 Personal Finance PowerPoint Presentation Large purchase of something such as a car, resolving consumer complaints. Get ready to get personally fit by practicing personal finance. Remember that we could break out our financial decisions generally into short-term decisions and long-term decisions. The short-term decisions we can usually get better and better at through a tinkering or trial and error type of method so that we can train our habits to fine-tune and hone down our habits, training our guts so we can trust our gut for the day-to-day decisions without having to go through as formal a decision-making process every time. When you're talking about the long-term types of decisions, you usually have to follow the adage of measure twice and cut once because we can't have that tinkering type of method, that trial and error method so we typically want a more formal type of process to come up to a more reasoned decision-making process here. It's usually worth our time to do so because it's going to have an impact for multiple periods into the future. So we broke out the decision-making process into those larger components or for those larger decisions into four categories. We've been talking about the pre-shopping activities, number two, the evaluating activities, number three, determining the purchase price and number four, the post-purchase activities. Now we talked about the situation of what if we have complaints? Note, when we think about these short-term and long-term decisions, when we have complaints, the first thing I would suggest that we would want to do is try to determine what we would like the resolution for the complaint to be because our gut reaction for all of us is when we feel like we've been wronged in some way, if we've been promised something by a business, goods and service up to a quality of standard and they're not at that quality of standard, then we typically just react and say, hey, look, this isn't right. You're not giving me what you promised to give me and so on. But when we do that, we often don't have in mind what we actually want as a resolution. What could they do at this point in time to resolve the problem? Because obviously, if there was a deterioration or the service or goods were not up to par, that has already happened at this point in time. So we've got to take a step back and say, okay, this didn't live up to what it should be living up to. I think the company does not live up to their promise. And now what do I want at this point in time in going forward with the compensation? And then we can kind of think that through so that we can talk to. And we're continuing on with number four, the post purchase activities. Thinking of the event where we have a complaint and event where the goods and services provided to us, we believe are below par, we're below what the promise was when we made the purchase. And that event, I would recommend the first thing we want to do is take a step back and think about where the goods and services really below the par. And then two, if they were, what are our recourse options? And then when we decide to look into our recourse options, we want to know what the desired result would be, which would make us happy. What are we aiming for at this point in time? Because we can't reverse the fact that the goods and services were below the expectations. And that seems obvious, but in practice, people, we often don't do this. Everybody basically just kind of reacts by gut and they say, hey, look, you gave me something that you promised one thing. You gave me something that wasn't up to par. And so therefore you lied to me and I'm just an upset about that. And you go back and just basically in a state of upsetness, but you're not really in a state where you can actually remedy the situation in that case. You'd have to think about, well, what do you actually want at this point in time? This kind of reminds me of one time when I was going to school, I worked at a cafe and happened to be the supervisor at this point in time. I had the gold name badge and everything. And someone at the grill had given someone who ordered a veggie burger, a chicken burger. And that person ate some of the chicken burger before realizing it wasn't a veggie burger, but a chicken burger. And they hadn't eaten meat for like five years, so they were quite upset, which I can totally understand. But of course, at that point in time, when you're looking for the recourse, then the question is what can we do at this point in time in order to remedy the problem? Because obviously we can't change the clock. We can't go back and change what happened. We could recognize that the order was wrong. We can recognize that the service wasn't up to par. We could take steps to improve the service. We can give another burger at this point in time. We can give you two veggie burgers. We can give you veggie burgers unlimited for the next week or something like that. We can basically, but we can't really turn back the clock. And that's often kind of the case. And obviously if it's something that happens that you immediately are receiving something, then you're going to have that kind of emotional response and say, hey, something was wrong with this. You didn't give me the right service and I'm upset and that's understandable. But again, if we want the actual action to be taken at that point in time, it would be better for us to say, what am I looking for now? And then try to gear our response towards what we want at this point in time. And we also kind of would like to measure that with regards to or in relation to, you know, how big a deal this problem is to us personally. Meaning if we're talking about a small purchase item, can we just stop doing business? Would that be sufficient? Or if it was a large item, then possibly it's going to be something that would warrant more recourse. Or if it's something that you do feel that you should say something about the company and the service of the company, then what's your recourse in those cases? So in the case where they got a chicken burger instead of a veggie burger, do you want to go online and put bad reviews up or something like that? Possibly to say, hey, look, these people aren't careful or something like that. That's a kind of recourse that you can take. In that case, it just kind of depends how important it is to you. But we want to basically think about what can I do at this point in time, of course, going forward. So step one, we typically want to become rational goal oriented rather than emotional oriented approach. So that when we do ask for something, we know what we're asking for, which is, again, not easiest thing to do. Number two, check for contact option on the company website so we can try to see how to get in contact with them. So we might want to, you know, go to their website and talk to someone. When you talk to someone, it would be useful if you could get a hold of someone that actually has authority in the situation. So like in the case, in our case, they could have talked to me, but I'm the supervisor on staff, but I don't have the capacity to like fire anyone. I don't have the capacity to make policy changes at that time or anything like that. But obviously there are managers that you might want to try to get a hold of someone higher up that actually has decision making processes. So I come back the next morning, you could talk to the management at that point and you could work out your problems at that point. So you might want to look into kind of a hierarchy. Who are you talking to within the organization? If you're talking to someone that doesn't have much control over things, then you're probably not going to get much more than venting to someone that really doesn't have any control over what's going on. And what you'd like to do is try to get to someone that they can actually make a difference or put some remedy in place. So you also have the Better Business Bureau. The BBB provides pre-purchase information. You can file a complaint with them. Mediation involves third party negotiating, non-binding, arbitration decision is binding, state consumer protection or office or agencies. So you can look into them for recourse as well. And then number four, you always have the legal action as Americans. We could sue anyone for any time we want. And sometimes there's a reason why we have that capacity, but it's not the first go-to we would probably want to do because oftentimes the suing of someone costs a lot in time and effort, even if we get money about it. So it's something that we always want to have there. It's like, to me, it's kind of like having the arms race, right? I've got the capacity to sue someone. I don't want to use it, but it's, you know, I've got it there. So we got the small claims course, the class action suits, and then other legal alternatives, legal aid societies and prepaid legal services that you could participate in possibly so that you have that capacity. Talking about alternative dispute resolution, the ADR, this information, most of it can be found in Investopedia. You can find online. This is by Daniel Liberto and it was updated July 26, 2021. You can go there for more references and continue your research if you're interested further in that. So what is alternative dispute resolution? The ADR, alternative dispute resolution ADR is in an insurance sense, a number of dispute processes used by companies to resolve claims and contractual disputes. So they're going to kind of set this process in place so that there is a process to go through the dispute resolution as opposed to possibly the more expensive kind of legal routes. So it could be a benefit for both sides because as we know, with many full, full scale lawsuits, the big winner is, of course, the lawyers. So insured clients who are denied a claim or offered this course of action as a form of recourse. It is employed to avoid expensive and time consuming litigation and arbitration. How alternative dispute resolution ADR works, alternative dispute resolution ADR is designed to settle disputes outside of the courtroom with the help of an impartial third party. So it's kind of similar to a court kind of situation, but what you're looking for is a less tedious, less expensive kind of situation where you get a third party that can act as the arbitrator to help you with your dispute resolution. Clearly that third party needs to be independent so they can have an interest in one side or the other so that you can both have some trust in that person's decisions to be kind of a neutral and fair one. So this pass is generally accessible after efforts between the client and the insurer to resolve any differences between themselves, fails and reaches and impasse. Many insurance policies contained mandatory alternative dispute resolutions ADR clauses depending on the state. So when you go into certain contracts talking insurance here but certain contracts, they might have these clause for the ADR as the method that you would prefer in the event that there's a problem in the event that there's a dispute in an attempt to make it easier as opposed to going through the more costly routes. So the two most common forms of alternative dispute resolution are a mediation and independent third party steps in to try and find a way for the insured and the insurer to agree on a mutually acceptable outcome. The mediator is not called upon to decide who is right but rather to add structure to communication between the disputing parties so they can hopefully eventually reach a resolution between themselves. So it's kind of like you got the mediator now which is hopefully going to kind of guide the conversation with that third party media. Then we have the arbitration, a neutral independent party called an arbitrator listens to arguments from both sides, collects evidence and then decides on the outcome of the dispute. So you got more of a heavy handed kind of thing with that third party similar to court ruling. So now you've got the third party that has a little bit more, you know, a good deal more power in this arbitration can either be non binding or binding. The latter means the decision is final and enforceable. So if it's a binding decision, it's going to be enforceable. So those terms non binding binding can be of course important. Well, the former implies that the arbitrator is ruling as advisory and only set in stone if both parties agree to it. The advantages and disadvantages of alternative dispute resolution ADR, alternative dispute resolution ADR is billed as time and money savings for customers. Civil suits are expensive to pursue and if you can get an attorney to take your case on a contingency basis, you'll typically give up at least a third of the money you are awarded. So in other words, if you have to actually hire a lawyer, that's going to be an expensive process. You might be able to hire a lawyer and they're going to basically just take a piece of the winnings if there are winnings. But that piece is often going to be quite high because they're taking on a pretty big risk in that case. So then again, expensive who wins in these cases. You know, the lawyer wins and it also leads to situations where if you're talking about two parties that are somewhat related if you do business with this other person quite often. The lawyer doesn't really have a lot of incentive oftentimes to preserve the long term relationship. They're just trying to annihilate in the immediate so they win the case and they can get their piece of it. So sometimes there's other factors that might be involved other than just winning a particular case. And that's why arbitration could be an easier way to go sometimes. The alternative dispute resolution ADR doesn't always deliver on its promise though. Sometimes this path can be just as expensive and stressful as the litigation journey it's supposed to replace, especially when a substantial and complex claim is under dispute and there are widely different views on how the facts are interpreted. Mandatory arbitration is only as good as the mediator or mediators who hear the case. Clearly if you're talking about arbitration and you've got a bad mediator, if you've got someone that the two people do not trust, then they're not going to trust the arbitrator, they're not going to trust the third party, it's probably not going to go too well. So many mediators come from the insurance industry, so they may be a built-in tilt toward the insurance point of view. So clearly if it's kind of a structured on the business side of things and the consumer doesn't really understand the process and it looks like the mediator was assigned on the business side of things, they can feel skeptical going in. So they might interpret clauses in the policy by the norms and standards of the industry, which could be quite different from what a policyholder or typical consumer might read into a clause. Because alternative dispute resolution ADR is not always straightforward, aggrieved parties are advised to first exhaust all appeals within the insurance company and or hire a public adjuster to represent them before considering dispute resolution. Public adjusters investigate insurance claims and then make their own assessment of the case with a report. You can then submit to your insurance company, they are paid on a commission too, meaning you only have to pay them if your complaint is successful. So now we're going to take a look at the Consumer Financial Protection Bureau, the CFPB, which you might look into for recourse in certain situations. Again, we're looking at Investopedia so you can check them out for more detail. This is by Jim Prabasco and it was updated September 27, 2021. So what is the Consumer Financial Protection Bureau, the CFPB? The Consumer Financial Protection Bureau is a regulatory agency charged with overseeing financial products and services that are offered to consumers. The CFBP is divided into several units, research, community affairs, consumer complaints, the Office of Fair Lending and the Office of Financial Opportunity. These units work together to protect and educate consumers about the various types of financial products and services that are available. Understanding the Consumer Financial Protection Bureau, the CFBP, the Consumer Financial Protection Bureau was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The CFPB is headed by a Chief who is appointed by the President for a five-year term. The Bureau is also assessed by the Consumer Advisory Council, which is composed of at least six members who are recommended by the Regional Federal Reserve President. Specifically, the CFPB helps consumer finance markets work more efficiently by providing rules, enforcing those rules and empowering consumers to take control of their personal financial lives. The CFPB works to educate and inform consumers against abusive financial practices, supervise banks and other financial institutions, and study data to better understand consumer and financial markets they participate in. Special considerations. The overall aim of the CFPB is to facilitate the development of the consumer finance market. Through this, consumers have access to transparent financial prices and risks and become aware of deceptive and abusive financial practices. The CFPB breaks down this high-level aim into four very specific strategic goals. The first goal is to prevent financial harm to consumers while promoting good financial practices. The second goal is to empower consumers to live better economic lives. The third goal is to inform the public and policymakers with data-driven analytical insights. The fourth and final goal is to further advance the CFPB's overall impact of maximizing resource productivity. How the CFPB helps? In addition to these high-level goals, the CFPB also provides financial guidance for private individuals. Student financial guides are provided for parents and students who will have to pay for college. These guides allow people to compare financial aid available on the market. For those who are far past college, the CFPB provides information resources on retirement planning. The organization can help with social security benefits and provides tips specific to the retirement situation of the individual. Finally, the CFPB can help private individuals with homeownership. The CFPB website provides consumers with interest rate information, monthly payment worksheets, and a loan comparison tool. For those consumers who need mortgage help, the CFPB provides advice on financial hardship. Finally, the CFPB's mission is to protect consumers including a complaint system available to the public. These are the steps consumers can take. So anytime you have these kind of complaint components, then those can be used as a tool when you're talking to people if they're subject to some of these regulatory agencies and so on. As well as just the non kind of regulatory agencies such as the online rating systems and so on. That does have a significant impact on businesses these days. So number one, the process begins when you file a complaint which you can do through the CFPB or another agency. The CFPB process urges you to study the complaint process ahead of time to avoid misunderstanding about how the system works. Number two, the CFPB forwards your complaint to the company you complained about and attempts to get a response from it. Sometimes another government agency is enlisted to help. Number three, within 15 days, 60 on rare occasions, the company is expected to report back on any steps taken or planned to address the issues in your complaint. This includes communication with you by the company as required. Number four, your complaint is published in the CFPB consumer complaint database along with a description of what happens after the complaint was filed. Your personal information is removed before publication. So you're not going to be putting your personal information. Number five, the CFPB will let you know when the company responds, let you review that response and give you 60 days to provide feedback. So now we want to take a look at the class action. So this again from Investopedia this time by Adam Hayes and it was updated August 25th, 2021. So we're looking class action. What is a class action? A class action is a legal proceeding in which one or several plaintiffs bring a lawsuit on behalf of a larger group known as the class. So in other words, oftentimes it's not beneficial for you as one individual that was harmed by a company to sue the company, but possibly you could have a class action suit where if you were to compile these things together, then there might be enough to basically take action, actual kind of legal action at that case. And that's going to be like the class action types of things. And that often happens. And you might consider that to happen more likely when you have these smaller things that happen where like if you if something happens and you're saying, okay, something wasn't up to par. I'm just not going to do business with them. I lost my money there. I did business with a bad, you know, a bad thing. I'm going to move and move forward and not do business with them going forward. But you know, there might be some recourse that should be taken even though it wasn't a big dollar amount. But you there should be recourse for two reasons, one, that you want to get recourse personally and two, to take some action against the company itself that might be taking advantage of people through misinformation. I think this is less difficult or less easy for companies to do these days because of all the online resources and people giving the online reviews and sharing their experiences. So it's a lot more difficult for companies in some ways to deceive people at least for a long period of time. You know, you still got those short term kind of things that can happen. But if a company's been in business for a long time and they're doing deceptive kind of things, then the online tools that are there to manage that might be more powerful these days than the class action suit. But the class action suit is there. So the judgment or settlement agreed to a rise from the suit covers all members of the group or class where penalties paid by the defendant are divided up among the class members. So if the class action suit wins, then everybody, you know, gets a piece of that that was that was part of it. So understanding a class action that the class represented in a class action lawsuit might consist of groups such as employees, consumers, investors or patients. Lawsuits are designated or certified by the court with jurisdiction as class action. If they meet certain criteria spelled out in a legal rule known as Rule 23, the criteria include the existence of a sizable group of people with similar claims or common interest and must specify the class, class claims, issues or defenses and must appoint the class counsel.