Consumer protection 101

- So one thing to think about as you think about your own financial literacy is what do you do in a situation where you try to interact with some type of a business or a financial institution and they either are misinforming you in some way or they're not doing what they said they would do? For example, let's say that you buy something online and you give the payment, you give the credit card, and they take the money from you but they don't send you what you thought they were going to send you. Or let's say you buy a product and it breaks immediately and maybe it's still in warranty, but they don't really fix that. Who could you turn to? Well, the main entity in the United States for that is known as the Better Business Bureau, sometimes BBB for short. And it's actually an independent not-for-profit but it exists for this exact reason. If there's a business that you think is doing not so great business practices, you can file a complaint with the Better Business Bureau and they actually will log that complaint and they keep track the same way that businesses or financial institutions keep track of your credit score. The Better Business Bureau keeps scores or ratings for businesses on how good their business practices are. And it's somewhat measured by the complaints that people are putting in on that business and to what degree those complaints are actually legitimate. Now, it's not just about buying a product or whether someone fixes a product or warranty, there's also situations where people might use misinformation or maybe not complete information or not complete education to take advantage of you the consumer. There's a lot of situations if you go back into actually just world history where especially financial institutions say, hey, give us a little bit of this money and we'll invest it in really good ways and it's gonna come out really well, or we'll give you this loan and there's no strings attached, but maybe there are some strings attached. Or maybe it was a more of a loan than you realized you were getting into, or there's certain aspects of the loan that might get you in trouble. And to help prevent that there is a federal agency called the Consumer Financial Protection Board. It came out of the banking crisis of 2011, when there were a lot of folks who were kind of not given all the details or maybe didn't have all of the necessary information to make a decision about taking out a big loan or maybe the interest rate will change dramatically, go up. They didn't realize the risks that were involved of taking out a big loan for an asset that was very speculative. Maybe the price of that might go down like a house in an area where the housing prices have just gone up a lot. And more extreme examples there's things like payday loans where fairly vulnerable folks might go into these loans not understanding the interest involved which is ginormous, to use a technical word. So that's what the Consumer Financial Protection Board does is to make sure that folks are informed, that people aren't doing misinformation or taking advantage of people's lack of knowledge. Now, those are the two big ones on a federal level, but there's also going to be other groups. There's groups that help monitor the types of securities that might get issued. You might say, well, what's a security? Well, it's things like a stock or a bond. And as you can imagine, if there's some kind of shady company that really has nothing behind it but says, hey, here's some shares and these shares are in the newest hot thing like it's artificial intelligence, biotech, whatever, whatever, a lot of people might say, oh, I'm just gonna buy those shares without realizing there's no company behind it. And so you also have groups that regulate things like securities. You have groups that regulate especially at a state level, insurance. It's one thing for someone to say they're going to insure you and collect your premium, but when the bad thing actually happens and you need to get the the payout, are they going to be there for you? That's why insurance is pretty regulated to make sure that the people who say they're offering insurance are actually good for it. So you need to be wary, you need to be careful, but you should also be conscientious that there are entities out there that are there to help inform and protect you.