The Consumer Law Page: Articles: CONSUMER FRAUD: Spotting and Protecting Yourself Against It [A General Primer]:

Entertainment

By Richard Alexander, Esq. Editor

Alexander Hawes, LLP is a California law firm that specializes in personal injury, wrongful death, and financial losses caused by negligence, defective products, toxic chemicals, corporate misconduct or insurance fraud on behalf of consumers, small investors, injured workers and small businesses. In addition to individual cases the firm prosecutes class actions for large groups of individuals who have suffered financial loss as a result of corporate fraud, defective consumer products, and environmental pollution. The firm holds Martindale-Hubbell's highest rating and is recognized in the List of Preeminent Law Firms in the U. S.

Contest Cons
Magazine Subscriptions
Shopping
Travel Scams
Vacation Timesharing

Contest Cons ^ (back to top)

Whenever you receive a letter telling you that you have won a "fabulous" prize, beware. The prize you win may not be worth the effort to collect it.

The prizes often are cheap imitations of the real thing. These deceptively described prizes sometimes are used as an inducement to attract customers to sales meetings for land or vacation timesharing (the use of a vacation home for a limited, prearranged time) or other merchandise. Promoters who use these cheap imitations call them "switchers."

The next time you get a computerized "personal" letter telling you that you have won a great prize, keep these points in mind:

• Do not be deceived by letters that look official or urgent. Some contest promoters use names that resemble official organizations (such as a state lottery or a charity organization) or an envelope that looks as if it contains an important telegram.
• Read the letter carefully. In some cases, the letter may tell you the cash value of each prize or that you must attend a sales seminar as part of the contest. This information often appears in fine print at the end of the letter.
• Remember, the chances of winning a truly valuable prize are slim.
• If you attend a sales meeting, do not sign a contract or give the salesperson a deposit right away. Ask for a few days to consider your decision. During that time, check out the company.
• Do not let the salesperson make you feel guilty for not buying what is being sold. It is only a sales tactic.
• If you sign an agreement for a vacation timeshare, many states law allow you five days to change your mind and cancel the agreement. There is no uniform rule and in many states there is no grace period.
• Before signing make sure you read the contract carefully. If the salesperson makes claims that are not in the contract, remember it is the contract that counts.
• Don't buy a product just for the prize.

Contest Cons--Decrease Junk Mail

If you want to curb delivery of unsolicited mail to your home from national companies, put your request in writing and mail it to:

Mail Preference Service
Direct Marketing Association
P.O. Box 9008
Farmingdale New York, NY 11735

Magazine Subscriptions ^

Unscrupulous magazine telemarketers (see Telemarket below) trick consumers into paying hundreds of dollars multiyear subscriptions to magazines they don't want or can't afford. Fraudulent sellers make presentations so slick that consumers often are unaware they have purchased several magazine subscriptions until they receive the bill.

Some deceptive salespeople avoid identifying themselves magazine subscription salespeople or they fail to give their names or the names of their companies. Others encourage consumers make purchases without giving the total costs. Some callers ask for a credit card or bank account number for "verification" purposes. They then use the credit card number to charge unwanted subscriptions or use the bank account number to withdraw money from your account.

Tips

• If you're contacted by a magazine telemarketer, listen carefully to the initial sales presentation. Don't be afraid to interrupt a ask questions. If you're not interested, say good-bye and hang up.
• If it sounds like a good deal and you're interested in buying, ask the caller for his name, and the name, address and phone number of the company. Do not give out your credit card number before verifying who it is you are talking to and checking out the company.
• Ask for the total yearly cost of each magazine and for the whole package.
• Before you agree to buy anything, ask to receive a written copy of the sales terms offered over the telephone.
• Another thing to remember about magazine subscriptions: If you receive an offer in the mail or as part of a sweepstakes promotion to review a "free" issue of a magazine - be careful. Supposedly, when the free issue comes, you can review it to see if you Re it. Then when the invoice comes you can simply write "cancel" on it and return it to the company with no further obligation, or you can pay the invoice amount and continue to receive the magazine. However, according to some complaints the bill comes first. Consumers who haven't kept track may think they owe the money and pay it automatically. In other cases the bin comes after several issues and consumers feel obligated to pay.
• If you agree to review a free issue, keep track of when you sent the offer in and when the magazine and bill come. Return the bill to the company as soon as possible with your decision whether to continue or cancel the subscription.

Shopping ^

Federal and state laws prohibit deceptive mail order practices. In addition, federal law specifies certain procedures companies must follow when offering merchandise through the mail.

Mail Order

Before You Order

Look closely at the advertisement. Pictures can be deceiving.

Order from reputable firms. If in doubt call the Better Business Bureau.

Determine the extent of any warranty before ordering.

Be wary of any offers that fail to offer a money-back guarantee.

Delays

After ordering merchandise you have the right to receive the items in a reasonable amount of time.

If the delivery time is not mentioned in the advertisement, 30 days after receipt of payment is considered reasonable.

If the delivery date cannot be met, the seller must notify you of the new delivery date. If the new delivery date is expected to be more than 30 days after the original date promised, the seller must provide an easy, cost-free method for you to respond whether you wish to cancel the order or accept the new delivery date. If the new delivery date is less than 30 days after the original promised time, the same procedure occurs, but failure by you to respond will be considered acceptance of the new delivery date.

Refunds

If a prepaid order is canceled, the seller must mail your refund within seven business days. If you charged your purchase, the seller must adjust your account within one billing cycle.

Damaged Merchandise

If, before opening a package, it is obvious an item is damaged and it was delivered by regular U.S. mail, simply write "Refused" on the package and return it to the seller. No new postage will be required.

If the damage is concealed, repackage it, include a note stating the problem and return it to the sender (you will have to pay the postage).

Any merchandise that is unsatisfactory should be reported to the seller. If the problem is not quickly resolved and you think the seller has been deceptive in its advertisements or has been unfair, report the incident to your local postal inspector or call your local district attorney or attorney general's office of consumer affairs.

Refunds, Exchanges, Returns

Most states allow stores set their policies: A retailer can offer you a cash refund, credit, exchange or nothing. If a store does not post its policies, it is your responsibility to ask.

Garage Sales, Auctions, Flea Markets

Before buying any new or used item at a garage sale, remember:

There generally are no warranties or refunds on the merchandise.

Shopping--Cancellations

Most states do not allow you to cancel an order with a retailer and expect a partial or full refund of your money. Before you put money down or sign a contract, find out what a store's cancellation policy is.

Check with your local legal aid office, state and country bar associations, city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for brochures and explanations of specific laws in your state on this issue.

Travel Scams ^

If you receive a phone call or postcard offering you a free vacation, beware. There's a good chance your dream vacation may turn into a real nightmare if you aren't careful.

The Catch

In some travel scams, the consumer is sent a postcard telling him he has won a free vacation. In others, the "vacation" is one of several prizes in a sweepstakes. In most cases, the consumer is required to call a number for more details or to "claim" the prize.

In one version of the scam, the consumer is told he will receive a package in the mail detailing the vacation offer. The operator then asks for his credit card number, telling him there will be a small service charge made to his account if he accepts the vacation.

One consumer is assured he will have a review period to decide if he wants the package before his account is billed for the service charge. This promise usually proves to be false.

These companies are slow in sending the vacation package materials and when they do arrive, the review period already has expired. The firm quickly bills the consumer's credit card for hundreds of dollars for its "service fee."

In other scams, a consumer is offered a "dream vacation" for an incredibly low price. After the consumer agrees and discloses his credit card number, he learns the catch: To qualify for the vacation he has to buy a second round-trip fare at "regular price" - only the regular price may cost him two or three times more than it would if he bought his ticket in advance or through an airline or reputable travel agency.

In other instances the salesperson fails to mention that the "free" vacation doesn't include such things as meals, taxes, deposits or surcharges.

In a similar scam, consumers win a "free" vacation when they pay several hundred dollars to join a travel club. The problem? When the consumer picks out dates and tries to book the trip, he is told all the dates he has chosen are either unavailable or already booked.

A similar twist played by some con artists involves selling consumers "discount travel packages." What the consumer actually buys, however, may be a book containing coupons and discounts available for free to all vacationers from chambers of commerce and business promoters.

The end result in vacation scams is when you finally are ready to take your trip, the company has disconnected its phones, moved or closed without notifying you or issuing you a refund.

How to Avoid Scams

• See Telemarketing, (most travel scams involve telemarketing).
• Don't give your credit card number to any person or business unless you expect to be charged for a product or service.
• Beware of ads with few details that promise a lot for little money.
• Be cautious of firms that ask you to pay before confirming reservations. Most reputable travel agents will confirm before payment.
• Deal with an established firm. If a firm is unfamiliar to you, check with relatives, friends or the Better Business Bureau.
• If you are not familiar with the firm, request written information regarding total costs of the vacation and all items included in the cost. Any transportation, lodging, meals or other items not specifically mentioned may not be included.
• Ask about your right to cancel. In the event of illness or change of plans, you could end up paying for a trip you never take. Also inquire about the availability of cancellation insurance.
• Be wary of vacation offers that are "good today only."
• Remember, the better a vacation package sounds the more thoroughly you need to verify the package's details.

Vacation Timesharing ^

Consumers sometimes are targeted by real estate developers and resort communities to buy vacation timeshares, an arrangement in which consumers buy vacation homes, usually in a resort area, for a specific length of time each year.

The property, which typically consists of condominiums, apartments, lodges, cabins or hotel rooms, sometimes is sold by salespersons using high-pressure tactics and misleading advertising. Sometimes the timeshare property may be a campground where timeshare members must provide their own campers or recreational vehicles.

Many states have special laws dealing with timeshares which protect consumers by providing:

• Right of recision. In some states a consumer signs a contract to buy a timeshare and then changes his mind, he has five days to cancel. The cancellation must be in writing, and cancellation is effective when the letter is postmarked. According to law in some states, the seller must give the buyer notice of the right to cancel at the time of purchase.
• Follow-through on promotional offers. The name of the business entity and all timeshare operations involved in the promotion must be included in promotional literature. This material also must contain the deadline by which all prizes are to be awarded, the odds of winning each prize and the manufacturer's suggested retail price for each prize.
• Delivery of promised gifts. When the seller uses free offers or other promotions when soliciting, the seller must deliver any promised gifts or an acceptable substitute gift or cash in an amount equal to the retail value of the gift offered within 10 days of when promised. The seller also must make available to the public a list of names and addresses of all winners. If the seller fails to provide the buyer with a promised gift, the buyer can sue.
• Explanation of timeshare exchange plans. Exchange plans usually involve trading a vacation at one timeshare facility for a vacation in another location. Limitations, restrictions or priorities regarding exchange programs must be outlined for the buyer. For example, the timeshare operator must tell a buyer if a Lake of the Ozarks vacation can be exchanged for an Alaska vacation only during December.

Understanding Timeshares

A timeshare often carries with it a potential for liability for the owner or member.

Complaints

Be sure to obtain and read any restrictions and covenants filed with the recorder of deeds in the county where the time-share resort is located.

Also, read the bylaws and rules and regulations. Sometimes, timeshare owners and members are subject to "special assessments" in addition to annual maintenance fees.

If you do not understand the full extent of your liability as a member or owner, consult an attorney before buying.

Also, beware of subsequent amendments to these documents. They may affect your liability.

Violations

Use of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or concealment of fact by a person in connection with the sale of timeshares is subject to civil and criminal penalties in most states.

Vacation Timesharing--Typical Complaints

Complaints range from disappointment with a prize and high-pressure sales tactics to outright deception and fraud.

Typical complaints include:

Not informing consumers they must listen to a lengthy sales pitch before receiving their "prizes."

Misrepresenting the facility's physical condition.

Misrepresenting the facility's market value.

Misrepresenting the facility's resale or exchange potential.

Making oral promises that were omitted from the written contract.

Including fees and obligations in the contract that never were mentioned orally.

Check with your local legal aid office, state and country bar associations, city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for brochures and explanations of specific laws in your state on this issue.

CONSUMER FRAUD | INVESTMENT | HEALTH | AUTOMOBILES | HOME | ENTERTAINMENT | CONSUMER ACTION

Richard Alexander is a specialist in personal injury litigation with 30 years in-depth experience. Emphasizing working relationships with clients has led to an exceptional record of success. He has served as a member of the Board of Governors of The State Bar of California, President of the Santa Clara County Bar Association and the Board of Governors of Consumer Attorneys of California. He is a founding member of the National Association of Consumer Advocates, and heads Alexander Hawes, LLP.

Alexander Hawes, LLP is a California law firm that specializes in personal injury, wrongful death, and financial losses caused by negligence, defective products, toxic chemicals, corporate misconduct or insurance fraud on behalf of consumers, small investors, injured workers and small businesses. In addition to individual cases the firm prosecutes class actions for large groups of individuals who have suffered financial loss as a result of corporate fraud, defective consumer products, and environmental pollution. The firm holds Martindale-Hubbell's highest rating and is recognized in the List of Preeminent Law Firms in the U. S.

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