Sneaks: "We'll Send You an Extra One, Free!"

Sneak: An advertising or business practice that can be within the letter of the law, but might also be intended to deceive.

If you are among those of us who watch non-network TV, especially early in the morning or late at night, you're probably familiar with the type of commercial that pitches the "free" or "two for the price of one" line.

Yes, you too can have not one, but two of these fabulous products for one low, low price! Such products range from devices that keep dogs from misbehaving to sunglasses that will give you High Definition sight! (Sorry, but I permanently lost my high definition sight, at least when it comes to reading small print, about ten years ago.) Vitamins! Face creams! Diet aids! Sleep aids! Two for the price of one!  Free, but only to the first hundred callers!

Somewhere in amongst all this enthusiasm, you'll find the line, "Just pay separate shipping and handling." Sometimes it's just in small print on the screen.

But who cares about shipping and handling?  You're going to lose those ugly bags under your eyes, you're going to be slim and beautiful, your dog is going to quit trying to bite your invited guests, you're going to see the world in a new, beautiful golden light, and you're going to be able to sleep at night!


Besides, how much can the shipping and handling be?

I suggest you find out before placing an order. For example, you get two dog controllers for only $10, but the shipping and handling for each is  $6.99, so you end up paying a total of $23.98.  The bracelet (it radiates natural frequencies that help you sleep!) costs $19.95, but you get another one free, so that's less than $10 each....except shipping and handling for each costs $7.95, so you're actually out $35.85.

The free thirty day supply ("Try it risk free"!) of the fabulous cream that does--well, I can't quite remember what it does, but I know it's just fabulous!--has a shipping and handling fee of $11.80.  Now I'm sure that this cream--which is risk free!--contains a whole bunch of exotic and expensive ingredients, so if they're giving me a sample--free!--it must be because it's so wonderful that I'll keep buying it forever. That's how they'll make their money. That's why they're willing to let me try it free!

Of course, if it turns out that it's 10 cents worth of cold cream in a 20 cent container, that actually cost $1 to handle and ship, then the advertiser could send out tens of thousands of "free" samples, never have a reorder from a single customer and still clear $10.50 each.... less the cost of marketing, of course. But I'm sure that's not true.  I'm sure all these products are worth every penny.

Still....if you wait awhile, these things tend to show up at Wal-Mart.  I happened to be down there today and found both the dog controller and the HD sunglasses, each priced at  $9.88. (They were sitting right next to the microwave pasta strainer/cooker and the catnip-laced cat claw-filer.)  Buy two of either of these and you're still paying less than the cost of those great deals offered on TV....and if you find you don't like or need them--my dogs are actually pretty good at responding to shrieks of "Bad dog! Quit that or die!"--I'm pretty sure Wal-Mart will give you a refund. Refunds for shipping and handling charges, on the other hand, are a whole 'nother story.

Still....if I could just remember the name of that  face cream....

UPDATE:
I couldn't resist adding one more example....a certain piece of "fast and easy" cookware.  The things it could make looked delicious, it was pitched as cooking these goodies very, very quickly and I could get two--two!-- for only two easy payments of $19.95.  Hmmmmm. $40?  Keep one for myself, give one away as a present?  Except there was...you guessed it....separate shipping and handling for each cooker, at a price, I discovered, when I went to the product's website and looked at the tiny-print footnotes, of $14.95 each!  So that low, low $40 cost is now up to nearly $70.

I'll pass.

Don't call and order without first checking the cost of  S & H!

Take Care When Using Craigslist...Well, Just Take Care, Period

From the MTS Archives

I think Craigslist is a great site, but you do shop at your own risk. The "flagging" system helps somewhat, but you still need to be careful.

Case in point? After writing my previous post on hunting for used cars, (see below) I was rather idly browsing through a list of small trucks on Craigslist and, curious, sent emails requesting mileage info to the sellers of two suspiciously inexpensive vehicles, a Nissan Frontier and a Toyota Tundra.

Here's what I got back from "Mark Johnson" on the Frontier.

Hi, I am selling this car because I am being dispatched to the Gulf of Aden.I will be there for more than a year and I’ve cut the price because I must sell before July 30th.The car is in great condition, no rust, no electrical or mechanical problems. I have a clean title ready to be signed. It is still available for sale if interested, price as stated in the ad .The car is in the Billings MT, and in case it gets sold I will take care of shipping.Let me know if you are interested, email back.

Now, if you've ever used the car/trucks section of Craigslist, you'll notice a warning at the top about how any offer to ship a car is "100% fraudulent. So the Billings, MT bit was a red flag. I mean, who's going to sell a vehicle at a very cheap price and also offer to ship it free from Montana to Dallas?
But it got better. I opened the email reply to my inquiry about the Tundra, also listed with a suspiciously low price.

This time, the reply was from "George Lucas" --now there's an original name.

Hi, I am selling this car because I am being dispatched to the Gulf of Aden.I will be there for more than a year. I’ve cut the price because I must sell before July 25th.The car is in great condition, no rust, no scratches. I have a clean title ready to be signed. No electrical or mechanical problems. It is still available for sale if interested, price as stated in the ad ($3500) .The car is in the Dallas area. in case it gets sold I will take care of shipping.Let me know if you are interested, email back.
 

Yes, a late model Toyota Tundra for $3500. This time, he was offering to ship the car from Dallas, which is interesting for someone advertising in the Dallas/Fort Worth area....Dallas is 50 miles away and one would assume that the Tundra could be driven that far, no?

And don't you love the implication that he's in the military?

And for Pete's sake, you'd think he could change the pitch just a little bit, no?

I replied to both posts with the word SCAMMER in 36 point bold type. I tried to go back and flag the ads, but they were already gone; obviously, other people had no problem figuring out that this guy was a crook.
So watch for these people. They are out there, doing their best to ruin a good thing. Read those warnings on the uppper right of the Craigslist page so you'll know some of the tricks scammers pull. Then flag them if you find them.....and never let your hopes for a great deal override your good sense.

Before You Go Shopping for A New (Or Gently Used) Set of Wheels

For those of you checking out the “cash for clunkers” (CFC) option, a few extra pieces of information:

1) This option really only makes sense if you truly have an old clunker, something along the lines of Quartermain, my GMC van. (Don’t tell him I called him a clunker!) At 15 years old and 260,000+ miles, I doubt his trade in value would be over $2000, so it would make sense for me to use the CFC rebate option and get a $4500 allowance for a new van or truck. If you have a car that can be traded in or sold for more than the $3500-$4500 CFC allowance, you’d want to go that route. Any “clunker” used for the CFC incentive will be scrapped, so it’s an either-or deal: trade-in allowance or CFC rebate, but not both.

2) If you’re wondering what kind of mileage rating your potential “clunker” has—and if it will qualify you for the CFC rebate—try this website: http://www.fueleconomy.gov/. It provides info on mpg ratings for a variety of cars, new and used.

3) To check out the prices of new or used cars online, try these sites. (Remember, the CFC rebate can only be used for new cars.)

- http://www.edmunds.com/ provides prices, reviews and ratings of both new and used cars. There’s also a handy feature that lets you get an idea of how much any particular model will cost to own and operate over its lifetime and a Search feature that lets you find specific makes and models for sale in your area.

- http://www.motortrends.com/ also provides reviews and information on both new and used cars and a local Search feature. (Both the Edmunds and Motortrend sites seem to feature only cars being sold by dealers.) There’s also a page that will let you know what rebates or incentives are currently being offered by car manufacturers and dealers.

- http://www.craigslist.com/, the on-line "classified ad" site. Just make sure you select your local city or state in the right hand column before searching. Also, be cautious when responding to ads for “owner” sold cars; there are scammers out there who pose as car owners when they’re actually dealers, and even some who’ll try to pull a version of the classic Nigerian scam by promising to ship you a car if you’ll just send them the money. You'll also see a lot of ads repeating as they're posted day by day.

A few last suggestions:

- Do your comparison shopping before you actually start looking at cars. Knowing what your target make and model sells for in your area will help you know if you've really found a good deal.

- Before going to look at used cars (which are usually sold with little or no warranty) ask your mechanic to give you some tips on checking a car for basic defects, (oil leaks, worn shocks, etc.) so you can eliminate cars with obvious problems. Then ask his cost for examining a car that passes that initial once-over. Most mechanics will check a car for a reasonable fee, and knowing that you’ll have the car examined before you buy it will deter crooks who are trying to palm off a junker. I’ve never bought anything but used cars in almost forty years of driving and I’ve never had an honest seller refuse to let me have the car examined.

- Take a friend with you when you go to look at a car, especially if you’re buying one from a private owner. The presence of a witness will often come in handy and it's safer when there’s two of you.

- Check with your Department of Motor Vehicles and see how car titles are handled in your state. (Each state is different.) Make sure you learn the difference between a “clean” title (meaning that the seller owns the car outright ) and a title that shows that the car comes with some kind of lien that must be paid off before you’ll actually own the car.

- If you’ll have to get a loan to buy your car, check rates and fees with local banks, savings and loans and credit unions for the best terms and prices. If you find good financing, see if you can get prequalified for a loan. There’s nothing worse than finding the exact car you want at a great price and either having to accept a dealer’s high interest loan, or having the deal fall through because you can’t qualify for a loan.

Good luck!

These Folks Just Never Give Up!

Well, I see the crooks are still busy.

I received this little communiqué in the form of an email a few minutes ago.

Dear Customer,

American State Bank carrying out a major system upgrade. This upgrade became necessary following recent security threats. Consequently, in the next few days, you may notice temporary interruption when using online banking to access your account. To experience a smoother and more secure online banking, please update your information in our records. The link below will guide you through the process:http://secure-banking.online.com. Please note that this one time exercise is mandatory for all American State Bank customers. For security reasons, we may suspend your account if your information is not updated.We sincerely regret any inconvenience.

Susan Flinn
Head of Online Banking

My computer, rather intelligently, put this email in the Junk Mail folder. Unfortunately, it’s something a little more sinister than junk mail. It’s a scam, and a nasty one.

Clues? This thing is riddled with them.

First, I know what banks I have accounts at and American State Bank isn’t one of them. (By the way, there's a ASB logo graphic on the original email and it's meaningless. Anyone can swipe such a logo just by copying it off the real bank’s website.)

Then there’s the line about “recent security threats” designed to scare anyone who receives this email into responding immediately. Scammers love to scare people into acting without thinking, so this is boilerplate scam language.

Next, we have the call to update my “information” in their records, so that I can experience “more secure” (another scare phrase) online banking. I don’t do any online banking, (this kind of thing is one of the reasons why) so that’s another red flag. What kind of information do they want me to provide? I'm willing to bet it's exactly the kind they could use to steal my identity.

Then notice the link provided. (I’ve removed a few letters from the link to keep anyone from accidently clicking on it and going to the crook’s website.) The link itself doesn’t even have the “secure” https --note the s--prefix that real financial institutions use. (The use of the word “secure” in the link is meaningless.) I’m tempted to click on this thing—I’m sure this link will take me to a webpage where I’ll be asked for information that a thief could use—but I won’t because the webpage might also be armed with a virus or worm that could end up on my computer.

Finally, it says that going to that link and typing in—what? Name, address, social security number—is mandatory. If I don’t do it, they’ll suspend that fictional account of mine. Another classic scare tactic.

Sorry, Ms. Flinn. Ain’t gonna bite on your hook.

If you receive something like this, neither should you. (If it’s for a bank you actually use, call that bank first.)


P. S. I went to the real American State Bank website, and here’s the first thing you see. The red coloring is theirs.

EMAIL SCAM – URGENT

Some community residents have received an unauthorized email appearing to come from American State Bank. The message encourages readers to click on a link claiming to be secure and provide their bank-on-line password information. If you receive this email, please do not respond or click on the link. It is a fraudulent email and could allow for criminals to obtain your personal financial information. If you have already received this email and provided your personal information, please contact ASB Customer Service immediately at 1-800-531-1401. A representative will help you determine preventative steps such as closing your account, deactivating your debit/credit card and/or changing your Bank-on-line passwords.

Sneaks and Scams: Before You "Pick Up The Phone and Call"

Okay, I've going to make a shameless plug for my new favorite web page, Popular Mechanics' "Not Seen On TV."

This is a part of the PM website where they actually test all those "Only $9.95! But wait...there's more!" products advertised on television. I will admit that I've often had the urge to "just pick up the phone and call!" but so far I've resisted. After all, if you buy something in a store and it doesn't work as advertised you can take it back to the store, fix a hapless assistant manager with a beady-eyed stare and say "I want my money back or else!" (Usually works for me, but then, my beady-eyed stare is legendary.)

On the other hand, if you order something off a TV commercial, there's the worry about giving your credit card number to a company that--well--sells products on TV. There's the worry about arguing about the product's effectiveness on a long-distance basis, the worry about whether you've going to get your shipping costs back, the hassle of packing the item up and hauling it to your local post office ....Okay, I worry a lot. (Hey, as the editor of this blog, it's part of my job description.)

Also, I hate buying things on the basis of a video demonstration. As a former video producer and director, I know how easy it is to rig--just a little!--such demonstrations. A carefully chosen camera angle, a little judicious editing and you can make a product look much, much better than it is. So when you watch these things, you just have to wonder....

(An example? You've seen the Sham-Wow commercial? Remember the part where the cola is poured through the chunk of carpet, then totally sucked right back up by the Sham-Wow? Did you notice that little puddle of cola showing in front of the carpet square, then--cut!--suddenly, before the Sham-Wow is brought into play, that little puddle's not there anymore? Now maybe there's a perfectly good explanation for that, but it totally destroyed the credibility of that commercial for me.)

The folks at Popular Mechanics are equally sceptical. So they test this stuff. They found that the Sham-Wow will actually suck cola up through a chunk of carpeting...except for the last few drops. (The reviewers suggest keeping some paper towels around.)

They found that the Awesome Augur is really only "awesome" when it comes to digging little holes suitable for disposing of....well, you need to read the review. They liked the Hercules Hook,though it fell a bit short of the TV ad's claims. (Don't use one to hang a lawn mower!) They did love the little blue Pro Caulk tool. (I've been dying to buy one of those and now maybe I will.)

So....if you've been tempted to just pick up the phone and call, check this website first. Not only does it provide the straight scoop on such products, it's a hoot to read.

Sneaks and Scams: One Monthly Bill You Should Always Read

I understand that both Oprah and Rachael Ray have touted the benefits of acai berries on their shows.

Now, I am not intending in this post to dispute either Oprah or Rachael or make any claim to dietary expertise. (Since my dietary expertise consists of managing to never--as yet--give myself food poisoning, I wouldn't dare.)

This post is instead all about being very, very selective about giving out your credit card info.

It's a sad fact that the scammers are always quick to pervert the newest hot product for their own use and it seems that acai berry pills are no exception.

Info is now starting to emerge on the internet about online offerings of this product that promise you can have a free month's worth for a very small shipping and handling charge.

So....you happily contact the company and make the order. Then you find that hidden in the fine print is the information that your card will be charged a big chunk of cash each month if you don't call and cancel within a certain time period. Except it's impossible to call and cancel. (The person in this particular situation ended up having to cancel his credit card instead.)

Or as Associatedcontent.com reports:

The real deception occurs when someone believes they are getting a free sample for $4.95, when in reality, they are being asked to give out their credit card number to pay the shipping cost, and agreeing to a $74.95 per month recurring charge on their credit card to continue shipment of the Acai Berry pills.

I have nothing against acai berries (figuring out whether they work as advertised is up to you) and I'm sure that there are acai berry vendors out there who are completely honest.

The points I want to make are:

• Always, always, read the fine print of any on-line agreement.


• Always, always, be cautious in giving out your credit card information. In fact, unless you are dealing with a well-known company, I suggest you never pay directly via credit card. Ask if you can pay through Pay Pal instead. If a company that advertises online won't accept Pay Pal, I'd think long and hard about dealing with that company.


• Most importantly, when you get your credit card statement, always take a quick look at the charges. You can't deal with a scam charge or even a charge that's an honest mistake if you don't know about it.

Again, I'm got no beef with acai berries. (Am I allowed to mention red meat in the same sentence? Sorry, couldn't resist. Bad Cathy!) I do have a problem with any scammer who uses the newest hot product to make life tough for consumers.

So should you. Be cautious about online purchases using your credit card, especially when dealing with a company that's not well-known.

And open up that credit card bill each month and take a quick glance at the charges. It's a habit that will serve you well.

Sneaks and Scams: Auto Warranties

I just hung up on an automatic call, one of a dozen I’ve received in the last month telling me that my auto warranty is about to expire. Interesting, because Quartermain, my GMC van, is far beyond any legitimate warranty.

Yet I keep getting these calls, including at least two on my cell phone, which REALLY MAKES ME ANGRY because I have a prepaid phone and it costs me $1 for every day I use it. How the heck did these people get my cell phone number?

Well, what’s going on is the latest scam, and it seems I’m getting off lightly. According to MSNBC, a dozen or so companies are pitching these warranties and some of their victims (and I use that word deliberately) are getting called four or five times a day, even when they beg to have their number taken off whatever list the scammers are using.

Even people listed on the Do Not Call Registry are getting the pitches. Sometimes, the solicitation comes via postcard, wtih some recipients receiving a dozen a week.

And those who make the mistake of responding to these calls are finding out that—hardly surprising—the “warranties” offered are rip-offs, with expensive premiums and ridiculously limited coverage.

The first clue you are not dealing with a kosher company is when you ask that the paperwork be sent to you so you can look it over and the company says they can’t do that until you send a down payment.

(Never, ever, ever deal with someone who wants you to sign on the dotted line or send them money without letting you read a contract first. Never. Ever.)

The second is when you ask to speak to a supervisor and the caller hangs up. This also is not the behavior of a reputable company.

Reports are that these people often claim that they’re representing major automakers, and to prove it, they provide specific information, including registration numbers, for your car. This is also a lie. Ask for a callback number and tell them you’ll check with your local dealer. Then do it, before you agree to buy anything.

Extended warranties, even when offered by dealers, are rarely worth what they cost, but buying one from a auto-dialing company you’ve never heard off makes no sense at all. These crooks aren't worried about complaints filed with local regulators, so if you get a chance, write down their number and report it to the FTC. Maybe if we provide the Feds with enough info, they can shut these scammers down.

Sneak: Another Invoice....That Wasn't An Invoice

There seems to be a trend nowadays when it comes to what I call Sneaks, those legal, but not-quite-ethical actions designed to separate us from our hard-earned money. This is a Sneak that takes the form of the bill that actually isn't a bill.

I wrote about this first in a post called "Double Check That Bill" about a company that sent me a something that looked remarkably like an invoice for a domain name I'd recently registered. You had to search rather carefully through this thing to realize that it was actually a solicitation for listing services. Had I been a little less suspicious by nature, I might have sent this less-than-honest company the $65 the "invoice" seemed to be demanding.

Well, I've received another such missive, this time from "Domain Registry of America." At the top is the line "Domain Name Expiration Notice"; below is a paragraph informing me that "As a courtesy to domain name holders, we are sending you this notification of the domain name registration that is due to expire in the next few months." It then lists my domain name and an expiration date, both in bold, finishing with "Act today!"

Below that, when I read the whole thing, was what a little forehead-wrinkling revealed to be, again, a solicitation for me to transfer my domain name to DROA, not an invoice from my current registrar. The yearly fee DROA wanted was $30, a price about three times what I'm now paying. There may have been information on additional fees in the fine print on the back of this letter, but not having a magnifying glass handy, I was unable to read it...and, frankly, that in itself was a red flag. (Fine print should never be that fine.)

I did a little online checking. The Federal Trade Commission, it turns out, obtained a court order in 2003 against DROA for this kind of thing, though in fairness, their current mailout would seem to be not nearly as deceptive as their original one:

...DROA has mailed millions of such “renewal” notices captioned “IMPORTANT NOTICE,” to urge consumers to act quickly to avoid “Register Lock” or “loss of your online identity.”

The missive sent to me didn't include that kind of language. Still, my version looked enough like an invoice that my first impulse was to simply pay it. But it struck me as odd that the expiration date was a good four months distant. Like I say, I'm suspicious by nature, so instead of doing what most busy people do--stick the thing in my to-be-paid pile-- I read it over carefully. Had I not, I'd probably be out $30, and worse, have my domain name in the digital clutches of these people.

So....take nothing for granted. If you get something that looks like an unexpected bill, read it carefully before you reach for your checkbook or credit card. Because anyone can print up what looks like an invoice...

...but isn't.

Weasel Words (Sneak!)

I first ran into the phrase "weasel word" when, some years ago, I researched the practice of "flipping" houses...and the even faster-growing industry of selling people information on how to get rich flipping houses.

Those selling books and seminars always advised neophyte flippers to include some weasel words or phrases in any contract they signed with a home seller. The purpose of these phrases was to allow the flipper to wriggle out of the contract if they couldn't find a way to make money on the deal.

I find a lot of similar phrases included for the same basic reason in the advertising of all kinds of products. Their purpose is to create certain impressions in the mind of the consumer, while allowing the company to figuratively shrug its shoulders and claim a mistunderstanding when those impressions turn out to be false.

"Up to" is one such phrase. So is "as much as."

• Lose up to five pounds per week taking our diet pill!
• Earn up to $5,000 per month running your own business!
• Save as much as 50% off on your electrical bill!

Keep in mind that if one person out of 1000 lost five pounds in a single week, or earned $5,000 in a month, or saved 50% on a single month's electrical bill using the product advertised, the advertiser can make that claim....even if the other 999 consumers lost, earned or saved next to nothing.

Another common weasel phrase? "Results not typical." How often have you seen that, especially when it comes to pitches for diets or exercise programs?It usually flashes on the screen in barely visible print, displayed just long enough for a very fast reader (I'm a very fast reader) to decipher. "Typical" means something that's "representative of a whole group" according to my dictionary. So this phrase actually counters what all those once-plump, now-perky people in the commercial are saying: "If I can do it--"using the advertised product, of course,"-- anyone can!" And when you find you're not an "anyone" and ask for you money back, you're told, "Hey, the commercial said the results aren't typical!"

Another of my favorites? "Flavor." Search for this word on food labels and if you find it, check the ingredients lists. That can with the big type that says "Hearty Beef Stew!" and the small type that says "Enhanced with beef flavoring" will probably contain just enough beef to be legal. The dog food that shows a cute pup licking his chops over a juicy slice of chicken? Check, and if you find the words "chicken flavored" on the label, you might find no actual chicken on the ingredient list, not even the ever-popular "chicken byproducts."

The big bottle of beverage with the strawberries and pineapples and peaches on the label, and the tiny type that says "fruit flavored"--according to the ingredients list, you'll be drinking mostly water and high fructose corn syrup, with a little artificial color and flavoring added. Yummmm!

Or how 'bout "Satisfaction Guaranteed!" I suggest you first get a definition of "Guaranteed." If the product turns out to be so badly designed that it's useless, does the guarantee consist of giving you an equally useless replacement? Or do you get your money back, but minus all sorts of fees for shipping, handling, restocking, etc.?

Then there's "in most cases." A company can say that as long as its claims for the product are experienced by even slightly more than fifty percent of a product's users. What about the other 49%?

Weasel words always involve some wriggle room, and that usually doesn't benefit the consumer. So ask for specifics, read the fine print, get it in writing, check the ingredients....cage the weasel.

Don't Shop Here (Scam!)

There's a new twist to the now-classic "get a big check and send some of it elsewhere" scam (see my initial article on this) and it involves adding the lure of being a "mystery shopper" to the pitch.

Mystery shoppers are people hired to shop in certain stores and then make a report on the experience. There are legitimate organizations out there that employ people to do this, but there are also crooks who offer pricey Mystery Shopper "certification" courses to those hoping to make a little money. All too often, the "certification" is bogus and the target of the scam is left with an empty pocket.

The current twist is a little different. People who answer "mystery shopper" ads are being sent pleasantly plump checks, with instructions that they cash the check, use some of the money for buying items while they "shop" and keep another chunk as payment for their services. The bulk of the money, though, is to be sent on to someone else, via wire or Moneygram. And hurry...this offer is only good for 48 hours!

The check from the prospective employer, of course, is fake, and the hapless job seeker ends up liable for any money sent elsewhere. It's another sad example of how often desperate people are preyed upon by those who have no scruples at all

So....be very wary of any scheme that tells you to cash any kind of check and forward part of the money . (With modern computers and printers, it's very easy to create a remarkably real-looking cashier or traveler's check.) This basic ploy has already appeared in a half-dozen different versions...keep your eyes open for what's next.

Banks: Comparing Apples to...Financial Grenades (Sneak!)

"Sneak" is my term for marketing and advertising pitches and practices that are probably within the letter of the law , but almost certainly intended to mislead.

Once again, I’ve received a marketing letter from a major bank. This one is pushing that darling of the banking industry, the home equity loan, a loan that’s absolutely wonderful….for the bank.

I didn’t even have to read the fine print to know this one was a Sneak. The less-than-honest information was on the front page, in the form of a comparison of how much money could be saved consolidating debts into a home equity loan from this bank.

The hypothetical debts listed were:

* a regular credit card with a 15.9% interest rate and a balance of $30,500
* a department store credit card with a 19.9% interest rate and a $14,000 balance
* an auto loan with an 8.69% interest rate and a $45,000 balance.

$89,500 of debt total, with, according to the bank, a total monthly payment of $1,650.04.

The letter says that if I got this home equity loan, the monthly “interest-only” payment on this hypothetical debt would be $298.33, based on an interest rate of 4%.

Wow! I’d save over $1,350 a month! Give me a pen! Let me sign this thing now! "$1,350 less! $1,350 less! Go team!"

Uh-huh. Sykes, put away your pom-poms. Let’s take a slightly closer look at this thing.

“Interest only?” Most loan payments are a combination of two things, an interest payment and a principal payment, interest being the money you pay for borrowing money, principal being the actual amount borrowed. So each time you make a "principal and interest" payment, you’re paying back some of the principal, thereby reducing the amount of money you owe. But in this example, with an interest-only payment, I'd pay nearly $300 a month…..and no matter how long I paid, still owe the same $89,500.

In other words, with an "interest-only" payment, a borrower essentially pays each month to “rent” the money.

So comparing a regular payment to an interest-only payment is not exactly kosher. (Actually, it's a classic Sneak.)

Let’s suppose that a hypothetical debtor, with credit good enough to qualify for such a loan, instead found a bank or credit union that would give him a consolidation loan for $89,500 at a fixed rate of 7%.

Based on a payback term of ten years, he’d pay $1,039.17 per month. With a slightly lower interest rate or a longer loan term, he'd pay less. The important thing is, eventually he'd pay off the loan.

But—but—but—you say—according to this letter, the interest rate on the equity loan would be only 4%! Isn’t it always better to pay a smaller interest rate? How can you beat 4%?

A reasonably good argument, except for one thing. A bit of fine print on the back of the letter informs us that this is a variable rate. As many people have discovered lately, variable rates are tricky things. A four percent rise on that 4%--an entirely possible scenario--would hike that “interest only” payment from $298.33 to $596.66…and our debtor still wouldn’t be paying off the loan.

But the Sneakiest part of this whole pitch? Mr. Debtor, already in hock for a $89,500, wouldn’t qualify for that 4% rate in the first place! According to the fine print….

(…read the fine print. Always read the fine print…)

….the rate offered only applies to loans over $100,000! So unless our debtor’s willing to take on another $10,500 worth of debt, he’s not going to get 4%.

Add this to the scenario, too... if our debtor “does not meet the repayment terms”...which means, of course, if he misses a payment or two... his interest rate could jump instantly to 18%. (Darn that fine print!)

And at 18%, even an “interest-only” payment on $100,000 would be $1,500.

Plus, nowhere in this letter does it mention exactly how one does pay off this loan. No mention of length of term, or how much each monthly payment would be if it actually included some principal as well as interest.

I guess the idea is that anyone taking out such a loan is to “rent” that $100,000 for the rest of their natural life, paying anywhere from $333.33 (4%) to $1,500 (18%) a month. Nice. Really nice.

Is this offer looking not quite so good now? Yes?

Yes!

But here’s the final kicker, the thing you should always keep first and foremost in your mind when any financial institution offers you a home equity loan….

….if you can’t make the payments, they can take your home.

If you can’ t make the payments, they can take your home.

Does that mean you should NEVER take out a home equity loan? No....but the reasons, terms and conditions should be considered very, very carefully. And....

...read the fine print!

Double Check that Bill! (Sneak)

Sneak: A possibly legal, but almost certainly underhanded and deliberately misleading way to separate people from their money.

You really have to admire the infinite creativity of those who are trying to find barely legal ways to bilk people. The latest "Sneak" came to me in the mail a few days ago, in the form of a bill from a company called Web Listings, Inc.

At least, I thought it was a bill. It listed a domain name I'd recently registered, included a "reference" number, and a "notice date," then the following very bill-like information:

HOW TO MAKE PAYMENT:
Please make checks payable to Web Listings, Inc.
Please write your reference number on the front of your check.
Enclose check in the addressed envelope provided
DO NOT SEND CASH.

Then there was a list of what my supposed "listing" included, plus a "Current Payment details" section that looked very much like what you'd see on any due bill. The amount I seemed to owe was $65.00.

This made no sense. I still had errands to run in town, but I decided to check into this "bill" immediately. The library in Springtown has, like many libraries nowadays, computers with internet connections. Rather than go all the way home, I stopped in, logged on, Googled "Web Listings Inc" and within two minutes learned that this company is actually selling listing services, though the only indication of this is three small lines on the back of the "bill" that let you know this is a "solicitation" not an actual bill at all.

Uh-huh. I sent the following email when I got home--bold type, all caps, to indicate, as best I could, the fact that this company had made me very, very angry.

ARE YOU PEOPLE CRAZY OR JUST STUPID?

WHOSE BRIGHT IDEA WAS IT TO SEND ME WHAT LOOKS LIKE A BILL? OR ARE YOU PEOPLE JUST CROOKED ENOUGH TO THINK I'D PAY IT WITHOUT NOTICING?

A bit extreme, some might say, but I think that companies who do this kind of thing deserve to receive slightly testy emails. Besides, I suspect they'd already gotten similar communiques from other people they "soliticited" since my email came back as "undeliverable." (How fast can such a company pull an email address after that address gets flooded with "flames?" Pretty durn fast!)

The point? Never pay a "bill" from anyone unless you're sure you've actually done business with that company. Companies do occasionally change names, but check first, especially when the bill is for a service or item you don't remember buying.

What a Deal! (Sneak)

Two themes for this essay: Always read the fine print....and isn’t it sad that banks now seem to have the ethics of "Push, Pull or Tow!" used care salesmen ?

I am looking at a marketing mailing sent me by my bank, one of the largest and oldest banks in the country. I seem to get such mailings at least once a week, all urging me, in one way or another, to borrow more money from this bank. (I have one of its credit cards.)

Carefully examined, this mailing skates close to being a pure huckster’s pitch. God help anyone who doesn’t read what’s buried in the fine print. (Fifty years ago, no respectable bank would ever have sent out stuff like this, but then, fifty years ago, banks weren’t in the business of convincing people to borrow money at high, variable interest rates. That kind of thing was left largely to pawnshops.)

The first thing I saw when I pulled this out of the envelope was a red headline that proclaimed “Now--an opportunity to take your credit card balances down to zero.” Because I’m “a valued customer,” the piece goes on to say, I can now get an “unsecured loan up to $50,000*” to pay off “expensive credit card debt†” at “competitive non-variable rates.”

Uh-huh.

To begin with, always beware of flattery. My bank--or rather, the computer that generates this stuff-- does not know me well enough to be realize how truly, truly special I am. This isn’t an pat on the back or a good citizen award, it’s a pitch to make money. Always keep that in mind when a company starts telling you how wonderful you are. Or in this case, how “valued” you are.

Next comes the part about how I can pay off “expensive credit card debt.†” The little symbol after the word "debt" is called a dagger. Daggers (†), asterisks (*) and so forth indicate that there are a few facts you really should be aware of tucked away somewhere in the fine print, where, if you're a trusting soul, you’ll never bother to go read them. But being a suspicious sort, I searched around and found the dagger, and learned that my bank “may prohibit use of this account to pay off or pay down any account issued by”......

.....my bank.

In other words, they want me to have the opportunity to quit paying high credit-card interest rates unless I’m paying those rates to them. Since most of my fairly modest credit card debt is owed to this bank, this deal is suddenly looking not quite so special.

Still, I can get an “unsecured loan up to $50,000*.” Note the asterisk. Another trip to the fine print. (In this case, the phrase “up to” has already hinted that I just might qualify for much less than $50,000, but one can always hope.) And there it is. “Your actual credit line could be lower than $50,000.” Oh, darn. I’ve got a feeling one has to have a large income to borrow that much. There goes my chance to buy the National Champion Arabian horse I’ve always wanted.

Still, I do have a little bit of credit card debt on another card and I can pay that off at “competitive, non-variable rates.” I might even be approved for their lowest APR (Annual Percentage Rate) of 7.99%††” Darn, there are two daggers this time.

Back to the fine print. “We may set your initial APR between 7.99% and 19.99%.” Whoa! That's quite a spread. What rate are we actually talking here? And what do they mean by “initial?”

Well, surely I can find out before I agree to the deal. After all, these are “non-variable rates.” I mean, any stays-the-same rate lower than what I’m paying now will still be a great deal, right?

Except that--when I check--I find that this rate isn’t actually fixed. The folks at the bank can change my interest rate whenever they want. They can change the fees involved. They can change the terms “at our discretion.” Says so, right in that half-the-size-of-everything-else fine print.

So how is this rate “non-variable?" Search, search, search....ah-hah! You see, it’s not tied to an index, such as the Prime Rate. It doesn’t vary automatically. It only varies when the bank decides to vary it. Got the difference?

Oh, there’s also a 3% transaction fee on any advance, and the loan length run from 5 to 8 years. So if I borrow $50,000 (I’d really, really like to have that horse and a barn and a trailer to go with it) I get to pay a $1,500 fee up front, then pay up to 19.99% per year interest for between five and eight years.

And I can call and set all this up in “as few as 10 minutes.”

Yep. Ten minutes to set up a loan that could leave me owing a huge chunk of money, for as many as eight years, at a rate that the bank can change any time it wants, that starts as high as 19.99% APR....and might just go higher. (I’m still worried about that word “initial.”)

What a deal! What a “major opportunity!”

What a crock.

Don’t assume that because a company is large and well-known, it won’t use tactics that would make a con artist blush. These days, you just can’t count on any organization (even, sadly, some that call themselves “non-profit”) being more honest and aboveboard than is legally required....and remember, such regulations are usually put in place in response to a lot of people being fooled first. And the flim-flam companies (and their lawyers) are always searching for new ways to not quite tell you the whole truth.

So always, before you sign anythng....

... check the fine print!

How Can I Pass Up This Mortgage Deal? (Scam!)

Esteban Tanner really thinks I'm wonderful. He wants to give me a honking-huge mortgage at an interest rate much, much lower than the national average. I know he really wants to do this, because he's e-mailed me about it twice. This is an unconditional offer and Esteban doesn't even care if I have rotten credit. And he's a Regional CEO! Wow! What a deal!

Of course, I don't know what company he's the Regional CEO of. And I don't know what makes me so special that he's willing to loan me over $400,000 at such a great rate. And since when did financial institutions not care about your payment record?

But still, how can I resist? All I have to do is click on the link provided and fill out an approval form.

Yet, remarkably, I think I'll pass. Because I'm willing to bet that good 'ol Esteban is a scammer. A click on that link just might attach a nasty little piece of software to my computer that will let this scammer see stuff that I e-mail, like my credit card numbers, passwords or bank account numbers. Or maybe the link really does take me somewhere, to a fake application form that invites me to fill in the blanks with such info as my Social Security number, my name, address, and—gee, ya think?—credit card and bank account numbers.

Can you say "identity theft?"

A scammer's best friends are human vanity and human desperation. Scammers target people who are such deep financial trouble that they're willing to grasp at straws. And they target people who will swallow the idea that somehow they're so special that they deserve a too-good-to-be-true deal. But when you get one of these so, so exciting e-mails, resist the pitch. No one is that special.

Not even me. Not even you!

The Newest Version of the "Nigerian" e-mail pitch. (Scam!)

Here's a newer version of the now classic Nigerian scam....you know the one in which some desperate person in another country contacts you because they need help retrieving a friend or relative's stashed millions? There's been a revolution or a coup or a natural disaster and they can't get at the money without your help. (And they're contacting you—out of all the six billion people on earth—because you're so honest, smart and special.)

All they need is a little help. A little money to pay legal fees, bribe politicians, pay commissions, etc. etc. If you'll help them with that, they'll be glad to give you a few hundred thousand bucks as a "Thank You" fee, once they get their mitts on the big stash.

Well, people are starting to catch on that this is a scam so we now have a new wrinkle. Now they want you to help them cash money orders or cashier's checks. (Conditions in their benighted country make it impossible for them to do this there.) Please just cash the money orders for them, take a nice chunk of change for yourself and send them the balance. They'll be so, so grateful.

And they really will be grateful, because they'll be so, so rich. You, unfortunately, will be so, so poor. Because, of course, the money orders are fakes. Good fakes—they really, really look legit—but worthless, none the less. But by the time your bank finds this out and lets you know, you'll have sent real money back to the scammer. And who's on the hook for the worthless money orders?

Your oh-so smart and special self. (The best friend of any con artist is human vanity.)

Another variant is the "purchaser" scam. This one involves offering to buy a rather expensive and also very expensive-to-ship item advertised for sale. (I became aware of this when people I know who raise purebred ponies began getting such e-mails.) The prospective buyer really, really wants to buy your item, and they'll send you a cashier's check, with extra money included for "shipping" the pony, piano, motorboat, bulky object d'art, etc. All you have to do is cash the check and send the "extra"—usually a few thousand dollars worth—on to their "shipping agent." (It's just way to much trouble for them to send a separate check to the shipper themselves.) Again, when the cashier's check turns out to be fake, you're now out the money.

A few indicators that you're looking at such a scam? Lousy grammar and spelling in the e-mails, since the perpetrators are often—though not always—foreigners. Few or no questions about the specifics of the item for sale. (Some scammers will even forget what the item is. When you're selling a pony and your prospective buyer starts talking about the piano they're buying, that's usually a clue.) An insistence that things have to be done very, very quickly, especially the part about sending the "extra" from the seller's cashiers check on to their "shipper."

Why is this called the Nigerian scam? Because Nigeria has very lax laws about such frauds, and many of the scammers operate out of that country. The internet has made it easy for them to commit fraud all over the world. Don't fall for their pitch.

Even if you're selling a pony!

Watch Out When Someone Calls You "Dear Customer" (Scam!)

Received any e-mails from PayPal or Ebay lately, addressed to "Dear Customer" and telling you there's a problem with your account?

Looks real, this e-mail. Has the Ebay or PayPal logo at the top. Of course, it only takes a moment to pull one of those logo graphics off the real Ebay or PayPal website....or any other website, for that matter.

I once took a whole three minutes to create a very plausible-looking e-mail, complete with logo, claiming to be from one of the country's largest banks, asking "Account Holders" to fill out a form ("Click on this link, please") so that their account information could be "verified." Of course, in my version, there was no form, and I identified this e-mail as a fake I'd created. Sent it to my friends to show them how easy this was to do.

Any legitimate company that you have an account with knows your name, and will never send you an e-mail addressed to "Dear Customer." Nor will it ask you for personal financial information to "verify" your account.

If you get something like this, do not respond! Do not give these people any information! Open a fresh window, go to the website of the real company and look for a "Contact us" link where you can ask if there's a problem with your account. Chances are you'll get an e-mail back telling you that there isn't, and asking you to forward the "scam" e-mail to the company,

A logo does not mean an e-mail is legit. Always check first....and keep your financial information out of the hands of identity thieves.

It's Still a Bad, Bad Idea to Pay Late! (Sneak!)

Ah, the credit card companies are doing it again....figuring out ways to charge you very, very high rates. And it's all legal.

I was watching TV a while back when I saw a commercial for a bank card that basically said that if you pay your credit card bill late, you won't be charged a late fee as long as you've made a purchase with the card during the billing period.

What a deal! Just use your card once a month and you don't have to worry about paying the bill on time!

Well, not exactly. You see, with most credit cards these days, when you pay late, two things normally happen. First, you're charged a late fee that can typically run from $15 to $35. But you can also have your card's interest rate hiked to the issuer's "default" or "penalty" rate....and in this particular instance, according to information on the card issuer's website, this rate is 30.74%! The info doesn't specify how many times you have to pay late before this kicks in, but often it's as little as once or twice during a six-month period.

No wonder this company wants you to "not worry" about paying late! 30.74% is a juicy return on investment for them....and to make this even more fun, they state that this rate may apply "if you default on any Card Agreement that you have with us." (The italics are mine.)

They can also hike the rate if you pay late to any creditor!

When you get a credit card, whether at the bank or by responding to a mail offer, forget about the large headline hype. Check the fine print, especially that contained in the here-you-gotta-tell-the-truth "grid." And don't trust credit card issuers to have your best interests at heart.....the interest they really care about is the interest they can make you pay.

(Note: Since I first wrote this piece, I notice that the commercial in question seems to have disappeared from TV. Could it be that someone pointed out to the upper management of the bank involved that this particular marketing ploy was just a bit too far to the wrong side of sneaky? I hope so.)

One Word....That's Not the Right Word

I saw a classic Sneak the other day on a TV commercial for a local used car dealer, the kind of ad where a salesman tells viewers about the dealership's "LOW, LOW DEALS!" and "EASY FINANCING!" (Okay, the capital letters and exclaimation points may seem excessive, but this is the only way to show, in print, what these guys sound like, true?)

Final yodel from this pitchman, accompanied by large screen graphics? "ALL CREDIT APPLICATIONS ACCEPTED!"

Wow! What a deal for someone with little or no money for a down payment, or less than pristine credit. This dealer will accept your application! Get down there!

Uh.....hit the brakes, folks. "Accepted" ain't the same as "Approved."

"All credit applications accepted" only means that they'll hand everyone who shows up a form to fill out. And then, if you really do have poor credit or no cash, throw it in the trash.

No reputable company will tell you that all credit applications are "approved" because no reputable company will make a loan to someone with a terrible credit history. (A less than reputable company will make such a loan... then charge you horrendous interest to cover their risk. Or jack up the price of the item you're buying to cover their risk. Or tack on a bunch of fees....well, you get the idea.)

But less than reputable companies will trumpet their promise to "accept" your application, because that only obliges them to take a look at a piece of paper, not give you a loan. Using that one word—"accept"—makes you think you have a chance at getting financing, even when you don't—and that little bit of deception gets you to go down to the dealership, and puts you right into that dealer's less than scrupulous hands.

Sneaks and Scams

On this blog, I'll frequently be talking about Sneaks and Scams. Most people know what a scam is—a really underhanded and usually illegal attempt to separate you from your hard-earned money—but what is a Sneak?

"Sneak" is my term for marketing and advertising pitches and practices that are probably within the letter of the law , but almost certainly intended to mislead. One example might be a TV mail-order item that's priced ridiculously low...and it's not until you check your charge card after ordering that you realize the "shipping and handling" charges—which were never disclosed—were ridiculously high. Sneaks are one reason you should always ask questions when a deal seems too good to be true....and also why you should always check the fine print of any contract you sign. One thing to be aware of when it comes to Sneaks: even nationally known companies sometimes resort to them.

I'll be posting info about Scams and Sneaks on this blog, and they'll be labeled as such. Sadly, I doubt I'll ever run out of new material. The stinkers who come up with this stuff are endlessly inventive!