For New Year 2010, resolve to be a smarter consumer
Column by Todd Haymore
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As you’re kicking off your New Year’s resolutions, here’s something to put at the top of your list: remember that if it sounds too good to be true, it probably is. In my two-and-a-half years as Commissioner of the Virginia Department of Agriculture and Consumer Services, that is something our staff members in the Office of Consumer Affairs have drilled into my head. Let me say it again: if it sounds too good to be true, it probably is.
We’ve heard this old adage from our childhoods. Yet I’ve found that we have trouble believing it. I think the reason is simple. Most of us tend to be eternal optimists when it comes to our own good fortune. Here’s the hard truth: no matter how good they sound and how much you want them to work, the miracle weight loss program, the get rich quick offer, the amazing price on driveway repair, the “free” loan all bear further investigation. Even if it sounds too good to be true, do your research before you buy into any of these offers, and take the time to research them carefully.
It does take a little extra effort to be a well-informed consumer, but it is well worth it. The consequences of inattention can be disastrous, including a depleted bank account, ruined credit, wasted time, identity theft and dashed hopes.
The folks in OCA tell me that there are several common signs of a scam, and if you notice any or all of them, you should be very wary. Perhaps you should even hang up the phone or walk away. Let me mention a few common scams out there now and also offer some advice on how to avoid being victimized.
Home repair fraud – A contractor approaches you saying that the crew has just finished a job (driveway paving, house painting, roof repair) in the neighborhood and has some leftover materials so they can give you a really good deal if you agree immediately. The contractor does not provide a written contract and later demands substantially more than you were originally told. In addition, the job is not completed or is done shoddily.
Foreign lotteries – You are promised a nearly sure thing for your investment dollars and when your lucky number comes up, the instigator says you have to send a substantial sum of money to pay taxes on your foreign winnings. The gambler never sees a dime; the only person to reap any winnings is the scam artist.
Investment opportunities – Don’t let the promise of low risk and high returns cloud your judgment. Get advice from trusted financial advisors. Think twice before handing over control of your money to a stranger. Monitor your investments and watch out for excessive trading.
Inspection scams – A company offers to inspect your chimney, roof, basement, etc., for damage, instability, infestation or other problems. Of course they locate troubled areas and stress the need for speedy repairs, not allowing you time to call for second opinions or better prices.
Health-related schemes – Promises of miracle cures abound. Typically they tout money-back guarantees but require you to use the treatment for several months, after which time the seller has disappeared and the guarantee is as worthless as the product.
Predatory mortgage lending – Protect the value of your home from shady lending practices. In equity stripping, the lender bases loan approval on the equity in the home rather than the borrower’s ability to pay, so consumers who cannot make the payments could end up losing their homes.
Nigerian/foreign country letters/faxes/e-mails – A letter from a titled official requests your assistance with the transfer of millions of dollars in excess funds out of a foreign country. In exchange for a percentage of the amount transferred, you must deposit the funds in a U.S. bank, provide the bank account number plus pay substantial sums for expenses before the transfer can be made. Even after paying for the expenses, no money ever appears from Nigeria or any other foreign country, and the crooks use your account number to steal the money in your own bank account.
Work-at-home schemes – The sign promises easy money made quickly right at home but neglects to mention the downsides such as hefty up-front expenditures for supplies, training or ads; lack of customers; inflated demand; or a much overstated job market. Make sure your efforts to make money don’t end up costing you more instead.
Identity Theft – It occurs when someone uses your name, along with your personal and financial information, to commit theft or fraud when making purchases, obtaining credit cards, loans, leases or in many other possible transactions. Thieves can get personal information from discarded receipts, bills and credit solicitations, or purchase it fraudulently. They can also trick you into giving them information in a process called Phishing, in which a phony, look-alike bank or company asks you for details and account numbers they should already have on file.
Basic tips to avoid getting scammed
– Do business only with people and companies you know and trust. Ask for additional information that can be verified. Legitimate businesses will be glad to provide it.
– Be sure you thoroughly understand the offer, deal, sale, contract, merchandise, service, expenses and return policy. Get in writing exactly what it is going to cost you, what you will receive, when it will occur, who is providing the merchandise or service and how to contact them if you have questions or are dissatisfied.
– Take time before you decide. Do not give in to pressure. Review the details, compare the offerings of other companies, check references and get advice from people you trust. Too much pressure is a sign of a fraudulent enterprise.
– Learn to say no, hang up the phone, close the door, delete the e-mail or throw away the mailing. If the offer or request sounds phony, makes you uncomfortable or seems too good to be true, terminate the exchange by hanging up the phone, shutting the door, deleting the e-mail or discarding the letter.
– Do not provide your personal or financial information to anyone unless you know for sure the business is legitimate, the information is required and will be secure. Think twice before you respond to even the most legitimate looking or sounding request for personal information, especially when you are asked to validate information they should already have.
– Don’t pay for prizes. By law, winners cannot be required to pay to receive a prize. So when a company tells you that to receive your prize you need to send them money for fees or a handling charge, realize that this is a scam. And be careful about registering for prizes. When you fill out a prize registration form at the mall, at a festival or in response to a mailing, your name and personal information could end up being be used by scam artists.
– Check out the company with the Office of Consumer Affairs. Before you sign a contract, make a major purchase or agree to use a company’s services, call the Consumer Hotline at 1.800.552.9963 in Virginia, or 786.2042 in Richmond, or check out the OCA complaint data base. Log onto http://www.vdacs.virginia.gov/consumers/search_db.shtml and click Complaint Database to determine if consumers have filed any complaints about the companies you want to use.
– Watch out for people who try to scare you. Don’t believe everything you hear. Whether they are telling you that you will go broke in your old age, your roof is about to collapse or your health is in imminent danger, get the facts before you act.
– Finally, let me repeat what I said at the start: if it sounds too good to be true, it probably is.
Again, these steps to being a smarter consumer are basic and they can take a little bit of time to complete, but they can save you a tremendous amount of time, money and heartache in the long run. Indeed, being a smarter consumer is a resolution worth making. If you have questions or concerns about consumer-related issues, don’t hesitate to contact VDACS. The easiest way is our toll-free Consumer Protection Hotline, in Virginia at 800.552.9963 or in the Richmond area at 786.2042. Our experienced consumer counselors are available to assist you Monday through Friday from 8:15 a.m. to 5 p.m. Find additional consumer information online at www.vdacs.virginia.gov/consumer.
Todd Haymore is the commissioner of the Virginia Department of Agriculture and Consumer Services.