Easy Money

Mr. and Mrs. Johnson were struggling to make ends meet and to feed their family of five. They decided that they needed to borrow money to meet their expenses for the month. They considered going to a bank for a loan, but they knew they had poor credit histories, and they didn’t want to be paying off interest over a long period of time.

They were very interested when they read the following ad in the newspaper:

EASY MONEY: Are you having trouble making ends meet? Do you need a short–term loan just to get you through a rough time? We offer quick loans to anyone regardless of credit background; No interest payments. Just a nominal processing fee. CALL TODAY!!

The offer sounded too good to be true. But although the Johnsons were skeptical, they called. The operator saidshe would be happy to offer them a no–interest loan of $2,000 repayable in six easy monthly installments. All the Johnsons had to do was to pay a one–time $200 fee that the company would use to process the paperwork.

The Johnsons did not have to meet anybody from the loan company, and nobody bothered them at their home. They scraped together the $200 and sent Easy Money, Inc., a money order.

When they had not received their money in three weeks, they began to worry. They again called the number listed in the paper, but the line had been disconnected. Finally, after, two additional weeks, they realized they were not going to get their loan and would never see the “processing fee” again.

Problem–solving:

a. Did any unfair or deceptive practices take place in the John–sons’ story? Explain.

b. What could the Johnsons have done to prevent their loss?

c. What can they do now? Can any state or federal agencies help them?

d. How can merchants and consumers use small claims court?

Match the words on the left with the correct definition
on the right:

UNIT 10.