some hypothetical situations. Explain that hypotheticals are not necessarily actual cases, although some of these are based on real cases. Tell students they will decide whether they think the seller's action was fair or unfair/deceptive.

4. Pass out Handout 1. Divide students into groups of three to five students or have them work with one other student. Ask them to read the hypotheticals and decide whether they think the merchant's actions were fair or unfair/deceptive.

Emphasize they are to decide what they personally think. There is no "right" or "wrong" answer; the exercise is to get their opinions. Tell them they will be expected to give reasons why an action is fair or unfair. Also tell students if they think they need more information before deciding, they should write out what additional information they need. Ask students if they understand the assignment. Tell them they have 15 minutes.

5. While students are working, walk around the room and monitor the groups. If students are working in groups of three to five, tell them they do not have to come to a consensus about whether an action is fair or unfair, but encourage discussion among group members.

6. Debrief student opinions. Ask students to provide their opinions and reasons. Record their responses on the board, using a chart. For example:

After each hypothetical and after students have given opinions and reasoning, tell them what the law is. Keep in mind that students are being asked to decide what they think is fair and unfair. While their opinions may not be in agreement with what the law has determined is legal or illegal, this does not make their opinion "wrong" or "right."

Be sure to give each group a chance to respond. Allow 20-25 minutes for this debriefing.

Information for Handout 1

• 1. Hypothetical: Jane joins a CD club that requires she buy five CD's during the year. She will receive a notice every month about that month's CD. She must return the card within 10 days, stating she does not want to buy the CD offered or it will be automatically sent and billed to her. Jane failed to send in the cards and has received 12 CD's; the CD club claims she must pay for all 12 CD's.

Response: This is a "negative option" or "negative response" plan and it is legal, as long as the seller follows specific rules that require disclosing all terms of the plan. The plans also must allow purchasers at least 10 days to mail in any form declining a selection. Consumers may cancel their membership at any time, but would be obligated to pay for selections they did not decline within the 10-day period. Jane is obligated to pay for the CD's, since she did not send in any of the notices.

2. Hypothetical: Ralph gets a flyer about an opportunity meeting to make a lot of money. He goes to the meeting and discovers that he must make an initial financial investment, which buys him the right to recruit others into the program. When he joins, he will get money for each person he recruits to join. The new recruits must invest in the business.

Response: This is an illegal pyramid scheme. Pyramid schemes are multi-level business ventures that violate the Washington Chain Distributor Scheme Act. These schemes differ from legitimate ladder-type business operations in that participants make money from bringing in other participants, rather than from selling a product. A typical pyramid meets these three requirements: l) participants are required to make an investment (sometimes called a "membership fee") to get into the program, (2) they make additional money (or anything of value) for each new participant they get to join, and (3) all new recruits must make an investment in order to recruit others to work under them.

3. Hypothetical: Terry and Ann see an ad for "freight damaged dining room tables on sale for $300." They go to the store where Al explains that the damaged tables have been sold. However, they do have dining room tables for $600 in stock.

Response: This is probably an illegal "bait and switch" sales tactic. Bait and switch is a deceptive advertising practice. If a seller advertises a low price on an item to bring customers into a store, but then downgrades the product or doesn't have it available and steers the customer to a more expensive product, it is a classic "bait and switch" maneuver. If the ad had said that there were only a limited number of damaged tables available, or if the store had reasonable quantity to meet the demand, it would probably be okay.

4. Hypothetical: When Terry and Ann arrive at the store to buy this freight damaged table, Al shows them the table for $300. He also suggests that a much nicer one is available for $600.

Response: This may be an illegal bait and switch sales tactic. The test is whether the seller had a "bona fide intent to sell" the damaged table.

5. Hypothetical: Cheatham's Sales offers a free one-carat emerald to anyone who comes to their one-hour presentation on condominiums. Marvin goes to the presentation and is subjected to high pressure sales tactics to buy a condominium. He resists and leaves with a low quality one-carat emerald worth $2.00.

Response: This is probably legal, since Marvin technically got what was advertised.

6. Hypothetical: A New Age Encyclopedia representative comes to Tom's home and interviews him about his beliefs in education. As a result of Tom's answers, New Age agrees to place an encyclopedia in his home at no cost. Tom's only obligation is to pay for annual supplements at $50 each for the next 10 years. Tom must pay for these 10 supplements ($500) in advance.

Response: This is an illegal phony contest, since the sales price of the books is $500.

7. Hypothetical: Rodney goes to a beef outlet store after seeing an ad for beef at a low price. He orders 100 pounds of beef and the meat dealer asks, "Do you use a lot of fat? You don't by any chance make your own soap, do you?" Rodney says "no" and the dealer then encourages him to buy better quality, more expensive meat.

Response: This is an illegal bait and switch. This is based on a real case in Washington!

8. Hypothetical: Shelly receives a postcard offering her a "thrilling, heart-shaped 14-carat gold-flash medallion containing 10,000 dazzling diamonds and one matching 14-carat gold-flash 18-inch necklace" from Henri Hamilton of J.E.N. Jewels of New York. The cost is just $3.00. She calls the 900 number on the postcard and is told all of the advertised necklaces are gone. Later, her phone bill includes a charge of $6.95 for the 900 number call.

Response: This is illegal, under Washington's Commercial Telephone Solicitation Act and the state Consumer Protection Act, as well as illegal under the federal Telephone Disclosure and Dispute Resolution Act of 1994. The seller is surely misrepresenting the quality and availability of the necklaces in order to make money on the 900 number calls. The federal law requires that companies that sell products and services over "900" telephone numbers to disclose their prices more completely and give consumers greater opportunity to dispute their bills. The law requires a preliminary message on all "900" services that discloses the identity of the company, the nature of the service being offered and the exact cost. Services that run games, lotteries or sweepstakes have to disclose the odds of winning. This hypothetical is based on a real ad sent to consumers in Washington in 1991.

• 7. Tell students that in Washington, the state legislature has enacted many laws to protect consumers. The most important one is the Consumer Protection Act, which provides that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful."

Explain that the Washington State Attorney General is primarily responsible for the enforcement of our consumer protection laws, but in some situations, consumers can bring actions to enforce the consumer protection laws. Tell students that they can get answers to their questions about consumer issues from the Attorney General's Consumer Protection Division, 900 Fourth Ave., Suite 20000, Seattle 98164; 206-464-6684 or 464-7744. Outside Seattle, call (800) 692-5082 or (800) 551-4636. The number for the hearing impaired is (800) 276-9883. The Consumer Protection Act gives the Attorney General's office the authority to bring lawsuits on behalf of consumers against businesses, and to ask the court for injunctions and restitution (repayment of money lost because of the unfair practice) of money to injured consumers.

The Division operates regional Consumer Resource Centers (CRCs) throughout Washington state. The mission of the CRCs is to educate students, adults and businesses in consumer law and practices; assist in resolving consumer complaints; and spot trends of unfair practices by businesses.

There are presently seven CRCs in Washington, located in Seattle, Tacoma, Olympia, Spokane, Bellingham, and Yakima. Each CRC takes in consumer complaints on a "hot line" and in written format from its surrounding counties and the county within which it is located. The staff at each CRC receives a tremendous number of calls and written complaints per year. In 1993, for example, the five CRCs received 17,951 written complaints and 235,594 telephone inquiries and referrals. They assisted in obtaining total restitution of $3,734,974 on these written complaints in this time frame.

The Consumer Protection Division also offers free brochures on topics of interest to consumers, including auto repair, landlord/tenant, health clubs and warranties.

8. Finally, ask students what they would do if they had a consumer problem. What resources are there in the community to help consumers? List student responses on the board or overhead.

Suggest to students that the first step should usually be to try to work out the problem directly with the merchant involved.

The Washington State Bar Association, 2101 Fourth Ave., Fourth Floor, Seattle 98121-2330, 206-727-8200 publishes pamphlets about legal topics of interest to the consumer. One sample of each brochure is available free from the WSBA by sending a long, self-addressed stamped envelope for each title requested. Consumer titles include: Signing Documents, Real Estate, Landlord Tenant, Bankruptcy, Civil and Individual Rights.

There are many private groups in Washington that publish information designed to assist consumers. The aims of the BBB are to protect the consumer, to encourage honesty in business, and to inform the public so the consumer can buy intelligently. The Better Business Bureau (BBB) of Western Washington, 4800 S. 188th St., Suite 222, SeaTac, WA 98188; (800) 488-3222, covers Western Washington from the Canadian border south to Chehalis and Pacific County. The remainder of Southwest Washington is covered by the BBB of Portland, (800) 488-4166. The bureau accepts complaints about businesses and offers tips booklets on many topics. It issues reliability reports on businesses. The BBB of Western Washington offers free mediation and arbitration to consumers through its Autoline program. (800) 955-5100.

If you are unsuccessful in resolving a dispute with a company yourself, at your request, the BBB will contact the company on your behalf. If the complaint cannot be resolved by the BBB's attempt to mediate the dispute, the matter may be submitted to BBB arbitration, provided the company has agreed in advance to participate in the arbitration process. Arbitration is a legal proceeding in which the parties agree to let a third party decide who is at fault. Once the parties sign an agreement to arbitrate, the arbitrator's decision can be enforced by a court.

Many counties now have dispute resolution centers that offer mediation services to the community. For example, in King County, the Dispute Resolution Center, P O Box 21148, Seattle, 98111; 443-9603 handles a variety of civil disputes, including landlord/tenant, merchant/consumer and neighborhood problems. Their services are free except for mobile home park mediation and domestic relations mediation. A sliding scale is used for domestic relations mediation. The Pierce County Dispute Resolution Center is located at 705 S. 9th St., Suite 207, Tacoma WA 98402; 597-8100

There are also private mediation services, including the Judicial Arbitration and Mediation Service (JAMS), throughout Washington state. These are organizations that provide trained mediators, who work with disputing parties to assist them to reach a mutually agreeable solution. JAMS uses only former judges as mediators. Both parties must agree to mediate, and the result will usually depend on the good faith and desire of both parties to reach a solution. The mediation service charges a fee for its services. Mediation services may be found in the Yellow Pages, under "Mediation services."

Many newspapers and television stations in Washington have consumer advocates, who can be quite effective in resolving disputes, especially with local businesses or merchants. One of these is The Seattle Times Troubleshooter by Shelby Gilje, The Seattle Times, P O Box 70, Seattle, WA 98111; 206-464-2262; FAX 206-382-8873.

9. The teacher could follow this lesson with the "Tubman" roleplay, Problem 26.6, pp. 316-317 of the Street Law (6th edition) book.

Handout 1
Fair Or Unfair? Opinion Poll

Decide whether you think the merchant's actions are fair (F) or unfair/deceptive (U). If you think you need more information, write down what information you need to make your decision. Be prepared to give reasons for your decisions.

_____1.	Jane joins a CD club that requires she buy five CD's during the year. She will receive a notice every month about that month's CD. She must return the card within 10 days, stating she does not want to buy the CD offered or it will be automatically sent and billed to her. Jane failed to send in the cards and has received 12 CD's; the CD club claims she must pay for all 12 CD's.
_____2.	Ralph gets a flyer about an opportunity meeting to make a lot of money. He goes to the meeting and discovers that he must make an initial financial investment, which buys him the right to recruit others into the program. When he joins, he will get money for each person he recruits to join. The new recruits must invest in the business.
_____3.	Terry and Ann see an ad for "freight damaged dining room tables on sale for $300." They go to the store where Al explains that the damaged tables have been sold. However, they do have dining room tables for $600 in stock.
_____4.	When Terry and Ann arrive at the store to buy this freight damaged table, Al shows them the table for $300. He also suggests that a much nicer one is available for $600.
_____5.	Cheatham's Sales offers a free one-carat emerald to anyone who comes to their one-hour presentation on condominiums. Marvin goes to the presentation and is subjected to high pressure sales tactics to buy a condominium. He resists and leaves with a low quality one-carat emerald worth $2.00.
_____6.	A New Age Encyclopedia representative comes to Tom's home and interviews him about his beliefs in education. As a result of Tom's answers, New Age agrees to place an encyclopedia in his home at no cost. Tom's only obligation is to pay for annual supplements at $50 each for the next 10 years. Tom must pay for these 10 supplements ($500) in advance.
_____7.	Rodney goes to a beef outlet store after seeing an ad for beef at a low price. He orders 100 pounds of beef and the meat dealer asks, "Do you use a lot of fat? You don't by any chance make your own soap, do you?" Rodney says "no" and the dealer then encourages him to buy better quality, more expensive meat.

_____8.

Shelly receives a postcard offering her a "thrilling, heart-shaped 14-carat gold-flash medallion containing 10,000 dazzling diamonds and one matching 14 carat gold-flash 18-inch necklace" from Henri Hamilton of J.E.N. Jewels of New York. The cost is just $3.00. She calls the 900 number on the postcard and is told all of the advertised necklaces are gone. Later, her phone bill includes a charge of $6.95 for the 900 number call.