Slightly Creaky

Alert: Debit Card Scam

2010-05-15T03:38:00.001-07:00

Submitted by a Slightly Creaky Reader: May 11

An incident recently happened to me that I want to pass on to you. I was in line at the grocery store. Like most of us do, as the cashier was ringing up my items, I held my debit card in hand. When it came time to pay, I handed my card to the cashier. No problem - WRONG!!

My bank called me the next day and advised I had overdrawn on my bank account. Imagine my shock when I was told of some transactions of well over $2,500 that I did not make; An HDTV from a store in Oklahoma; Three packages were sent from Fort Worth, Texas by FedEx to a Bahamas address; and an iPod was purchased from a store in California. My bankcard had never left my possession. She closed that debit card account once and for all and issued me a new card. I asked her how someone could have used my debit card to make purchases when it never left my possession?

She then told me about a new method that thieves use to obtain debit//bank card information. They purposely wait in line behind some checking out and use their cell phone camera to take a picture of the credit/debit card. This way, they have the name of the cardholder, numbers and expiration date. Literally within an hour they post on a specific underground Web site that they have credit card information to sell. The same credit card info is sold to lots of different people. These people then make purchases over the telephone using your card information. Once they can no longer use the card, they move on to another stolen card. It was then that I recalled while waiting in line to check out, I heard a "ping" and turned around. A female of about 20 years of age had her cell phone in hand and quickly told me "I'm sorry. I pushed the wrong button." Oh well... yeah, yeah!

Now, the tip. When you are waiting in line to check out, keep your debit/credit card face down and hand it to the cashier the same way. Then tell him/her about why you are handing it to them face down and advise them to return it to you face down also.

2010-01-28T06:11:00.000-08:00

Due to lack of replies on our Slightly Creaky Blog, we are temporarily suspending posting here.

If you have comments or questions relating to the Blog, please post comments here or write to us at info@SlightlyCreaky.com

Should there be sufficient interest, we will be please to resume posting our Consumer and commentary articles.

What Determines Value and Cost (Part 2)

2010-01-20T03:58:00.000-08:00

What Determines Cost?

Last week we saw how the cost of raw materials may vary over time. We also discussed the influence changing currency markets have on product costs. There are many other factors, although we only have space to discuss a few.

1. Transportation. When petroleum exceeded $140 a barrel, prices of all commodities jumped. Almost all products are energy dependent. Even farm stands, where the produce is sold where it is produced, reflect increased transport prices as merchants pay for packaging, items they cannot produce themselves, and shipping.

Interestingly, as transportation prices fell, the retail costs did not drop as rapidly. This was due to a need to make up previous losses and the fear that the reduction in oil costs was just temporary. With commerce interlaced, it takes only one area of elevated merchandise expenses to affect all others.

2. Insurances. How do I insure thee? Let me count the ways…. Businesses maintain liability, fire, production, and property insurances. They may pay for or contribute to employee health, dental, and other insurance plans. Although per product the expense may be minimal, these costs have to be passed on to the consumer.

3. Salaries and Payroll Expenses. Salaries are among the greatest expenses a company has, especially in the United States, Japan, and Europe. A major factor in moving to a third-world company for production is the relatively low cost of labor, a lack of employee benefits, and few government regulations.

In addition to salaries, many countries require additional expenses such as Social Security (half is paid by the employer), unemployment insurance, and business taxes. Add in business contribution to medical insurance, pensions, sick time, vacations, and office perks, and the actual cost of labor may be double the salary rate.

4. Taxes. When will people stop falling for the politician’s lower tax ads? If Federal or State taxes are reduced, local property and school taxes rise. You always land up owing more no matter what they do. There are income taxes, land taxes, usage taxes (such as toll roads and bridges), and taxes on purchased items.

You are aware of sales tax. Almost every state and many localities add a percentage of the product purchased as a tax. I happen to live in New York, which has state, county, city, and other add-on fees. But even before the sales tax, many products get import taxes known as tariffs. They serve a dual purpose: raise funds for the government and increase the cost of foreign goods that can sell for less than similar domestically produced items (usually due to low foreign labor costs).

There are also excise taxes added to products and services. These can be added at the front end (taxes the production company pays) or directly on the consumer. Examples of such fees included those added to gasoline and other fuels, alcoholic beverages, tobacco products, and on telephone and cable bills. New York has been considering a tax on sugary beverages such as certain fruit drinks and soda.

5. Building Costs. It costs lots of money to build a factory, and considerably more to maintain it, upgrade it, and fix problems. Many companies (in part due to local ordinances) spend millions anually on landscaping, safety or security fencing, parking lots, and the maintenance of all such things. As you might expect, all these costs are added to the price of the product.

6. Profit. No one is in business to break even or to lose money, although that does frequently happen. All along the line, every company, person, and associated group takes a share of the pie. Each slice adds to the total cost. Let’s consider who may take profit from the cost of an apple:

a) Farmer
b) Sorter
c) Trucking company
d) Crate builder
e) Cold storage facility
f) Another trucking company
g) Wholesale produce market
h) Commodities traders and product brokers
i) Retail store chain
j) Local store

While the apple does not cost the tree anything to produce, when you consider the maintenance of the farm and equipment, the taxes, insurance and fees owed each step of the way, salaries and benefits, spoilage, and profits for all people involved, even if all involved takes a fraction of a cent per fruit, that one poor apple may become worth 20 or 25 cents before it reaches the consumer.

The Unknown Factors. While it may be possible to calculate a simple product produced or grown locally, it is nearly impossible to even guess at how much a more complex product costs. When a store cries that it’s selling for below cost or is losing money, or when an advertisement announces a major sale, just how accurate is the information in the ad?

During the next few weeks we will investigate how advertisement and store statements mislead the customer into believing they are getting a great deal. Don’t cry for the store owners.

What Determines Value and Cost (Part 1)

2010-01-09T07:28:00.000-08:00

(Consumer Safety & Awareness article: Part 43)

What is Value?

Technically, something is valued if it is needed, wanted, or generates special memories. When we refer to an economic value, though, we are looking at a product we want at a price that is less than we expect to pay. Generally the only way we have to know if a thing is truly on sale is if we make it ourself, believe the store that is selling it, have compared the price of that product at many other locations, or know how much it costs the store to purchase it (wholesale).

In a blanket statement, although one that does not always apply, consumer economists suggest that you never believe a “list price,” an advertised rate, or a store sign as an indication of the true value of the product.

Thus to know if something is a good bargain, the consumer must know how much it costs to produce. The true cost can be determined in two ways. One is the Supply and Demand method and the other is an actual calculation of all the factors that goes in to creating the product, bringing it to the store, and making it available for you to purchase. Few people know what those factors are. This week we will look at a few of them, and conclude in the next article.

1. Raw Material. All products originally come from natural resources. Be it grown, mined, harvested, artificially altered, or chopped down, the cost of removing the raw material from its original source can vary. This is where Supply and Demand has the most influence. If the product contains a rare material, and many people want it, the cost of production may be elevated.

We see changes in raw material prices frequently as a food item’s availability is affected by storms, drought, blight, or other “act of God.” A frost in Florida may reduce the amount of oranges available, and thus increase the cost of production. The farmers still have to pay for the care of the trees, taxes, fertilization, pest control, etc., for their orchard. They have fixed costs, yet may be getting a fraction of their normal crop production. Prices go up so that they can stay in business.

Another fixed cost of raw material is the search for new sources of the item. One reason oil production is expensive is due to the need to constantly search for new fields. They may be under the ocean, in hard-to-access locations, or in populated regions. The cost of geological surveys, land leases, the moving of equipment, and many other factors all add to the cost of the product. Even if the new oil wells are unproductive, the expense of drilling has to be passed on to the consumer or the company cannot stay in business.

2. The Human Factor. Ineptness, power, and greed play a huge role in the cost of an item. When a petroleum transport goes aground and spills oil into the ocean, the company has to pay for the repair and replacement of the ship, the clean up, any fines, as well as the cost of the lost product. The expense of such actions is passed on to the consumer.

International policy also affects how much a product costs. When the United States placed a boycott on products from Iran in the 1980s, we lost our main source of pistachios. Prices tripled in less than a year. The increased prices reduced demand. Eventually pistachio farms were developed in California and elsewhere, increasing the supply and thus lowering the cost.

Throughout recent history, petroleum has been used as a power-pawn. OPEC artificially reduces production in an effort to: a) obtain more money for member nations; b) increase their international power and importance; c) use as a hammer to force through policies that are beneficial to them. Hugo Chevez used Venezuela's oil production as a propaganda tool, offering discounted prices to America’s poor in order to win friends.

In 1980, Nelson Bunker Hunt and William Herbert Hunt, together with some wealthy Arabs, controlled the supply of silver in an attempt to gain extra profit. Silver had been selling for under $2 an ounce in 1973 when their scheme started. By 1979 their manipulations increased the cost to over $5 an ounce, and they were not satisfied. These people purchased more than half the world’s supply of silver and withdrew it from availability, causing prices to skyrocket. At its peak in early 1980, silver was going for $54 an ounce. Once the Federal Government stepped in, the prices collapsed falling 80% in less than a month.

3. Currency Exchange Rate. The price of most products float – they are unrelated to the value of a specific currency. Petroleum and other commodities are tied in to the value of the American dollar. With political, economic, and other factors constantly changing the value of currency, the costs of products related to them vary as well. The current high cost of petroleum and oil products is in part due to the lower value of the American dollar as compared to other currencies.

Exchange rates can have both positive and negative effects. A lower American dollar means that products produced in this country cost less overseas and thus sell better. This lowers our trade deficit and helps multinational companies. Products produced elsewhere, though, such as cocoa, bananas, electronics, European wine, and raw material, cost more in the United States.

Next week we will look at transportation, insurance, and fees that add to the cost of a product.

What Is Wrong With Education?

2009-12-23T03:31:00.000-08:00

In response to our recent series of articles about Education-related scams, an honored educator suggests that we take a long look at traditional education practices. Perhaps there are better approaches.

What Is Wrong With Education?

Generation after generation of human beings are educated by those who came before. It is how knowledge and survival skills get passed down to maintain continuity of knowledge. Every system of education has its benefits, and its pitfalls. There are those who are well served, and those who fall between the cracks and are lost, sometimes to society itself.

So what is the best way to educate? To know that, we must know what education is. Until we have a working definition, how can we determine how to do it, and judge whether or not we are doing it well?

Education means different things to different people. To some, particularly those who are of religious bent, education is merely indoctrination into the catechisms of a particular faith. It is no accident that, for so long, the only literate people was of the clergy. As knowledge increased and made changes to the way we live our lives, it became imperative that knowledge and skill sets not be lost. Knowledge was passed from master to apprentice, from professional to intern. In this manner, knowledge and skills have been passed from generation to generation, guaranteeing the perpetuity of human knowledge.

Of course, nowadays, we have the greatest repository of knowledge history has known since the Library of Alexandria. It’s called the Internet, and it is loaded with everything you might want to know (as well as some things you probably didn’t want to know). Now that knowledge has been deposited in such a manner, the skills needed these days include the parsing of information to weed out that which is useless for a purpose or just downright false. A basic fund of knowledge in all kinds of subject areas is required for survival in our society. So how do we give that knowledge and development of critical thinking skills?

Schools.

A school is a building where education ostensibly takes place. In the course of a school day, children are shuttled from room to room, from teacher to teacher, to be filled up with knowledge like buckets with water. The classroom might or might not have appropriate resources, the teacher might or might not be familiar with how to make the best use of those resources. There might or might not be enough money in the budget from year to year that the people in the community might or might not vote through for use in obtaining the necessary resources.

The students might or might not have had a good night’s sleep, a place to sleep, or a place to do their work undisturbed. The administration might or might not be concerned with education over what is their usual main concern…maintaining a positive image of the school within the community, no matter what that takes or how big a rug is needed to sweep things under. It is the favorite whipping boy of the community members who are anti-tax, and the funding of schools is inequitable and unsustainable in the extreme.

The students are subjected to standardized testing from year to year to assess…what? Their growth? Their knowledge? Their application of knowledge? Their teacher’s ability to teach to a standardized test? The students are subjected to a one-size-fits-all curriculum (which might or might not be more individualized and differentiated by teachers) and the goal of education is always given as a vague, indefinable “it will prepare you for college/adulthood/etc.”

First, not all students are going to be going to college, and that should not be our goal. Some of our students are going to be going into trades, and our current BOCES system (vocational training in New York), while good, does not go nearly far enough. Apprenticeships need to be brought back. You learn by DOING, and those who learn with their hands are always going to be frustrated in a traditional school setting. There are also lots of children who will be going on to more artistic pursuits, and the resources are seldom available for them to realize these dreams unless parents have great walloping scads of cash available to send their tots off to an appropriate private institution.

Also falling between the cracks are the truly gifted children, those who excel in an academic environment. So much in the way of time and resources are used to address discipline issues and just get the kids to shut up so that a class can take place, that the bright student quickly gets bored and shuts down. Honors classes help, but when honors classes are opened to anyone, and pressure is brought to bear to make sure everyone succeeds, once again the time, effort and resources are weighted towards the lower end. High school used to be stratified, but the “one-size-fits-all” mentality that pervades public education at the present time frowns at “tracking” students into levels of ability, fearing that it will stigmatize those who are in the “lower” track. Meanwhile, those in the “higher” track are made to pay the price.

What is wrong with education? Pretty much everything.

Unless we as a society start to glamorize intelligence and real achievement based on making a positive and material contribution to society instead of glamorizing people on “reality” TV shows, we will never make education attractive enough for our young folks to buy into. Until we get those who learn with their hands out of formal schools and into apprenticeships, where they can finally be free, until we treat our best and brightest students AS our best and brightest students, we can never have real progress in education.

Education must be student-centered, not school-centered, teacher-centered or administrator-centered. Once we recognize that, maybe we can work on fixing the problem.

‘Tis the Never-Ending Season

2009-12-15T07:31:00.001-08:00

(Consumer Safety & Awareness article: Part 44)

Guest Editorial from
Nancy Dickerson, Slightly Creaky Active Living Columnist.

Teachers once taught that a year held four seasons: spring, summer, fall or autumn, and winter. Now certain parts of the country probably had to use a great deal of imagination to divide the days of sunshine from sunshine, but maybe the oranges grew riper during one season or something of that nature. At any rate, children knew fall approached when Halloween and Thanksgiving dominated their art work at school. And finally the winter season had confirmation in pictures of snowflakes and snowmen made of Styrofoam or other art supplies.

Today seasons have completely changed, and the change has absolutely nothing to do with global warming or even political correctness. If spring is now welcomed with a picture of a cardinal, the bird is plainly decorating a baseball uniform. Fall, of course, is welcomed with the bright red bird on a football uniform. In some strange manner the seasons have gone from falling leaves and snowflakes to failing drug tests, breaking bats, and an entire battalion of assorted creatures which somehow have come to represent team spirit and aggressiveness. Who knew that a dolphin could be so dangerous? Or that a cardinal could be induced to tear someone’s head off or stomp on another player?

This change in the seasons has not restricted itself to one nation; indeed, some nations have divided themselves along national sports boundaries. Soccer games or some other event can ignite riots and a national emergency. Stampeding fans and stadiums that are ill-equipped for the enthusiasm of sports fans have been responsible for deaths in many countries.

Finally, from these changes have come new heroes—the national champion sports stars. Strength, agility, precision, and natural athletic abilities bring admiration beyond belief to men and women who become national symbols. Those men and women receive remuneration many times higher than many other well-known individuals.

But the wealth and fame come with a price. Just as the flashy cardinal is instantly recognizable, so too are many famous sports figures. Unfortunately, notoriety quickly follows the loss of anonymity when these men and women lack the morals or character of true heroes. Thus has developed the latest seasonal game: disparagement of the intrepid dissolute. Will teachers soon be teaching children how to draw and use a megaphone?

Education Scams (Part 5)

2009-12-07T03:17:00.000-08:00

(Consumer Safety & Awareness article: Part 43)

(Continued from two weeks ago.)

Previously we looked at Pennco Tech, a school in New Jersey and Pennsylvania that, according to many who reviewed it on the Internet, does not live up to their promises.

ITT, a highly advertised technical correspondence school, also has a huge amount of complaints listed against it. Here is one from a former ITT instructor. “The school is a scam that preys on stupid, uneducated people for the $40,000 federal student loans that they obtain. The books are a joke, the curriculum is written for morons, and the credits don't transfer.”

There is a list of litigation taken against ITT including, “ITT Educational Services, which operates ITT Technical Institute across the country, agreed to pay $725,000 to settle an investigation by the California attorney general’s office. The investigation found that the school improperly calculated students’ grade-point averages in order to facilitate students’ collection of financial aid from the state. It was launched as a result of numerous allegations from former employees and instructors.”

Here is another of the many complaints against them: “It's amazing how easy it is to make money in America. America used to be the land of the free. Now-a- days, it's the land of the free to be exploited. ITT Tech is a prime example of this. Their scam? Let virtually anyone in, and charge top dollar for an education that is comparatively worthless. ITT is just like the sub-prime mortgage lenders of recent years. Their prey is exactly the same. Both promise our less qualified citizens a heretofore unavailable piece of the American dream – a home or a college education -- and then they break that promise with educational standards that are too low or mortgage payments too high. And the end result is virtually the same – a lot of debt and nothing to show for it, except a wealthier corporation. Well, at least until the house of cards come crashing down.”

Associated Content.com has this: “According to the Department of Labor, Information Technology careers occupy four of the five fastest growing occupations in the United States with phenomenal growth foreseen over the next seven to ten years. In response to this, a huge industry has sprung up to provide training to people who want to ride the wave of ITT success. The advertisements are slick, moving and very enticing. Testimonials from actual students talking about how attending this or that technical school changed their lives, saving them from a life of laying roofing shingles or flipping burgers. Sometimes there will be large ads in the local paper about how people with the right certifications can make 50, 60 or even 70 thousand dollars per year.”

For a person who may have gotten off track after leaving high school or an older person who is forced to start a new career, these opportunities appear very appealing and the ads make it look quick and simple. In a matter of a few months, a person can make the leap from manual labor to working in an exciting and rewarding career in the Information Technology industry. The reality is something different.

When a student signs up for a technical school among the first things they will be asked about is financing. The cost of completing all of the courses is generally between $9,000 and $15,000 depending on the school. The student will be asked to fill out forms to request a career loan from one of several providers.

It is important for the student to realize that these are not "student loans" and they are not government backed, although some of the schools may intimate that they are. The student is responsible for the full amount of the loan whether the courses are completed or not. Repayment of these loans is under a special set of rules that allow for minimum monthly payments for the first year and then higher monthly payments for a period of eleven to fifteen years.

The trap in these loans is that unlike normal student loans, the money is often paid by the lender to the school, not to the borrower. In many cases the school receives all of the money up front before the student ever sets foot in a classroom. If the student drops out or fails to complete for any reason, the school usually keeps the money and the loan must still be repaid by the borrower.

I could go on, as there are many more similar complaints. The point is simple: Community Colleges are the best option for those interested in a technical education. There are some good schools out there, but none have the reasonable tuition, the guarantee that the teachers are qualified, and the quality classes offered that the state’s two-year schools offer.

Black Friday Starts the Largest Consumer Rip-Off Season

2009-11-26T06:40:00.000-08:00

‘Tis the season for giving and for being thankful. And every store in the country is being thankful for the tricks they have learned to use to rip us off. We’re simply going to list some examples.

1. The most popular independent grocery store in the community is noted for its fresh produce, fish, and meat. Four days before Thanksgiving, knowing that customers anticipate their relatively stable and moderate prices and outstanding quality, they raise prices and put out “Sale” tags through the store.
a) Iceberg lettuce had been selling for 89 cents to $1.29 – today’s special was $1.99
b) Romaine was also 89 cents last week. This week it’s $2.99.
c) The most they sold broccoli crowns for during the last year was $1.39 a pound. For this week’s special it’s “on Sale” at $1.69.
There were more than 200 similar examples throughout the store.

2. “Discount” outlet malls bring out the big guns, listing mark-downs of over 50%. Look carefully – all the price tags are new. The brand-name handbag that was selling for $50 for the last three months now has an “Originally sold at $199” or “Compare at $249” and has been marked down to only $89.

3. Sticking with outlet malls…. Many of the products sold there are manufactured specifically for the outlets. They may have the same brand names and styles, but may also be poorly made, seconds, or worse. Yet the prices are, in many cases, the same or just slightly lower than what you would pay for the high-quality merchandise at a department store.

4. You’ll even see signs for “Up to 90% off.” That means items can be anywhere from no discount to 90% and you can bet that most of the stuff is priced for profit. Going through a major department store’s Black Friday ad, we compared the prices with their weekly ads for the last month: not one item was lower and most was at normal retail or slightly higher.

5. Stores tend to spend the week before Thanksgiving repricing their products upwards from 10 to 50%. Then, when they discount them 30 to 50% you may be paying even more than before they went on sale. Weekly sales during the year are almost always better buys than the prices between Thanksgiving and Christmas.

We have spent the last 40 weeks discussing tricks merchants use to trick people. Just to summarize:

1. Shop around. Even when items are marked with such terms as on sale, at the lowest price of the year, or deep discount, you probably can get it for less elsewhere. Compare store ads with the prices at Amazon.com. (And Amazon usually ships for free.)

2. When you see signs that offer great deals, do not be fooled. ‘Tis the season to be skeptical.

3. Avoid gift cards. Read back through past blogs on this site for an explanation as to why. They are almost always money losers.

4. Read the return and refund policies. Some stores give only 3 or 5 days and demand a receipt be included even for exchanges. On occasion items marked as “discounted,” even if they really are not, may not be returned or exchanged.

Some advanced thinking now can save you from the post-holiday credit card bill blues.

Education Scams (Part 4)

2009-11-18T03:32:00.000-08:00

(Consumer Safety & Awareness article: Part 41)

Learn at Home & Tech Schools

Many high school students, lacking the grades or the interest to go on to college, seek to get technical training. With a long history of advertising, on matchbooks, in pulp magazines, and now on the Internet, hundreds of companies provide technical training for such people. Scammers, seeing financial gain, have moved in.

Pennco Tech is a good example. Pennco Tech is an actual school, located in Bristol Pennsylvania, with a satellite unit in Blackewood New Jersey. If you go to their web site you will find, “You have goals for your future. Strong ideas about what you want to do, and how you want to live. The problem is that the steps to achieve these goals aren't always clear. Pennco Tech helps you bridge the gap between dreams and reality. We work with you to formulate a solid plan, and then give you the training and employer connections you need to accomplish that plan.”

Sounds good? Yet why do we see things like this posted on the Internet? “Pennco Tech guarantees they will help you find a job. That’s all a sales pitch to get you into their “programs". I am over $10,000.00 in dept for the student loan that I cannot pay back! They will leave you with nothing. Don’t let your fate be the same.”

Here are some more complaints about this school:

“I earned an Associates Degree, which I believe is invalid because the degree has the Bristol, Pennsylvania campus on it. I only was there for the last two weeks of the 18 months I attended. When I asked Pennco Tech why was this, I was informed because the Blackwood, New Jersey campus was not an accredited school and they cannot legally give degrees. I received a diploma also at that time, which had the Blackwood campus on it. The course had to take place the last two weeks in Bristol to make the degree ‘good'. I paid 18 months for a two-week degree.”

“Licensed teachers did not teach the courses that were taught. When we traveled to Bristol the same teachers were sent to teach us. Now there is a case of unlicensed teachers teaching in an accredited school.”

“The course taught outdated computer languages that no one is using.”

“I was just informed by Pennco Tech when I called to get the figures that I paid that the Computer Programming course that I studied was discontinued a few years back due to poor job placement for perspective employees in that field.”

“I am writing this letter to report a fraudulent misrepresentation made by Pennco Tech in Blackwood, NJ. Senior Admissions Representative Karl Mancuso "Guaranteed" lifetime job placements for the Heating, Air Conditioning, Ventilation, and Refrigeration (HVAC) class with a starting salary of $15-28 dollars an hour. He also said if I had good attendance, kept good grades, and participated in class my chance of earning the highest salary of $28 an hour would be more likely.”

“After speaking with Donna, the Career counselor, we were told there are NO jobs for ANY class in the salary range quoted to us by Mr. Mancuso. The actual starting salary is only $9.50 an hour. With a slim possibility, Donna may be able to find me a job paying up to $13. She said she had never heard of an entry-level position paying as high as $28 an hour. Donna also stated that because of equal opportunity employment, everyone’s resume must be sent to prospective employers, not just the people in the top of the class. Everyone must be given the same employment options for every paying job available.”

“I believed at the signing of my enrollment contract with Pennco Tech that I would be earning a full time starting salary of over $20 dollars an hour. I would have never given up my $14 dollar an hour plus commission position, take out $15,000 (plus interest) in student loans, and sacrificed my families (we have 3 kids) future for a job only paying $9.50 an hour. We were lied to and taken advantage of and I would like the school, and Mr. Karl Mancuso held firmly responsible! We relied on him to factually represent Pennco Tech, and it was his lies that we put our future on the line for and enrolled with this school” (Grammar errors in the original maintained.)

More on this topic next week.

Education Scams (Part 3)

2009-11-02T06:41:00.000-08:00

(Consumer Safety & Awareness article: Part 40)

When money is needed and people are desperate, scammers move in. Phony scholarships are not common, but high interest and misleading loans for education can ruin a person’s economic future.

Scholarships.com reports, “Scholarship scams are so common that one could easily think they’re a new form of art. Don’t allow yourself to be duped by a scholarship scam artist; you’ll end up spending valuable time and unnecessary amounts of money for absolutely nothing. Luckily, these scams are fairly easy to avoid as long as you recognize the warning signs.”

The U.S. Department of Education suggests, “If you’re searching the Internet for scholarships and visit a site that asks for your credit card or another form of payment before it’ll help you find funding, you might want to keep searching. Similarly, if you or your parents are contacted by an unfamiliar organization that invites you to an “interview” or “seminar” about preparing and paying for college, do your homework. Ask your high school counselor or a college financial aid administrator whether they’ve heard of the organization and know whether it’s legitimate. In many cases, such invitations are a way to get you and your parents to come listen to a sales pitch. The company wants you to pay for advice on scholarships and other funding that you can get free elsewhere.”

FinAid.com, a legitimate financial aid information center, has reports of these types of scams:

1. Scholarships that Never Materialize. Many scams encourage you to send them money up front, but provide little or nothing in exchange. Usually victims write off the expense, thinking that they simply didn't win the scholarship.

2. Scholarships for Profit. This scam looks just like a real scholarship program, but requires an application fee. The typical scam receives 5,000 to 10,000 applications and charges fees of $5 to $35. These scams can afford to pay out a $1,000 scholarship or two and still pocket a hefty profit, if they happen to award any scholarships at all. Your odds of winning a scholarship from such scams are less than your chances of striking it rich in the lottery.

3. The Advance-Fee Loan. This scam offers you an unusually low-interest educational loan, with the requirement that you pay a fee before you receive the loan. When you pay the money, the promised loan never materializes. Real educational loans deduct the fees from the disbursement check. They never require an up-front fee when you submit the application. If the loan is not issued by a bank or other recognized lender, it is probably a scam. Show the offer to your local bank manager to get their advice

4. The Scholarship Prize. This scam tells you that you've won a college scholarship worth thousands of dollars, but requires that you pay a "disbursement" or "redemption" fee or the taxes before they can release your prize. If someone says you've won a prize and you don't remember entering the contest or submitting an application, be suspicious.

5. 419 Scam Scholarship. In a variation of other scams we have seen, some prize scholarship schemes can get you into deep trouble. The sponsor sends the student a check for the scholarship, but requires the recipient to send back a check or cash for the taxes or some other fees. Or the sponsor sends a check for more than the scholarship amount and asks the recipient to send back a check or cash for the difference. The scholarship check ultimately bounces, as it is a forgery, but by then the recipient’s funds are long gone.

6. The Guaranteed Scholarship Search Services. Beware of scholarship matching services that guarantee you'll win a scholarship or they'll refund your money. They may simply pocket your money and disappear, or if they do send you a report of matching scholarships, you'll find it extremely difficult to qualify for a refund.

7. Investment Required for Federal Loans. Insurance companies and brokerage firms sometimes offer free financial aid seminars that are actually sales pitches for insurance, annuity and investment products. When a sales pitch implies that purchasing such a product is a prerequisite to receiving federal student aid, it violates federal regulations and state insurance laws.

8. Free Seminars. You may receive a letter advertising a free financial aid seminar or "interviews" for financial assistance. Sometimes the seminars do provide some useful information, but often they are cleverly disguised sales pitches for financial aid consulting services (e.g., maximize your eligibility for financial aid), investment products, scholarship matching services and overpriced student loans.

The College Board reports on a number of different scams:

9. Our scholarship is guaranteed or your money back. No one can guarantee that they'll get your child a grant or a scholarship. Refund guarantees often have conditions or strings attached. Get refund policies in writing—before you or your child pays

10. You can't get this information anywhere else. There are many free lists of scholarships available. You and your child should start researching scholarships at the high school or library before you decide to pay someone to do the work for you.

11. Need Your Financial Information. “I just need your credit card or bank account number to hold this scholarship.” No one should give out a credit card or bank account number on the phone without getting information in writing first. It may be a set-up for an unauthorized withdrawal from your account.

12. We'll do all the work. Don't be fooled. There's no way around it. Your child must apply for scholarships or grants himself.
13. The scholarship will cost money. Don't pay anyone who claims to be "holding" a scholarship or grant for your child. Free money shouldn't cost a thing.

14. You've been selected by a national foundation to receive a scholarship, or - You're a finalist, in a contest you never entered. Before you or your child sends money to apply for a scholarship, check it out. Make sure the foundation or program is legitimate.

Fraudulent scholarships can take many forms; some of the most common types have been presented here. If you receive an offer that uses one of these tactics, be suspicious. If you believe the offer is a scam, report it. Sometimes a scam persists for years before people catch on to it. Even when people realize they've been cheated, few file a complaint.

Education Scams (Phony Degrees, Part 2)

2009-10-26T03:43:00.000-07:00

(Consumer Safety & Awareness article: Part 39)

Phony or purchased degrees are far more pervasive than most people think. They usually make the headlines only when a medical practitioner or educator is revealed to have no true degree.

BlogingStocks.com interviewed Barry Minkow, whose company, ZZZZ Best (pronounced "Zee Best") appeared to be an immensely successful carpet-cleaning company but collapsed in 1987, costing investors an estimated $100 million. He was convicted of fraud and several other offenses and sentenced to 25 years in prison, but served only seven years, getting a probationary release from prison in 1995. The interview in part stated:

“Minkow released the names of seven public company executives caught lying about their degrees. The former head of the fraud known as ZZZZ Best Carpet Cleaning has been working hard to verify the credentials of 358 public company executives and directors. The names put through the ringer were generally in industries he suspected were filled with "hype." Upon identifying executives whose degrees weren't listed in a large database of college graduates, schools were contacted directly to verify if the executives earned degrees or not.

”I've been investigating corporate fraud for over a decade, and have generally found that when there's a small fraud being committed by an upper-level executive, chances are greater there's a much larger fraud being perpetrated at the same time. My evidence is only anecdotal, but I've become a believer based on what I've witnessed -- that small frauds are often only the tip of the iceberg when it comes to wrongdoing by upper management.”

A search on the internet for doctors, dentists, and other professionals who, after obtaining jobs using offshore college degrees and eventually causing injury of death due to their lack of proper education turns up over 140,000 hits.

Burleson Consulting, a major computer assistance company, has seen hundreds of people applying for positions in their own company with false or improper degrees, and thousands in corporations they have assisted. They report that, “Verifying a college degree is especially problematic for foreigners, some of whom count on the Human Resource department’s inability to speak a foreign tongue. Many HR departments automatically discard resumes with foreign degrees because some diploma mills set-up a fake registrar’s office to verify graduation from phantom schools.”

The FTC has found that, “Diploma mills may claim to be “accredited.” Colleges and universities accredited by legitimate organizations undergo a rigorous review of the quality of their educational programs. Although many diploma mills claim to be “accredited,” their accreditation is from a bogus, but official-sounding agency that they themselves created.”

They recommend that you look out for sound-alike names. Some diploma mills take on names that are very similar to well-known colleges or universities. A “dot edu” Web address is no guarantee of legitimacy, either. Keep in mind that some diploma mills use credible-sounding foreign names. Researching the legitimacy of a foreign school can be a challenge, but is clearly worth the time. If you’re having a tough time checking out a particular school, call the registrar of a local college or university and ask if it would accept transfer credits from the school you are considering.”

You can use the Internet to check if a school is accredited by a legitimate organization at the database of accredited academic institutions posted by the U.S. Department of Education at www.ope.ed.gov/accreditation

You can also easily spot a phony school through these signs:

No Studies, No Exams — Get a Degree for Your Experience. Diploma mills grant degrees for “work or life experience” alone. Accredited colleges may give a few credits for specific experience pertinent to a degree program, but not an entire degree.

No Attendance. Legitimate colleges or universities, including online schools, require substantial course work.

Flat Fee. Many diploma mills charge on a per-degree basis. Legitimate colleges charge by the credit, course, or semester, not a flat fee for an entire degree.
No Waiting. Operations that guarantee a degree in a few days, weeks, or even months aren’t legitimate. If an ad promises that you can earn a degree very quickly, it’s probably a diploma mill.

Click Here To Order Now! Some diploma mills push themselves through aggressive sales tactics. Accredited colleges don’t use spam or high-pressure telemarketing to market themselves. Some diploma mills also advertise in newspapers, magazines, and on the Web.

If the school caught your attention through an unsolicited email or pop-up ad, it may be a diploma mill. Legitimate institutions, including distance learning programs, won’t advertise through spam or pop-ups.

Education Scams (Part 1 – Phony Degrees, Part 1)

2009-10-19T04:58:00.000-07:00

(Consumer Safety & Awareness article: Part 38)

One of the most important things young people can do to improve their lives is to get a good education. Unfortunately, scammers know this and build a variety of frauds to deceptively get money from people who are trying to improve themselves. Thus we get educational scams.

The Nation, a highly respected magazine, presented this information in 2004: “When large amounts of cash and the entrepreneurial spirit intersect with an institution as impoverished and trusting as schools, it's not long before financial scandal strikes. That time is now here.”

These scandals involve construction shortcuts and kickbacks, diverted funds, outright theft, and all the white-collar crimes we associate with Enron, the financial institutes, and other industries. In 2008, in a school in New Jersey that was being constructed, the contractors took so many short cuts and used such substandard material that the building was a disaster waiting to happen. In fact, it was such a horror story that the building had to be totally renovated at a cost considerably higher than the original estimate. Although several people did go to jail, the renovations, the trial and related expenses were all footed by the local taxpayers. The building may not open until 2012.

I once had the honor of working for a man who was proud to display his Doctor of Divinity degree. As I got to know him, during a five-month relationship, he proved over-and-over that his corrupt business methods, his desire to cut corners, and eventually the scam he was perpetrating, showed he was as phony as his degree. He had paid several hundred dollars to purchase it online.

The FTC warns, “Are you ever tempted by an email or an ad claiming you can “earn a college degree based...on life experience”? Don’t be, say attorneys for the Federal Trade Commission, America’s consumer protection agency. “Chances are good that the ad is for a ‘diploma mill,’ a company that offers ‘degrees’ or certificates for a flat fee, requires little course work, if any, and awards degrees based solely on life experience.”

Most employers and educational institutions consider it lying if you claim academic credentials that you didn't earn through actual course work. Federal officials say it’s risky behavior: If you use a so-called “degree” from a diploma mill to apply for a job or promotion, you risk not getting hired, getting fired, and in some cases, prosecution.”

Taking it a step further, USA Today has this story in 2003: “After Marion Kolitwenzew learned her daughter was diabetic, she took her in 1999 to a specialist for care. He seemed impressive, with an office full of medical supplies and a slew of medical degrees from universities. It turns out those diplomas came from degree mills, which are bogus universities that confer degrees for little or no study. When the mother followed his advice and took her daughter off insulin, the 8-year-old girl began vomiting and died.”

“The North Carolina man who treated her, Laurence Perry, is serving up to 15 months in jail for manslaughter and practicing medicine without a license. But questionable degrees aren't just being used by bogus doctors.”

“Employees armed with academic credentials from diploma mills have held jobs as sex-abuse counselors, college vice presidents, child psychologists, athletic coaches and engineers. While some employees simply falsify their résumés and make up degrees, others turn to diploma mills. These bogus colleges and universities make it easier to pull off the résumé charade because they provide fake diplomas and transcripts that often seem legitimate.”

USA Today discovered, “There are more than 400 diploma mills and 300 counterfeit diploma Web sites, and business is thriving amid a lackluster economy — doubling in the past five years to more than $500 million annually, according to estimates. Some fake schools in Europe have made as much as $50 million a year and have as many as 15,000 "graduates" a year. The number of fake accrediting organizations set up by con artists to provide diploma mills an air of legitimacy has swelled from half a dozen 10 years ago to 260 in 2003.”

Alan Contreras, Boston College’s administrator of the Office of Degree Authorization reports, “As recent cases show, the "false approval" problem has become widespread and now occurs in an astonishing diversity of venues. There have been problems with regulatory schemes and bogus colleges supposedly based in Australia, Canada, Malawi, Mexico, and St. Kitts. Of course, the United States is also full of diploma mills. We are now in a period of universal domestic and international portability of bad standards, poor enforcement, and worthless degrees.”

A recent example comes from Singapore and, sadly, concerns an Oregon college. Boston College was contacted by a Singaporean who had “earned" a degree from this school. Unfortunately, no such school exists. The entity was just an incorporated business (now shut down) with a college-like name. The incorporator sold degrees mainly in Asia and used the state-issued business license as proof that the "school" was government approved. Since this diploma mill made no attempt to sell degrees within Oregon, we did not even know it existed.

The true core of this problem is illustrated by the Singaporean’s main concern. The degree holder was troubled not because he had been scammed or because we had not done our job in catching the perp, but because we insisted that the degree was worthless. Under Singapore law, it seems, this was a "U.S.-approved degree" and thus legal for use, and he wanted to use it. So the United States is not only the victim of international falsity in academic credentials, but also the perpetrator, since (unlike Oregon) some states do not prohibit the operation of diploma mills.

The Ten Best Ways to Waste Money

2009-10-13T06:48:00.000-07:00

We all spend money on things we do not really need. You frequently see lengthy articles in magazines and newspapers telling you ways to save money. Here are ten things you can easily do to waste your hard earned cash. They are certainly not in any particular order.

1. Buy a soda at a restaurant. Including the soda itself, the ice, and the salaries they pay for cleaning and serving, a typical 12-ounce soda costs under ten cents. What you are getting is 4 ounces of beverage and a lot of ice. If you must purchase soda, ask for it with no ice (or one cube at the most), or ask for a separate glass of ice and put it in as needed.

2. Buy something on impulse. Stores are set up so that you most readily see things that they want you to purchase. Today, in a Best Buy, I saw two end caps with their highest profit ear buds (for iPods) three aisles over were similar products, possibly better quality, and most at lower cost.

3. Believe an advertisement. Stop, go back to my Advertising Blog #1. Start reading.

4. Don’t bother reading contracts, bills or disclaimers. Who needs all that small print? You do. The typical person gets billed for almost $500 a year s/her did not purchase.

5. Accept what other people tell you. I have just the product for you. This natural remedy will cure your headaches, prevent cavities, and get rid of shoe odor.

6. Purchase nostrums, vitamins, and vanity items. Why not? In the United States alone people spend over $80 billion a year hiding wrinkles, dying hair, whitening teeth, and taking over-the-counter cures for things they might not even have.

7. Don’t bother checking store prices. What a pain. Just because something that’s marked “on sale” at $4.99 is more than twice what the supermarket down the street usually gets for the same product, and you’re going there anyway, believe them. Hey, if it’s on sale it must be a great price. They won’t lie, would they?

8. Pay in advance for a service. Everyone is honest. There is no need for contracts. They guy says he’ll surface your driveway for $80 – hey, believe him. Give him the money and … why is he driving away?

9. Accept products and services without asking questions. Get a free home alarm. Get pest control coverage for a year. Buy an extended warrantee. Besides the fact that more than 60% of such things are either scams or nearly useless, go ahead, get it.

10. Do not seek alternatives. See an item, like an item, buy it. There is never any need to check out reviews or look online to see what other stores are getting for the same product. Just because my wife found the same surge protector online at Amazon for $49.99, I might as well pick this one up at XYZ Electronics for $129.00.

This ends our lengthy run of advertising scams, but certainly not the end of the line for examining ways people cheat you. Next, we’ll look at education-related cons.

Consumer Safety & Awareness Part 36

2009-10-04T16:34:00.000-07:00

Advertising Scams (Part 10 – Words that Deceive, part 2)

More words that advertisers love to use and what they really mean. Continued from last week.

Free Trial Offer – Many companies do provide free offers or coupons for a free product. Do not, though fall for the scam where you get something for free yet have to give your credit card number for shipping and handling. In almost all cases these are membership club scams. In the small print you’ll find that by getting the free sample you are agreeing to accept more each month at an unrealistic price (plus more shipping and handling).

Feel Better! Look Younger! – Ponce de Leon’s descendants are still searching for the Fountain of Youth and such products make huge promises and sell for up to over a thousand dollars. Never believe an ad that promises to make you look better or feel better. For about what they cost you can go to a doctor specializing in what you need “cured” and have a realistic assessment. Almost all of these products are no better than snake oil or eye of newt.

The Miracle Solution – Since ancient times people have been pushing cure-alls or solutions to ailments. In the Dark Ages there were longevity potions, arthritis magnets, and prayers for invalids. In the 1800s, peddlers sold tonics, elixirs, salves, and pills. Whatever ailed you, they had a cure for. In the 1980s, we had cures for all sorts of cancer, menstrual cramps, impotency, and hair loss. Actually some drug companies have made limited break-throughs with some of these concerns, but the side effects may be worse than the original problem.

All Natural – (or No Artificial Ingredients) – All things are derived from nature. It used to be that anything could use this term, and many products still do. But look closely at the ingredients – all natural preservatives, food colorings, flavors… and none of them are any better for you than the old-fashioned stuff.

One Time Offer – Buy it right now, I’ll give you the best deal ever. Walk away. Don’t even talk to the guy. It’s stolen, a fake, or junk.

Includes Omega 3 - (or Fish Oil, or Antioxidant, or Secret Ingredient, and 200 other or more other supposedly health items) – Whatever the most recent nutritional study discovers, within weeks products will contain the ingredient. The worst is Acia, a useless product that has been advertised for weight loss, diabetic cure, cancer cure, and dozens of other things. The Food and Drug Administration and dozens of independent labs have found no value in these products. So why do people buy them? Read on….

Listen to What Our Users Have to Say – Testimonials are phony. The people in them are actors and paid to say what they declare is the latest best product. The actors will never be fined or sent to jail because they are just playing a role. The companies do not mind getting a $4 million fine after making a profit of $50 million.

Multi-level marketing companies (for a list see Wikipedia) use testimonials to sell their overpriced useless products. They get your friends, neighbors, and relatives hooked on one of their products and tell them they can get their supply at a discount if they become a representative.

Improve Your Sex Life – (or Natural Male Enhancement) – Sexual aides have been around for centuries and every time there is a real breakthrough phony products follow. In the 1990s there were products that stated they “contained an ingredient found in Viagra.” Yes – their pill used the same solvent or thickener, or coloring agent. Also watch out for sale of these items on the Internet at a discount – most of them are phony.

Consumer Safety & Awareness Part 35

2009-09-28T06:05:00.000-07:00

Advertising Scams (Part 9 – Words that Deceive, part 1)

We all recognize them: the sensationalized words that advertisers use to attract our attention. Remember, they have to get you to look at their product before they can sell it to you. Here are a few favorites along with their true meaning:

New! - (First warning – the exclamation mark is your first indication that they are trying to trick you.) – Does “new” mean better? Many recently released products are subject to recall or upgrades. Ask yourself: What about this is “new”? Is it a totally new product? Is this an old product with some new added?

It is frequently the second choice. In such cases it may be a new package (whoopee) or it may contain a new ingredient. There probably is no explanation on the package to explain why they had to change the contents – so research it first. The new ingredient may simply be a new preservative, a substitution, or some over-the-counter additive that may sound good but in reality does little or nothing. Accompanying “New!” is usually a higher price.

Better – (or Improved) - The first thing I wonder is why were they selling an inferior product to begin with. Is it “better” because it contains something “new” or because they changed the taste? Reread “New!” and you’ve just about covered this topic as well.

Guaranteed – (or Warranted) – In most cases this phrase is useless. The product itself may be guaranteed to work if you use it exactly as described, in a specific environment, at a certain time of the day, or when your in-laws are visiting. Never will the terms of this promise be spelled out on a package, and rarely in an advertisement. The Web site may have the details, but it will take you 10 minutes searching the site to find it and three hours of reading to understand it.

Guarantees always contain exceptions. There are always time limits (1 year, 3 months, 10 days, until you open the box) and usage limits (Pronghorn toothpaste is guaranteed to prevent cavities if you use it four times a day, with a Pronghorn Superior Toothbrush, along with daily flossing, with Pronghorn Super-Glide Floss. You must also prove that you visit a Pronghorn pre-approved dentist for cleaning at least once a month.).

Even if you meet all the requirements, what sort of satisfaction will they provide? They may only replace a certain part or it may have to be brought or mailed in to a certified repair store (at your cost usually). They may repair it or substitute another repaired product – rarely will a company give you a completely new product to replace a malfunctioning one.

Some guarantees are “money back if not completely satisfied.” In most cases you have to pay shipping and possibly a restocking fee, which, together, may come to more than you originally paid.

Better Than – My dog’s better than your dog. Our car has a larger glove compartment… get better mileage than…. And has a lower price than… If a product’s only quality is that it has some feature that is better than other products, look at those other products. Very few things have only one or two features. Car ads tout a couple of great items, yet they contain thousands. Just because a few are better may not mean it’s a better product.

Doctor Approved – (or Clinically Proven) – Almost every company that sells medical or medically related products have physicians on staff. They can easily get their company doctor to approve the product. They can even get 9 out of 10 of their company doctors to approve (and the 10th will be fired).

Similarly, such companies pay to have their products tested. They might even hire a dozen or more independent labs. Their ads, though will only describe the results of those that have good things to say about the product.

Imagine, FDA approved drugs have an amazing testing program, yet hundreds of them are recalled each year. Over-the-counter, homeopathic, and “natural” remedies have no such legal obligation. They frequently set up their own testing labs, give them fancy names, and then say how good the product is. (Also see “Listen to What Our Users Have to Say “ which will be in next week’s blog).

Sale – Do not be fooled into thinking that everything you see in a sales advertisement is ”on sale.” A recent examination of a supermarket weekly ad showed that 23% of the products had reduced prices while 8% of the items shown were price increases (compared with the previous week). Buy-One-Get-One ads may also be deceptive, with the store selling the product at higher than normal prices or at “list price,” which is usually more than you’d normally pay.

Starting at only… – (and For As Low As…) – A sure bet that what you want will be considerably higher. This is especially true with cruise, airline, and hotel prices. The one-week cruise for $699 may be for one room, located on the inside, lowest level, next to the laundry room. Also watch for vacation prices that are per-person, rather than per-room. Two people will pay twice the price.

Save up to – This is the same at the previous one. The ad may say you can save up to a huge amount, but then again you might not. This is especially true in auto ads that use the undefined terms “for qualified buyers.”

For Only – You have no idea what the value of this product is, so when you are quoted “only” $24,000 for a bathroom makeover or $43,000 for a time share, what do you have to compare it with. Become an expert before you shop. In fact, print out sales ads from the Internet and take them with you.

We once visited a time-share that wanted to sell us a week “for only $29,000.” The pitch ended when I showed them that there were more than a dozen of their units currently selling on the Internet for under $10,000.

Continued next week.

Consumer Safety & Awareness Part 34

2009-09-09T04:51:00.000-07:00

Advertising Scams
(Part 8 – Deception Through Subtraction)

This is the last in our series "Deception by..." Next week we will be taking a brief vacation. Join us on September 28 for some new thoughts about consumer awareness.

Keep the box size the same, or increase it, and reduce the contents. Pay more, get less. We can take ice cream as an example. The companies cite rising sugar and milk costs as the cause of the price increases in 2006. Typically, in New York’s Mid-Hudson region, a 64-ounce container of brand name ice cream was retailing at $1.99 and occasionally going on sale for as low as $1.49. That year there was a reduction in container size to 56 ounces accompanied with a price rise to $2.99. Interpreting that, we go from 3 cents an ounce to 5.3 cents per ounce, a 60% increase almost overnight.

Forward to 2009 and milk and sugar prices are within 5% of their pre-price increase. Transportation costs have been reduced. Wages have gone up an average of under 4%, yet we now find that brand name ice cream is selling for $4.99 and the container holds 48 ounces. Per ounce that’s 10.4 cents, more than 3 times the cost it was three years ago. Expenses have, perhaps, risen 10% during that time.

How do companies justify that?

In a recent news article, dairy farmers are complaining that they are receiving less than 50% of last year’s prices for raw milk. Processed milk has come down considerably recently, possibly by as much as 25%. Yogurt and cottage cheese have also seen a slight price drop. But other dairy products have seen price increases. Cheese is up almost 25%. Bakeries are charging more citing increase milk costs. (Eggs are currently selling at the lowest in several years. Sugar and flour wholesale prices are down as well.)

Yet store brand ice cream, store brand cheese, yogurt, sour cream, and other dairy products have seen drastic price reductions. Bakery products continue to increase in price. If you ask why – you get the standard reply: “Cost of ingredients have increased.”

Bananas? There was a blight in the Cavendish bananas that we typically see in the stores. It’s one of hundreds of types of bananas, the one that we’re used to eating. Prices increased dramatically between 2006 and 2008 as a result of shortages and the cost of research to improve the crop. This has paid off, as the 2009 harvest is bountiful. WalMart has reduced prices from a high of 69-cents to 42-cents. Several box stores are down below that. Yet supermarkets, now that people are used to 69-cents, have generally refused to lower their prices.

Public congratulations must go to cereal companies. Their prices, which rose in 2005-6 due to the amount of corn diverted to ethanol, stabilized once the price of ingredients did. Recently we have seen sale prices reflecting levels not seen in over ten years. Post and Kellogg cereal, same size boxes (and occasionally promotional bonuses) can be seen for under $2.00, less than half the 2007 price.

A few weeks ago we compared advertising to magician tricks – now you see it, now you pay twice the price. Deception through subtraction applies to advertising pictures as well. Have you ever compared a store’s ad picture to the real thing? They show huge English muffins holding overflowing egg-and-cheese sandwiches. In actuality, they usually picture the pre-cooked items. Once prepared and handed to you, they may be half the size.

Last winter a national chicken restaurant was advertising 12 pieces for $9.99 (with all the trimmings), 83-cents per piece. Now they have a great deal for you – 16 pieces for only $19.95. That’s a price increase of 42 cents per piece of chicken, a 50% increase. A slightly larger quantity for a considerably larger price.

Consumer Safety & Awareness Part 33

2009-09-01T04:52:00.000-07:00

Advertising Scams
(Part 7 – Deception Through Addition)

Billy Mays was a super salesman. His products may have caused some of us to blink twice, and his $19.95 prices rarely varied. Whenever you saw him you’d wait for the punch line, “But wait, if you buy now….” He’d throw in a second item, or sometimes something totally unrelated. But Mr. Mays was always honest about the price. You saw the cost of shipping and handling right in his advertisement and the free items never created additional costs.

Mays and his partner, Anthony Sullivan, have had many imitators, and some of them practice deceptive advertising. They are easy to spot if you are paying attention. One item for the set price (usually $19.95, far below the value they say it’s worth) and lots of added bonuses. The catch comes at the end, and rapidly, “for additional shipping and handling.”

Thus the product, at perhaps $19.95 and $6.50 S & H, may be something you want, and the extras may be nice, but there may be three added items, each worth a few dollars, and each with an additional $6.50 S & H. There have been several of these deals where the total cost is over $50. While you can return the items and get your original $19.95 back, you cannot get the S & H refunded and you have to pay return costs (and possibly a restocking fee).

Another deception through addition practice, one that works so well that we’ve seen more than 100 companies use it, is to offer a product for free, with a small S & H charge. They only accept credit card purchases. In the small print, possibly not even in the original ad, but included in the documentation you get with the product, you have become enrolled in their “purchase club,” and will continue getting the product until you cancel it.

ProActiv, a skin care product, offers their product on television, in newspaper and magazine ads, and through web sites. You purchase their main product, get free bonuses, and you believe that’s the end of it. What you may not see is their small print, usually two to five levels down on pages you may never consider visiting. What you eventually find is:

“When you order our 3-Step System, alone or with additional products, you're automatically enrolled in the Proactiv® Solution Clear Skin Club: your passport to a variety of exclusive benefits designed specially to give you a clear advantage over acne.”

And…
“There's no minimum number of kits to buy, and you can cancel at any time.
· Never worry about running out or forgetting to reorder
· Every 60 days, receive a 2-month supply of your Proactiv Solution kit (less your free bonuses). Your credit card will be billed, plus shipping and handling, for each 60-day supply.”
Perhaps you did not expect to get another shipment, ever. But if you do not cancel prior to the second shipment going out, you’re stuck with it. ProActive may be an honest company with a good product. We do not make such judgment calls. What we do not like is their sales technique.

Yet it works so well that it has been imitated by companies that are very deceptive, yet stay within the law. Enzyte, “the number one selling supplement for natural male enhancement,” offers a free 30-day supply with $5.95 S & H. Only if you look closely you will find…

“*With your trial order today, you are enrolling in our free ViaLife Rewards Program. Approximately 1 week before your current cycles run out we will begin shipping you regular bi-monthly 60 day cycles and your credit card will be charged $79.90. Membership includes guaranteed free shipping plus special offers on other Vianda brands.”

Notice the asterisk? That tiny * will be very easy to overlook in their huge ad.

Before making any purchase from a television, print, or web advertisement, do your research.

Consumer Safety & Awareness Part 32

2009-08-24T07:24:00.000-07:00

Advertising Scams
(Part 6 – Deception Through Inflation)

Investor’s World defines “inflation” as “The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. Over time, as the cost of goods and services increase, the value of a dollar is going to fall because a person won't be able to purchase as much with that dollar as he/she previously could. While the annual rate of inflation has fluctuated greatly over the last half century, ranging from nearly zero inflation to 23% inflation, the Fed actively tries to maintain a specific rate of inflation, which is usually 2-3% but can vary depending on circumstances.”

Even with that definition, and the many others available to us, economists argue over what it really means, what causes it, and how to fix it (assuming there is a need to).

In An Analysis and History of Inflation, Don Paarlberg states, “Consumers blame food processors and distributors for price increases that result from inflation. Likewise, increases in rent are attributed to greedy landlords. Manufacturers who raise prices are accused of profiteering, even when they may be losing money.”

He goes on to explain that inflation is actually caused by the government’s continuous increase in the amount of money available – the more money, the less it is worth, and the more (in terms of the American dollar) things will cost.

Many consumer advocates, though, including myself, feel that in some cases manufacturers and merchants do artificially cause price inflation in order to increase profit. The case for this was made by WalMart’s demand this past winter that its suppliers lower wholesale prices or they would switch to less expensive brands, including their own house label. If the rapid rise in food and household good costs was out of the control of the manufacturers, shippers, and others involved in the production end, WalMart, the leading brand in price management, would not have made the demand. To back up that possibility, it was reported that within a few weeks more than half the suppliers did roll back prices, some considerably.

Others blame the theory of Supply and Demand as the cause of inflation – not only is the population increasing, thus causing more demand, nations that previously had little need for luxury products are now clamoring for them. Opposing that is the ever-increasing efficiency of manufacturing and production. Increases in demand are frequently offset by greater production per acre (which is offset by fewer acres being dedicated to production). Increases in demand are offset by more efficient production methods and the use of new material (which is offset by a decline in availability of raw material).

Mr. Paarlberg also comments, “The logical way to deal with the problem of inflation is to stabilize the value of money, in which case both inflation and deflation would disappear, and their inequities with them. It is understood that the way of doing this is to limit the issue of money. But such a course would require more discipline than the public and public officials worldwide have been able to muster. There are those who have vested interests in inflation, and others who gain by deflation, so none of the various proposals for stabilizing the value of money has been found acceptable.”

This, though, does not take into account the growing desire by managers and stockholders for greater salaries, dividends and benefits.

There is one pressure that consumers can bring forth to fight artificially induced inflation – stop purchasing those products whose prices have artificially increased. Look for sales, purchase store brands, compare prices from store to store.

There are nine supermarkets within 12 miles of my house. This week one is selling green seedless grapes for 89-cents, one has 99-cents, and another $1.29. The remaining are all charging $1.99 to $2.99 a pound. One has the audacity to advertise their $2.49 price as a “sale.” If you purchase grapes at any of the higher-priced stores you are fostering artificial inflation.

During any week, anywhere in the country, you will find similar discrepancies. Until the consumers of this country become better education and act with knowledge, deception through inflation will remain with us.

Consumer Safety & Awareness Part 31

2009-08-17T18:56:00.000-07:00

Advertising Scams
(Part 5 – Deception Through Omission)

In a previous blog, we mentioned that advertisements are usually not long enough to include all aspects of a product. They certainly have no opportunity, even if they were foolish enough to want to, to include significant facts about similar competing items, except in a negative way.

Infomercials, though, many of which run 30 or 60 minutes in length, have sufficient time to provide such detail, yet somehow neglect to do so. In a half-hour commercial for an exercise machine, you may see 20 minutes of some healthy, robust individual using the product, always smiling, youthful, and sweat-free. The “host” continues to repeat the same fantastic reasons why this is the best toning, weight-loss, and muscle-building product on the market.

At no time are they any cautionary statements, except perhaps to check with your doctor to make sure you are healthy enough to use the machine. They do not expect anyone to do so, but their insurance carrier demands that such statement be included. Consider the disaster when someone is injured (and there always are injuries on any type of exercise equipment), and there had been no disclaimer. And what is not included in the ad is placed in the instruction book, with bright red stop signs and “caution” and other such labels.

Once you have purchased the product there is little chance of you returning it, and perhaps little opportunity to do so. Now that you have it you can be told of all the dangers to pets, children, and even healthy people cause by moving parts, heavy weights, sneezing while in motion, and… well any possible potential dangers.

Here are some warnings we found – try to discover what type of product they were on.

1. Remove wrapper, open mouth, insert muffin, eat. (OK, that one was obvious)
2. Use like regular soap, (See below, yes- you can peek)
3. This product is not to be used in bathrooms.
4. Do not climb over fence.
5. Please do not eat.
6. Do not use while sleeping.
7. Keep out of children.
8. May irritate eyes.
9. Do not use as earplugs.

Everyone always does ten of these. I decided to do nine just to be different.

Products that may really need to include precautions never put them in either their advertisements nor on the outside of the container. Probably the most famous warning is on computer software where the box has a warning not to open the package until you agree to the license for use agreement. The license can be found inside the box.

Also left off commercials is a list of other similar products that may perform better, be less expensive, more reliable, or healthier. It’s obvious why. Try to imagine a Pepsi commercial that states, “Store brand colas may be produced in our factory, have exactly the same ingredients and taste, yet cost half of what we charge.” Or perhaps this imaginary statement from a fast food restaurant, “Our ¼ pound hamburger averages 800 calories. It contains fillers, preservatives, and potentially other unhealthy ingredients. Eating this may lead to heart attacks, cancer, or allergic reactions.”

One can only wonder what an honest cigarette commercial might include. Now that the FDA can regulate contents, additives, and cigarette advertising, perhaps some honesty may appear. “If you smoke this product you have an 80% chance of becoming addicted. Continued use may lead to all sorts of unhealthy side effects. Breaking the smoking habit may be impossible. Since they cost so much you may land up a pauper, but your habit will still have you scrounging for something to smoke. But you’ll look cool.”

Answers:
1. Yes, a muffin
2. A bar of soap. Seriously.
3. A “Portable Bathroom Heater.”
4. Lion cage in a zoo,
5. A package of “Odor Eaters”
6. On a hair dryer.
7. Adhesive warning on a kitchen knife
8. On pepper spray
9. On a package of “Silly Putty”

Consumer Safety & Awareness Part 30

2009-08-11T04:47:00.000-07:00

Advertising Scams
(Part 4 – Deception Through Comparison)

My dog’s better than your dog. (Taken from a pet food commercial in the 1970s.) That can be extended to any topic – my car, my home alarm company, my clothing line, my anything you want to buy. Comparing one item with another, whether similar or totally different, is an advertising gimmick that has been around for ages.

No matter what you compare, unless it’s an item to itself, any such action is deceitful and unfair. By law (copywrite and patent) no two products can be alike. Fords and Toyoda, Sealy and Perfect Sleeper, Coke and Pepsi. The best thing about having different products that fill in a similar nitch is that every person is unique, and our interests and likes differ.

When an advertisement uses taste tastes, or softness tests, or whatever comparison they use, you can bet the people they select for their poll are very carefully chosen. One of the criticisms placed on President Bush was that he stacked his community meetings with loyal Republicans and anyone who showed disagreement was removed from the hall. Can you imagine partisan political polls where the Republican tally only fanatical religious conservatives and the Democrats select gay-rights, pro-choice atheists? The results will be rather skewed.

So when a medicine is selected by 9 out of ten doctors, one must question whether those physicians (we assume in such cases that “doctor” = medical practitioner and not someone with a Doctorate in Engineering) have received massive amounts of that product as free samples, or whether they work for the company in question.

No poll, no sample, will ever ask all the qualified people. Political polls question perhaps a few thousand and extrapolate the results based on scientific and statistical principles. An advertising company has no such requirement. They can place their sample in tiny print somewhere in the ad, and keep it on the screen for five seconds. If they even do that much.

Nine out of ten cans prefer Friskies? Perhaps that was the only food they have been fed for the last three months and what they are used to.

Nine out of ten people prefer Blue Bonnet? Perhaps their only other choice was a product that had been specifically chosen for its poor quality.

Even worse are commercials that compare parts of their product to parts of others. I have no idea how many types of cars are available in the United States (and am too lazy to research that at the moment). When a vehicle commercial says their model gets better mileage than Car B as well as a better ride than Car C, and costs less than Car D, my first thought is that Cars B, C, and D must then have dozens of aspects better than the advertised vehicle.

Obviously no ad can compare the top 50 or so most important facets of an automobile (and even that would vary depending on who you talk to). That is why Consumer Reports has an annual car issue – so we can compare such things, and get our information from a mostly reliable independent source. That is why Motor Trends, Car & Driver, and dozens of other automotive magazines also provide such information.

So let’s use those magazines – “Our car was chosen best in its class by Motor Trend.” Isn’t that also using a comparison? Perhaps Car & Driver selected another vehicle. Perhaps Motor Trend select it, yet had many things to criticize. No comparison commercial will ever give you a negative report on the item being sold.

(At this point I went out to do some shopping. I passed an ad for a law firm voted “The Best in the Hudson Valley.” The best what? Voted by whom? Compared to what other law firms?)

Advertisements must remain within the bounds of the law. Even the worst product can compare itself to something else and claim to be better, stronger, healthier, tastier, or less fattening. Comparisons are simply deceptive advertising.

Consumer Safety & Awareness Part 29

2009-08-03T04:04:00.001-07:00

Advertising Scams
(Part 3 – Deception Through Exaggeration)

Before you read this Blog, take a look at Fast Food: Ads vs. Reality, which shows pictures of fast food items as they were advertised along side of actual photographs. McDonald's Sausage McMuffin ad photo looks like it was before it was cooked (the English muffin is not toasted). The KFC Famous Bowl “actual” shot makes it look like something I would not feed my pets.

Before you purchase a product for the first time, any product, research reviews of it on the Internet. While it’s true that disgrumpled consumers write many reviews, and as many are actually written by the company that made the product, by reading between the lines you can get a feel for the quality, the reliability, and the cost-worthiness of the item.

Computer games are a good example. The advertising hype for the item may begin two to three years before the game is available. The reviewers are showing best-case possibilities. They are informed of what the finished product will be like. It is doubtful if the programmers are going to say that it’s a dud – they have invested millions of dollars into production. Always wait a few months before buying the game. You may land up getting version 2.5 with many of the bugs worked out. If the price falls from $49.95 to $19.95 in ten weeks, you know it’s a disaster.

Along the same lines, movie and television shows are hyped with grandiose terms: the show of the season, the best police drama on television, and this year’s huge hit. Quite a few of these absolutely perfect entertainment showpieces are off the air within four or six episodes. Sixteen million people may have tuned into the pilot show, 12 million the second week, 3 million remained around by the sixth week, and even the sponsors stopped watching soon after,

Who writes the reviews shown in the advertisements? Quite frequently it is truly the words of the reviewers. Yet there are three things you must consider:

1. Not all reviewers are sane. Quite a few liked “My Mother the Car.”

2. Some reviewers work for the television station. Do you think a reporter working for CBS is going to say a new CBS show stinks?

3. Advertisements are permitted to paraphrase or truncate a review. Consider: “This is the worst television show to come along in 20 years.” This may appear in the ad as, “The reviewer has not seen a show of this quality in 20 years.

Advertisers love superlatives: Best!!! Greatest. Sure to win awards (as the bomb of the year?). The best cereal for your heart, the best and fastest Internet connection, the best service. How about some honesty: “The biggest and most blatant exaggeration in advertising.

Consumer Safety & Awareness Part 28

2009-07-27T14:07:00.000-07:00

Advertising Scams
(Part 2 – Deception Through Misdirection)

Advertisers probably enjoy watching magicians as both occupations employ deception through misdirection. The magician must get the audience to focus on something so as to deceive. Flourish a hand to get the eye over there while the other hand slips the trick card into the deck. Point out the lovely assistant while slipping the key to the lock into his mouth.

Deception is the hallmark of advertising as well. Want to sell a car? Point out the lovely color, the smiling 30-somethings looking through the showroom, say something cute and totally off the subject.

How else can you explain that during the last five years we have seen countless speeding cars on hairpin turns or driving fast through streets, totally void of other vehicles? Is this likely to be the way you drive? How about some honesty – like showing the car stuck in rush-hour traffic not moving? Oh, they use that one also, but somehow the car magically lifts above all the others and is suddenly moving along an empty country lane.

Why bother telling us about the many recalls and overpriced extras they force on us when they can show cars taking off after the showroom closed and driving around town on their own, or turning on their own radios and flashing their headlights to the rhythm of the music?

Five-star crash test results – what does that really tell you about the vehicle? Talking test dummies? Direct the audience’s attention away from their sales gimmicks and on to something that will make them remember the car’s name and model. What lovely music from the radio (I’m usually tuned to the traffic reports). What beautiful leather seats, which get boiling and sticky in hot weather and never warm up when it’s cold out.

Distract us by putting an entire household’s worth of toys in the back of the 8 MPG SUV, or showing how attractive the 12 MPG sports model is to people standing on the street. Yes, I am certainly going to buy a car just so that others can admire it.

Distract us by informing us only of the few good points of your product. It can cure heartburn, but the side effects may include diarrhea, headaches, sleeplessness, and inability to concentrate, while it kills off the good bacteria that help us properly digest our food. Let us know that id we eat your cereal for eight weeks we can drop our cholesterol from 200 to 192 while absorbing more salt than we should have in a day. Tell us about the great taste but not the additives that are under investigation because they may cause cancer, stroke, heart attacks, or hyperactivity in our children.

Political ads love to use misdirection. Candidate One accuses his opponent of not caring about the cost of prescription drugs. At the end of the ad you see it was paid for by the American Pharmaceutical Association. His opponent accuses Candidate One of being soft on crime while gun manufacturers are filling his campaign chest. Did he mention that last year he sponsored an early release bill for hard-core criminals?

Remember the purpose of advertisement – to get you to buy the product, the service, the concept, or the candidate. Do you thing Pepsi is ever going to have an ad stating that their blind taste-taste found people prefer Dr. Pepper? Such a study would be quickly destroyed. Nine out of ten doctors (who happen to work as researchers for the company) prefer the product the company makes (and the tenth was fired).

I watch commercials and read advertisements just to spot the fallacies in them. I have no intention of buying advertised products as there is probably other, just-as-good or better products (a little on-line research will discover them) that charge less because they do not have a $100 million ad campaign thus adding $2 to the cost of each item they sell. Remember that national brand companies make the no-name brands (do you think Safeway cans it’s own food?), which are then sold for half the price because they do not have to pay for advertising.

Quick, watch the flame coming from the magician’s left hand – he’s going to make quality, good deals, honesty, and integrity disappear with his right one.

Dangers of Internet Purchasing

2009-07-20T05:12:00.000-07:00

Guest Blog

Although it is very convenient to purchase things either over the phone or internet there are also problems that can arise. Before placing an order it is extremely important to know the specifications of the item in order to be assured that it will suit your needs. If you are unsatisfied upon receiving the product chances are you will have to pay the return shipping (and possibly a restocking fee) even if the company agrees to refund your money. In some cases you will also be out the initial shipping cost. Depending on the item this can be quite a substantial fee.

In many cases certain drawbacks may not become apparent until you actually open the box and read the instructions. This recently happened to me when I purchased an international automatic dual converter kit which I intend to use solely to recharge batteries. The instruction booklet stated that you could only keep an item plugged into a converter for a maximum of thirty minutes which is nowhere long enough to recharge a battery.

Upon calling the company I was told this was indeed the case and what I needed to get was a transformer that could be used for extended periods of time. I was quite upset and then contacted the place where I ordered it from and was told I could get a refund but would have to pay to have it shipped back.

Upon researching the item further I discovered to my delight that this particular converter acts both as a transformer at lower wattage and a converter at higher wattage and thus should be suitable for my needs. I had this confirmed by a supervisor at the company who apologized for the erroneous information that I had previously received.

Happily this turned out well but very well could have wound up costing me shipping charges and nothing to show for it.

Submitted by Roberta Rosengarten

Consumer Safety & Awareness Part 27

2009-07-14T13:19:00.000-07:00

Advertising Scams

(Part 1 – You Do Not Care They are Robbing You)

To this point we have discussed techniques scammers, robbers, and other unsavory people use to get your goods and money. There is, though, not much of a chance you will encounter any of these techniques.

Yet every day you are exposed to hundreds of advertising scams. In fact a large majority of advertisements, on television, radio, newspapers, and magazines, and, especially, on the Internet, use some form of deception to convince you to purchase their product. There is even a chance you will be offered items that do not exist.

Always keep in mind that manufacturers make products and need to sell them. They do this by whatever technique they can, not always honest ones. The federal government writes laws and hires people to inspect advertisements, but laws can easily be circumvented and there are so few inspectors that unless there is a blatant violation of law or many complaints, dishonesty is rarely discovered.

Even though there are state and local consumer protection agencies, as well as dozens of foundations and private organizations (such as Consumer Reports – see below), it is far too easy to bend the law, to use misdirection, exaggeration, testimonials, or any of the dozens of semi-legal techniques to fool consumers.

And warnings do not reach the people that most need them. We are so used to advertising that we simply let them filter into our brains without any question. Every day the ten organizations listed below, and hundreds of others (including Slightly Creaky), pass alerts on to consumers. Yet such things do not sell newspapers. Consumer warnings rarely make it into TV or Radio news as these companies depend on advertising for their existence. Would they run an ad for Direct Buy (for example), collecting millions in revenue, and then have news article that there are questions about this company’s honesty?

For over two years I have been trying to get organizations in my community to let me speak to the public about advertising scams, yet only two places welcomed my overtures, and only five people signed up to attend. Are people uninterested in protecting what they have worked so hard to earn? Do they simply not care? Are they too busy watching television (and viewing advertising) to find out how they are being scammed of thousands of dollars a year?

The folks here at Slightly Creaky are at a loss to explain this apathy. If you have any thoughts or suggestions, please let us know at suggestions@slightlycreaky.com. We will post the best of these comments in a future blog.

Obviously those people who are reading this are interested in consumer fraud and misleading advertising, and probably wish to know more about this. Our weekly posts can only touch the surface and provide generalities. You can bookmark these ten web sites and visit them occasionally to get the latest consumer protection information:

Slightly Creaky’s Consumer Assistance Links: http://www.slightlycreaky.com/scams.html#ConAssist

Consumer Reports: http://www.consumerreports.org/cro/index.htm

Better Business Bureau: http://www.bbb.org/us/

Scam Busters: http://www.scambusters.org/

Scam.com: http://www.scam.com/

Federal Citizen Information Center: http://www.pueblo.gsa.gov/scamsdesc.htm

Federal Reserve Consumer Information: http://www.frbsf.org/publications/consumer/fraud.html

ScamBlog: http://www.scamdex.com/ScamBlog/

QuackWatch: http://www.quackwatch.org/

Hot Scams: http://www.hotscams.com/

Consumer Safety & Awareness Part 26

2009-07-06T06:43:00.000-07:00

Internet Service Scams

(This morning one of the Slightly Creaky e-mail accounts received over 200 Mailer Daemon rejections. Obviously the account had been hacked and used to send out spam. We deleted the mail, checked the accounts, changed passwords, then called up our web company. They could not find any trace of this e-mail, nor did it show up on their secure server. We are still working with them to trace the senders and resolve the issue.)

Most likely you have heard about Internet attacks on computers. They can take several forms, but all can be devastating. There are hundreds of sites online dedicated to computer risks. One of the most complete, yet hardest to understand, is Computer Knowledge. I have borrowed some definitions from them so that you can be more aware of the types of problems that can occur when you use the Internet. Most good anti-virus software will protect you from these, especially if you maintain the program’s automatic upgrade subscription.

a) A Dialer is a program that will use the computer's modem to dial various phone numbers. The purpose of this unauthorized dialing can vary but usually is to activate premium cost phone numbers that will show up on the infected user's phone bill or to access pornographic material.
b) Worms and viruses spread by themselves; a worm spreading by itself and a virus typically needing a host to carry it. Some worms/viruses will also carry a Trojan, making the distinction even more of a gray area.
A worm will be designed to take advantage of some known vulnerability in the operating system. Many of these will open a backdoor to the computer so other programs can be inserted or commands can be given to your computer to perform tasks you probably would not want it performing (e.g., sending bulk spam e-mails).
c) A rootkit is basically stealthed malware. Rootkits are programs that typically replace kernel programs and DLL files with improper programming. Since it's a system file that has been replaced it's much easier to mask and hide these features from anti-virus software. One major company included a rootkit in its software on purpose. If you attempted to copy their software, legally or illegally, it messed with your system. Lawsuits resulted.
d) A Trojan is a program that runs on a computer as part of or in addition to another program that an infected computer's user is running. Trojans have various functions; some attempt to download and install other infections, some download and show advertisements, some log keystrokes and send that information to locations where the user’s names and passwords are used for unethical purposes. Other Trojans open backdoors into the infected computer so that unethical people can use the infected computers to send out spam. A few Trojans are particularly malicious and attempt to disable the infected system and make data on it unavailable to its owner

No matter which of these infect a computer, the result will be unexpected and possibly unknown theft of either service or identity. It is important to use the latest anti-virus programs, updated, to protect a machine. A firewall, in addition to whatever the Internet Service Provider is using, should shut off any access from the outside. Other protection packages can reduce the risk of getting adware, pop-ups, and other unwanted programs that, at a minimum, will slow your computer down.

If you have ever had a computer malfunction, and contacted the company you purchased it from, they may have asked for your IP number and permission to gain Internet access directly to your computer. Using this technique, which we might consider legal hacking, the company’s technician can examine your setting, find out what is wrong, and possibly even remotely fix it. Imagine what a person with evil intent might do.

If your computer has been infected, you may become subject to theft of service, as the attackers can then use your computer as the base of spam-mail attacks. If federal agents trace such attacks, they will land up at your infected machine, not the scammers. Even more frightening, if you operate a business or make financial transactions from this infected machine, the hacker may be able to learn your identity and security information.

People also operate web sites from their home computers. Infected machines open the door to hackers to access those websites. At minimum they can maliciously alter or disable the site. It is possible that they can create a direct resender so that people attempting to access the site you operate land up at a scam location or pornographic page. If your web site has items for sale or other financial transactions taking place on it, the hackers can intercept them and take the credit card numbers and other information for their own use.

Thus, the more you use your computer for Internet interaction, the more you need to be aware of what is happening at your site. Many people build something then rarely return to it. Check the site you developed daily. Use whatever protection your web support and service companies provide. You may even wish to invest in a monthly or yearly subscription protection anti-virus plan. Do not just purchase one based on an ad, though. Use what your ISP recommends as best for your circumstance.

Consumer Safety & Awareness Part 25

2009-06-29T04:43:00.000-07:00

Identity Theft Insurance

One of the most misleading, overpriced services available to consumers is insurance for identity theft. Several companies offer them, and they are certainly not worth it. They do nothing to repair your credit, only provide financial insurance in case someone steals your financial information. You are generally covered by your credit card companies and bank accounts, so additional insurance is not needed.

In the case of identity theft, the problem is not so much financial loss as it time of recovery. It may take months to convince the banks and credit card companies to release your account back to you, and whether you are insured or not, your credit rating will suffer. Go to the web sites of these companies and you’ll see comparison charts. Like automotive commercials comparing one car to another, each insurance company only lists the features in which they will be superior. If they do not match up to other companies their chart will not include that item. Thus they look good, no matter what quality of service they provide.

Privacy Rights Clearinghouse, often quoted by not only these insurance companies but others in the field, states:

“Generally, credit monitoring services cannot protect against the five kinds of fraud which we will describe below. Some more comprehensive services may be able to provide limited protection against these other types of fraud. Generally, services that claim to provide more comprehensive protection monitor online chat rooms, blogs, and news sources to look for evidence of criminal activity. However, there is no assurance that a particular fraudulent activity will become the subject of an online discussion. The ability of such enhanced services to protect you from fraud is as yet unproven. Clearly there is a tremendous amount of fraudulent activity that does not get discussed online.

In our opinion, most identity theft monitoring services are unable to provide anything close to complete protection for the following kinds of unlawful activity:

a) Existing account fraud occurs when an imposter uses your current accounts to commit fraud. For example, an imposter could use your credit card account number to make a purchase from an online vendor, or your bank account number to make a withdrawal. This is also referred to as “account takeover” fraud. You generally learn of such fraud by carefully reviewing your monthly account statements.

b) Debit or check card fraud occurs when an imposter uses your debit card or check card (or the information from your card) to remove money from your bank account. The imposter does not need to know your PIN because he or she will be able to use the card for an “off-line transaction.”

c) Social Security number fraud occurs when an imposter uses your SSN to obtain employment, for tax reporting purposes, or for other illegal transactions. For example, an undocumented worker might use your Social Security number to obtain employment or an imposter might use your SSN to avoid paying taxes on their income.

d) Criminal identity theft occurs when an imposter gives another person's name and personal information (or counterfeit documents) to a law enforcement officer during an arrest. Frequently, the imposter fraudulently obtained a driver's license in the victim's name and provides that identification document to law enforcement. Or the imposter, without showing any photo identification, uses the name of a friend or relative.

In many cases, the imposter is cited for a traffic violation or for a misdemeanor violation and is immediately released from the arrest. If the imposter then does not appear in court at the appointed date, a warrant of arrest will be issued under the victim's name. If at a later date the victim is stopped for, say, a traffic violation, he or she may be arrested because of the outstanding bench warrant.

e) Identity theft involving one’s health information (medical identity theft) occurs when an imposter uses an individual’s name and/or other information (often insurance information) to obtain or make false claims for medical goods or services. Medical identity theft may result in erroneous entries being entered into an existing medical record, or the creation of fictitious medical records in the victim’s name.

This potentially can have fatal consequences for the victim. For example, in an emergency room setting, the victim may be unconscious at the time of treatment. If the victim’s medical record reflects the imposter’s blood type, allergies, medications, or other medical conditions, health care providers may make dangerous errors.

For detailed information about identity theft, how to minimize the likelihood of becoming a victim, and ways to fix such problems without paying for expensive insurance, visit the Privacy Rights Clearinghouse at http://www.privacyrights.org/fs/fs33-CreditMonitoring.htm

Consumer Safety & Awareness Part 24

2009-06-23T04:59:00.000-07:00

Refusal to Pay

In a slightly less traditional sense, theft of services results when a customer refuses to pay for a service performed. This can happen in many instances from the use a professional such as a co-writer or lawyer to a medical situation. Although it would be unusual for someone to receive health services without first providing proof, at minimum, of identity, it does happen.

If you are a business owner, anyone who uses what you provide without paying is guilty of either theft of service or product thievery. Individuals can be victims as well if they ever provide assistance to someone with the expectation of receiving anything in return and are then not paid.

For example, the Texas District Attorney’s office reported the following incidents:

a) Lady takes her sick cat to the Vet but later never pays the vet bill.
b) Parent takes kid to day care but fails to pay bill for several months of day care services.
c) Man with no insurance goes to dentist for teeth cleaning, gets teeth cleaned, then fails to pay dentist bill.
d) Lady gets car repaired by mechanic at auto garage and fails to pay bill.
e) An attorney went to pickup a saddle he was having reworked. He took the saddle out to his truck to "get his checkbook". The lawyer then got in his truck and drove off without paying for the saddle. When the saddle maker called the police and they contacted the attorney, the attorney claimed the saddle maker owed him some legal fees for "advice given at the saddle shop". The lawyer even prepared a bill that same date for his services and put it under the saddle maker’s door. The sad thing is this lawyer does this to people all of the time.

While each situation has to be judged individually, after studying a number of such cases, these District Attorney’s came to a conclusion:

“The answer is always: what can you prove was the intent? If you can prove the drawer of the check did not intend to transfer the money by check (i.e., he knew he was going to put a stop payment regardless of the completion of the work), then you have a theft.

The stop payment is merely the camouflage. It may or may not be legitimate. You still have to prove what was in the mind of the drawer when the service was done. So, you obtain a statement explaining the stop payment. You look to see if the person has done this before (a history of 30 stop payments might be a clue).

You know that most of the elements are proven. The only element of them in doubt is the intent to deprive, which must be formed at or before the service was provided.”

A search on the Internet shows some examples of this problem:

a) A pilot was arraigned on three felony counts of theft of services after being accused of cheating an aviation company of more than $80,000 for chartering three private flights using a false credit card.
b) An investigation revealed a man illegally gained access to a local Internet service provider’s network and was selling that access to his customers. This illegal company has been in business for approximately two years.
c) In several cases in at least three states, after prostitutes charged men with rape when they did not pay for services given, the judges or prosecutors changed the charges to theft of services.
d) An actor was arrested after he refused to pay for an assessment on property he was interested in purchasing.
e) A municipal supervisor was convicted of having other county workers do repairs on his house while they were on county time.
f) Two men were prosecuted for arranging the phony rental of construction equipment. One was a worker at the rental company; the other was a contractor. Forging papers together, the contractor used rental equipment on his projects without paying for them.
g) A truck driver used inactive license plate on his trailers and went through the E-ZPass machines without paying for the tolls. His evasion on $4,748 in highway tolls in one state resulted in almost $30,000 in penalties. This included 633 violations in one year.

I once worked for an organization that promised me $500 a week for 20 hours of Internet development and organizational development. After ten weeks, having only received $100, I informed them that I expected to be paid what was owed. Eventually I took them to small claims court where I was granted what was owed, but since the organization dissolved was never able to collect, although the situation is still pending.

Consumer Safety & Awareness Part 23

2009-06-15T03:42:00.000-07:00

Theft of Services -- Part 2

(Continued from last week)

To attack the growing problem of cable service theft, the District of Colombia enacted this law: “No person shall:

a) Obtain, intercept or receive, or attempt to obtain, intercept or receive cable television services from a cable television company by device, converter, decoder, trick, artifice, deception or other means with the intent or purpose to deprive such company of an or all lawful compensation for rendering each type of service obtained;

b) Assist or instruct any other person or persons in obtaining, intercepting or receiving, or attempting to obtain, intercept or receive any cable television service, by any means whatsoever, without payment of all lawful compensation to the cable television company for rendering each type of service obtained;

c) Make or maintain a connection or connections, whether physical, electrical, mechanical, acoustical or by other means, tamper with or otherwise interfere with any cables, wires, components, modems, lock boxes, pedestals, or other devices or equipment of the cable television company used for the distribution of cable television service, with the intent or purpose to deprive such company of any or all lawful compensation, and without express authority from the cable television company;

d) Make or maintain any modification or alteration to any device, equipment or apparatus or remove, disconnect or sell any device, equipment or apparatus installed by the cable television company without the authorization of a cable television company for the purpose of intercepting, descrambling, decoding or receiving any program or other service carried by such company which such person is not authorized by such company to receive, or for the purpose of selling any such device, equipment, or apparatus; or

e) Make, manufacture, import into the District of Columbia, assemble, transfer, distribute, promote, sell, lease, lend, offer, own, possess, or possess for sale, advertise or publish for sale or lease any device, equipment or apparatus, or any instructions, information, plan or kit for such device, equipment or apparatus, or for a printed circuit designed in whole or in part to intercept, decode, descramble or otherwise make intelligible any encoded, encrypted, scrambled or other nonstandard signal distributed by a cable television company.”

Other states have similar laws. Although they are hard to detect, service companies have been fighting back by installing devices that detect usage surges and that can monitor the number of televisions or computers attached through individual houses and apartments. The companies are keeping their detection methods confidential so that they can maintain an edge over those who wish to overcome such safeguards.

Consumer Safety & Awareness Part 22

2009-06-08T04:00:00.000-07:00

Theft of Services -- Part 1

Traditional Service Theft

Traditionally, “theft of service” meant obtaining a utility without paying for it. Thus if you illegally wired your television into a cable company, tampered with your electric or gas meter, or used a slug in a pay phone, you were subject to both civil and criminal charges. Today, with the Internet and other technology, the term can be expanded.

ComCast, which provides television, telephone, and Internet services, warns users, “Any unauthorized person who intercepts or receives communications provided over a cable system may be penalized under the Cable Communication Policy Act of 1984 [47 C.F.R. 553(c)]. This includes the theft of audio, video, textual data, and any other service. The law applies to manufacturers and distributors of equipment as well as to individuals. Parties found guilty of cable theft are subject to both civil and criminal penalties, which may include substantial fines and/or time in prison.”

Time Warner Cable explains it this way, “Theft of cable services is the reception of any services offered over a cable system without paying for the system. Cable theft is a widespread problem that results in revenue losses to the cable industry totaling several billions of dollars per year. By depriving cable operators of substantial revenue, people who steal cable adversely affect cable companies' ability to provide their customers with high quality products and services.”

New York State Law, as an example, specifically says that, in cases of tampering with gas meters for the purpose of reducing or escaping charges the culprit’s liability, “shall include, but not be limited to, the cost of investigating, repairing and replacing meters and pipes, and the cost of moving a meter and installing it in a secure location.”

Central Hudson Gas & Electric reports, “Our field representatives undergo regular training to recognize and report theft of service, and are active in seeking suspected cases during their daily tasks. Lost or unrecovered revenue can raise the cost of service to the vast majority of honest customers who legally receive and pay for their service.” During 2006, Central Hudson has recovered $160,000 from individuals attempting to steal electricity and natural gas through overt or fraudulent means.”

During the last three years people have been arrested and prosecuted for many types of such actions. Here are a few examples:

a) In Texas, a man illegally connected his mobile home to municipal water. He was fined $10,000.
b) In Florida, a person sitting in a car outside a private house was arrested for tapping into and using the homeowner’s WiFi connection.
c) In the state of Washington, a man parked his van outside a coffee shop to use their WiFi. After several warnings he, too was arrested under the theft of service laws.
d) In October, 2007, the first federal case involving downloading music by Internet without paying for it resulted in a $222,000 fine for a woman in Minnesota. There have been hundreds of civil cases won against people who download music without paying for it.
e) In Europe, people who violate intellectual property laws by Internet downloading can be fined, jailed, or both. It is not unusual for the conviction to include forfeiture of the computer involved and all peripherals.
f) In Japan a man who ran an extension cord from a neighbor’s house to power a rice steamer was arrested
g) In Guyana, South America, over 100 people were arrested in one week for theft of electricity.
h) The Baltimore Sun reports a 32-year-old man was, “arrested and accused of using electricity from a neighbor's house to power his computer. He was powering his computer through an electrical cord plugged into his neighbor's exterior outlet, police said. He was charged with fourth-degree burglary, theft of electrical service and trespassing.”
i) In India, seven people were arrested for tapping into other people’s telephone lines to call friends and relatives living in the United States,

To attack the growing problem of cable service theft, the District of Colombia enacted this law: “No person shall:
a) Obtain, intercept or receive, or attempt to obtain, intercept or receive cable television services from a cable television company by device, converter, decoder, trick, artifice, deception or other means with the intent or purpose to deprive such company of an or all lawful compensation for rendering each type of service obtained;
b) Assist or instruct any other person or persons in obtaining, intercepting or receiving, or attempting to obtain, intercept or receive any cable television service, by any means whatsoever, without payment of all lawful compensation to the cable television company for rendering each type of service obtained;
c) Make or maintain a connection or connections, whether physical, electrical, mechanical, acoustical or by other means, tamper with or otherwise interfere with any cables, wires, components, modems, lock boxes, pedestals, or other devices or equipment of the cable television company used for the distribution of cable television service, with the intent or purpose to deprive such company of any or all lawful compensation, and without express authority from the cable television company;
d) Make or maintain any modification or alteration to any device, equipment or apparatus or remove, disconnect or sell any device, equipment or apparatus installed by the cable television company without the authorization of a cable television company for the purpose of intercepting, descrambling, decoding or receiving any program or other service carried by such company which such person is not authorized by such company to receive, or for the purpose of selling any such device, equipment, or apparatus; or
e) Make, manufacture, import into the District of Columbia, assemble, transfer, distribute, promote, sell, lease, lend, offer, own, possess, or possess for sale, advertise or publish for sale or lease any device, equipment or apparatus, or any instructions, information, plan or kit for such device, equipment or apparatus, or for a printed circuit designed in whole or in part to intercept, decode, descramble or otherwise make intelligible any encoded, encrypted, scrambled or other nonstandard signal distributed by a cable television company.”

Other states have similar laws. Although they are hard to detect, service companies have been fighting back by installing devices that detect usage surges and that can monitor the number of televisions or computers attached through individual houses and apartments. The companies are keeping their detection methods confidential so that they can maintain an edge over those who wish to overcome such safeguards.

Consumer Safety & Awareness Part 21

2009-06-04T04:10:00.000-07:00

Advance Fee Check Scams

In an advance fee-checking scheme, you receive money that you either did not expect or more than you expected. In all cases it is something that has to be cashed such as a check, money order, or traveler’s check. Usually it is made out to you, but occasionally it is already signed and you have to cosign it before it can be cashed. The sender wants you to keep part, perhaps a substantial part, of the check and send the rest to him or someone else.

The item is either counterfeit, stolen, or otherwise not usable. It is good enough for the initial deposit, so that you can get the money, but eventually turns out to be bad. You are then out the money you sent, and have to reimburse the bank. In addition, there is almost always bounced check fees as well as paperwork to explain what happened. Usually the banks ask the police to get a statement. On occasion, the person who cashed the check is jailed. As this scam is getting wider recognition, though, that has become a less likely possibility.

Here are a few examples from Internet sources:

A fake check scam visited a woman in Greeneville, TN when she posted her resume at Craigslist. Soon after, a job offer came knocking on her doors. The offer was from a company that described itself as a ‘work at home’ firm. It said she was selected and also had her first assignment ready. It sent her a check for $3,800.35 together with some instructions.

She was asked to cash the check at her local bank; 10% of the money was hers to keep. She was asked to forward the rest to a woman in Knoxville. She was specifically instructed to use the Western Union wire transfer service to send the money.
The young lady became suspicious and decided to dig deeper. She contacted a branch of the bank that seemed to have issued the check. Officials at the bank told her the account against which the check was issued was a fake and did not exist. This meant she would have been scammed of any money she would have sent after cashing the check.

Another woman was contacted by fraudsters after finding her name at Michigan Talent Bank, an online job site. She was offered a job for performing online work. Since it was an Internet based work, the company said that she would require a computer and an Internet connection at home. However, the company was ready to pay for the computer. It sent her five money orders of $500 each and asked her to cash them at any local bank. Then she was directed to send $2000 from this amount to a vendor who would send the computer to her house after receiving it. She was told that she could keep the remaining $500.

The lady would have been scammed of $2000 if she had sent the money as directed. Some alert employees at her local bank were able to determine immediately that the checks were forged.

There were a couple of things that the lady probably missed and which would have alerted her to the scam early. Firstly, the exercise of asking her to cash company checks and then send some money out of it seems questionable. Why was the company asking her to do it, when it was simpler to do so, on its own? Then, the fact that it was appointing her without conducting an interview should also raise doubts.

If you sell items using online classifieds, beware, this could happen to you too. Two separate incidents from Craven County should alert you to a particular risk involved while selling online by this means.

A woman was trying to sell items on Craigslist for $200 that were sold to a buyer who sent a check for $3,250. This was followed by an e-mail explaining that the check was a mistake as it was posted to the wrong person by the buyer’s accountant. The scammer asked her to accept the check as payment and send back the balance as a return check. Furthermore, he apologized for the trouble and even urged her to help herself to a tip of $50 more for all the hardships.

She did not fall for the scam. In fact she did not even bother depositing the check. She believed the check was made on a common computer printer. She promptly reported the matter to the Sheriff.

The owner of a horse farm in Illinois, placed an ad to sell one of her mares. She then received this curious e-mail (spelling is as in original): “My name is Keth. My client is in terested in buying it. I would like to know the last cost price so that I can proceed further on this, meanwhile my client pay with cashier cheque. Best regards, Mark”
The woman, who’d seen scams before, thought she might play along for fun. Here was her reply. “I’m confused. Is your name Keth or Mark? Anyway, my price on the mare is $1,500. Please let me know if you are interested.”

In no time she received this response. “The price is okay by me, and I want you to know that I have a client who is owing me $6000. I will instruct him to issue you a cheque on my behalf. As soon as the cheque gets to you, I want you to go and cash it immediately and send down my balance through Western Union to my shipping agent. My name is Mark.”

In an attempt to see where Mark was going with his proposal, she wrote him that she would accept only a money order. Mark, who obviously was not a spelling-bee winner, replied. “Thanks for you have instrunct most of my associate about the money order, but they told me they can only pay buy caher chek so don’t worry I will instruct him to issue you 100 percent cather cheque.”

Sure enough, she eventually received a cashier’s check in the amount of $6,000. But she wasn’t naive enough to cash it and forward the proceeds to Mark. First, she called the bank and verified that the check was a counterfeit. Then she sent Mark an e-mail telling him that she’d cashed the check and forwarded the proceeds per his instructions, supplying him with phony Western Union wire transfer information. After Mark made several unsuccessful attempts at collecting his nonexistent funds, she burst his bubble.

“Mark, the check you sent me is no good. You need to get ahold of your client and tell them to have money in the bank next time. I have spent a lot of time with you in this transaction and I would appreciate your still buying the horse.”

It came as no surprise that she never heard from Mark again. In reality Mark wasn’t interested in the horse at all. He simply was trying to get her to cash a phony cashier’s check and send him money.

Microsoft has these seven telltale signs of a scam:
1. You don't know the person who has sent you the message.
2. You are promised untold sums of money for little or no effort on your part.
3. You are asked to provide money up front for questionable activities, a processing fee, or to pay the cost of expediting the process.
4. You are asked to provide your bank account number or other personal financial information, even if the sender offers to deposit money into it.
5. The request contains a sense of urgency.
6. The sender repeatedly requests confidentiality.
7. The sender offers to send you photocopies of government certificates, banking information, or other "evidence" that their activity is legitimate (these are fake).

Consumer Safety & Awareness Part 20

2009-05-26T13:01:00.000-07:00

(Continued from last week)

Examples of Advance Fee Scams (part 2)

Here is an actual example of such scam as reported on 914Legal.org.

“Last month, hundreds of internet users from places right across the US were done in by a scam perpetrated by a company calling itself The Fairway Lending Group. The company gave a false address and claimed to be operating out of 1699, Wall St., Mt. Prospect. It was careful to leave out local residents. The scam would have blown apart if any of the locals had found out that it was not occupying the said premises.
The company was especially targeting those with a poor credit rating. It offered a loan that was actually a scam molded on the advance fee type of scams.

The scam started when people responded to mails from the company that promised them easy loans. They were then asked for their bank account details presumably for processing of the loan request. The victims were next asked to make a payment as collateral for the loan. They were asked to make the payments through Western Union money transfer. The amount people paid ranged from $900 to $5000.

Users should have been warned when asked to pay any amount upfront before receiving a loan. Such loan schemes are actually banned in the US and in Canada. Any such loan offer would be illegal if offered in the first place.

Apart from money lost, the victims in this case, might also be exposed to identity theft, having revealed their bank account details to the fraudsters. The thing for them to do would be to either close the account or to give instruction to the bank if possible to temporarily suspend it.

As of now, there is no trace of the company. Local authorities claim to have no clue about their whereabouts. Being an Internet based scam, the fraudsters found it easy to hoodwink the police by covering their tracks.

Seeing an increase in scams, the Federal Deposit Insurance Corporation provides warning signs that may indicate a loan offer is not legitimate:
The loan approval is "guaranteed." Lenders do not typically guarantee loans before analyzing the applicant's financial condition, credit history and ability to repay.
The loan applicant is required to pay upfront fees to a third party or individual. Loan fees are normally paid to a business after the loan has been approved.
The lender or loan processor may be located outside of the United States.
Fees are requested using a retail wire transfer system. A password is sometimes used by the overseas receiver to pick up the funds in an attempt to hide the true identity of the criminals and make funds more difficult to trace.

Occasionally you have no idea you are paying anything. Ads may include phone numbers that generate telephone fees added to your phone bill. Some online sites require downloads that include a virus. It switches your Internet Service provider from what you are using to theirs, usually located overseas with huge fees.

Growing in popularity are death threat reports. Someone has hired a “hit” on you and the person who accepted the contract will not follow through if you pay him.

People outside the United States have to be aware of scams stating that the company can get people into this country. They provide employment offers in the US, targeted to people specifically living in India, although other places may be involved. These jobs have come from a variety of sources, but are usually traced or linked to a company based in the United States, that are information technology consultants, contractors or simply a specialist employment agency. These companies have clearly stated that they will "assist" or even outright claimed that they will "obtain" the necessary working permit visas on behalf of the proposed employee. Of cause, upfront fees are needed.

In some cases, the scammers ask that the person come to the foreign country directly to handle the transaction in person. The US Department of States warns: Over the past 3 years, 15 foreign businessmen (one American) have been murdered in Nigeria in AFF scams. Since September 1995, at least eight Americans have been held against their will by these criminals in Lagos that have come to the attention of the U.S. Embassy. In 1996 the U.S. Embassy helped repatriate ten Americans who came to Lagos looking for their “pot of gold.”

Consumer Safety & Awareness Part 19

2009-05-09T04:49:00.000-07:00

Examples of Advance Fee Scams

In order to recognize the many varieties and ever changing advance fee scams, one needs to study many examples. Con artists spend considerable time creating new, innovative schemes to trick us. They mask their techniques and hide their intent carefully.

In the previous section we looked at the typical Nigerian 419 scams that included promising something for a fee paid in advance, an inheritance, found money, stolen goods, ATM cards, and traveler checks. Other 419 scams, all requiring you to pay for something in advance and usually involve a wealthy investor who wants to invest in a large sum of money in a foreign country, but can't attend to the business personally. Wouldn't you care to do them the favor of overseeing the investment?

A fortunate person has gotten a large quantity of a commodity, oil, gold, or diamonds for example, but cannot move them from their storage facility without the help of a foreign investor. If you would only pay some fee, bribes, or other expense, he will let you keep a very generous percentage of the commodities' market value once they have been sold.

A business places a relatively small legitimate order from your company, usually under $1,000 worth of goods. Thereafter, another order is placed, for a slightly larger amount, again, paid in full. Suddenly, an urgent order and much larger is placed, but this one needs to be air freighted on the double! Your trade partner has just received a lucrative contract, and if this shipment arrives on time, it means many more large orders in the near future. Don't worry about waiting until the bank draft clears, after all, the order is from a trustworthy company that has always made payments before.

You receive an e-mail from a U.S. Special Forces commando who has found millions in drug money while conducting a covert mission against the Taliban. The "commando" says he has stashed the cash in luggage, but wants to keep it in someone else's bank account "for safekeeping."

The National Fraud Information Center reports a scam artist who used dating websites, including sites for gays. She pretended to be the daughter of a slain African gold mine executive seeking a long-term relationship with a special someone. Phony Web sites, which look quite realistic, may contain plenty of investor information, often copied from the sites of legitimate regulators. The sites are one of the many ploys used in advance fee scams that try to get investors to send money in advance of any service rendered. These fake sites often use "cookies" to track visitors and gather information.

Taking advantage of recent health scares, one advance fee ploy involves the discovery of a vaccine or other preventatives that can not only save millions of lives but will also generate considerable money. The inventor needs financial support to distribute, market, or manufacture his cure. A twist on this one is the sale of stock in such a company. Stock is not sold by e-mail. If you are actively advertising real estate for sale, you may receive an offer to purchase your property from a foreign concern. The catch: You are required to pay up-front fees to a “special broker.” Once paid, you cannot locate this special broker to consummate the purchase.

Almost all of these schemes have five common features – something of great value exists, there is a pressing time issue, it comes from out of the country, assistance is needed, you can not tell anyone else, and advanced payment is required to free up the item of value. Until 2007, more than 50% of these originated in Nigeria, but now they can come from anywhere. In many cases similar versions even have local, United States or Canada, origins.

Many domestic advance fee scams are financial in nature and prey on people with poor credit history or current money flow problems such as late payment of mortgages or loans. They promise low cost loans, debt consolidation, improved credit scores, or other solutions to financial problems. All of them require a fee for processing, credit evaluation, good faith, or other improbable reason.

Occasionally, yet growing more common, the scammers do not ask for any money at all, but need information to verify your credibility. These are identity theft scams. Never send anyone your bank or investment numbers, or even let others know where you invest. Your social security number must be sacred – only medical and valid insurance people need this. If you have an investment that produces dividends or interest, the company needs your social security number for their IRS reports, but deal only with such institutions in person.

(To be continued next week)

Consumer Safety & Awareness Part 18

2009-05-01T03:54:00.000-07:00

How Advance Fee Scams Operate

Poor Nigeria. It seems that this country frequently gets blamed as being the center of Internet scams. That’s because the Advance Fee fraud originated, or at least was perfected there. In addition, the Nigerian government seems to protect fraudulent activities and does not prosecute scammers when they are discovered. Now-a-days these types of scams can originate anywhere, including the United States and Canada.

According to UltraScan, a global investigations group, the Nigerian Advance fee scam, also called the 419 scam, is the world’s must successful fraud, costing people worldwide over $32 billion. More than 300,000 people have fallen for this, with more buying in every day.

Since it is so widely publicized, why does it continue to be so successful? Because people want to believe, and because people are greedy. There are more than 100 variations on this scam, so they may be hard to spot at first, but all of them call for the mark to pay upfront before getting the thing of value.

NextWeb Security has a huge list of such scams – here is a sample:

In the original scam, of which new variations are generated daily, the 419 scammer has or can gain access to a large sum of money by some means and he needs the financial and personal help of the target, in return for a percentage of the funds, to get the necessary transactions processed and get monies out of the country. As in all advance fee frauds, the mark has to send money prior to obtaining any benefit. Once the funds are transferred, either you do not hear from the scammer again or he has excuses to ask for additional sums.

The ATM Card Payment Scam is used in conjunction with other scams, such as a fake Lottery Scam. The victim is promised an ATM card with which the victim can withdraw millions of dollars (up to a large limit per day) at any location that accepts ATM cards. However, the victim must pay a fee to receive the card. If it ever is received, it will not work. A "Replacement card" will then be offered, again for a fee.

In the Black Currency scam the 419er has a large amount of currency available to share with the target, but the currency has been defaced. However, the currency can be cleaned if the target will purchase enough of the correct cleaning solution. Guess who has it for sale?

In one of the original 419 frauds, the scammer has Cashier's Checks or money orders he needs cashed, and the target can keep a percentage of the check as his commission for cashing it and forwarding the remaining proceeds to the 419er. The original check or money order sent to the target eventually bounces. The target is out both the money advanced to the 419er and the amount owed to the bank. The target must also pay any overdrafts and any relevant fees. On occasion the victim lands up in jail for bank fraud.

Charities are not safe. The 419er approaches a charitable organization with a request for help, usually about getting a large sum of money transferred out of a country in which the charitable organization operates. A percentage of the proceeds are often offered to the charitable organization for their assistance. The 419er needs the charity’s money for fees in order to get the monies freed up.

In a job scam, the 419er "employs" the target to process financial transactions for a commission and has the target advance the net proceeds of these transactions to the scammer before the checks sent to the target bounce.

If you run a business, beware of the scam in which goods or services are ordered in advance, on credit. Then the scammer does not pay or pays with a bad check.

In the romance scam, the 419 meets the target online in a chat room or through a dating or instant messenger online service, befriends the target, and gets the target to advance him money for various reasons.

Greedy people often fall for the inheritance scam. Someone has died with no relatives to claim the large cash bequest left by the deceased. Often, the 419er says that if someone does not claim the money it will revert to the Government and no one will get it. The target is asked to "stand in" as a relative to claim the money, with the 419er taking care of all the details, and then they can split the proceeds. The scammer needs up-front money for fees to get the target declared the rightful inheritor.

In another action that can get the victim in legal trouble, the 419er will obtain stolen merchandise for personal use or to sell. Because many companies will not send merchandise to Nigeria or Eastern Europe due to warnings about stolen credit card purchases, the scammer must find an in-country person to receive then reship the goods.

Scammers all around the world use similar techniques. We frequently hear of “gypsy-type” contractors offering to do repairs on a home at low cost. They may be willing to resurface or blacktop your driveway for half the expected price. Once you agree, they unload some supplies from their truck, and then ask for advanced payment to get additional supplies. Since they have material set out, you agree, perhaps giving $120 for five buckets of blacktopping. They drive off to get it and you never see them again. You are left with useless garbage on your lawn.

This type of scam also applies to roofing, carpentry, and other odd jobs. Some contractors ask for money up front, then do a shoddy job, or start and never finish. It may take years and lots of legal fees to get back even part of what you paid them.

Online auctions use advance fee techniques, purchasing items and never paying for them or selling items and never sending them once they receive the money. In some cases you do get poor quality or out-of-date products.

No matter whether it is through e-mail, a telephone call, or an in-person visit, never pay anyone prior to start of work. Honest contractors may reasonably ask for a small percentage, and more to cover their expenses as the work progresses. Never get a bank load, pay a worker, because if he disappears, you are left owing the bank the amount of the loan.

Consumer Safety & Awareness Part 17

2009-04-20T04:42:00.000-07:00

Advance Fee Scams: Introduction

One of the most common illegal schemes is called the “advanced-fee” scam. It involves getting payment or a product before giving anything of value, then disappearing. There are two main formats, the simple get-the-fee-and-run technique, and the counterfeit rebate scheme. The second, originally a “Nigerian 419” scheme, revolves around receiving a check, depositing it, and sending part of the amount to the scammer. The check is stolen or counterfeit. We will look at this in depth later.

Advanced fee schemes can arrive in the mail, by e-mail, through phone solicitations, personal visits, in newspaper and magazine ads, and even through paid television and radio commercials. They can earn the scammers enough to quickly pay for their upfront fees, generate a nice profit, and provide them with get-away cash. They know how to cover their tracks well.

All such scams are uninvited. You do not contact them, they contact you. The mass mailing available to Internet spammers provides a perfect venue. Let’s start off by analyzing an actual e-mail that people have received.

AWARD NOTIFICATION: FINAL NOTICE

Attn: Winner,

We are pleased to inform you of the lottery result winners of Australian International Lottery Programmes held on the 30th of July 2007 from the Australian International Lottery programme. Which is fully based on an electronic selection of winners using their e-mail addresses. Your name was attached to ticket number; 675061725 9356460902 Serial Number 67749137002. This batch draws the lucky numbers as follows 2-9-23-35-46 bonus number 14, which consequently won the lottery in the second category. You are here by having been approved a lump sum pay of US$400,000.00 in cash credit file ref: ILP/HW 46704/03 from the total cash prize shared amongst eight lucky winners in this category.

Due to mix up of some numbers and names, you are advised to keep your winning information confidential until your claims has been processed and your money remitted to your nominated bank. This is part of our security protocol to avoid double claims and unwarranted abuse of this programme by some participants. All participants where selected through a computer/mail balloting system drawn from Nine hundred thousand E-mail addresses from Canada, Australia, United States, Asia, Europe, Middle East, Africa and Oceania as part of our international promotions program which is conducted annually. This Lottery was promoted and sponsored by a conglomerate of some multinational companies and also the Australian Government as part of their social responsibility to the citizens in the communities where they have operational base. Further more your details (e-mail address) falls within our European representative office in Amsterdam, Holland, as indicated in your play coupon and your prize of US$400,000.00 will be released to you from our regional branch office. We hope with part of your prize, you will participate in our end of year high stakes for US$2.3 Million international draw.

HOW TO CLAIM YOUR PRIZE: Contact our Claims Office under the African Payment Centre, where your winnings fell.
Contact Person: Mr. Alexzander Evans(RCA) Phone_+234_80 666 70849
Email: agentalex.australianlotto@yahoo.com

TO FILE FOR CLAIM: Please quote your Date of draw, Reference Number, Batch Number and Winning Number, which can be found on the top-left corner of this message. Also, you should give in your telephone number to help locate your file easily. For security reasons, we advice all winners to keep this information confidential from the public until your claim is processed and your prize has been released to you and also to the public. This is part of our security protocol to avoid double claiming and unwarranted taking advantage of this programme by non-participant or unofficial personnel.

Note: All winnings MUST be claimed before the 30th of August 2007: otherwise all funds will be forfeited. Congratulations once again on your winning!

BEST REGARDS,
MR.DANIEL ROMAN
(LOTTERY COORDINATOR)

PLEASE DO NOT REPLY TO THIS EMAIL. CONTACT YOUR CLAIMS AGENT AT:
agentalex.australianlotto@yahoo.com

ANY BREACH OF CONFIDENTIALITY ON THE PART OF WINNERS WILL RESULT TO DISQUALIFICATION.

The catch is that when you call up or write to submit your claim, they ask you to pay a fee or to submit your credit card or bank account number to cover some expenses. It could be taxes, verification of identity, promotional costs, or some seemingly reasonable cause. Payment is usually through a money order, Western Union, or similar method that is not traceable to the actual scammers. They may not ask for gigantic sums. Occasionally, especially if they hope to con thousands, the fees may be a few hundred. They have been known to ask for thousands of dollars at a time.

Let’s analyze this letter.

1. It is called the “Australian International Lottery Programmes.” Google that phrase and you get around 200,000 hits. The first one may say “Congratulations, you have won, this is real.” All the others say that this is a scam. In fact, Goggling the phrase with “scam” after it leads to such sites as Fraud Aid, which contains a list of thousands of names used in scams.

2. “Your name was attached to ticket number; 675061725 9356460902 Serial Number 67749137002. This batch draws the lucky numbers as follows 2-9-23-35-46 bonus number 14” Too much detail. That is a technique scammers use. They believe that people will fall for official-sounding gibberish.

3. “US$400,000.00 in cash credit…from the total cash prize shared amongst eight lucky winners” Multiply that amount by the 8 winners and you get $3.2 million. Are you going to believe that the second place prize was that much?

4. “Due to mix up of some numbers and names, you are advised to keep your winning information confidential until your claims has been processed and your money remitted to your nominated bank.” Three things in this sentence. Any prize that asks you to maintain confidentiality is a scam. No questions about it. Secondly, this is a conglomerate of major corporations and the government. Would they get numbers and names mixed up? Last, they are already leading up to needing your bank account number. You give it to them and they can drain your entire savings.

5. “This is part of our security protocol to avoid double claims and unwarranted abuse of this programme by some participants” There are eight winners. Even if you include the first place and a few hundred minor winners, what are the chances their organization, especially since it was “promoted and sponsored by a conglomerate of some multinational companies and also the Australian Government” will be so disorganized that they cannot keep track of a few names?

6. “Drawn from Nine hundred thousand E-mail addresses from Canada, Australia, United States, Asia, Europe, Middle East, Africa and Oceania.” Why not Mexico and South America?

7. “Further more your details (e-mail address) falls within our European representative office in Amsterdam,” No North American representative? Seems unlikely.

8. “We hope with part of your prize, you will participate in our end of year high stakes for US$2.3 Million international draw.” Heads up! They are going to ask you to send money to play in this drawing before you get your prize. Interesting that their grand annual prize is $2.3 million, yet second place was $3.2 million.

9. “Contact our Claims Office under the African Payment Centre, where your winnings fell. Contact Person: Mr. Alexzander Evans(RCA) Phone_+234_80 666 70849
Email: agentalex.australianlotto@yahoo.com” Wow, there’s a bunch of give-away signs here. Why would someone in the United States, who has a “European representative” have to contact someone in Africa? Let’s Google that phone number. There are only a few results and the first screams “scam.” The second is written in Cyrillic letters, meaning the scam may have originated in a former Soviet Union country. International calling code “234” is Nigeria. Remember what we said earlier about this being a favorite of the “Nigerian 419” scams?

10. “Also, you should give in your telephone number to help locate your file easily.” How can they cross-reference to your telephone number when this was a random drawing using e-mail addresses? They do not have your phone number, but giving it to them will make it easier for them to scam you, or to sell the information to others who can try to trick you.

11. “We advice all winners to keep this information confidential from the public” A second such warning. They know if you tell anyone you will be informed it is a scam.

12. “PLEASE DO NOT REPLY TO THIS EMAIL” Because if you do, you will get a no-such e-mail return. They love using throw-away e-mail addresses. Use it once and then delete it. The same is true for using a “Yahoo,” “G-Mail,” “Hot-Mail,” or any other form of free e-mail service. Your contact is agentalex.australianlotto@yahoo.com. Agent X? And a Yahoo account? You would think that a bona fide lottery would have its own domain.

13. “ANY BREACH OF CONFIDENTIALITY ON THE PART OF WINNERS WILL RESULT TO DISQUALIFICATION” In case you did not catch it the first three times.

This is just an example. There are many other types of advanced-fee scams.

Consumer Safety & Awareness Part 16

2009-04-13T05:06:00.000-07:00

Multi-Level Marketing and the Law -- Part 2

In 2007 a class action lawsuit was brought against both Amway and Quiztar. Amway refused to cooperate because all their distributors have to sign an agreement not to sue them, but rather to submit to binding arbitration. They get to pick the moderator and set the rules. The judgment went against them.

The suit is based on the same charges that the FTC brought against Equinox, SkyBiz and other MLMs that regulators shut down. It states that the Quixtar program – based upon selling products to recruits "for personal use", then authorizing them to recruit others to do the same while requiring them to maintain quota levels of monthly purchases, and then rewarding them in a multi-level compensation system – is a fraud. The suit also attacks Quixtar's infamous "tools" business as a second pyramid scheme perpetrated on new recruits.

Equinox International Corporation, and its founder, William Gouldd, operated a multi-level marketing company that encouraged consumers to become distributors for products including water filters, vitamins, nutritional supplements and skin care items. Equinox distributors ran classified ads in the "help wanted" sections of newspapers, which implied that a salaried position was being offered. Those who responded to the ads were instead given a sales presentation designed to recruit new distributors.

The suit claims that Equinox told potential distributors that they could earn money by selling products or recruiting additional participants but emphasized that the real way to make money is through recruiting, not through sales. New recruits were encouraged to purchase $5,000 worth of products to become a manager, rent desk space for $300 to $500 a month, obtain their own telephone line and attend training seminars that cost between $300 and $1,000. Participants were told that "financial gains were dependent upon the continued successive recruitment of other participants" and that retail sales are not required to make money.

Investigations determined that a very small percentage of distributors actually recoup their expenses. In reality, the majority of participants drop out of the program with little or no earnings despite the defendants' claims that everyone who participates in the program will receive substantial income. The courts closed down the business and ordered over $40 million in restitution.

The United States Postal Inspector made this statement:
Multi-level marketing is a system of selling in which you sign up other people to assist you, and they, in turn, recruit others to help them. Some entrepreneurs have built successful companies on this concept because the main focus of their activities is their product and product sales. However, there are many multi-level distributorship schemes that are nothing more than sophisticated chain letters. They operate as a "pyramid," claiming participants can earn lots of money by concentrating most, if not all, of their efforts on recruiting distributors rather than selling a product.

The success of a pyramid distributorship for each and every distributor depends on continuously getting additional people to join the pyramid. However, there is a practical limit to how many distributors can be found and to how many product units they can sell or use. To protect yourself against falling victim to a multi-level marketing scheme, note whether the basis of the promotion is the sale of a product at the retail level, as opposed to an emphasis on recruiting more and more distributors to help you increase your income.
There is no easy way to wealth. A multi-level marketing scheme is no exception, other than perhaps for the promoter who originates it and receives the large fees from unsuspecting victims.

Before you get involved in any business where you have to sell products to your friends, take the time to read the information at mlmwatch.org. They list governmental legal action against several dozen multi-level marketing companies including Amway, Herbalife, Nu Skin, Nature’s Sunshine, and Oxyfresh. Even Scientology has been classified as an MLM as members get paid for every new recruit they bring in.

The truth is that there are many legal companies that fall into this type of business, and it is possible, with a few of them, to become financially successful, but not without work. More important, from a consumer’s point of view, is that the value of the products they sell tend to be exaggerated or misrepresented.

As we have recommended before, when offered a product from anyone or any company, you should initially turn it down so that you can research it. If the product claims to be a cure, whether called natural, herbal, or scientifically proven, at very least have your doctor check for compatibility with any medication you are already taking. Copy the ingredients from the bottle or jar. If you feel you have a medical need for such a product, have your physician do a blood test to discover if there is a systemic cause for the problem. Often doctors can find inexpensive remedies as opposed to the month-after-month of using an unproven and possibly expensive product.

Before you purchase a perfume, skin cream, nail softener, or other cosmetic product, compare its price to both name brands and store brand products that have similar claims. MLM state their products are less expensive because of no middleman, but they do indeed have a multiple of middlemen, all of whom grab a profit. A truly honest salesperson will let you take the product in to your pharmacist so that you can seek advice.

Consumer Safety & Awareness Part 15

2009-04-06T08:07:00.000-07:00

Multi-Level Marketing and the Law -- Part 1

Multi-Level Marketing makes the owners and the initial first few who join wealthy on top of the backs of those who come after. No matter how they sell it, MLM is economic slavery and thievery. The FTC classifies all multi-level marketing company as pyramid schemes. On May 13, 1998, the Federal Trade Commission stated:

The Commission took its first concerted action against pyramid schemes in the 1970's during a boom in home-based business and MLM or direct selling. One-on-one marketing became common for many consumer items -- from cosmetics to kitchenware, and Tupperware™ parties became an icon of the era. Unfortunately, the rise in legitimate multilevel marketing was accompanied by a surge in pyramid schemes. Those schemes played off the popularity of MLM or network sales but paid more attention to networking than to selling actual goods.

One of the Commission's first cases was In re Koscot Interplanetary which involved a company that offered the opportunity to become a "Beauty Advisor" and sell cosmetics. The company's incentive structure really did not encourage retail sales. Instead, it encouraged people to pay $2000 for the title of "Supervisor" and purchase $5400 in Koscot cosmetics, and then to earn bonuses by recruiting others to make the same investments. The Commission found that Koscot operated an illegal "entrepreneurial chain" and articulated a definition of illegal pyramiding that our agency and the federal courts continue to rely on.

The Commission found that pyramid schemes force participants to pay money in return for two things. First is "the right to sell a product", second is "the right to receive, in return for recruiting other participants into the program, rewards which are unrelated to sale of the product to ultimate users.” The Commission explained that paying bonuses for recruiting: “. . . will encourage both a company and its distributors to pursue that side of the business, to the neglect or exclusion of retail selling. The short-term result may be high recruiting profits for the company and select distributors, but the ultimate outcome will be neglect of market development, earnings misrepresentations, and insufficient sales for the insupportably large number of distributors whose recruitment the system encourages."

In In re Amway Corp, another landmark decision from the 1970's, the FTC distinguished an illegal pyramid from a legitimate multilevel marketing program. At the time, Amway manufactured and sold cleaning supplies and other household products. Under the Amway Plan, each distributor purchased household products at wholesale from the person who recruited or "sponsored" her. The top distributors purchased from Amway itself. A distributor earned money from retail sales by pocketing the difference between the wholesale price at which she purchased the product, and the retail price at which she sold it. She also received a monthly bonus based on the total amount of Amway products that she purchased for resale to both consumers and to her sponsored distributors.

Since distributors were compensated both for selling products to consumers and to newly-recruited distributors, there was some question as to whether this was a legitimate multilevel marketing program or an illegal pyramid scheme. The Commission held that, although Amway had made false and misleading earnings claims when recruiting new distributors, the company's sales plan was not an illegal pyramid scheme. Amway differed in several ways from pyramid schemes that the Commission had challenged. It did not charge an up-front investment fee from new recruits, nor did it promote "inventory loading" by requiring distributors to buy large volumes of nonreturnable inventory. Instead, Amway only required distributors to buy a relatively inexpensive sales kit. Moreover, Amway had three different policies to encourage distributors to actually sell the company's soaps, cleaners, and household products to real end users.

First, Amway required distributors to buy back any unused and marketable products from their recruits upon request. Second, Amway required each distributor to sell at wholesale or retail at least 70 percent of its purchased inventory each month -- a policy known as the 70% rule. Finally, Amway required each sponsoring distributor to make at least one retail sale to each of 10 different customers each month, known as the 10-customer rule.

In its conclusion, the FTC states:

Beware of any plan that offers commissions for recruiting new distributors, particularly when there is no product involved or when there is a separate, up-front membership fee. At the same time, do not assume that the presence of a product or service removes all danger. The Commission has seen pyramids operating behind the apparent offer of investment opportunities, charity benefits, off-shore credit cards, jewelry, women's underwear, cosmetics, cleaning supplies, and even electricity.

If a plan purports to sell a product or service, check to see whether its price is inflated, whether new members must buy costly inventory, or whether members make most "sales" to other members rather than the general public. If any of these conditions exist, the purported "sale" of the product or service may just mask a pyramid scheme that promotes an endless chain of recruiting and inventory loading.

(Continued next week)

Consumer Safety & Awareness Part 14

2009-03-30T03:42:00.000-07:00

The Truth About Multi-Level Marketing

6uccessLine (spelled with a “6” rather than with an “s)” is a gateway for multi-level marketing. The site says, “Get Paid Working from Home! All you have to do is take a FREE Video Tour and afterwards, we'll call you to see if you have any questions. It's that simple! Just fill out the form above.”

It continues, “Jump onboard the next big Internet wave. Get paid up to five times each and every month. Be mentored by millionaires who have walked the walk. Start living the lifestyle you’ve always dreamed.” If that was not enticing enough, there are testimonials. “Since joining this company at age of 20-years old, I have been empowered to positively impact and motivate people while enjoying a great income and lifestyle from networking.” Yip, that’s the exact quote. The web site’s privacy disclaimer leads right back to the same page. The only way to proceed is to submit your personal information.

“Our opportunity provides the following: Work when you want, where you want, with who you want and even how you want! Get paid monthly residual income, month after month, year after year! Promote yourself up the ranks at your pace! Work part-time or full-time! Time-freedom you never had!” They go on to provide you with services they use. “Our services include the following: Digital Phone Service Wireless/Cellular, Local Calling Service, Long Distance Service, Internet Service.” Gee, I use them too, don’t you?

Other statements fall directly into the pyramid scheme format: “Not only can you work here in the U.S., but you can also build your business all over the world. Who would have thought that a multi-billionaire (Donald Trump) would be recommending people who are looking to be their own boss and start their own business to seriously check out the network marketing industry? Well, it's the truth. Because of the low cost - high return, people who have a strong burning desire can become very successful in a relatively short period of time.”

So what is this “network marketing industry?” If you Google those three words you get 300,000 hits. Most are similar to the one I just presented: join and make a mint without working hard. Fast Company, one of the participants explains what it does this way: “

“Network marketing, or multi-level marketing, is one of the fastest-growing business models of the past few decades. The most prominent examples of direct selling companies include Amway, Avon, Mary Kay, Nu Skin, and Herbalife. In 2003, U.S. total direct selling sales totaled more than $29 billion. Any business model that has achieved this kind of success probably has lessons that all business people can learn from. We define this family of business models as a method of distribution in which people are paid for sales volume generated by people they have recruited into the distribution network.”

“A significant number of network marketers have negative experiences with the industry. That is why 70% of all people who have ever been a direct selling representative are no longer in the industry. One of the things that make the sector most attractive, the low barrier to entry, also creates some its greatest dangers. Many people get into it without the necessary skills to run a successful business. Successful salespeople penetrate an untouched market, and then work to gain a high market share in that market. This is easier to do if everyone in it knows all the players. Why? Because word of mouth in that type of network will spread more rapidly about the value of your product or service.”

"If you think of the whole process like dating, we bring someone to our Web site, and then we ask them to have sex immediately. There has to be some courtship first." One of the delicate aspects of network marketing is that people leverage their personal relationships to sell a product. Although that leverage makes some people queasy, the success of the network marketing model shows that many people do comfortably build multiplex relationships: Their friends are their customers.”

Wikipedia puts it quite simply, “It is sometimes difficult to distinguish legal and reputable multi-level marketing companies from illegal pyramid or Ponzi schemes. MLM businesses operate in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid schemes try to present themselves as legitimate MLM businesses.

The key distinction between these illegal schemes and legitimate MLM businesses is that with legitimate companies a meaningful income can be earned solely from the sales of the product or service to customers who are not themselves enrolled in the scheme. While some of these MLM businesses also offer commissions from recruiting new members, this is not essential to successful operation of the business by any individual member. The distinguishing characteristic is whether the money in the scheme comes primarily from the participants themselves (pyramid scheme) or from sales of products or services to customers who aren't participants in the scheme (legitimate businesses).

The distinction, though, is far murkier. The FTC has found that the vast majority of products sold by multi-level marketing companies fall into a narrow range. They include unproven nostrums that are sold by testimonial rather than by proven scientific studies. Many also sell trinkets as if they are special more expensive objects. Those that have products of value, sell them for a far higher cost than compatible products, thus providing a nice profit for the company and a reasonable income for the lower level salespeople.

Jon M. Taylor, who has an MBA and a Ph.D in business marketing, has spent over 20 years studying multi-level marketing. He states, “Law-enforcement agencies seldom require honest and understandable disclosure of essential information to MLM prospects. I have examined the compensation plans of more than 250 leading MLMs and found that virtually all hide the near-zero odds of making a profit, and in fact almost certain loss. Here are the typical ways they exaggerate to new recruits.”

Misrepresentations and the Truth
They Say -- Presented as a great “income opportunity,” with huge incomes reported for many.
The Truth -- A few are at the top of a pyramid of participants are enriched at the expense of a multitude of downline participants, about 99% of whom lose money.

They Say -- “Everyone can do this” – and earn a good income.
The Truth -- Holding up top earners as examples of what others can do is deceptive. It is unfair to sell tickets when – for nearly everyone – the ship has left the port.

They Say -- Average earnings statements on official reports make MLM’s appear highly profitable.
The Truth -- Reports of average incomes are full of deceptions – (Example - 20 on one page for Nu Skin’s report of “Actual Average Incomes.” The FTC Order for Nu Skin to cease misrepresenting earnings of distributors.)

They Say -- Products can be resold at retail prices for a handsome profit
The Truth -- Products are high priced and sold primarily to recruits to “do the business,” rather than to persons outside the network of participants.

They Say -- Presented as a legitimate business – “not a pyramid scheme”
The Truth -- Product-based MLM companies have been found to be the most extreme of all the types, with the highest loss rates far worse than most games of chance in casinos.

They Say -- Work for only an hour or two a day, and build up a “residual income” that will allow you the “time freedom” to quit your job and spend more time with your family or do whatever you want.
The Truth -- To profit at a recruiting MLM, one must work long hours and be willing to continue to recruit to replace dropouts. One must also be willing to deceive large numbers of recruits into believing it is a legitimate income opportunity. Recruits are only fattening their upline’s commissions. And is there anything immoral about hard work for honest rewards?

They Say -- “The job market is not secure.” The stock market is even shakier. MLM offers a much more secure and permanent (residual) income.”
The Truth -- Multi-level marketing is far more risky than either the stock market or the job market. It even makes gambling look like a safe investment by comparison. Residual income for almost all MLM recruits is a myth.

They Say -- Standard jobs are not rewarded fairly. In MLM, you can set your own standard for earnings.
The Truth -- Fair? Most multi-level marketing compensation plans are weighted heavily towards those who got in early or scrambled to get to the top of a pyramid of participants.

They Say -- “If not legal, the program would have been shut down long ago.” MLM’s have survived legal challenges. The fact that they are still around tells you they are legitimate.
The Truth -- Consumer protection officials are reactive, not proactive. Since victims rarely file complaints, law enforcement seldom acts against even the worst schemes. Victims don’t complain because they blame themselves, and they fear self-incrimination or consequences from or to their upline or downline.

They Say -- If you fail at this program, it is because you failed to properly “work the system.” The Truth -- The system itself is inherently flawed – an endless chain recruitment of participants as primary customers. The vast majority will always lose money.

They Say -- “In any business, one must invest time and money to be successful.” (Committed MLM participants may continue investing thousands, and even tens of thousands of dollars, over years before running out of money or giving up.)
The Truth -- The more one invests in time, money and effort, the more he/she loses – unless willing to deceive enough people to rise to the top of a pyramid of victims. In legitimate companies, sales persons are not expected to stock up on inventory or subscribe to monthly purchases. But in recruiting MLM’s, incentivized purchases (required to participate in commissions and/or advancement) are often merely disguised or laundered investments in a pyramid scheme.

They Say -- Take advantage of “momentum” and “windows of opportunity.”
The Truth -- This kind of appeal has been used for 20 years. The momentum cannot continue indefinitely, leaving those who come in later in a loss position, which is 99% of recruits.

They Say -- The demand for these products is growing at a rapid rate. “They literally sell themselves.”
The Truth -- The sale of products is distributor-driven, not market driven. Most products are sold to new participants to get in on this “ground floor opportunity.”

They Say -- Unlike franchises, business startups, or sales of existing businesses, you can start an MLM business with very little capital.
The Truth -- Multi-level marketing typically bleed new recruits of their funds by inducing them to buy products on a subscription basis, to pay for ongoing training, and otherwise draining them of their resources until they run out of money or give up.

They Say -- You will belong to a great support team. In MLM, you have a whole network of people willing to help you succeed and be your friends.
The Truth -- Some Multi-level marketing companies operate like a cult with an “us vs. them” mentality. Watch how quickly the team ostracizes you when you quit or discover contrary information about the legitimacy of the program.

They Say -- Our products are unique and consumable – perfect for repeat business.
The Truth -- MLM products are typically “potions and lotions.” The secret formulas are a cover for the fact that they are priced too high to compete in standard markets.

They Say -- Products are less expensive because you cut out the middleman.
The Truth -- MLM creates thousands of middlemen, with few real customers outside a bloated network of “distributors”. Typically, they are very expensive, not competitively priced.

They Say -- Our “tools for success” are unbeatable. Sign up for our seminars and conferences, and buy our books and tapes to assure your success in this business.
The Truth -- Hardly anyone makes money selling products, so a lucrative source of income for those at the top is the sale of “success tools” to supposedly assure the success of their downline – who are in fact only further victimized when they buy these motivational items.

They Say -- Some very reputable people are involved in MLM.
The Truth -- This credibility argument is used with many scams. Notables can be bought.

They Say -- Some MLM companies invest in very worthy (and visible) causes.
The Truth -- The mafia supported local charities. And because a bank robber donates some of his take to charity, does that excuse the robbery?

They Say -- You will be helping your friends and family by recruiting them into your downline.
The Truth -- For potential personal gain, you are exploiting those you care about the most. In other words you are squandering your social capital.

Consumer Safety & Awareness Part 13

2009-03-23T05:28:00.001-07:00

History of Pyramid Scams

The Consumer Awareness Institute classifies several scams as pyramids. They include multi-level marketing, network and consumer direct marketing, as well as the typical pyramid schemes. Included in the multi-level marketing category are Shaklee, Herbalife, Amway, Avon, Mary Kay, Nu Skin, Sunrider, and Vector marketing. Wikipedia lists over 40 active companies in this group.

The earliest recognized pyramid schemes were chain letters. The initiator sent out an unknown number of postal letters stating something like, “This is a good luck letter. Put your name on the bottom of the list and send it to 5 people, plus the person on the top of the list.” If everyone followed through, eventually it would go to 5, then 25, then 225, then 625, and finally over 3,000 people.

If the scam was to, “Send $1 to the person at the top and put your name at the bottom of the list,” and if everyone followed through, the scheme would net around $3,000. The United States Post Office prosecutes pyramid schemes senders for mail fraud.

Many pyramid schemes involve selling products of little or no value. In the 1950s and 1960s, many such activities involved signing up at least 5 people you know to get important, priceless information on how to make money legally from such things as government or armed forces surplus auctions, confiscated goods, or some financial investments. You had to send their names in with $10 to get the information, as well as notify them that they can also participate. In most cases there was time pressure as it was a limited offer. If 500 people fell for the scam, the originator was $5,000 richer, which in those times was a year’s salary for the average worker.

Charles Ponzi, an Italian immigrant to America in 1903, who had been arrested in Canada for various fraudulent activities, made a fortune after World War I illegally trading international currency. In 1919 he established a company, the Security Exchange Commission, and advertised that investments in his company would receive a guaranteed return of 100% in three months. Thus, if you invested $100, 90 days later you would receive $200. He accepted amounts of from $10 to $50,000 from individuals.

Using new money that he received from those who heard about this amazing return, he paid off the initial investors, giving them the harvest he promised. The success of the Security Exchange Commission became well advertised and people flocked to send him money. His scheme only lasted nine months, but he accumulated over $15 million, a huge sum for 1920. He served time in jail and was deported back to Italy in 1934 where he eventually died nearly penniless.

In the 1960s, William J. Armantrout founded Modern Floor Fashions to sell carpeting. He ran his company as a pyramid scheme, netting millions. His salesmen sold overpriced and poor quality carpets to customers who were told that if they recommended up to ten others, they would get referral fees that would eventually reimburse them the total cost of the carpet. For each person they recommended that actually bought, they would get $60. If, eventually, those secondary clients recommended others who made a purchase, they would get $40. Thus if half of their recommendations purchased, they’d receive $300, and if half of those people’s referrals bought, they could potentially get an additional $1000. On average the carpets sold for between $1,000 and $1,500. Very few people saw more than $100 total in such commissions, and since the carpets provided considerable profit for the company, they did quite well until shut down by the government.

For six months in 1967, in Morgan City, Louisiana, Howard Blachly, operating under the trade names of Pioneer Products or Pioneer Marketing, sold water softeners using what they called a Referral Selling Plan. Along with two confederates, Blachly set up appointments with potential purchasers during evening hours. As part of the sales technique, it was required that both husband and wife be present. This is typical in a selling scam, as we will see when we look at pressure sales techniques.

A demonstration of the product was given by means of a miniature model of the water softener, and the advantages of using the treated, demineralized water in the home were explained. At the conclusion of the demonstration the parties who expressed an interest were then informed of the mechanics of the Plan. They were told that as a result of a promotional advertising plan, the family could not only acquire the water softener at no cost to themselves but also would have the opportunity to earn a profit. This was possible since each sale thereafter made to a future prospective customer whose name had been supplied by the current potential purchaser would entitle such purchaser to a referral sales commission of $40. No limit was placed on the number of referred parties that the purchaser could give. The right to an additional $40 sales commission also extended to secondary sales. Thus each sale to a third level customer would also net the current family $40.

Once the family was convinced, they signed a contract for the water softener for $610, including taxes, or for a time payment that came to $829 over 36 months. The contract also spelled out the referral commissions. A second copy, with additional information was also signed, by both the husband and wife and the salesperson. This one was, they were told, “for purposes of record keeping or for obtaining credit references.” In actuality, the second was a blank property deed, which, once filled out, turned the ownership of their house to Pioneer Products.

Blachly was convicted on 17 counts of mail fraud and sentenced to 3 years' imprisonment on one count, sentencing on the remaining counts suspended with 5 years' supervised probation.

In one of the first direct marketing cases heard in the United States, Ger-Ro-Mar and its president Carl Simonson, were convicted under the pyramid scheme statutes for using a technique now commonly used by the multi-level marketing companies we looked at earlier. In this case, the company enlisted the services of people to sell their products at wholesale and retail, requiring distributors to buy an inventory of varying size before they may participate in the program. A potential distributor (also called a "consultant") may enter at one of three levels ("Key Distributor," "Senior Key," or "Supervisor"), and eventually work up to a fourth and fifth level (District Manager and Regional Manager).

Entry into the program is through a non-refundable purchase of merchandise from the company or one of its distributors. All distributors except the lowest purchased directly from the company; a Key Distributor purchases from his sponsor. The initial purchase requirement for entry into the program is $300, which is discounted 35% to $215. As you advanced in management level, your purchase amounts also increased, first to $1,000, then $3,000. Each was also discounted.

Thus when the manager sold to a supervisor, the manager received a profit of around 15%. The manager then sold down to the next level, also getting 15%. The promotional literature stated that a district manager could earn up to $56,400 per year and Regional managers up to $90,600. The legalese was the phrase “up to,” and in reality no one came close, except the officers of the company.

There are several general techniques that identify pyramid schemes, and these also apply to mass-marketing companies.
Participants are recruited in an endless chain of participants.
Advancement is based on how many others you recruit.
Participants are expected to buy products or services in order to qualify for commissions or bonuses or to advance in the scheme.
The company pays commissions and bonuses on more than four levels of participants.

Next time we will discuss Multi-Level marketing, which, although they conform to the letter of the law, are in actuality considered selling schemes by most consumer advocates.

Consumer Safety & Awareness Part 12

2009-03-16T09:05:00.000-07:00

Pyramid Scams: Introduction

Greed can make many people act unscrupulously; especially if they themselves have been scammed into believing what they are saying is the truth. Most pyramid scams are based on this. Pyramids, similar to what is known as Ponzi schemes, are illegal in every state. They are based on making promises that cannot be easily disproved and that appear to work. Many e-mail scams today are based on it. In fact I remember seeing similar things run by classmates when I was in school, oh so many years ago. I doubt the kids knew what they were doing was illegal.

Consider the shape of the pyramid and relate it to this scam. The person at the top comes up with a moneymaking idea: an investment in something that does not exist. For example, they promise everyone that they will invest money in a great company that has been averaging 5% returns a month for the last six years. Only he knows about them and only he can get the money to the investment company. It is usually located outside the United States and does not come under US laws and regulations. If you invest $200, the least they will accept, which is really not much, for three years, you will get a check for at least $10 a month every month for those 36 months, or a total of $360. And you will then get the original investment back. Since the company is building a Costa Rican hotel or a German factory, or digging a Peruvian gold mine, you will never have to report it to our government, as the money was not made in this country.

So you invest the $200 and, sure enough, in a month you get $20 in cash, a whopping 10% return. Then the scammer gives you a new opportunity: he will share half of the fee the company pays him, for every new person you can get to invest. He gets $4 a month for each investor, so if you get 10 people to join you’ll get an additional $20 monthly. Thus the pyramid grows. During the next few months your return may vary between 5 and 10%, so after four months you have gotten at least $60 back, more than a quarter of your investment

If he has 100 people on the hook initially, and runs this scam for four months before disappearing, he’s made $140 from your initial investment (times 100 people) and, if each of those people get 10 more, than those ten get ten more investors, there is obviously a lot on money being forwarded. Some invest more than $200 or contribute additional sums after the amazing 10% return the first month. You can imagine that in four months the quite large pyramid has made him well over $100,000 or even $200,000. He then, suddenly, and with no way of contacting him, disappears. Since only the original 100 people ever met the scammer, or shared e-mails with him, and each of them has profited from those they brought in and are thus unlikely to go to the cops, the scammer rarely gets caught.

The greatest of such scammers, Alyn Richard Waage, used a pyramid scheme to take money from around 15,000 investors. His total was estimated at $60 million dollars. He set up a company called Tri-West Investment Club, and, using a web site and e-mail, told investors the money would be put in safe, high-yield securities. When he was eventually arrested, and jailed in South Carolina, it was discovered that the money had been spent on a private yacht, a helicopter and real estate.

A close friend of mine lives in a small town around an hour from Bogotá, Columbia. His area made huge news last November with the breakup of a country-wide pyramid scam that possibly included as many as a ten percent of the people in the country. David Murcia Guzman, who named his company after himself, DMG, escaped to Panama, but was captured and returned to Bogotá. The 28-year old, executed his scheme for around 3 years, hooking in over 200,000 Colombians who sold their homes to invest with him.

The Colombian newsweekly magazine, Semana, described it this way:

For the last two years, a unique economic situation has calmed the income anxiety of those who live in the Putumayo region, which since the 1990s has based its economy on coca cultivation and harvesting. Many people arrive at the DMG offices as much as two days before the payment day. Months ago they had left millions and millions of pesos in DMG’s coffers. Some lost all of their savings. Others, what they got from selling their house, their car or their farm. There are even some who have taken out bank loans in order to invest the cash in this magical way of increasing their capital. When they arrive at the branch, the person receives the “benefit” of his investment, as agreed in each contract. Interest rates of 10, 15, 30, 50 percent, and during “special offer” periods even 100 percent.

Ten million pesos in DMG’s hands for six months can be turned into 20 million. Or if you prefer a monthly payment, they will give you a million pesos every 30 days. That is, 10 percent. One can choose whichever way one prefers. Either way it is well above what any bank would pay to a savings account holder.

David Murcía Guzmán is the person behind this miraculous system. A young man of less than 30 years about whom little is known in the region. Only that one day he came to six of Putumayo’s 13 municipalities and set up his business. The DMG offices, the local population says, have strong safes to hold the cash that arrives at the regional airports and is transported along the department’s awful roads by armored, escorted cars.

There is nothing clear about this business. There are no sanctions from Colombia’s bank-oversight agency; there are no results from the preliminary investigations that the Prosecutor-General’s office began. The business is so prosperous, that in a zone where the narco-economy led the parade for years, it is easy to imagine that something strange is behind this surprising way of getting many out of poverty.

But this matters to very few. In the region, people are so content with DMG that any politician who wants to campaign and win elections in Putumayo would do well not to get involved. “A legislator asked in public about the origin of this money and called for an investigation, and the next day he had thousands of opponents in the department. The people will not allow this subsistence source to be taken from them,” commented a departmental government official.

At least two people were killed in riots in November when the people who ran the local DMG offices started shutting their doors and disappearing with cash. Mr. Guzman faces charges including money-laundering and illicit enrichment. He denies the allegations. Even after he fled, was arrested and returned to Colombia, his scheme continued, taking on a life of its own. DMG was still operating until the police closed its 60 branches across Colombia. Protests against the government by investors who insist that the company is legitimate and that the government had forced its collapse lasted for weeks. The Colombian authorities believe DMG was the most sophisticated pyramid scheme this country has ever seen.

Consumer Safety & Awareness Part 11

2009-03-09T04:46:00.000-07:00

Bait & Switch: Pet Scams

Nothing is cuter than a cat. Nope, no dog, hamster, or fish comes close. And nothing is less adorable than a scam revolving around animals. Scambusters reports on five pet-related frauds.

If you have placed an ad in a local paper about your lost pet, and particularly if you offered a reward, you may get a call from someone claiming to have found your pet and asking for money to get it to you. There are many obvious ways to avoid this scam. Ask for a description of the animal, especially distinguishing marks not listed in your ad. Ask where it was found. Ask if there was a collar, especially if there wasn’t one. Tell the person to send you a picture by e-mail. Inform them that you will pay cash on delivery only.

Occasionally the caller threatens to harm your pet to put the pressure on so you'll pay up. In such cases ask for a callback number as you have to arrange for the money. Then notify the police. Threatening an animal for cash is embezzlement as well as violates the state’s cruelty to animal laws.

In a variation, the caller claims to be a trucker who found your injured animal as he was driving through the area. The caller may offer to send the animal back with another trucker who is heading your way. Turn that offer down. Treat it the same way as already described.

If the caller claims that your pet needed vet care, which he has taken care of and paid for, but he needs you to wire him the money so he can pick your pet up, ask for the name of the vet so you can find out the condition of your animal. If he refuses then hang up. Never pay in advance and never give out your name and address. If the call is legitimate, meet the person at the vet’s, even if it is out of state.

In a more complicated scam, your ad prompts a call from someone who claims to have found an animal that might be yours. In the process of exchanging descriptions, the caller will say that he's found a different animal, not yours. He'll apologize for your loss, and for taking your time. This is a set-up -- in a short time, he uses the information he's gotten about your pet to have a second person call and claim to have found your pet. Again, he'll try to collect any reward money in advance.
Your lost pet ad prompts a call from someone who precisely describes your pet, and wants to return it to claim the reward. In reality, your pet has been stolen by this person, who knew you would run an ad!

In a bizarre twist, scammers also respond to 'found' ads with the claim that you have found their pet. When you return the found pet, it may be sold to a research facility.

There are also advanced money scams relating to purchasing pets. The most common is where you buy a pet online, pay for it, and never get it. Another common one is when you are selling a pet (or any animal) and the person sends you a money order or check for an amount much larger than the agreed price. When you make contact the scammer tells you to cash the check and send him the difference. You’re stuck with a stolen or counterfeit check, and the bank wants its money back.

Bait and switch works on pets as well. You respond for an ad for an expensive breed of animal, pay for it, and get a mutt.

When getting an animal, be alert if the seller does not let you spend time with it prior to purchase or if the animal looks or acts unhealthy. If the seller focuses on the money and not the animal, then you should leave. In some cases the seller lets you see the animal, puts it back in his car, then takes your money and drives away.

The Humane Society’s web site has stories about such scammers.

“We all know the Internet can be a great place to buy anything from books to DVDs and rare gifts, but it's not where you should go to buy a new pet. In addition to disreputable dealers and puppy mills, Internet scammers have crept into the realm of online pet sales, stealing money from unsuspecting people who think their new dog or cat is on the way to his or her new home, when in fact there was never really an animal at all. The only party harmed in these scams is the person who is out hundreds or thousands of dollars. “

“In the real world of online pet sales, families often lose significant money when the pet they ordered falls ill soon after arrival. Such animals come from breeding stuck in factory-style operations, churning out babies to be sold off for a quick profit.”

The first rule whenever someone thinks of buying a pet is to visit where that animal was born and see how the parents are living. That cute puppy in the photo on the legitimate-looking website is almost too cute to be real. Often, he isn't.

One scam promises you a free puppy—as long as you pay the shipping. Once the scammers get your "shipping" costs, the scammer says your puppy is stuck at the airport due to customs complications, and you are asked to send more money.

Finally, the scammer (and the puppy who never existed in the first place) disappears. In many cases, victims think their dog is at the airport waiting for them after they've sent two or three money orders.

One woman recently contacted the Humane Society for help in saving a puppy that didn't exist. She believed she was adopting the puppy from a person she had met on the Internet who was stationed abroad. After taking some money from the woman for "shipping" costs, the scammer requested more money to help transport the dog from a European airport, where she said the dog was being held because of problems with the crate. After receiving e-mails that appeared to be from airport officials, the woman was convinced that "her" puppy was really at the airport and in need of her help. But it was all a hoax.

One e-mail scam tells the story of a woman whose mother unexpectedly died, leaving behind "adorable bulldog puppies" who—along with their parents—are in need of a home because the daughter and her husband moved to an apartment where pets are not allowed. Respondents are duped out of "shipping" or "adoption" fees for these non-existent puppies.

In other cases, the seller claims to represent an animal shelter or a Good Samaritan, offering the breeds for "adoption." In these cases, it's important to remember that reputable shelters do not place puppies by sending out mass e-mails and then shipping animals to people.

Internet scammers can deceive would-be buyers by using readily available online photos or by using stolen photos of other people's pets to represent the non-existent animal. They will often copy the claims of legitimate rescue groups and attempt to sound reputable by saying that they will only adopt the pet to someone who has a fenced yard, for example. They will also copy the text from breeder ads and claim to have registration certificates, vet records and health guarantees.

For more information about pet scams, visit TerrificPets.com/Scams where they actually list e-mail sent from people who have been the target of scam attempts.

Consumer Safety & Awareness Part 10

2009-03-02T04:10:00.000-08:00

Bait & Switch: Financial and Service Scams

How would you react if a store keeper took your five-dollar bill and gave you a single in exchange? Some financial institutions use bait and switch to increase their profits, and, based on their reactions and refusal to admit there is anything wrong with their practices, they simply do not care.

Every time a company attempts to sell an annuity, they are pulling a scam. Annuities have the worst rate of return of any investment, and by telling you otherwise, in fact by assuring you that it’s the best investment you can make, the salesperson as well as the company is lying to you. By not offering an investment that has a higher rate of return, they are using a variation of bait and switch.

USA Today offers this advertisement as an example: "Come learn from the IRA Technician" at a seminar that more than 10,000 seniors have attended. Top sirloin steak will be served — along with tips on "how to guarantee your IRA will never run out, regardless of market fluctuations." The seminar then attempts to sell you an annuity. Since it takes forever for annuities to pay off, those over 50 should never invest in them.

When I was teaching, I was offered annuities almost every year. Many of my fellow teachers actually invested. Today, partly because I refused to invest in them, I have more money than they do.

An annuity is an investment that is tax deferred. You put in an amount, usually it’s taken out of your pay check and any interest you earn is not taxed until you cash it out, usually when you retire. Annuities are poorly regulated, and the companies are not required to disclose everything to you. They actually produce the lowest return of all legal investments. Many of them not only have large, occasionally hidden fees and commissions, but also take a percentage of your earnings out for maintenance or other silly excuses. Even Fidelity Investments, one of the most trustworthy names in the industry, was cited for annuity fraud.

It is highly recommended, based on more than 30 years of investigation by lawyers and consumer advocates, that you never put any money into an annuity and if you have money there you should consider withdrawal as soon as you can, even if it creates a penalty. A typical municipal bond fund, which is mostly tax-free and has consistently returned over 3%, occasionally up to 5%, produces as much as five times the return of an annuity.

The following information is from infofaq.com: “Variable annuities cost too much. Because annuities are primarily insurance products, their fees typically dwarf those charged by mutual funds. This is simple to understand when you realize there are two players involved instead of one.....the insurance company and the mutual fund company. According to Morningstar, the average variable annuity passes along expenses of 2.2 percent of the assets per year. This percentage probably won't mean much to you unless you realize how such a large fee can drain the momentum out of a portfolio. Let’s suppose, for example, that you invested $3,000 a year in a typical variable annuity that generates a yearly and unbelievably large 8 percent return before expenses. At the end of a 25-year period, your annuity would have grown to $168,000. If you had put that money into tax-efficient index mutual funds, charging between a low of 0.20 percent and a high of .50% in yearly expenses, the index fund would be worth $230,000. That's a difference of $69,000.”

Salesmen love to boast that you won't pay taxes on the money that's growing inside an annuity, because it’s "tax deferred". That's true, but it’s only half the story. You'll owe ordinary income taxes on every dollar of annuity withdrawals. This might not seem so bad until you appreciate what would happen if you had invested the same money in stocks or mutual funds in a plain old taxable account. These withdrawals would be taxed at long-term capital gains rates, which is only 15%. So lets say you're in a 35% ordinary income tax bracket and you've got a variable annuity. You'd pay $350 in taxes for every $1,000 you pull out. In contrast, if you'd kept this money in a taxable account, you'd pay no more than $150 for every $1,000 withdrawal. Extending this a bit, an investor cashing out a $100,000 annuity would pay $35,000 in taxes vs. $15,000 in a taxable account.

“So it is likely that investors buying variable annuities will actually end up paying more in taxes and having less after-tax wealth at retirement. In fact, the tax deferral feature of annuities actually harms investors who hold mostly equities in their accounts. If these investors are not told that they are being tax-disadvantaged by this tax deferral feature, then their brokers are making material misrepresentations and omissions.” 401-K accounts also have the same tax problem.

“Further, the tax disadvantage won't die when you do. It can hurt your heirs. That's because your beneficiaries will be saddled with paying capital-gains tax on any profit your annuity generated. If your original $50,000 annuity grew to $75,000, your heirs would owe tax on the $25,000 profit. In contrast, if you had placed your money in taxable mutual funds, because of the step-up in basis, your kids would get that $25,000 tax free.”

Earlier I mentioned that many of my fellow teachers have fallen for annuity plans. Teachers do not have access to 401-K plans for retirement. The only similar thing that is available to them is the 403-B. This is one of the worst investment and retirement options ever conceived. Howard Clark, a scam blogger and radio talk host, states “In the worst cases, teacher’s unions are handling the retirement plans and are taking kickbacks for putting teachers in a certain annuity. In New York, for example, the New York State United Teachers union gets a $3 million kickback to put teachers in these plans. If you’re a teacher, you need to know about this and take action. You can transfer your money tax free to two low-cost companies. The companies with the lowest costs are TIAA-Cref and Vanguard. Both are much better choices than any kind of annuity your union is pushing on you.”

So how do you know the best way to invest your money? You hire an investment counselor or you respond to one of the many ads for investment services. You might as well give your money to me right now. I’ll spend it on a few cups of coffee that we can share and you’ll have gotten a better return.

Cox Broadcasting recently had a show about investment counseling. Their conclusion was, “One of the greatest danger points is in mid-career, when you find yourself with a great deal of money in a 401K. At that time you're at the greatest risk, because that's when you're most likely to end up hiring a commissioned salesperson. Is that a problem in itself? No. There are plenty of situations when paying a commission is just fine. But in the investment world, there can be inherent conflict of interest with commissions. There are plenty of investment products that may not be the best choice for you, but you may be sold on them by the person you hire simply because the commissions are humongous. Variable and Index Annuities are referred to as 'sold', not 'bought', since people don't buy these on their own -- they are convinced to do so. Salespeople use code words such as Retirement Secured Account and other phony phrases to keep from tipping you off that you're being sold an annuity. Sometimes a Life, or Immediate Annuity makes sense, but the commissions are so low you won't hear much about them.”

“You also need to stay away from "fee-based planners." These salespeople start with a fixed fee, but the commissions on products they may sell you defray those initial costs, which again, may not be in your best interest.”

Financial scams are not limited to annuities and the sale of high-commission investments. In fact, there are so many of them that it would be impossible to list all even in a 1,000-page book.

Credit cards use bait and switch. They offer you initially low rates that zoom upward quite rapidly. Debit cards have hidden fees and, with interest charged from the moment of use, they are among the worst ways you can shop.

Mortgages come in so many flavors that it’s often hard to know if you have been switched from the one you wanted. In 2007, a Seattle mortgage company used a unique scam. According to the Seattle Post-Intelligencer:

“While Linden Loans LLC advertised residential home loans at "1 percent, with no points and no fees," the state Department of Financial Institutions said it found that "not one borrower actually received those terms in 2006." The department is looking into the company's 2007 practices.”

"The 1 percent rate touted by Linden lasts only a matter of months, and requires borrowers to accept predatory loan terms that would greatly increase costs to borrowers," Deb Bortner, the department's director of consumer services, said in a statement. "Consumers have to be careful. Low rate, low-cost mortgage loans may be available, but they often result in borrowers paying more than they should."

The Los Angeles Times offers this hoax from 2008: “Federal authorities in Brooklyn today indicted two former Credit Suisse brokers, alleging that they tricked large corporations into buying more than $1 billion of so-called auction-rate securities tied to mortgage debt in recent years. The companies had hired Credit Suisse to invest their short-term cash reserves in auction-rate debt backed by federally insured student loans, according to the indictment. But the brokers instead often placed clients in auction-rate issues backed by subprime home loans and other mortgage-related debt known as collateralized debt obligations -- because those issues paid them "significantly higher" commissions, the government says.”

BusinessNet has this example: “According to an Oct. 29, 2002 securities fraud action filed by the SEC in U.S. District Court in Oklahoma, Southmark has defrauded at least 400 investors, most of them elderly, since 1996 with a "bait and switch" gimmick using advertisements for high-yielding certificates of deposit. Customers seeking the safety of CDs would inquire, the suit says, then Southmark agents would aggressively pitch to them "a purportedly personalized managed mutual fund investment program." The agents described the program as "as safe or safer" than CDs. But principal invested in mutual funds may depreciate, unlike CDs which guarantee a set return.”

“Also investors were sold Class "B" mutual fund shares that carry deferred sales charges (loads) and higher internal expenses than Class "A" shares. One customer, a retired commercial airline pilot, invested his $2.1 million retirement savings with Southmark and quickly incurred more than $84,000 in commission charges and fees, according to court records.”

Just because the institution has a known name, and a good reputation, does not mean that individual salesmen will not attempt to defraud their customers. Enter every financial transaction with your eyes opened.

Consumer Safety & Awareness Part 9

2009-02-23T05:11:00.000-08:00

Bait & Switch: Hospitality Industry

Be careful whom you give your business card to. Several business people have reported this situation: You go out to eat at a fine restaurant, probably not too far from your place of business. Someone enters soon after you and takes a seat He orders a meal and, upon leaving, stops off to say something to you like, “Nice to see you,” or “That looks good, I think I’ll order it next time.” He smiles and waves, then disappears from your life. When you go to pay your bill, his charges have been added to yours. He presented your business card and told the cashier that you said you’d pay.

All hospitality businesses are subject to this scam. You order tickets, get a hotel room, have a meal, or book a flight. When you get your credit card bill the charge is twice or more than what you expected. The company you dealt with quoted you one price and charged you another. Be sure to see the price in writing before agreeing to any offer, and keep the written receipt.

Travel Industry wire reports that online booking companies use this ploy frequently. “I called Expedia and a very polite, helpful agent apologized for the problem and found my $400 fare,” says Daniel, a microchip designer from Palo Alto, California. “She tried to book it for me - and then informed me that the fare had changed to $900 because fares can change in seconds as tickets are purchased.''

MSNBC followed through on this, speaking to an Expedia spokesperson. “While uncommon, the the two-system format we use will rarely return disparate fares,” says Expedia spokeswoman Katie Deines. “It speaks to the highly dynamic nature of pricing and availability. Expedia works throughout the booking process to verify pricing and availability so we are showing customers the latest information.” But travelers don’t care about the highly dynamic nature of pricing and availability. When they see a low fare one minute and a higher price the next, they call it a bait-and-switch. The price you’re quoted should be the price you pay. Every time.”

Global Travel News remarks, “The sad news is, travelers have to contend with this practice. Airlines and online travel agencies protect their claim by using words such as “for as low as” or “travel with rates as low as…” These are gray phrases wherein they only claim that they MIGHT give you the fare they advertise but they can’t really guarantee them.”

Hotels often offer low prices, but hide the bait-and-switch in the fine print. You may arrive at your destination to find that you have been placed in a small or poorly situated room (such as next to a busy restaurant or near the elevator), or one with a single bed. Services promised are often not applicable to your room, such as free breakfast or Internet service. The hotel has a room available that provides all you want, but it will be considerably more expensive.

MSNBC also reports this scam, “The California Department of Justice recently announced the arrest of Orange County travel agent Ralph Rendon. “The suspect allegedly ripped off dozens of senior citizens who wanted to travel to Cuba for religious and cultural purposes,” says the California Attorney General. The scam targeted Jewish and Greek Orthodox seniors trying to congregate with people of their own faith on the Caribbean island. After the 34 victims forked out five-figure deposits, Rendon announced their trips were being blocked by the Treasury Department and refused to refund their money. According to state investigators, he used the money to lease a brand new Mercedes, pay his rent and hire a divorce attorney.”

When you go to a fine hotel, you would think that the stores in its lobby offered only the finest merchandise. Experienced travelers have been finding knock-off items, such as watches, jewelry, handbags, luggage, electronics, and pirated CDs and DVDs, in many hotels in Europe and Asia. They are advertised as the real thing and offered at “discount” prices that are far more than the counterfeits usually sell for.

Hotels.com has been advertising that they will find exactly what you are looking for, exactly where you want it. There’s a good reason they include that in the ads. Many Caribbean Island hotels have been advertising that they are “on the beach,” or “in the center of the action,” when they are actually quite far away. Joe Yogerst of Forbes Traveler Magazine reports, “Unsuspecting travelers can get scammed into rooms only a few notches above a pig sty, places like the Hotel Carter in New York, which recently topped TripAdvisor’s list of the Top 10 Dirtiest Hotels in America. A manager at the Hotel Carter — who requested anonymity — said, “We know about the list. We’re doing OK. We’re still busy.” Then there’s the centrally located Park Hotel in London, which one TripAdvisor reviewer dubbed a “typhoid cubicle.””

Christopher Elliott another travel columnist, collects experiences reported by frequent travelers. The most common is charging for items that were not used. Many hotel rooms come with a self-service refrigerator and snack items, with outlandish prices, such as $5 for a Snicker’s Bar. If you simply accept the room as is, you may find that you are billed for items not used, although they truly are now missing from your room. Most likely they were never stocked to begin with. The bill for these items probably will not appear on your hotel charges but be placed directly onto your credit card. Your “use” of the hospitality items was not discovered until after you checked out. By the time you get the bill it’s too late to disprove it.

Consumer Safety & Awareness Part 8

2009-02-16T03:25:00.000-08:00

Bait & Switch: Retail Stores and Services

We previously discussed how a mattress company was cited for bait and switch. All types of stores do it, and many get away with it. There are a number of variations used. Food stores like to advertise for their lower quality meats, and when you see how much fat, bone, and gristle there is, they hope you upgrade. Stores frequently display poorer items on the same shelf with the more profitable one.

Shelf placement is a trick all stores use. Products they want you to purchase are placed between waist and head level, with lower profit items on the bottom. Companies actually pay stores for ideal placement. Rather than doing this in cash, which may be illegal in some jurisdictions, they give the store discounts and extra products.

Electronic products are used in borderline bait and switch ploys. Stores may advertise for last year’s product and place it next to this year’s. Lower quality components are featured with the hopes that after you listen to the poor sound, you’ll switch up.

Digital camera scams abound. Many of them follow the same pattern and we have discovered eleven complaints against nine different companies using the same formula. Computer magazine Maximum PC explains a typical example: You order a specific camera by telephone, mail or Internet. Months later, you still haven't received it. You call the vendor, and you're given a song and dance about it being back-ordered because of X excuse, (but) would you like to buy the camera bundle with some accessories for $1,700? If you fall for the up-sell ... you'll notice that your package bundle includes (only) the battery and charger (which are normally included with the camera for MSRP). If you give up and cancel the order, you've wasted a ton of time, you don't have a camera, and the company has had your $600 for three months.

In November, 2008, the following action was taken:
Texas Attorney General Greg Abbott today charged two online digital camera and electronics retailers with conducting an unlawful bait-and-switch sales scheme. Today’s enforcement action seeks restitution for Texans who suffered financially because of the defendants’ unlawful conduct.

According to state investigators, Broadway Photo, L.L.C. and Starlight Camera & Video Inc., both of Brooklyn, N.Y., attempted to attract customers by offering the lowest retail prices on price-comparison Web sites. Once customers selected merchandise and made credit card purchases via the defendants’ Web sites, customers were notified that their orders had been processed. Despite the order-processing notice, customers were subsequently asked to call a specified telephone number to confirm their orders.

However, rather than use the calls to confirm customers orders, the defendants instead initiated aggressive, high-pressure sales pitches promoting over-priced accessories, including memory cards and batteries. The defendants’ telemarketers insisted these upgraded accessories were needed in order for the customers’ confirmed merchandise to function normally.

When customers refused these offers, the defendants told the customers the confirmed merchandise was substandard and lacked warranties. The defendants’ telemarketers encouraged customers to purchase different, more expensive products. If customers refused, the defendants canceled the orders, claiming the products were indefinitely back-ordered. When the defendants actually did ship orders, customers who intended to purchase new merchandise often received used or refurbished products.

In 2002, a federal court in Nevada issued an order against a BTV Industries e-mail scam that offered free video-game consoles but instead routed people to a pornography Web site charging $3.99 per minute. “According to the FTC, in the "bait-and-switch" scheme consumers received unsolicited spam e-mail messages claiming that the recipients had won a free Sony PlayStation 2 or other prize through a promotion supposedly sponsored by Yahoo. In fact, the e-mail messages directed consumers to an adult Internet site through a 900-number modem connection that charged them up to $3.99 per minute of use. Apparently, when consumers responded to the e-mail informing them that they had won the game system, they then were routed to a Web page that imitated an authentic Yahoo page. That page then instructed consumers to download a program that would purportedly permit them to connect to a "toll-free" Web site where they could enter their name and address to request a PlayStation. Yet, when consumers adhered to these instructions, they were connected to a pornographic site by way of a 900-number, where they then incurred per-minute charges.

In October 2008, a Hess Express gas station in West Roxbury, Massachusetts was “fined for displaying gas prices that weren’t what they were selling. The bait-and-switch occurred for a 15- to 25-minute period on Sept. 18 around 2 p.m. It is a clear violation of consumer rights, according to the city’s Inspectional Services Department. When prices go up, they must change the signs first and then the pumps, according to ISD. When a price change was done, the station had neglected to change the price on pumps.”

A newly discovered, but not too infrequent trick of automotive dealers, is to entice people in stating that they offer the top price on trade-ins. The salesperson refuses to give the trade-in price until a car is selected. Once that is done, a very low trade-in is offered, often raised slightly upon complaint. If the buyer backs down, the salesperson insists that he has to pay for the new car anyway since the paperwork was completed while they were negotiating. In some cases the used car had been brought to the service center for “evaluation,” and the dealership refused to give the car back, again saying the deal was completed.

This October, in Tallahassee, Florida, a Central Florida internet pharmacy company was sued by the attorney general, because “the company engaged in a “bait and switch” scheme, luring consumers into providing their credit card information by advertising prescription diet pills for significantly reduced prices. The company would then bill consumers for the prescription diet pills but would send herbal supplements instead of the purchased pills.

Professional Wrestler Magazine claims that a bait and switch was used to attract people to a wrestling event. “TNA really pumped up the audience with word of a "big announcement that will change the wrestling world." They even ran advertisements of the "big announcement" bearing Mick Foley's image on some of the biggest wrestling websites. And they saved the "big announcement" for its over-hyped "historic" show at the Hard Rock in Las Vegas.” The announcement was simply that he had brought stock in a company related to the wrestling industry.

Television news shows use the same ploy to get you to stay tuned for a major announcement after the commercial, assuming that you will watch the ad while waiting for the totally unimportant item. They build up the tension by having the news announcers state that it was coming up three or four times, and then not giving the information until the end of the show.

The Atlanta Journal Constitution reports complaints about carpet cleaning companies who put advertising coupons in your mailbox or in the glossy inserts in the newspaper with "specials" like $5.95 per room or whole house for $49.95. Once they arrive, they offer a more expensive service giving a variety of reasons. If you turn them down, they use inexpensive inert chemicals that can sometimes harm rugs, do a rapid job, take your money and leave.

Consumer Safety & Awareness Part 7

2009-02-09T08:07:00.000-08:00

Bait & Switch: Household Alarms

Home alarm companies so overuse bait and switch that they need an entire section to themselves. The large national companies’ advertisements appear to offer a free or inexpensive home alarm system, but once you get to the sales pitch, with a salesman in your living room or kitchen, you discover it only covers a few doors and perhaps no windows (substituting an interior motion sensor that supposedly covers all windows). Then they offer small add-ons at “low cost,” which, once added up, comes to a substantial selling price. Your house, no matter who you are or where you live, is always more complex than the initial basic system. But if you do not purchase it today you will not be able to get all of the great side products they are offering at the same price tomorrow.

ADT is a national alarm company that has ads in magazines, mailers, on television, and on the Internet. A typical ad states that their “state-of-the-art system includes”
a) Front and back door protection. If you have any additional exterior doors they are extra.
b) Infrared motion detector. Singular. One is included in the package. These are line of site detectors only, so if an intruder bypasses the area covered by the motion detector they will not set off the alarm.
c) Lots of add-ons such as a way of turning the alarm on and off, window and lawn signs, emergency buttons, and a siren.

There are no window alarms included. No glass breakage. Their initial system is free, except for a $99 installation fee and a 36-month monitoring contract that costs $35.99 monthly, or $1,295.64. How good is this system? So good that as soon as they come to your house (we actually invited them in) they prepare a list of things you need to add on. In our case they ignored the basement window, our glass-enclosed sunroom, and the garage. Strange, as the salesman was working on commission.

Consider your house. Calculate the number of entry doors you need to alarm, and the number of windows that an intruder can enter. Do not forget to include basement and second story windows that can be accessed, no matter how difficult it may seem to you, from a garage or add-on roof. Does their two-door and a motion sensor system cover your house?

Their online site does supply one price. Their top-rated alarm panel costs an extra $349. Every other product has this statement “Click Here To Schedule Your FREE Risk Assessment. “ The salesman will count every window on your first floor and basement as well as potential points of entry elsewhere. For each window he will recommend, at an additional price, a window alarm and glass breakage alarm (because a thief can break your window and disconnect the alarm). How much more will this add to your cost?

Because California has strict liability laws, there is, hidden in their web site, the required “Contract for our California Customers.” Most likely these apply to every state. Here are a few things you need to know copied directly from their site. This is lengthy, but, as with all fine print contracts, please read it through completely. As you go through these statements, ask yourself why they feel they have to include them.

a) You agree that: if you terminate this contract during the first year, you will pay us $450.00, if you terminate this contract during the second year, you will pay us $200.00. These amounts are agreed upon damages and are not a penalty.

b) We have the right to increase the annual service charge at any time after the first year.

c) You agree to pay all directly or indirectly imposed false alarm assessments, taxes, fees or other charges of any police or fire department, or any other governmental body. You agree to pay all telephone or signal transmission company charges for area code, telephone numbering or other changes. You agree to pay us to reprogram the system if necessary to comply with any area code, telephone numbering or other changes. You agree to pay to us any increases in our cost for facilities used for transmitting alarm signals under this Contract. You agree to pay a service charge if our representative responds to a service call or alarm at your premises because you improperly followed operating instructions, failed to properly lock or close a window, door or other protected point or improperly adjusted CCTV cameras, monitors or accessories.

d) It will be extremely difficult to determine the actual damages that may result from our failure to perform our duties under this contract. You agree that we and our agents, employees, subsidiaries, affiliates and parent companies are exempt from liability for any loss, damage, injury or other consequence arising directly or indirectly from the services we perform or the systems we provide under this contract. If it is determined that we or any of our agents, are directly or indirectly responsible for any such loss, damage, injury or other consequence, you agree that damages shall be limited to the greater of $500 or 10% of the annual service charge you pay under this contract. [Editor’s note: The annual service charge under this contract would be $360.] These agreed upon damages are not a penalty. They are your sole remedy no matter how the loss, damage, injury or other consequence is caused, even if caused by our negligence, gross negligence, failure to perform duties under this contract, strict liability, failure to comply with any applicable law, or other fault. At your request, we may assume additional liability by attaching an amendment to this contract stating the extent of our additional liability and the additional cost to you. You agree that we are not an insurer even if we enter into any such an amendment.

e) In the event any lawsuit or other claim is filed by any other party against us arising out of the services we perform or the systems we provide under this contract, you agree to be solely responsible for, and to indemnify and hold us completely harmless from, such lawsuit or other claim including your payment of all damages, expenses, costs and attorneys' fees. These obligations will survive the expiration or earlier termination of this contract. These obligations will apply even if such lawsuit or other claim arises out of our negligence, gross negligence, failure to perform duties under this contract, strict liability, failure to comply with any applicable law, or other fault.

f) If the system is ADT Owned, we have the right upon termination of this Contract, to remove, disable or abandon all or any portion of the ADT Owned system. You are required to provide us access to the system for removal and we have no obligation to repair or redecorate your premises after any such removal. We do not waive our right to collect any unpaid charges by such removal, disablement or abandonment of the ADT Owned system. If the "Customer-Owned" box is checked, the equipment will become the property of the Customer upon payment of the Total Installation Charge including Sales Tax in full. ADT yard signs and window stickers shall remain the property of and may be removed by ADT, even if the "Customer -Owned" box is checked. Your right to display them on your property during the term of this Contract is not transferable.

g) However, there may be areas where we determine, in our sole discretion, it is impractical to conceal the wiring. In such areas, wiring will be exposed. Upon completion of the installation of the alarm system, we shall thoroughly instruct you in the proper use of the alarm system. We shall not be liable for loss due to water intrusion, mold, fungi, wet or dry rot or bacteria.

h) During the first three (3) months after installation, we will repair or, at our option, replace any defective part of the System, including wiring, and will make any needed mechanical adjustments, all at no charge to you. We will use new or functionally operative parts for replacements. At your request we will repair or replace the equipment we provided at our then-prevailing prices.

Most likely all national home alarm companies have similar policies. From what we can tell, all similar alarm companies use the same lack of pricing formula and also provide only a very basic system.

We do recommend home alarm systems, but believe it is far better to deal with a local alarm company. They usually know what is happening in the area and can recommend a system that is best for your neighborhood rather than a generic anywhere-in-the-country setup. If possible get at least three estimates. While they are looking over you house, ask questions about your current home situation – alarm experts love to point out weaknesses in your security. They will spot where you need to add a lock, an outside light, or other simple and inexpensive solutions to problems you might not even realize you have.

You have all heard of the medical alert alarms offered by various companies, especially useful when an elderly or sick person is living alone. Many of the home alarm companies can provide such remote pendants that do the same thing for a considerably lower cost. They work anywhere in your house. Now you can also get such systems in the form of a brooch or a wristwatch. Most of them are waterproof so can even be taken into the shower, but ask before you do so. They are tied into the home monitoring system and while they have an initial reasonable cost, there should be no extra monthly monitoring fee. When the alarm buttons are pressed, it sends a signal through your home system to alert the monitors. They can be used in case of injury, fire, home invasion, or any other emergency. They are far more reasonably priced than the nationally advertised security products for which you have to pay additional monthly fees. For what those national medic alert companies charge for monthly service, you can have your entire house monitored for break-in, fire, and medical assistance. So if you are planning on getting a home alarm, it is wise to pay the extra for fire monitoring and purchase one or two of the remote personal pendants.

Consumer Safety & Awareness Part 6

2009-02-02T03:24:00.000-08:00

Household Bait & Switch

Bait and Switch has many variations. Some service franchise companies use this technique to get you to sign an annual contract, then they inform you that what you have is bare minimum and will not satisfy your needs. Since they already have you under contract, their new sales pitch is worded so you think you are getting something special.

Lawn care companies promise to do monthly fertilization, using chemicals specifically formulated for your needs. Each month they alter what they use to attack early spring weeds, long-term problems, and even provide special pre-winter care. What they do not offer, and charge extra for includes grub control, shrub and tree fertilization, and dethatching. They push you to have these services. Their service is usually only for limited lawn space. To do your entire yard may double the advertised cost.

I have a personal problem with these services. My yard consists of half lawn and half flower and shrub areas. I once tried a lawn care service that promised that their technique would do no harm to my plants, yet the serviceman destroyed an area of pachysandra, a mugu pine, and some hosta. When I complained they said there was nothing they could do.

Pest control companies also offer annual contracts, but they rarely cover everything. There are many established and documented scams involved in insect control, such as finding evidence of infestation without finding any insects (because the insects are under your foundation or inside the wood), using improper or short-lasting chemicals, or even dropping insect pests from bottles and then showing you that you need extra service.

The South Carolina Consumer Affairs Bureau handles a large number of complaints against pest control companies. Their web site has this warning, “Pest control fraud is prevalent in areas where you are more likely to have problems with insects. This con game usually takes the form of a termite inspector who appears and informs you that termites have infested your home and if you contract for his services today, you will receive a discount. Always avoid such pressures. It is extremely doubtful that your house will start tumbling down around your ears that very day. Besides not applying pesticides properly, the pest control con artist may not use a recognized or effective pesticide. As a matter-of-fact, they may apply nothing but some chemically smelling liquid. Don't deal with door-to-door pest control operators. If you need their services check the yellow pages, call them and ask for an estimate based on your needs.”

You can have problems with companies that service inside the house as well. National carpet installation services offer low prices and quick installation. They, though, may attempt to get you to purchase better quality, explaining that the one on sale is not good for your situation, and charge extra for the under pads. The same can apply to companies that install or refurbish cabinets, wallpaper, or do household cleaning.

Bathroom refinishing companies have been cited many times for bait and switch, poor material, and refusal to stand by warrantees. Here is one example from the Internet consumer organization, CTV: “On May 31, 2006 {company} reglazed my bathtub, at a cost of $175.00, giving me a 5 year guarantee. It is now September 29, 2007, and the bathtub finish is peeling. I called the company, speaking to Will and was told to call him the next week and he would make an appointment to come and repair it. I phoned 4 times in the past two weeks and he has an answering machine, so I left a message. He is never in to take my call and he never returns my call.”

By the way, several companies offer spray-on bathroom refinishing kits for old and worn baths and showers. Attorney generals in several states have filed suits against a few stating that the products are short lasting and nearly useless. It is often less expensive to have a contractor install a new bathtub than to refinish an old one.

One thing to watch for in bathroom remodeling, especially for seniors and those with medical problems, are the advertisements for improved units where no price is listed. Once the salesperson is in your home, you are subject to both bait and switch and high pressure sales pitches for products that cost many times their value.

Window remodeling also attracts bait and switch tactics. The low advertised prices might be for poor quality windows that do not meet the building code in your area. The sizes offered may be irregular, and to fit your windows there is an additional fee. The salesperson may talk you into including features that you do not need.

Home alarm companies so overuse bait and switch that they need an entire section to themselves.

Consumer Safety & Awareness Part 5

2009-01-26T15:42:00.000-08:00

The Four Steps

One of the most common scams, one that is totally illegal in every state, is called Bait and Switch. A simple definition of this is when a merchant advertises for a product at an attractive price knowing that no one will purchase it. There are two general reasons – either it will not be available or it will be of poor quality. The advertisement is the bait, to attract you to the store, so that the merchant can then switch you to a more expensive and more profitable item.

Former New York Attorney General, Elliot Spitzer, in a decision involving a Newburgh mattress company, provided the reasons why this technique is illegal. “My office is fighting to protect the integrity of the marketplace, to level the playing field for competitors and to ensure that consumers have clear, non-misleading information from which to make purchasing decisions.”

In order to sell a product, there are four steps any merchant, honest or not, needs to go through. The first is to get the potential consumers aware of the product. So many new items are introduced every week that it is generally impossible for people to know about even a fraction of them. This is why advertising is used. Ads are issued specifically to people who may use the product: a consumer buying in a supermarket, a merchant who might increase sales or efficiency by using it, a teacher who may find it easier to teach a concept through use of the item, or the United States Air Force which might employ the new product to more easily spot an enemy or to make it easier to shoot a target.

Once the consumers are aware that the product exists, the second step is to make them aware of the value of the product. We are faced with a huge selection of things that can satisfy our needs and wants. Why, then, should we switch from what we currently use, or from our traditional methods, to this new item? The merchant must give us a desire to try the product. Again, this step uses advertising.

You see it daily on television and print media ads. This new or improved, or larger item will make you more lovely, stronger, happier, healthier, better able to do your tasks, or more popular. These ads may appeal to vanity more than to logic. Consider automotive ads that use sex appeal to sell a hunk of metal. People will look up to you if you own this particular brand, your life will be easier, your ride smoother, you’ll have more leg room, or the vehicle will get better mileage.

You are now aware of the product and you recognize that it might provide some sort of benefit or advantage to you. All that does no good if the product is not available. One of the weaknesses of new technology, such as a cell phone, computer game console, or similar device, is that manufacturers need to sell it to the public before sufficient quantities of the product are on the market. Manufacturers can use that to their advantage, though, creating tension, the need to possess, and to be among the first. It really does not matter if the item is not yet fully tested, if there are known bugs, or if the initial selling price far exceeds the true value.

The last step in selling an item is making it available at an attractive price. Only the manufacturer, and other companies that make similar products, has any idea what it costs to make and where their sales tipping point is. This phrase has several meanings. It is commonly used to indicate the point where a product is considered mainstream, where the majority of the population sees a need for it. It can also indicate the zero profit point of an item, where all the costs added up come together and anything above that is profit.

Consider a teeter-totter, the children’s playground see-saw, or a balance scale. The tipping point is when the fulcrum is totally balanced. Move it a bit more and the balance swings to one side. To the left there is a financial loss, to the right a profit. Obviously the company does best when it makes the greatest possible profit.

Since the general public can only compare a new product to similar ones that already exist, they depend on the manufacturer, the advertisements, and the merchants to set a value on new or improved items. In general, the initial price, often called the “list price,“ is set considerably higher than it needs to be. The primary reasons given for this is that the company has put a lot of their own financial resources into development, paying for experimentation, testing, salaries, prototypes, and related expenses. To do so they have either borrowed money, and are paying interest, or have taken money from other areas of their business to pay for research and development. They need to recoup their investment and pay off their loans as quickly as possible.

As the product becomes more popular, and they can sell it in greater quantity, several things happen that help reduce the cost, lowering the tipping point. Mass production is less expensive than making fewer items. Shipping larger quantities to the same destination is less expensive. Fewer people are needed in the R&D aspect, so cost for salaries and benefits decline. As bugs are fixed, less money is spent on customer services. Inexpensive ways to produce the product are found. Parts, bought in larger quantity, also result in lower costs.

It is nearly impossible for anyone, including the manufacturer, to point to a time when they can lower the price they must charge and still maintain the profit level they need. It is just as hard to determine when the volume has increased so much that the company has what outsiders may consider excessive profit. A manufacturer will not lower a price until it is forced to, as indicated by a reduction in sales or a pending competitive product that may reduce its market share.

We now have the four steps needed to sell a product: awareness, desire to possess, availability, and acceptable cost.

Like honest merchants, scammers use these to get their marks to buy a product. In bait and switch, they offer something you are aware of, that you have a desire to own, that they make available to you at an attractive price. The problem is, they set out from the beginning to deceive you. There is either no product or the one offered is of substandard quality. The scammer has a solution: for a little bit more we can move you up to a product that is of better quality and is available. Their definition of “a little bit more,” though, may not be the same as yours.

Let’s get back to Attorney General, Elliot Spitzer’s mattress rip-off. Here is the actual decision from November 13, 2000:

Spitzer found that Resnick's Mattress Outlet, Inc., repeatedly ran advertisements offering specifically displayed mattresses for $29.95 to $59.95. When customers sought to purchase the advertised mattresses, Resnick's would discourage them by disparaging the quality of the mattress or by not stocking enough to meet demand. Resnick's sales people would then steer those customers to more expensive mattresses.

"Bait and switch advertising involves the advertising of an item at a very low price to lure consumers into the store and then switching the customer to a far more expensive model by stating that the advertised product is unfit or unavailable. It's an age-old sales tactic that gives an unfair competitive advantage to a business over its competitors by using false promises in its advertising to entice customers into its stores," Spitzer said.

The Attorney General found that Resnick’s advertising was misleading because it left the impression with consumers that all mattress purchases qualified for its advertised free frame, free delivery and free removal policy, when in fact, the offer did not apply to the advertised mattresses, but was limited to only certain specifically prepackaged mattress sets. Spitzer's office also found that Resnick's deceptively claimed that it would double someone's money back if a consumer could buy a mattress for less from a competitor within 100 miles. Resnick's stores are primarily stocked with mattresses manufactured by and exclusively for Resnick's stores. The few remaining non-Resnick manufactured mattresses carried in Resnick's stores are only rarely available at competitor stores within a 100-mile radius.

Most mattress company commercials use a similar ploy – they state they will give you a free mattress or additional cash, or something special if you can find the same mattress at a lower price anywhere else. For them it’s a safe bet. You see, all mattress companies put a different identification number on mattresses sold to different stores. They may sell the exact same product to Sleepeze, 1-800-Mattress, Macy’s, Penny’s, or whatever store you are dealing with, but each company receives its mattresses with a different code. Therefore it is impossible for a consumer to prove that the exact same mattress is being sold for less elsewhere.

Consumer Safety & Awareness Part 4

2009-01-12T03:28:00.000-08:00

Why Scams Work

There are several types of scammers, each with their own specialty. Some work on the road, hitting and running away so rapidly that you see them only for a few moments. Some specialize in mail, telephone, or e-mail fraud. Generally what works in one of these media does well in others, although some variations are easier in a particular mode. Others work in offices, and they rob you with their pens, computers, calculators, and contracts. They include lawyers, financial advisors, tax consultants, government workers, and all sorts of white-collar workers.

Every occupation provides opportunity for people to work scams, from within and without. They can rob you with a gun, through trickery, or with a piece of paper. They can assist you in fooling yourself. Scammers provide the opportunity for you to fall into their traps.

No one knows how many CEOs sit in their offices, perhaps playing computer games, raking in their millions. It is impossible to estimate how many hackers transfer money from one account to another or use other people’s computers to make their fortunes. Large corporations have so many layers of security, that it’s impossible for them to see the individual twigs in their vast forests.

Who steals from others? Principals and school superintendents misdirect funds or lie on their expense vouchers. Little league managers and supervisors obscure their income totals and fib about what they spend money on. Community and school tax collectors pocket cash given by homeowners. Politicians, contractors, and people who make purchases for all sorts of companies and institutions accept kickbacks or look the other way when poor quality material is used.

Insurance companies, cable and telephone services, lawn care and pest control franchises all create contracts so obscure that they can easily add on fees for what you thought was covered by contract. Auto repair shops use sub-standard inexpensive parts, or replace good ones with used. Gas stations and deli counters rig their weights and measures. Homeowners hide defects when they sell their houses. Building inspectors accept bribes.

Think back on episodes of Law & Order, Monk, NCIS, or any television show or movie involving people, money, and possessions. They are not outlandish. Well, “Men in Black” was a bit extreme. Situational dramas are based on real life happenings.

Every day, from morning to night, you give scammers the opportunity to rob you. Every time your telephone rings, it could be someone testing to see if you are home. When the doorbell chimes there could be someone waiting to sneak into your house. In the streets and stores there are teams of pickpockets, people who stage accidents, and others looking to provide you with the opportunity to purchase things at highly inflated costs. In your work place there are those who know just what you need to cure your sniffles, or to provide the best health care, or to give you a chance to improve yourself.

There are frauds dealing with education, daycare, and repairs of all sorts. There are con artists waiting to explain why you need a new roof or fresh blacktop. There are gas stations and home heating fuel companies that purchase the dregs from the bottom of those huge storage tanks, and their products are more likely to contain water or sediment that will ruin your engine or furnace.

There are “honest” businesses with good reliable names that sell substandard material, put impurities in their product, and sell medications that have no value or may even be harmful. Trusted advisors will bill you for work not performed or will sell your personal information for a profit. Judges take bribes, cops take bribes, teachers take bribes, and contractors take bribes.

Have I insulted your profession yet? Sorry I missed it. You probably know someone who does exactly what you do who is a bit shady. People cut corners, they get even with their bosses, they feel they are not paid enough or not appreciated. Human nature.

Enough paranoia. Yes, there are people out to get you, and if you let them they’ll jump at the opportunity. Let’s see what we can do to put you in bulletproof armor; a scam-resistant vest of knowledge that will prevent, deflect, reduce opportunities and make it less likely you’ll be chosen as a mark.

Next week we will start looking at specific con situations.

Consumer Safety & Awareness Part 3

2009-01-05T03:00:00.000-08:00

Who Scammers Target

All types of people are subject to being scammed. They attack the rich and poor, men and women, young and old. Scammers do not discriminate – they do not care about your race, religion, or nationality. It makes no difference where you live. They even try to con other scammers.

There are, though, specific groups of people that are more susceptible to scammers simply because of their background, culture, age, or knowledge. There used to be a commercial that stated, “A well informed consumer is our best customer.” A knowledgeable consumer is less susceptible to a scam. This has nothing to do with education or intelligence.

The more you know about any aspect of life, the better you do at it. I am a teacher by trade, and was fairly successful. But do not ask me to build a bookshelf, work with plumbing, or drive a truck. Since the 1980s I have been researching scams. During that time I have been exposed, through reading and actual active participation as a supposedly unsuspecting mark . I may still fall for one of these cons, but it’s very unlikely.

So, to protect yourself, you need to be aware of the main scams, those you are most likely to come across. This includes knowing who the scammers go after, what they are seeking, how they study their intended targets, and generally how they operate. In each case you should look at a variety of examples of actually successful scams. Just reading about a few in the newspaper and wondering how anyone can be taken in, is not going to do it.

The absolutely perfect victim for a scam is an elderly religious person, living alone with few outside contacts. This takes into account several factors. Scammers use psychology, sociology, human traits, reactions, and tendencies. Like a gambler, they play the odds. Older people were brought up in a more trusting environment. Their childhood and younger lives were protected from fraudulent activities. In many cases they cannot conceive of anyone wanting to take advantage of them.

A person who lives alone, even by choice, is subject to feelings of loneliness. People have a desire to belong, to be needed and liked. Thus an elderly person who does not have constant human companionship, is more likely to believe in someone who demonstrates a concern. Elder abuse is almost always caused by a relative, a friend, a caretaker, or someone the person has put trust in, such as a lawyer or financial advisor.

Religions teach people to trust others, especially those who have nearly the same beliefs. Add this factor to living alone and being elderly, and you have a perfect mark.

Other human traits scammers count on include the desire to have the best possessions and the willingness to take risks to obtain them. Some call it the greed factor. Others blame advertising companies who bombard us with the latest and greatest, displayed in perfectly clean homes with wonderful furnishings. Everyone in ads is healthy, beautiful, young, and can afford anything they want.

It makes no difference if you are already wealthy, or are just making it from day to day. There are scams created to appeal to the greed in all of us. Although poorer people have less available money, they can be conned over and over simply because they have a greater desire for the wealth they see around them. Those who already have plenty are conned less frequently, but for bigger prizes.

Each of the scams, frauds, and other illegal practices we will be looking at has been tailored to meet the susceptibility in all of us. No one is immune. You may never see it coming, or it may be staring you in the face so blatantly that you can’t recognize it for what it is. On the other hand, you may be so absolutely certain that it’s a scam that you feel you can beat it. Yet again, you’re falling for their deceptions.

Scammers are not smarter than you, but they have more experience. They know when a scam is worth pursuing and when it’s time to run. And they run so fast, and hide so well, that they are almost never caught.

Consumer Safety & Awareness Part 2

2008-12-29T04:26:00.000-08:00

The Honesty Factor

Most people would be dishonest if they knew they could get away with it. According to an AP release on November 30, 64% of students have cheated on tests. That is dishonesty. Add to that 30% of high school students have admitted shoplifting. Most likely there are others who will not admit it.

Is it only society’s morality checks that keep more people from being crooks? If not for the fear of being caught, of the social stigma associated with it, the consequences both through the criminal justice system and through the loss of “face,” would more people act dishonestly? In many social circles, dishonesty is admired. Many teenagers look up to those who beat the system, even when they do so in ways that are contrary to their upbringing and their religion

Are these people reacting to the examples they see around them – sports figures and popular singers carrying guns around, abusing drugs, ignoring sexual morality, and generally flaunting their ability to do improper things and get away with insignificant punishments? Does our society now look up to the CEOs who make millions while driving their companies into bankruptcy? Then, after their business tanks, they are hired to run another company.

Honesty seems to have several meanings. People want others to be honest in their dealings, but they do not always seem to think that they need to be honest with others. We see people, public figures, accused of crimes, refusing to accept any blame, decrying any thought that they may have done something wrong, only to plead guilty a few weeks later.

Perhaps it is this jaded attitude that has opened the door to so many scammers, thieves, white-collar criminals, and other crooks. From President Clinton’s denial of sexual wrongdoing, to Vice President Gore’s supposed invention of the Internet, to president Bush’s many twists of truth in order to convince Congress and the American people that we needed to go to war in Iraq, from the top down honesty is no longer policy.

Alaska’s recently convicted Senator, Ted Stevens, totally denied any wrong-doing. He was convicted of seven counts of failing to disclose more than $250,000 in gifts and home renovations. Yet he refuses to believe he did anything wrong. He admits to having all these things done for him, yet states that since he did not formally accept the gifts, that he was just keeping them temporarily, he was not guilty of any impropriety.

Humans have been raised for thousands of years to accept the honesty of our religious leaders. In fact, since faith is the cornerstone of religion, and those who set church policy also set morality standards, how can our society maintain an appreciation of honesty when so many religious leaders have lied, stolen, ignored their vows, and committed horrendous crimes?

We also accept society’s ills as an excuse when a crime is committed. The accused did commit the crime, but it was not her fault because she was pregnant, or had just given birth, or because he had a poor childhood, or because he saw the same thing done on television. We scoff at some of the trials that result in huge settlements for seemingly little things, yet “we” are the people who are on those juries who determine the outcome. We wonder why a minor violation can result in a huge jail sentence when major criminals get off with probation or less.

All this opens the door to scammers. These people, who have purposefully set out to rob, whether through overt act or deception, rarely see any harm in their acts. It is their job. The marks or pigeons are simply there as aspects of their work.

Next week we will examine why scams work. Just how is it that such people can stay in business, in fact rack up billions each year?

Consumer Safety & Awareness Part 1

2008-12-23T06:33:00.001-08:00

Thieves All Around Us

My wife and I love penguins. We once traveled a few hundred miles, during a vacation, to visit a rookery. One of the most interesting facts about these creatures is that Adélie penguins, which use rocks for nests, have no hesitation stealing the rocks of other penguins. This behavior is not limited to penguins. Grosbeak, Sparrows, and Starlings have been known to steal the entire nest of other birds, occasionally taking parts and at other times just laying their eggs in nests made by others and moving right on in.

Anyone who has a flower or vegetable garden is quite familiar with animals that steal what we work hard to produce. Deer, raccoons, chipmunks all like to eat our favorite flowers. Animals also take from each other. Monkeys do not hesitate taking whatever they want, no matter who or what it belongs to. Squirrels and crows love to carry away things that would surprise you.

Although this may come as a shock, humans also steal. Yes, they do. In fact theft predates human history, that is, before we learned to write our ideas down. It is simply a human trait. When it is easier to take from someone else than to get something ourselves, our ancestors did not hesitate doing so. Morality and social attitudes towards stealing is a relatively recent addition to human behavior.

Today, throughout the world, human societies have taboos on thievery, especially from one’s own group. It has long been believed that Gypsies had no qualms about taking from others, yet there is no actual proof this is a trait of these Romanian people. Due to the need to stay alive, all creatures will steal when their survival or those of their families depend on it.

Yet some humans make an art of stealing from others, whether they need it or not. People do this to obtain things they simply want, or to deny others from having material goods. People steal works of art and other treasures simply for the pleasure of having such objects. Rich people have been known to steal simply to become richer. Many people take what is not theirs because they know they can get away with it. More than 70% of shoplifters can afford the objects they take.

In this new series, we will be looking at organized planned thievery. Although theft of opportunity probably accounts for a large portion of stolen goods and money, theft by design probably accounts for over 90% of the value of property stolen. It take only a moment, and little thought, to take a candy bar, a pair of socks, or a bottle of perfume from a store or to lift a valuable from a house you are visiting or living in. But a lot of planning must go into art heists, bank robberies, and embezzlement.

It is doubtful if anyone reading this has a Monet or a Ming vase. If you do, you probably have all sorts of alarms and insurance policies. Most thieves are not sophisticated enough to get away with super-heists. But by taking $100 or $2,000, or $15,000, organized groups and knowledgeable individuals can do just as much harm to us as those people who get millions in museum robberies. Most of these small thefts are the result of scams.

A scam is theft by design. It is planned, practiced, perfected. It uses trickery, the skill of a magician, and deception. It works because the scammers study human nature, can predict how people will react in certain situations, and they take advantage of people’s trust. They target older people who are usually in need of someone to believe in. They target religious people who have an interest in sharing

There are many types of scams. The most common, which we will be writing about in this blog, include, but are not limited to:

> Bait & Switch
> Pyramid Scams
> Advanced Fee
> Theft of Services
> Robbery
> Counterfeiting
> Theft by Design
> Blackmail
> Deceitful Advertising

By knowing how the scammers operate, and examining the types of people and situations that make their work easy, you can learn to protect yourself, your family, and your valuables.

“Seeing is not Believing” part 18

2008-12-15T05:06:00.000-08:00

Christmas Sales Dangers

For the last five months, Slightly Creaky’s blog has been running a series called “Seeing is Not Believing,” explaining the ways that advertisers, manufacturers, and stores manipulate your senses in an attempt to get far more than they deserve. This week we wrap up that series and prepare for a new one.

As we close in on Christmas, all around us are advertisements for sales. Every year, November is the month or getting ready for Christmas sales, December is when we get zonked with “Buy, Buy, Buy,” and January sales are when stores get rid of the leftovers. Most of these sales are based on percentages – 10% off, 20%, 30%… even as much as 80% off. We must ask – 50% off what?

You have to wonder, if stores can take so much off their prices, and not only stay in business but expand and give the bosses and stockholders huge bonuses, then just how much of a mark-up is there? In “Seeing is not Believing” we have spoken about pre-sale markups, the concept of list price, and the manipulation of sales terms to befuddle and mystify the public. During the last four weeks, we have been carefully studying ads and sales prices and have noticed one simple trend: no matter how great the percentage discount, the prices have hardly changed.

Remember what we have previously discussed: stores can set whatever price they want on an item. We have no way of knowing how much they cost to manufacture, ship, store, and how much these businesses mark up the products. We have seen the same item, same size sell for a huge range of prices. Here in the northeast, the same can of Campbell’s 10.5 ounce gravy was selling in ShopRite for 3/$1.00, it was on sale the same week at Price Chopper for $1.00 a can, and elsewhere we have found it for as high as $2.49 a can.

If a store sets the “list price” of an item, say a lady’s blouse that cost them $10 wholesale, at $80, then that is its value. They only need to sell it at that price once. That is the value they put on it, and that value is not set in your mind. They can then sell it for any amount and call it a sale. Yet each time you see it, it’s listed as an $80 value. They can take 10% off at $72, or 30% off at $56 and still make a huge profit.

Then comes Christmas and their huge “More than 50% off” sale. This blouse, selling now for $39.95 is still bringing them a huge profit. In three months the leftovers will be at $19.95 at Marshall’s and they’ll do just fine. Even when they reduce it 30%, they are making money.

There is no law that prevents any store from removing a price tag and substituting one at a different amount. It is a general rule that stores that are holding “out-of-business” sales raise their previous prices 20 to 40% prior to putting “Everything on Sale at 30% off.” Thus the items may be selling for even more than they originally were.

At the holidays, many stores use the same ploy: raising their price tags, then discounting the items based on the higher price. Any percentage-off sale is meaningless unless you can compare the new price to what that item typically sells for. ‘Tis the season for giving; yet businesses believe this is the season for taking. Be careful, be knowledgeable, and do not believe all that you see.

Happy Holidays everyone.

Consumer Safety & Awareness

In November, I offered my services to teach a class on “Consumer Safety and Awareness” at a college near where I live. If all goes well, this offering, at their Center for Community and Educational Services, will be available to those in New York’s Hudson Valley area. This is not a college level course, rather an “adult education” presentation open to everyone.

As is my habit, when I get involved in a project I dive in, doing research, writing out ideas. Totally unanticipated, I already have far more information than I can possibly use for that 5-session offering. And my research has shown me that there’s a lot more information out there.

Therefore, as a service to the public and as an extension for those who take the class, starting next week the Slightly Creaky blog will be offering a new series “Consumer Safety & Awareness.” It is my hope to extend this to at least 50 weekly articles covering scams, fraud, household and automotive safety, Internet, mail and telephone fraud, and much more.

If you have been taken by anyone, by a scammer, a store, or a service company, we’d like to hear about it. Feel free to post your comments on this blog, on the Slightly Creaky message board, or simply write to us at info@slightlycreaky.com.

Seeing is Not Believing Part 17

2008-12-08T15:19:00.000-08:00

Call in the Next Five Minutes

Who can resist a special deal? When people are offered things for a deep discount or possibly free, they rush to buy. Perhaps it is human nature, perhaps greed.

We knew a person who used to look for such sales and went far out of her way to get them. If a place offered something with a rebate that saved a dollar or two, she would buy it, even if it meant spending an extra $5 on gas and tolls and take an hour round trip. A few years ago, when she was visiting and saw we had something that was not working properly, she offered to give us one from her stock of more than a dozen that she had gotten for free.

During a visit to her house we noticed a bag among her garbage containing quite a few food items in closed packages. Thinking she had placed them there by mistake, we asked whether they were food pantry donations. She stated they were all items she had bought at a discount but were now out of date. She may have saved half price on them, but threw half out.

Companies take advantage of this trait to get us to buy things that we really don’t need, and may not even want. In print ads they are called “loss-leaders,” an item the company sells at cost or even at a small loss, to get you into the store. Milk used to be a common item that headlined advertisements. Buy your milk for half what it sells for elsewhere and while you’re in the store you may get cigarettes, snacks, and other high profit items. Now you see movie DVDs used the same way.

Restaurants use soda as a loss-leader. You may think you are getting a great deal when you get a free fountain soda, or even a 12-ounce can, but the cost to the store is negligible. Consider that supermarkets make a profit when they sell 12-packs of soda for $2. Thus a can of soda can not cost them much more than eight cents each (and possibly a 5-cent deposit). If they can get you to buy a $5 sandwich (which is $4.50 profit) and throw in a can of soda for free, who wins?

Television advertisements give away “free” items frequently. Purchase the acne cure (cure?) for $20 and get six items that other companies could not sell because no one really wanted them. Remember the extra shipping and handling charges we mentioned in last week’s blog?

Cruise ships use the same technique. Most of them over-inflate the prices so they can offer $200 off each room (not each person) and $100 room credits that must be spent on their amazingly high prices. Free water, coffee, tea, and ice tea, but soda, which costs them less than coffee, is $2.00 a glass or all-you-can-drink for $40 a week. Consider that – you need to drink 20 glasses of soda in seven days to break even. Twenty 12-ounce cans at the supermarket would cost you under $4.

Taking a cruise means more than being on a ship. At each port you get a chance to visit significant destinations such as historic sites, scenic locations, wineries, or other highly publicized must-see tourist traps. If you take the cruise ship’s planned tour you are guaranteed to get back before the ship leaves port, and you will also pay twice or more than if you take a similar tour purchased locally.

We’ve taken six cruises in the last dozen years and have only taken two tours: a penguin rookery and a swim tour in the South Pacific. They were wonderful, and well worth the cost. But we balk at spending $300 a person for a one hour hard seat no-shocks bus ride to some obscure location, ten minutes touring the place, a free 3 ounce glass of grape juice, and another hour back.

In one of our previous blogs we discussed high-pressure sales (Part 7, September 13, 2008). This is where you are told you can get a substantial discount if you purchase NOW. The offer will never be available again. Radio and television ads use the same technique, but with a twist. Purchase within five minutes and you get a discount, or a free item, or free shipping…. The implication is that if you wait six minutes you will not get the special offer. Twenty minutes later you hear the same ad, possibly on a different channel, again giving you just five minutes to call in. And tomorrow it’s on again, and next week, and next month…

NOTE: There is only one more article in this series. Started on December 22 we begin a new series entitled "Consumer Safety and Awareness"

Seeing is Not Believing Part 16

2008-12-01T07:45:00.001-08:00

Hidden Fees

Have you taken a good look at your telephone or cable bill recently? The details may be shocking. While many companies advertise “low” rates for such services, by the time they add on extra fees for things you have never heard of, your bill can be twice or even three times the advertised rate.

One television advertisement for multi-line cell phones has a large $49.95 in their ad and you might think that’s the cost. Actually that is what they charge for each extra line. The monthly rate is around $100; add two lines and you are paying double. Include the service fees, subscriber charges, recovery costs, and other usually unexplained add-ons and you’re up to $240 before state, Federal, and local taxes. Plan on it going around $300 a month.

Add to that the cost of the telephone. Oh, they are giving the phone away for free? Wow. It now costs less than $10 to make a cell phone, even with all the extras. They make up for it with an “activation fee,” whatever that is, of only $49.95. Per line.

Now telephone companies are charging for each text message sent and received. There was a recent story of a California teen who did not realize there was a surcharge for texting from Canada while on vacation and the next month’s bill exceeded $20,000.

Frequently when a new service is provided, such as text messaging, walkie-talkie calling, or e-mail delivery to your cell phone, initially it is offered for no extra cost. A year later, once you are hooked, the fees kick in. In many cases there is no advanced warning that what was once free is now costing you a hefty sum. Or, if there is notice, it is in small print mixed in with five pages of similar small print that you read the first time you got the bill, but have since ignored.

Television used to be free. You put an antenna on the roof, or, if you live in a city, rabbit-ears on top of the set. Then came cable offering better reception to rural areas. Cable also offers more than 12 channels. With some cable companies you had to pay extra for local stations until Congress stepped in to end that extra hidden cost.

Now you can get cable, as part of a package, for $29.99 a month. You also needed to add telephone for a similar price, and Internet service. Actually that is not a bad combination if you need all three. Although if you want more than the “basic” package of 80 channels (74 of which you’d never watch), your cost doubles, triples, or exceeds $200 a month.

Get a free home alarm. Sounds great until you look at the hidden fees. The “free” package may only cover four windows and one door. Not many of us have four windows and one door. We had five of these “free” alarm companies visit us and the actual cost for our house (9 windows and three doors) came to just over $1,200 from a local independent company (which did not insist that we sign a long term monitoring contract) to more than $3,000. The four national companies, all of which advertise ”free” alarms, also wanted two year or longer monitoring fees of $33 or more a month. For 24 months that comes to $800, which is not so free.

After 40 years of listening to infomercials, I recently saw a product on television that I thought of purchasing. It may not have been worth $19.95, but it was something I could use and had never seen in the store. But wait… if I ordered now they would triple the order and I’d get three for the same price. Plus a shipping and handling charge of only $8.99 (why can’t they say $9?). Each. Yes, you had to purchase three, and the cost was $20, plus three $9 fees for $47.

The newest gimmicks are shipping surcharges. Some companies add on a “cost of shipping surcharge” due to the high gasoline prices. We did not see such surcharges when gasoline was going for $4.30 a gallon, only once they fell below $3.00 again. The company may not be able to tell you in advance what this surcharge is, as it is based on many factors including the cost of gas, the shipping company they use, the time of delivery, the shipping distance, and the number of box seats the boss needs for next week’s football game.

Seeing is Not Believing Part 15

2008-11-24T09:45:00.000-08:00

Others Charge More – Do It Yourself

Have we gotten so lazy that we no longer attempt to do the simple things ourselves? Americans have become the slaves of advertisements so much that even in this time of recession, when many of us are cutting back on purchases, we still hire expensive companies to change a dripping faucet, to mow our lawns, and to do the things our parents and grandparents would simply do themselves.

Three years ago, we were frustrated with our inability to grow grass in one part of our lawn. Falling for the advertisements, we responded to a national advertisement stating that the company will turn our lawn green, get rid of weeds, and all we had to do was sit back and enjoy. Their price was about twice what I would have paid for the “organic” fertilizer that I had been using, but they would do the work and guarantee it.

The franchise owner visited us and walked the yard. Their price (based on a minimum square footage) would cover the front and side lawns only. To do the back yard would be an extra $90 for the year. Not bad, we agreed. Two days later one of their employees pulled up, took out a spray tank, and walked the yard spraying. Twenty minutes later he was done, put up warning signs, and left. According to those signs, they did not use the non-toxic chemicals they had advertised. It was a warning to keep children and pets off the lawn for three days.

I complained. The contract I signed was for the chemical they used. They never offered the option of the non-toxic product, but should I desire, I could now switch to it. They cost would be almost five times what was originally agreed on.

The next time they came, the worker was using headphones and singing while working. He sprayed the side of the house, some of my flowerbeds, and a few shrubs. Within a day the flowers were wilted, the shrubs turning brown, and the side of the house stained. I complained. The owner came back and looked. He said he would fire the worker for being so careless (I saw him at another house, still working for the company, two months later), but there was nothing he could do about the dead flowers and shrubs.

I told him to cancel the contract; I’d take the loss. Even this summer there was one area where they sprayed that, with the original soil removed and new dirt and flowers put in, nothing grows properly.

As soon as I fired the company, I did what I should have done originally: Googled them. There were web pages filled with similar complaints, people who had negative experiences not only with this company but also with other “lawn experts.”

Using the Internet to research lawn care, and taking a few books from the library, I discovered that by trimming some branches that were shading part of the lawn, using a few bags of lime, and removing the thatch in the spring, my lawn should improve. It did.

Today, with plumbers and electricians charging almost or over $100 just to come to the house to give an estimate, with service contracts costing $400 and up, and with $40 oil changes, we need to stop depending on others, to take the time and the pride and learn to do many things ourselves.

Many school districts, colleges, libraries, and community organizations offer low cost or free adult education courses. If you no longer have the maintenance manuals that came with your lawn mower, leaf blower, or similar product, try the Internet. Companies offer free or inexpensive replacements. These manuals will show you how to change the oil, sharpen the blade, and replace fluids. If you cannot get a replacement from the company, try a bookstore. Ask the hardware store owner or worker. Lowes and Home Depot have done a good job training their employees. They also have many low cost do-it-yourself books.

Use the Internet. There are many online forums where people share their knowledge of small repairs and product reliability. One great online resource (see below for more) is newsgroups. If you have never used one, see TechFAQ first. Google Groups is a good place to start.

Other online Do-It-Yourself resources:

Slightly Creaky’s Leaky Pipes

Michigan State University: Home Maintenance & Repair

DoItYourself.com

How Stuff Works

How Things Work

This Old House

AutoZone

Lowes How-To Library

Home Depot Know-How Center

Monkey See

DIY Network

Seeing is Not Believing -- Part 14

2008-11-17T09:21:00.000-08:00

The No-Price Policy

A friend recently responded to an advertisement for a bathtub refitting company. The product was just what she needed to solve several issues, loss of mobility and an aging bathroom. The advertisement did not list a price, and she invited a salesman into her house to demonstrate, with sample material, without asking how much the product cost. She never made the purchase as, with free installation and a $500 discount, the new bathtub was more than four times what she was willing to pay, over $20,000.

This is an old sales technique. Get the person to want the product badly enough and they may not argue about the price. Automobile ads make cars look sexy for that reason. Door-to-door encyclopedia salesmen (I was one, briefly, in the 1960s) hooked the parents on why their kids needed the product before mentioning the $1000+ price. Many products are now advertised in magazines and newspapers using this technique.

As an example, we can examine a magazine many people trust: the October, 2008 AARP Bulletin. AARP sells space for these ads, they do not profit from the advertising techniques. The information below was garnered during the week of October 12. (Slightly Creaky often links to AARP articles as we find them to be well researched and worded so any one can understand.)

Page 2 – full page. Sleep Number Bed. The Select Comfort web site offers both a 4-day delivery and a $500 discount, but to find the actual price you have to actually order the product, including inputting a credit card (we did not). The small print includes: “$500 cash off only for Queen and King Sleep Number® 9000 and Sleep Number Memory Foam T bed sets, and is not stackable on extended financing plan,” as well as, “As of September 1, 2008, variable APR is 22.98% and on all accounts in default, 28.99%.”

There were two additional ads for Sleep Comfort beds in this issue

Page 15 – full page. Nutrisystem. The advertisement says “Eat FREE for 3 weeks.” (Capitalization and color as in original ad.) It states that Tony Orlando lost 103 pounds and Marie Osmond dropped 40. The small print states, “Results not typical.” The only price listed is “All for about $10 a day.”

Their web site did not list the price and made additional promises. Their disclaimer is, “Offer good on Auto-Delivery order only. One additional free week of food will be included with your first and second deliveries. With Auto-Delivery, you are automatically charged and shipped your 28-Day program once every 4 weeks unless you cancel…. However for this offer you must stay on Auto-Delivery for at least two consecutive 28-Day program deliveries to receive the second free week of food,” Three pages down you find that each 28-day program costs a minimum of $329.95. If we are to believe that this is for 28 days, which comes to $11.78 a day, which is “about $10 a day.”

You need to be careful, though, as hidden in a scroll-down box is, “Substituted food items may contain different ingredients and allergens than those in items originally ordered.”

Page 34 – quarter-page ad. Premier Walk-In Tub. “As seen on TV.” The web advertisement promises, “Low entry, built in seat and temperature control are some of the benefits our tubs offer.” Some models offer optional hydrotherapy jets.

To view their products, you pop a virtual soap bubble and are taken to a different page. Thus it is nearly impossible to compare the products. Nowhere on the web site are prices listed – you need to call, mail, or e-mail a request. There were dozens of companies, in addition to the manufacturer’s home page, advertising for this product. None listed a price.

Back Cover – full page. BOSE Acoustic Wave music system. As with the others, there is no hint as to how much it costs, but you can make “12 easy payments.” The small print stated, “on orders of $299-$1500,” does give you an amazingly wide range. The BOSE web site lists the price right on the top right: $1,378.00.

Seeing is Not Believing Part 13

2008-11-10T03:27:00.000-08:00

The Gifts That Keep Taking

Here comes Christmas, a birthday, any event that calls for the giving of a gift. Everyone’s interests are so diverse that you might not even know what your spouse, neighbor, or third cousin wants. So you solve the problem by purchasing a gift card.

Just about every store now has them: grocery, clothing, beauty parlors, tool shops, and phone companies. Most people think that giving a gift card solves many problems, but actually it can create even more.

Most gift cards come with a time limit – use them within a certain number of months or the store starts deducting a percentage or cash amount each month for “maintenance.” Some of them expire completely on a set date. Thus if the person receiving the $100 card does not use it by the set time, you may be only giving $85 or $60, or nothing at all.

Stores like gift cards. Not only are they inexpensive to produce, it ensures that someone will be coming in to make a purchase. Frequently the item bought exceeds the value of the card generating additional profit for the store. This is one reason many stores now give such cards rather than cash when you get a refund – it ensures that you must come back, and you will probably purchase more than the value of the card.

Consumer Reports cautions against the use of gift cards: “Earlier this year, TowerGroup, a research firm in Needham, Mass., estimated the value of unused gift cards in the U.S. at $8 billion for 2006. And in its fiscal 2006 annual report, the retailer Best Buy revealed a $43 million gain from gift cards that were unlikely to be used.” Recently their parent company filed a report with the FTC about people losing the value of the cards when a store closes or files for bankruptcy. (Also see “$8 Billion in Gift Cards Went Unredeemed Last Year”.)

The FTC has been active, warning people that gift cards are not always the best way to go. “But before you buy a sack-full of gift cards from your favorite retailer, restaurant, or local financial institution, the Federal Trade Commission (FTC) wants you to know that some strings may be attached.” Among the problems reported are identity theft, loss of funds, counterfeit or fraudulent cards, and hidden fees. Be sure to read the FTC Fact Sheet (PDF file) about gift cards before buying or even accepting one as a gift.

With a growing number of scams revolving around gift cards, even those you buy in your favorite store might be tampered with prior to purchase. Think twice before purchasing one.

Additional resources:
New Gift Card Scams
Beware New Gift Card Scam
What is a Gift Card Scam?
Gift Card Fraud
Buyer Beware: Gift Card Scam Alert

Seeing is Not Believing Part 12

2008-11-04T13:13:00.000-08:00

Most people use coupons when they shop. They appear to save us money, especially since many stores double them. But in reality, they are simply another form of advertising and generate additional profits for both the manufacturers and the stores.

There are two common types of sales coupons: those from the manufacturers on specific products and those from stores. Both serve the same purposes – to get you in so you will shop, and to get you to buy a product you may not otherwise purchase. In some cases the items are new, and providing a discount coupon is a major sales technique to win your loyalty to the product. Manufacturers believe, and they are frequently correct, that once an item is tried many shoppers come back to it.

Over the years, stores have tried to attract customer loyalty by placing their own coupons in advertisements – you only get the discount on the product at that specific store. Of couse the manufacturer gains as well, and has probably reduced the wholesale price to that store during the sales period. One advantage to the store is that they do not double their own coupons. A 75 cent off manufacturer’s coupon may cost the store $1.50 if they double, but their own coupon for the same amount would cost them half that amount.

Stores usually limit the doubling to coupons under a dollar. Thus a 75-cent coupon is worth $1.50 to the consumer, but a $1.00 is only worth face value. This explains why manufacturers have so many $1 coupons. BUT – to use them you need to buy multiples of the product. Thus you see $1 off two or three items, which forces you to buy more than you might need or reasonably use. You may be tempted to pass the item by, but the name remains in your mind through this subtle advertising technique.

Recently one cat food manufacturer has been offering a dollar off if you purchase 24 cans at one time – thus less than three cents per item – and each can sells for over 60 cents. Thus to get your dollar back you have to spend at least $14.

So how can a consumer win at this game? Selectively use coupons only for items you would otherwise purchase. I happen to use the brand of cat food mentioned above, and wait for it to go on sale, usually around once a month. I currently have around 60 discount coupons for items I generally use anyway and compare them to what is on sale, using a coupon only if it is to my advantage to do so.

One of my favorite grocery stores offers coupons that seem to provide significant discounts. They may be for $1 off any frozen food item in the store or 25 cents for a loaf of bread. The catch is that you have to spend $15 (not including the coupon items) to qualify. Since I make a shopping list and rarely vary from it, there are times I pass on such items.

One way you can take advantage of such promotions is to have a separate list of items you know you’ll need sometime within the next few weeks that do not normally go on sale: garbage or storage bags, detergent, spices, tea… If you need a few dollars more to make the spending requirement, purchase one or more of these items.

Used properly, couponing can save you several hundred dollars a year as well as give you the opportunity to try items you might not normally purchase. Just remember that neither the manufacturer nor the store is losing money on them, and they are gaining a customer.

Who is Best For the Slightly Creaky?

2008-10-24T04:30:00.000-07:00

The Slightly Creaky web site is not political in nature, but as this Blog was established as our editorial wing we feel it is our obligation to express the opinions of the editorial staff prior to what may be one of the most important presidential elections of our lives. We feel that the 2008 election will decide:

1. Health Care issues for the next 20 years.
2. Social Security’s future.
3. The reformatting of Medicare and Medicaid as well as the prescription drug plan Part D.
4. Regulations controlling the cost of prescription drugs for the next 20 years.
5. The composition of the Supreme Court.
6. Regulations controlling the excessive profits and incomes of those American companies and CEOs whose actions control prices.
7. Local taxes including property and school. As Federal taxes are reduced, local and state governments must raise their taxes to compensate.
8. Morality in government. While it may not be our business to pry into the personal lives of those in government, it is our obligation to make sure our government respects the rights of the people.
9. The way the United States is respected overseas. This affects both our safety and our pocketbook.

(Please refer to the Internet links for comparative data. The information presented here comes from each candidate’s web site, position statements, and speeches unless noted otherwise.)

1. Health Care. Whether you have medical coverage or not, whether you are uncovered, can afford your own medical insurance plan or are wealthy enough to simply pay as you need it, whatever is recommended by the next president will have a great impact on what Congress decides. Remember, the President can only suggest. It is Congress that actually passes the laws.

There is no doubt that both the Senate and the House of Representatives will have a significant Democratic majority for the next two years, possibly (and historically) for four years and longer. It is unlikely that Congress will accept John McCain’s proposal, not just because he is a Republican, but also because so many health and economic experts rejected its basic premise. Simply said, giving a tax credit of up to $5,000 per couple ($2,500 for single adults) as well as taxing the value of health care for those whose companies now provide it for free, violates all that our federal government has done in the way of social programs for the last 80 years.

In addition, the McCain proposal will add to the ever-increasing inflationary costs we have seen in medical coverage. Simply giving people money to purchase medical insurance does not guarantee that the insurance companies will reduce the nearly 7% increase we see annually. If that continues, the amount of coverage $5,000 will afford us will be negligible.

Obama’s plan has several reasons for success. In addition to having already won the support of a majority of Democrats (and some Republicans), it maintains the best of the current health coverage policies. People would have a choice of keeping the plan they already have if it works, if it is cost effective, and if it provides them with the options they want. If not, they have a second plan they can compare with what they currently have and choose to select it.

In the short run, both plans would cost around the same. Taken over a period of twenty years, though, inflation and the demonstrated greed of the health insurance industry, would make McCain’s plan considerably more expensive for the individual, the family, the American People, and inflate the government’s contributions from $5,000 to (over 20 years) an estimated $12,000. If the McCain plan’s coverage does not have an inflationary clause it simply will survive for only a few years and then be fiscally useless.

2. Social Security. It is for certain that Social Security needs fixing, yet no one wants to pay for the fixes. Those who really need this retirement and disability plan cannot afford to pay more for it. Those in the middle class who depend on Social Security for having more than a minimal of comfort (if affords them the ability to raise their winter temperature from 65 degrees to a more comfortable 68 and gives them the option of an occasional luxury such as a meal out or an extra gallon of gasoline), are having enough of a struggle with what they currently have.

There are several options for the survival of Social Security (whose inflationary COLA will result in a 5.8% increase in 2009).
> We can raise the amount everyone pays by increasing the percentage taken from our wages (currently 7.65% since 1990, 15.3% for self-employed). That hurts everyone immediately, especially unlikely at a time when we foresee several more years of international economic turmoil.
> We can eliminate the ceiling on which you pay this tax from the current $102,000 ($106,800 in 2009).
> We can reduce the benefits or set it so that people do not receive benefits until later in life.
> We can create a window of non-payment similar to the Plan D Prescription law: everyone pays until a certain amount of income (such as the $106,800 in place for 2009) and then there are no social security taxes until your income exceeds $250,000 annually.
> We can divide Social Security into two parts – one amount guaranteed and one part dependent on the stock market. This is known as “individual investment accounts.”

When Social Security was introduced in 1937, people paid 1% of their salary into the plan. This amount has been increased 25 times. The current amount has been stable for 18 years, the longest in history. In fact the second longest period of stability was 12 years (at 1%). It is unlikely that Congress will ask self-employed people to contribute more than the current 15.3%.

Individual investment accounts, as proposed by President Bush and kept alive by John McCain, have previously been rejected by Congress, by the American people, and by financial experts. Had that proposal passed in 2004, those who had contributed would have lost around 50% of their retirement investment during the last two years.

While it’s impossible to predict what the stock market will do, we cannot afford to gamble with our future economic security. The idea behind Social Security is to give the people a cushion where they know they will have an income once they can (disability) or choose to no longer work (at age 62 or later).

Those who wish to gamble with their retirement, and can afford to do so, already have several options, all more secure than the individual investment account plan: 401(k) and IRAs. A compromise plan would include maintaining social security with some payment alteration to secure its future, and adding optional retirement accounts such as the 401(k). It is likely that businesses can be encouraged to contribute to such plans, as many have, through low-cost tax incentives.

Of the options presented, increasing the wage limit on payment seems fairest to all. Congress has been increasing this amount annually anyway. At this time it makes sense to use the option that has worked with Plan B: provide a window where middle class wage earners do not have to pay. Should that prove insufficient, the window can be reduced in the future with minimal harm to the greatest amount of people.

3. Medicare. In 2007, Medicare alone accounted for $394.5 billion of the federal budget. Medicaid and other health benefits added $276.4 billion. Together they amount for $670 billion of the total $2.8 trillion budget, almost a quarter of the total Federal budget. Add to that the amount that states and local governments put into health care and it’s obvious that something must be done.

Some in Congress want to see these medical entitlement programs eliminated, combined perhaps with a new total medical coverage package (see topic 1 above). Should that be workable, without a significant increase in total or percentage costs, then it is to everyone’s benefit.

Neither candidate has expressed a definitive thought on this issue, except that Barack Obama wants all children covered either by individual plans, an improved national health plan, or through Medicaid (or SCHIP for those caught between the Medicare limits and those who can afford a health care plan). Senator McCain’s statement on health care does not offer any coverage for children nor does he address Medicare specifically.

4. Prescription Drugs. With Plan D in effect, neither candidate has addressed this issue other than stating (both of them) that they support the importation of drugs if the price from foreign countries is lower. This includes the following:

> McCain has a history of supporting health benefits for seniors, although he refused to support Plan D, and he voted against expanding it. He is in favor of income indexing Plan D so that wealthier people pay more for coverage. “Under the McCain proposal, Medicare beneficiaries with annual incomes of more than $82,000 for an individual or $164,000 for a couple would pay higher premiums for prescription drug coverage.”
> Obama wants to lift the current ban that prevents the US government from dealing directly with drug companies to increase bulk purchases and the lowering of costs.
> Both candidates are looking to reduce the time it takes for generic drugs to become available

5. Supreme Court. With three potential retirements among the Justices within the next four years, all of them with liberal or moderate tendencies, it is important for voters to decide whether they wish to support Obama and thus maintain the current equality between the liberal and conservative wings of the Court, or McCain and cause the court to drift towards conservatism for the next twenty years.

6. Excessive Profits and Taxes. One issue that Senator Obama keeps on returning to is that the wealthiest Americans can afford to pay a greater percentage of taxes, thus reducing the burden on middle class people and undoing the shift created by the Bush tax cuts. McCain would like to see the benefits given to the rich during the last eight years to remain in place.

Historically, the wealthier have paid a greater percentage of their income in taxes. This has been the backbone of the graduated income tax system used by the Federal government and most states. When the 16th Amendment was finally passed in 1913, the tax rate was set ranging from 1 to 7% of income based on how much you made, with the largest amount for those making over $500,000 (in 1913!). Less than 1% of the entire country had to pay any income tax under this original plan.

In 1916 the Federal income tax rate was change to range from 2% to 15%. “By 1917 a taxpayer with only $40,000 faced a 16 percent rate and the individual with $1.5 million faced a tax rate of 67 percent.” (Department of the Treasury Fact Sheet) Supporting the historic differential, “By 1936 the lowest tax rate had reached 4 percent and the top rate was up to 79 percent.”

Currently the difference is significantly less with far fewer tax steps than we have historically had and ranging from 10% (making $16,000 married) to 35% for the wealthiest making over $357,700.

Thus, for a person earning $10 million a year, not including the massive tax loopholes the wealthy usually find, in 2008 such an income would result in a Federal income tax of $3.5 million. Correspondingly, in 1916 such a person would have paid $6.7 million, and in 1936 $7.9 million.

John McCain wants to maintain the current 35% limit on taxes as well as reduce corporate taxes from 35% to 25%. Senator Obama would like to see a repeal of the Bush tax cut for the wealthy (over $250,000 annual income) and use the amount generated by this to give those making less than this amount a tax breaK. This is not socialism nor is it “redistribution of wealth.”

This means a return to how things were taxed throughout more than 70% of the history of federal income tax. It puts a larger burdon on the wealthiest 1% of the country, whether they are a small business owner or a corporate CEO. Under this plan, 99% of the population would see a tax reduction. In addition (according to CNN), Obama’s plan would “eliminate income taxes for seniors making less than $50,000 per year and eliminating all capital gains taxes on start-ups and small businesses.”

Both candidates are looking to help those with children. Obama wants to increase tax savings on college accounts and McCain assures that there will be no new taxes on cell phones and Internet usage (Obama has not addressed these issues).

7. Local taxes. Federal tax savings during the last twenty years have saved us nothing. For every dollar the federal rate is cut, the local and state taxes have gone up even more. The rate of increase in property and school taxes is greater now than it has ever been. The average family sees less of their income due to these increases.

While neither candidate addresses these issues, John McCain looks for an across-the-board Federal spending reduction to help balance the budget. In normal times this would be an admirable goal. However, with inflation so high, with the world in an economic tailspin, and ever increasing local government costs, an across-the-board freeze or reduction will be an income tax increase to everyone.

During the Bush years, while we paid a smaller percentage to the Federal government, the states have had to pick up the slack on education, highway (and other infrastructure costs), medical and welfare, as well as every other form of governmental program. In some locations people are paying almost twice as much for state and local taxes as they were seven years ago. McCain’s plans would feed into this frenzy of increased non-Federal tax increases.

Barack Obama recognizes several things: Federal tax rates for the majority of people have to remain the same or be reduced (reduction is planned for 99% of the population), seniors on fixed incomes need even more tax relief, governmental spending must back state and local needs so that a country-wide reduction does not result in local increases.

Obama is seeking to maintain or raise funding support in crucial areas, specifically health, infrastructure, and education. An increase of government spending in these fields will also provide stimulation to the declining job rates and economy by providing more jobs in the crucial construction and health fields. The top-down proposals that the Republicans have pushed since the 1970s has only produced income increases for the wealthy. Cutting corporate taxes and lowering the amount the wealthiest Americans pay has resulted in more income for the top 1% of the rich while others have seen their purchasing power decline.

8. Morality in Government. The talking heads and sound bites that seem to impress many people point out negativity in every candidate. Yet no person alive has ever had a pristine life. Should we judge a person’s ability to lead our nation based on a personal life, no one would qualify.

What is more important, from a governmental point of view, is whether the people in power can be trusted to be fair to all Americans. George Bush and his circle of advisors have proven many times over that they can simply not be trusted. They hide behind “executive privilege” to refuse giving testimony on issues of vital importance to this country’s security as well as whether they have violated the basic rights guaranteed by the Constitution.

Nothing says more about the quality of a person than whether they are willing to answer questions about their actions. In many cases these testimonies are sealed and secret, yet the Bush administration, both those currently in office and those resigned, retired, and removed, refuse to do so. This is government by fiat – a dictatorial practice that is not only forbidden by the Constitution, but which has been avoided by every branch of the government since our country was founded.

There are many questions about the start of the war in Iraq and how it has been conducted that the Bush administration refuses to answer. This also applies to their actions in Afghanistan, the reasons behind the failure of the New Orleans recovery program, the toxins in the trailers used for those who lost their homes, the federal attorney scandal and dozens of other issues. The lack of trust in our executive branch caused by this secrecy has been a national disaster.

We are not just voting on a president. When a person is elected to this office, he (she) is responsible for selecting the Cabinet, judges, ambassadors, and hundreds of thousands of others. Ultimately the buck stops at the top. Any improper action by an executive official reflects on the president directly. The Bush administration’s greatest failure is the unwillingness to admit to any fault and their attempt to hide all mistakes.

Thus it is fair to look at the background of each candidate to see how each person has reacted in the past. It may seem unjustified to bring up Obama’s nebulous association with a 1960s radical or McCain’s association with several people who have gone to jail for financial impropriety. But these things must be considered, however briefly.

In all fairness, both Senators have minor instances of relationships with people of questionable character, but both McCain and Obama themselves have outstanding characters and can be trusted not to repeat the secrecy and distrust fostered by the Bush administration.

The difference, though, lies in their selection for vice-president, the person who is a heartbeat from the chief executive’s office. Although we hate to admit it, there are thousands of biased people in this country and an attempt on Barack Obama’s life, should he be elected, is not only possible, but likely. At the same time, John McCain does not have a pristine medical history, and while he is in good health at the moment there is always a chance his cancer might return and he is subject to other frailties that people his age succumb to.

Joe Biden, a man whom no one accuses of any impropriety other than occasionally saying things he should not, is respected by Democrats, Republicans, and, since no country is isolated, those in foreign countries who deal on the executive level. Sarah Palin, on the other hand, has demonstrated, through her few years as mayor and governor, that she abuses her authority and advises her assistants to hide behind executive privilege, just as George Bush does. This week’s disclosure that she billed Alaskan tax payers for non-business vacation travel with her children demonstrates that she puts her needs above the law.

While neither of the presidential candidates has named specifically whom they might appoint to their Cabinet or other important positions, we need look no further than the person they selected as their potential replacement to get a glimpse of how their administration might be run.

9. Respect Overseas. The United States is still the world’s superpower. While Russia may flex its strength attacking one of the world’s weakest nations, and China is a growing giant with poverty throughout its rural areas, no other country can match this one for military strength, the ability to move arms and men around as needed, and the responsibility to use such strength wisely. That is until George Bush invaded Iraq.

Security is a two-way street. You must do what you can to protect yourself, but you must also avoid giving cause for others to dislike you. Bush’s foreign policy of preemptive attacks, name calling, secretive prisons, torture, and unilateral actions have undermined 200 years of American fairness.

Although the next president will have dozens of significant priorities to get this country and the economy back on track, one that needs to be addressed foremost is that of international relations and internal security. You can never protect yourself from everyone; you can never foresee every potential action. You can, and should, though, minimize the risks by reducing the reasons people have to attack you.

In a marriage or any other relationship, success and friendship only come with open communications and honesty. A partner who lies, by deceit or omission, who does not play by the rules set for harmony, who insists that only his policy will work, and who advance with force rather than through cooperation, will only destroy that relationship. The same is true in international relations whether with another legitimate country or a terrorist organization.

Sarah Palin and John McCain have continuously criticized Obama’s desire to hold open and honest talks with anyone at any time. Pakistan and India still have border disputes and refuse to discuss them. China and Vietnam had a falling out over issues of trust. The two Koreas still cannot resolve issues more than 50 years after their conflict. The same is true in dozens of places throughout the world.

The first step towards working out difficulties in a marriage, in a business contract, in any dispute is to hold open and honest communications. Even Israel, whose existence depends on ever-vigilant security, this week has decided that it is time to consider swapping land for peace. One of George Bushes success stories is the result of his opening a dialogue with Libya’s Muammar al-Qadhfi. In three years this country had moved, through open and respectful talks, from one of the “axis of evil” to a country with whom we can now open diplomatic relations.

For six years George Bush refused to talk with North Korea. During the last 18 months the negotiations and communications have resulted in their dismantling nuclear facilities. There is a long way to go there, but it’s a positive step. One has to give before one can receive. One has to open communications before there can be any understanding.

Barack Obama is willing to follow the path taken by President Nixon, whose actions brought China from a reclusive threat to one which, while still not conforming to “western standards,” holds diplomatic channels opened and freely resolves many issues that made us consider them the world’s largest threat in the 1970s. Ronald Reagan used diplomacy to end the Cold War. Even the Cuban Missile Crisis, we now know, was not solved by Kennedy’s threat of war but by behind-the-scenes negotiations that gave Russia some of what they wanted in European security in exchange for removing their armaments from Cuba.

Palin seems to view the world as a wilderness. When a moose walks in front of her she reaches for her gun. McCain, in retrospect, is now saying low level talks with anyone is fine. Barack Obama repeats the Teddy Roosevelt thesis of “Speak softly and carry a big stick.” (According to Roosevelt, that was an African proverb, not an original idea.) Obama is willing to hold negotiations with anyone at any time in order to gain security for this country, but should such communications fail he is willing (and no less a person that Colin Powell believes him) to use the force of this mighty nation to protect us.

Palin and McCain want to continue the mistakes of the first six years of George Bush’s administration. Even Bush has learned from those mistakes.

Slightly Creaky is not endorsing either candidate, yet it’s obvious how we, as slightly creaky people in our 60s view the issues and the people. Please be sure to enter this election with open eyes and an open mind.

On November 4th we intend, as a group, to be at the Town of Newburgh, NY Recreation Center before 8:00 in the morning to vote in what may be the most important election since the Depression. Whoever you support, be sure you, too, accept your obligation and right to participate and vote.

Seeing is Not Believing Part 11

2008-10-18T06:46:00.000-07:00

Stay Tuned After the Commercial

Almost every night my family watches network news after supper while cleaning up from our meal. No matter which network we watch, they use the formula introduced in the 1920s to get you to come back for the next show, or in this case, to stay for the commercial. Instead of leaving us with the heroine tied to the railroad tracks, though, they promise an amazing story immediately “following this brief break.”

Of cause the whole idea is to get you to remain attentive during the commercial. Most people, I’d venture to say almost everyone, would like to mentally block out the latest automotive sale, the coming attractions to a sit-com we’d never watch, or whatever they are pushing. But we absolutely have to remain so that we “find out if tomorrow will be even hotter than today” (no it will not be) or to “discover which Hollywood star is expecting triplets” (someone we have never heard of and could not care about).

To make matters worse, after three minutes of news they take a “brief” 60-second break, come back with another 5-second teaser (thus the break is over) and have another 60 seconds of advertising. In addition, if the story is really something you’d like to hear about, they do not show it immediately, but tease for it several times before commercials before finally showing it.

Television dramas are picking up on this, showing as many commercials as they can in the most unexpected places. At the end of an hour show (40 minutes if you subtract the commercials), you know it’s over, only the punch line is missing. “We’ll be right back,” After that final commercial, some shows are then showing a split screen with another commercial and a fifteen-minute concluding scene that is usually anticlimactic anyway.

Product placement in a movie or show used to be subtle, now it’s blatant. You know what soda or beer they are drinking, what brand cereal they are having, and the model of the chase car is clearly in focus. Look around the room and there will be perhaps a dozen brand products showing. On street scenes there are commercial billboards or buses with advertising passing by.

We have been told that it costs a considerable amount of money to produce these shows and if it were not for the commercials we would have pay-TV. Even on the “premium” cable channels that you do pay extra for there are commercials for other shows as well as an increasing amount of product placement.

Perhaps it’s time to reduce the number of channels from the over 300 now available (900 if you consider each has a Spanish, and a high definition version), to less than 50 to reduce costs. Of the 300 or so channels, perhaps you watch 10 or 12 on a regular basis and most likely no more than 25 or 30 total. If you are reading this it’s unlikely you’re the type to watch Celebrity Bowling Ball Painting or Dancing With the Inmates.

Seeing is Not Believing Part 10

2008-10-11T06:25:00.000-07:00

We Know What You Need

Someone in your family probably has a cell phone that takes pictures, contains a GPS, provides Internet and e-mail access, records memos, provides a daily calendar, and dispenses dental floss. Next week they will discard that product when the manufacturer comes out with Model 16 that does all the above and contains a pop-out comb, toothbrush (with your choice of toothpaste), and nose hair clipper.

Around 19 years ago, we purchased a new washer and dryer with dozens of possible settings, temperature for wash and rinse, and a variety of drying options. Over the years knobs have fallen off or broken, yet it makes no difference: we only use two settings on the washer and one on the dryer. Now they have dryers that offer simulated dry-cleaning and washers that use “the power of oxygen” rather than detergent.

TV Cable companies (as well as satellite and the telephone companies’ recent entries into the field) also know what channels you want to watch, all 900 of them. Fighting consumer suggestions and complaints and using their lobbying power to keep Congress at bay, they have fought all attempts to give people the option to select and pay for only the channels they want. The TV providers claim they are only following regulations, so that smaller television stations, which have few followers, can survive. In actuality they are following profits, and everyone knows it. Most of these smaller broadcast companies will eventually move to the Internet anyway, where they will do just fine.

Commercial garbage haulers are the same. They offer one plan: once-a-week pickup of one container of trash, plus recycling, all for $30 or more a month. Fortunately, where we live, we have a trash transfer station where seniors can drop off their refuse at fifty cents a bag with no cost for recycling. It is now three years since we dropped our garbage hauler and we’ve saved over $1,100.

One industry that has not conformed to this all-inclusive party is the computer manufacturers. Even though Microsoft has attempted to force their products on to every PC, you still do best configuring your machine at the company web site, HP, Dell, Gateway, Mac, and others, just the way your family or business needs it. You can then purchase only the software that you wish to use.

Hospitals and doctors also follow the all-you-can use policy. In order to avoid potential lawsuits and cover their insurance company’s demands, they frequently order many lab tests that are not needed and avoid providing expensive ones that might save a life. Dentists demand a cleaning every 3 or 4 months now, and even veterinarians have gone to a one-size-fits-all, six-month pet checkup.

Consumers must not follow blindly. Be aware, ask questions, and demand alternatives. If a store, service company, or even your medical providers do not offer options or compromises, then go somewhere else. They treat us like this only because so many people let them.

Seeing is Not Believing Part 9

2008-10-04T05:52:00.001-07:00

Fewer calories? Greater Profit!

They contain only 100 calories per bag: potato chips, cookies, fruit drinks, flavored popcorn, and dozens of other products. Originally this marketing trend was advertised for kids’ lunch bags – give them the snacks they want, but control the amount of calories they get. Does it work? Not at all.

The products in the 100-calorie packages are the same items that are found in the larger bags. They contain the came number of calories per ounce (or serving), the same amount of fat, the same amount of salt. The only differences are that they are packaged in smaller bags and cost considerably more per ounce.

If, as they are presented, these products are only used as a child’s snack, then one can argue that there is merit in them (if money and health was not considered). Children, and adults, that are given a full-sized bag will eat as much as they can. If the bag is of limited size, they can only eat what is in that bag. Unless they feel unsatisfied and reach for a second, or third package.

They are the lazy mom’s solution. It is far less expensive, and far better for the child, to purchase a store-brand box of zip-seal bags (around three cents each and reusable) and select only the healthy snacks you really want your child to have: low calorie, low fat, low sodium. In addition, you can give them a greater variety, including different items every day.

According to netgrocer.com (http://netgrocer.com/), here are a few comparison prices:
Chips Ahoy! Candy Bites - 100 Calorie Packs: $2.29 a bag (.59 an ounce)
Chips Ahoy! Cookies - Candy Blasts – full size bag: $3.56 (.25 an ounce)
Less than half the price

Oreo Candy Bites - 100 Calorie Packs: $2.59 a bag (.55 an ounce)
Oreo Cookies - Reduced Fat Chocolate Sandwich: $4.04 (.22 an ounce)

Pop-Secret Microwave Popcorn - 100 Calorie Premium Butter: $6.39 (.64 an ounce)
Pop-Secret Microwave Popcorn - 94% Fat Free Butter: $3.85 (.42 an ounce)
ShopRite Microwave Popcorn - Light Original: $1.79 (.20 an ounce)

In every example above, and in every 100-calorie pack we cound find, even taking into account the extra cost of packaging and shipping, the promoted product was at least twice the cost, and twice the profit, of the regular sized bag.

Better yet, provide a healthy snack with no added sugar, salt, or other things the kids (and adults) don’t need: a banana, an apple, a peach, or a 1.5 ounce box or raisins (90 calories).

Seeing is Not Believing Part 8

2008-09-27T06:17:00.000-07:00

Are You “Well Qualified?”

We are used to hearing the term “…for well qualified buyers…” on auto advertisements, but recently this phrase has also been appearing in advertisements for homes, mortgages, furniture and appliance ads, and elsewhere. None of these ads, except occasionally in the tiniest of print that appears for a few seconds only, explains what makes someone qualified for the special treatment or low rates offered.

We checked hundreds of online ads to discover what some of these requirements are and discovered that none of the advertisements we saw explained this phrase on the advertisement page. You had to go as far as eight clicks below the ad to discover a definition, and not all of them even provided a definition. Most offer no explanation at all. Some examples:

> “Three important factors - adjusted capitalized cost, residual value and the money factor - determine the monthly rate of a lease.”
> “See your local [brand] automobile dealer for program details and offer. This is not an offer of direct financing.”
> “Financing is simple, quick and no-obligation.”
> “Dealers set actual vehicle sales prices. See participating dealers for details. For well qualified buyers. Not all buyers may qualify.”
> “If qualified, dealer retains all rebates and incentives.”
> “Upfront acquisition fee and capitalized cost reduction with no security deposit; total net capitalized cost and base monthly payment does not include tax, license, title, registration, documentation fees, options, insurance and the like). Not all buyers may qualify.”
> “Not valid with current offer. Does not apply to prior or future purchases. Restrictions may apply. Void where prohibited.”
> “Incentives available to residents only.”

Generally, “well-qualified” can mean whatever the dealer, company, or salesperson wants it to mean as it is not a legal term, nor is it regulated by law. It may be based on a variety of factors including:
> Credit score
> Prior purchase from same store
> Prior ownership of same model
> Residency within a township or distance from store
> Trade-in
> Membership in an approved organization
> Limited time offer
> Availability of a limited stock item

It is recommended that, when you see an offer of special consideration for a “well-qualified buyer,” that you ask to see, in writing, the company’s policy regarding the advertisement. If they have no written policy, you should not trust the dealership or company and purchase the product elsewhere.

A Tail of Two Attitudes

2008-09-21T04:57:00.000-07:00

In the world of commerce, there are two conflicting truisms: “Buyer Beware,” and “The Customer is Always Right.” It is rare that either of them is completely accurate in any given situation. On the other hand, it is true that “You catch more flies with honey than with vinegar.”

When it comes to customer satisfaction, some stores and many salespeople do not wish to put customers first. Although I try not to mention specific company names in this blog, several must be mentioned today. These stories relate to Sears, ShopRite, The Tractor Supply Company and two clothing chains.

Our local ShopRite (a North-East food supermarket) has many super-sized stores that carry just about everything. The one nearest to us, though, is more than 40-years old and, by today’s standards, antiquated. There is another Shoprite 10 miles away, twice the size, yet I avoid it when possible. The small store may not have everything in the newspaper ad, but it more than makes up for it by having courteous concerned people working there.

On three occasions during the last month the store did not have an advertised product in stock – in fact they probably never had and never would. Each time, as soon as I showed the ad at the “Courtesy Counter” The phone was picked up, the floor person called, the product was found or something was substituted. (With personal thanks to Dennis, and many others, whose efforts make this small store seem like the best place to shop.)

On the other hand…. One of these stores is a clothing shop. Six months ago, a customer on crutches and starting to feel pain asked a clerk for a chair. She was told they do not provide chairs. When told there were four by the front registers the response was, “So, go there and use one.” Eventually the manager was called and she stated, “We have a wheelchair by the front door, you should have taken that if you felt you were not going to be able to walk around.” Not customer satisfaction.

Sears’ Craftsman promises a lifetime guarantee on their non-power tools. I purchased a hoe there more than 20 years ago and, as the blade bent, got another in exchange with no questions asked. Six years ago I bought their most expensive rake and exchanged it four years later when seven tines snapped off. Now I want to exchange it again as this one did not hold up too well, but the company has discontinued the model and the nearest to it is of lesser quality. No one at Sears can tell me what to do. (I can be reached at info@slightlycreaky.com.) Hopefully this will soon be resolved as the leaves are already starting to fall.

One other clothing store…. Towel sets were advertised on a half-price sale. At the store there were only a few left and nothing matching. I asked the salesclerk for assistance and she seemed bewildered. The department manager told me that this was an in-store special only and not available online, yet they had none in stock and the store did not give out rain checks (which violates New York State law). I really wanted those towels so I asked for the store manager.

The woman who approached me seemed friendly, but when I asked for a rain check and was refused, then explained that it was state law, she walked away from me. I asked for her name so I could complain to the company and the Attorney General’s office, and she started screaming, went into the stock room, and got two young men, considerably larger than me, and told them to throw me out. After she walked away, the larger of the storage clerks asked me what the problem was, offered to call me if the towels came in on that afternoon’s truck, and gave me the manager’s name. While the company did respond positively to my e-mail and telephone calls, that lady was never reprimanded.

Now for The Tractor Supply Store. I used to laugh at their commercials, but when one opened near me a few years ago I had to go in to see what it was all about. I am now a confirmed shopper there for four reasons: they always have what they advertise, their prices are reasonable, their quality is high, and everyone in the store puts the customers first. Whether it is a company-wide policy, or just that the manager (Kay Covert – Highland, NY) sets such a wonderful example, I’m not sure, but they have my vote for what a company needs to do to retain customers.

Seeing is Not Believing – Part 7

2008-09-13T07:15:00.000-07:00

Pressure Sales

During the 1970s and 1980s, Time Share marketers perfected the “used car” selling technique known as pressure sales. This is a multi-step procedure involving getting you interested and involved in a product (in this case time share vacations) and selling it to you at an extremely high price. The sales person knows that it is unlikely that you will purchase the item at the price quoted, but they have a great offer for you, in fact a whole bunch of great offers.

Initially they sell you a one-week vacation, but once you turn it down they offer the right (at a nominal fee, which, once it is closely examined is not at all inexpensive) to shift your week to another week and even another location almost anywhere in the world. Even better, if you buy two weeks, and they do not have to be together, you get a substantial discount.

Once you show resistance to that, they bring out the big guns: if you sign up today, and today only, they will throw in a major discount. That might be a significant percentage off the price, a third week for free, or some such “sweetener.” Turn that offer down and the sales manager comes over with an even better offer. High pressure and even insults are used to persuade you to BUY NOW.

Recently that technique is being used for other products, especially home improvement items. At least one bathroom remodeling company offers to replace your existing shower with a state-of-the-art enclosure that does wonderful things and provides increased comfort, usage, and safety, for only… a price that far exceeds what you would expect to pay. Once you turn them down they sweeten the offer with free products, a reduced price, a quick installation, and other high-pressure tactics, but only if you make the purchase immediately.

Home alarm companies use the same technique. Their advertisements appear to offer a free or inexpensive home alarm system, but once you get to the contract you discover it only covers a few doors and perhaps no windows (substituting an interior motion sensor). Then they offer small add-ons at “low cost,” which, once added up, comes to a substantial selling price. But if you do not purchase it today you will not be able to get all of this at the same price tomorrow.

Television and radio sales use a similar technique. Purchase within the next ten minutes and you will get two for the price of one (although you may have to pay a high “shipping and handling” cost for the second item), or get other products as part of the promotion. But the offer is only good for the next ten minutes. Of course, twenty minutes later you hear the ad repeated, and tomorrow… and next week.

Automotive and computer products give you “limited time offers.” They may have reasonable sales in their advertising, but with a time limit. Next week you will find a new advertisement, a new time limit, and possibly a better deal. It is almost impossible to know when to buy as they confuse you with double-talk.

The best thing to do is to determine for yourself, without looking at the advertisements, whether you need a new or replacement item (or vacation home) and then do online consumer research. Find a reasonable price range for the product you want. Consider all options ahead of time. Then seek at least three companies that provide the product you want. Investigate and compare price, quality, installation or delivery time, and warranty (watch for the small print – many warranties are worthless). After each sales pitch make a comparison chart so you can easily see which company is offering closest to what you want at a price you are willing to pay. If the company offers you a buy-today-and-save option, show them the door.

Seeing is Not Believing – Part 6

2008-09-06T07:56:00.000-07:00

Size Matters

Consider the life cycle of a package of cereal. When you first purchase it you get 18 ounces for $1.99. The package has no particular advertising slogans on it. Six months later, although you are not aware of it, while the outer package stays the same, the contents shrink to 17 ounces. Six months after that it’s advertised as “a full pound for the same price.”

Two years after your initial purchase, there is a special: 10% more for the same price. (That’s an extra 1.6 ounces.) Strangely the package is a smaller size, although the contents now fill the inner bag. Once the sale is over, the box remains the same yet the contents have shrunk to 14 ounces. Soon after you see a “new larger size,” 16 ounces, and, glad to be getting more for your money, you may not notice that it’s now selling for $2.49.

Watching the weight of the contents is of major importance when making purchases. Many products come in several sizes, although the larger one is not always the best bargain. One of the finest food stores we have ever visited has been selling carrots at 59¢ a pound with 5-pound bags going for $2.99. When you weigh the 5-pound bag it comes to a few ounces over. Each of the one-pounders is also a few ounces over, and five of them weigh around 6 pounds. Yet together they cost 4 cents less.

Larger sizes, if you are going to use the entire item while it’s still fresh, may be a great deal. You may only need two pounds of ricotta for the lasagna, and it costs $2.99, yet the 3-pound may be selling for the same price or $3.49, still far less per pound than the smaller size. What else can you make with ricotta this week?

Personally, I do not think “churned” ice cream tastes any better than the old-fashioned type. By churning it, there will be more air and less actual product in the package, yet it looks like you are getting more. Therefore the new 56-ounce “half gallons” look the same size that the 64-ounce half gallons did.

Another trick is for the company to make you think they are doing something for you: easy to hold bottles contain less than the previously not so hard to hold ones did. “New and improved” is a sure sign that there is either less in the package, a higher price, or the company has somehow saved itself some cost. How does a brighter color on the package translate to a better deal for the consumer?

Seeing is NOT Believing -- Part 5

2008-08-29T04:31:00.000-07:00

Lowest Price of the Season

If you watch television, you will be familiar with stores that run sales for special occasions. It might be Back to School, Columbus Day, Lowest Price of the Season, or some such silliness. Some stores run two to three sales a week and in many cases the same items are on sale, for the same price.

Most states have laws regulating what can be advertised as “on sale.” To circumvent these laws, all a store has to do is have a “list” or “suggested” price and occasionally sell the item at that amount. Usually it is so high that no one would buy it; but tomorrow it will be On Sale again.

One crafts store is noted for having huge signs outside their building and announcements in their ads for “50% off all picture frames.” This sale has been running for years. In actuality, the price they sell the frames for is so high that even at the discounted rate you may not be getting a good deal.

Clothing stores are prone to special occasion sales since no one knows what the products actually cost to make, ship, and handle. Silk shirts may sell for $20 each, and next to them are silk ties, using a quarter as much fabric, requiring no buttonholes, buttons, and few seams, selling for more than twice the price. What is the justification? Two blocks away, at the same chain’s outlet mall store, the shirts may be “discounted” to $30 and the ties are selling for $15.

This is no longer a supply and demand market. Today prices are set by the store, and if the items do not sell they simply spend more money on advertising stating what a great deal the high prices are.

One of the reasons you can frequently get good deals in a discount store is not that the products cost less to make or are of lower value, but the stores do not spend millions weekly in advertising and then have to raise the prices of the products to pay for the ads.

Toothpaste is a good example. There are actually few companies manufacturing this product. Each may place the same formula in as many as three-dozen competing packages. The ones that advertise, the so-called name brands, have to charge two to three times what the unadvertised store brands get, yet it’s basically the same product.

Americans, and in increasing numbers others around the world, have been tricked into believing ads. You MUST have this specific brand (only available at this store), and you “MUST buy it now since it’s on sale at THE LOWEST PRICE OF THE SEASON.” Next week it will no longer be on sale, it will no longer be the same season, and the price will be 20% less.

Colleges Want to Drop Drinking Age

2008-08-23T07:30:00.000-07:00

("Seeing is NOT Believing" will return next week)

Hidden in the news about rising prices and rising tension between Russia and the world, was an article in USA Today entitled “College presidents want lower drinking age.” It appears that “College presidents from about 100 of the best-known U.S. universities, including Duke, Dartmouth and Ohio State, are calling on lawmakers to consider lowering the drinking age from 21 to 18, saying current laws actually encourage dangerous binge drinking on campus.”

Their rationale is that college (and probably non-college) students 18 to 21 are drinking anyway, so why not make it legal? Pressure has been put on these college leaders by a group called “the Amethyst Initiative,” headed by a former college president from Vermont, which has been lobbying for this change. If you are interested in their reasoning, visit their web site. One thing lacking there, though, are reasons not to lower the drinking age. Here are a few.

1. When states increased the drinking age from 18 to 21, drunk-driving accidents, especially in college communities, dropped significantly.

2. Around 40% of all college students already have signs of alcohol abuse or even dependence. There is no study to indicate how this would change by lowering the drinking age, but it certainly would not decrease.

3. The use of alcoholic drinks reduces cognitive abilities. The resulting reduction in both creative and rational thinking is not what we expect to see on college campuses.

4. The availability of alcoholic drinks for 18 year olds would increase the likelihood that those under 18 would have an easier time getting such products. Many school districts already report students as young as 8 coming to school drunk.

5. Mixing alcohol with the strong hormonal impulses of those in their late teens may result in an increase in pregnancy, date rape, vandalism, aggressive responses, and similar undesirable behavior.

6. By reducing the drinking age, more young people will have access to the product and develop a life-long dependency on alcoholic drinks.

7. During the last twenty years we have seen that restricting easy access to cigarettes has contributed to a reduction in smoking. A corollary can be seen with drinking. By making alcoholic beverages available to those 18 to 21, we will be indicating to a highly impressionable age group that drinking is acceptable.

8. Alcohol abuse is already a social, medical, and emotional problem for many. By lowering the drinking age we risk increasing the number of people who will become alcohol dependent and increase the impact alcoholism has on our society.

9. The increase rate of college-aged suicides continues to rise. This is an accurate assessment of the emotional fragility of this age group. Alcohol abuse is a leading cause of depression and is, itself, a depression-causing drug. By lowering the drinking age we are not combating this trend, and will, rather, see an increase in youth suicides.

10. By admitting that they can neither control nor discourage their students from drinking, the college presidents who are joining this organization are admitting defeat rather than putting increased effort into combating alcohol abuse.

Seeing is Not Believing, Part 4

2008-08-16T03:35:00.000-07:00

Discount Stores

During the last 20 years, the United States has seen a growth in both high-end and low-end stores that advertise that they provide deep discounts (or similar euphemistic advertising slogan). Generally these stores fall into three categories: “Dollar” shops, membership clubs, and outlet malls. A careful consumer can obtain many good bargains at these places, but they can also spend more money on items here than they might at a supermarket or variety store.

In the dark ages of the modern world, the Five & Dime stores held the place that the Dollar shops do now. There were several important differences: Woolworth, J.J Newberry, Kresge, and similar stores offered many items at small prices, but they did not stop there. It was also possible to spend several dollars for products. They were “variety” stores that provided a huge range of products.

Today’s Dollar stores, and there are several national and many local names, state that every item in the store is the same price. For the most part that’s accurate, although some may be 2-for-a –dollar and others higher, usually marked as “special purchases.” Comparing the typical product in such stores with WalMart and Target will show that you can purchase similar products for slightly less or more elsewhere. Many items in the discount stores are discontinued, overstocked items, or holiday specials that, while still in date, have passed their intended target.

You can obtain many items in these Dollar stores that are not easily available elsewhere, especially gift boxes and packaging, Mylar balloons, and trinkets. There are also major savings on telephone and computer cables and jacks, electrical tape, pet toys, and simple kitchen gadgets.

The large membership stores, not limited to BJ’s, Sam’s, and Costco, charge an annual fee that is advertised to provide a discount on prices saving you more than the membership cost. There are two catches, though: you generally have to buy larger sizes and they rarely put items on sale. If you are a small business and have need of gallon sizes of pickles or mustard, or if you go through diapers, snack food, and kitty litter so fast that you need a huge supply, then these stores are for you.

But not all is at a discount. If you compare prices to your local supermarket, you will find that many items, even those not on sale, are less expensive, and you have a wider selection of products and brands elsewhere.

In addition, some membership stores, especially those who specialize in furniture and home goods, do not always offer either quality or discounts. Shop around and compare prices before buying. You need not waste gas or run all over: check online. Slightly Creaky’s Consumer Assistance Page provides a list of Price Research Sites to assist you.

Likewise, outlet stores are best for those who either know typical prices for the items they are seeking, or those who absolutely have to have name brands. In many cases, the discounted off-name products are made on the same assembly line or in the same Chinese factory that the advertised products are.

Seeing is Not Believing -- Part 3

2008-08-09T03:24:00.000-07:00

Bait & Switch: 2008

We all recognize the old Bait & Switch advertising. Illegal in every state, companies advertise one product to bait you into the store and then either do not have the product or it’s of such poor quality that you are easily switched to another more expensive item.

They still do it, more subtly, and they still get away with it. Here are a few examples:

Vacuum Cleaner: The bait: Advertised for a seemingly low price, probably with several free “exclusive offers” such as a car vac, computer attachments, or a steam iron. The switch: buy a better model and get extended warrantees and free cleaning for up to 20 years at ever increasing prices. Beware: The “free” products may be of poor quality and generally not things you might use. Note, though, that if you do keep the vacuum in good condition and get it cleaned using their program, it will probably last the 20 years and do a good job.

Meal Discount Coupons: The Bait: buy one meal at the regular price and get the second for free or at a discount. Possibly buy two meals and get a discount on both. The Switch: There may be many exceptions to this policy: minimum purchase prices (spend $50 to qualify), good only on certain days or at certain meals, or limited menu selections. Beware: When you use such a coupon, check the bill carefully. The restaurant may ignore your coupon (“we forgot,” “computer error”) charge you more than the listed price for the meal, or add a surcharge to make up for using the coupon. We have experienced restaurants adding non-ordered or delivered items onto the bill, such as soup, an extra appetizer, or a beverage.

Furniture: The Bait: Buy a complete living room set and get free end or coffee tables; possibly “close out” sales with deep discounts. The Switch: The free products, and possibly the items offered are of poor quality or do not match. Beware: the sales staff is trained to use high-pressure tactics to move you up to items they want to sell. Most showrooms are so large, and the sales staff follows you so closely, that they show you what they want to sell, not what you may wish to purchase. Ask to be left alone to browse at your own pace. Many companies now charge for delivery and for removal of old items.

If you have replaced a large item, and the old product is still in somewhat usable condition, consider advertising for it at a local college. Offer it for free “as is.” That way a needy college student gets something they can use and you do not have to pay removal charges.

Membership Clubs: The Bait: Pay a small annual fee to join and get deep-discount prices. The Switch: A few companies offer low quality and limited selection at prices that really do not provide a discount. While Costco, Sam’s Club, and BJ’s have made this business model a success, and if you need to buy in bulk these companies have a reputation for providing what they advertise, you can frequently find items for less at a non-membership food market. Beware: A few home supply stores have used the membership ploy to sell low quality items at discounted prices. Be especially careful if the store does not display items but only provides catalogues.

Seeing is Not Believing -- Part 2

2008-07-31T04:46:00.000-07:00

Games Prices Play

If you think you are getting a bargain, you’re wrong. It’s that simple. When an item is on sale, its still making a profit for the person or company selling it. The stronger the advertisement’s wording, the less likely you’re getting a good deal.

Advertising Price Increases: For the last six months, we have been purchasing a seafood – shrimp salad at our local store for lunch on occasion. It is low in fat, quite tasty, and $3.99 a pound. Two weeks ago the store’s newspaper advertisement featured this product for $4.99. One give-away that the price has gone up is the inclusion of the word “only.” Cat food that was selling for 44 cents a can is now “only 2 for 99¢.”

BOGO: The same store that increased the price of the salad also uses the “buy one, get one free” gimmick. Frequently, if you know the actual price of the product, this can result in a great opportunity. But this store rarely advertises the price of the product, just that if you purchase one, you’ll set the second “of equal or lesser value,” for free. After selling boneless chicken for $1.99 a pound for weeks, they had it “on sale” at a BOGO price of $3.99.

I will admit that their “buy six bagels and get six free” is always at the regular price, and I do purchase it. No, I cannot eat a dozen fresh bagels, but they freeze well (as do English muffins).

For Six Easy Payments: Reverting to television and the sixty-second infomercials for salad spinners, the world’s sharpest knives, and other items “not available in stores.” They all tell you to “call within 3 minutes” to get a great deal (although since they run the ad throughout the day for weeks, how can they tell when those three minutes are up?). Whether they sell for “only $19.99” or for six weeks of easy payments, before you purchase check out WalMart (now they have eliminated the hyphen so it’s no longer Wal-Mart) or Target to see what they are getting for a similar product. You might even find that $19.99 special at the “All For a Dollar” store.

Spend $15 Coupons: Inflation has increased the “spend $5 and get…” all the way up to $15, and it will probably go higher soon. If you are already going to spend that much in the store, these can be good deals. In fact if you need the products, and were planning on spending $10 or more, it may be worth it to get an extra something for the coupon special. It, though, is never worth the trip or the savings if you were not going to purchase anything or if the product is not something you really need.

Seeing is Not Believing – Part 1

2008-07-26T04:52:00.000-07:00

TV Advertisements: They Think Us Fools

There is one sure way to save money and avoid purchasing items that you neither need nor work as touted: do not believe advertisements.

No one believes in miracle weight-loss pills (then why is it a billion-dollar a year industry?). We all know that those fad ab-strengthening machines do not burn away calories of take inches off your waist by themselves.

The purpose of advertising is to sell you something that you would not normally purchase. Companies make products and need to sell them; it’s that simple. It makes no difference what the media is: television, paper ads, billboards, or radio. They ARE out to get you, and your money.

Open your eyes when watching television advertising (or simply ignore them completely).

Home security alarms: Are we to believe that a wife has had an alarm installed on the house without consulting with her husband? The alarm company has to take a home inventory, look over what type of system is best, where to put the components, and then make an appointment for the technicians to come. How good can it be – let’s try it out. Run around the house (from daylight to dark) with your suit jacket over your shoulder and carrying your briefcase. What is he looking for? He can get in at any time, just open a door (or does he not have a key?). What does that advertisement prove except that the people that buy the product are fools?

And “for free?” Not hardly. What is offered is a minimum system that might cover a two-room shack. You want more than a few windows or doors alarmed? You want glass-shattering coverage? Add a few thousand. In addition, you need to sign up for monitoring at a cost that, within three years, would be more expensive than thet alarm system. And then they usually have you and your money for more years beyond that. But the alarm companies just want to get in your door – they are salesmen.

Snake oil, encyclopedias, tonics, and sure cures for all that ails you.

Cholesterol-lowering foods: Eat our product and lower your cholesterol. One ad says that the item may lower your level by 4% in six weeks. Actually they want you to buy the product for six weeks. If you normally eat bread, eggs, muffins, or any high-cholesterol food, by switching to almost any healthier product WILL produce positive results. If you buy their product you encourage more inane ads. If you have a cholesterol of 300, a 4% drop is 12 points. Not much of a solution.

Car Advertisements: Let’s compare our car with another. We have got to have at least one thing, of the thousands of items on a car, that is better than someone else’s vehicle (one that costs more than ours). Our glove compartment is 10% larger than a car that sells for thousands more. We have a spot for your coffee mug (is that safe driving?). We have cute wheels. We have sexier models or ones that can do handstands and jump over the hood. We get 27 MPG (in the 1970s there were many cars that got over 35 MPG). We can climb a 90-degree hill and take you across rugged terrain (but can it get you to work and back without costing $20 for gas?).

You can spot the improbabilities yourself. Watch the advertisements, and don’t believe.

Research Can Lower Your Costs

2008-07-19T04:56:00.000-07:00

For those of us who are retired, as well as others who have the time or wish to make the time available, a little research can help you find the lowest cost of food, clothing, gas, heating fuel, and much of what we need. Slightly Creaky has done much of the work for you. Below are a few samples. Go to our Consumer Assistance site for more information and Internet locations.

Gasoline:
Gas Buddy: Set up by community throughout the United States and Canada, and reported by community members. Anyone can join and submit the current prices for stations in your community.

MSN Autos – Local Gas Prices: Submit the zip code and get not only a list of gas stations, but a quick glace at the highest and lowest prices and what each station is charging. Each entry is dated. At the bottom of the page are the national lowest and highest prices for regular gasoline throughout the country.

MapQuest National Gas Prices: Input the type of fuel you need, regular, premium, diesel, or alternative, then put in the zip code. Starts off locally, then expands outward to nearby communities. Place your mouse pointer over the listing and the station appears on the map.

AAA Daily Fuel Gauge Report: While this does not list actual pump prices, you can see statewide trends, averages, and other useful information.

The Heritage Foundation: “Based on a review of the energy legislation currently before the House of Representatives, the price of regular unleaded gasoline could rise from average August 1st prices of $2.09 per gallon to $5.58 in 2016. That is an increase of 167 percent. Analysts in the Center for Data Analysis developed this estimate and comparable ones at the state level from assumed effects of three major provisions in the legislation: continued mandates for biofuels content of gasoline, new taxes imposed on energy companies, and new regulations that will affect the oil producers. This estimate also takes into account price gouging legislation that was passed by the House earlier this year. To see state specific estimates, please move your mouse pointer over the state below:”

Home Heating Fuel
Most web sites in this category want a service fee to assist. They contact local fuel companies and attempt to get them to bid on your needs. In most cases, though, we find they have affiliate sites that win the bid ignoring whether they were the lowest price, best quality, or most reliable. Slightly Creaky suggests you find a listing of heating fuel sites in your area and contact them by telephone getting their current prices.

Home Heating Oil Prices.com: Has contact information for local fuel companies. On occasion they list recent prices.

Consumer Products
Slightly Creaky suggests that you do not depend on any one consumer product site as none of them are all-inclusive. Check out these locations to find a product and to get an idea of current retail prices. Then go to the web site for your favorite stores and check weekly advertisements to get the best deals.

Shopzilla: Enter the product you are looking for and Shopzilla will produce a listing of current retail and online prices as well as pictures of the product and reviews.

Price Grabber: Gives you the opportunity to select a product category or to input the product in a search engine. Includes product description and reviews.

MySimon: “A comparison shopping site for almost everything: Apparel, computers, electronics, jewelry, video games, and more. We gather prices on millions of products from thousands of stores, so you can compare products and find the lowest price before you buy.”

Smarter.com: Includes information about rebates and discount coupons. "Come to Smarter.com before you buy online. Using an unbiased system to compare prices on products from thousands of different merchants, Smarter.com helps you shop and find the best prices, products and websites. As the leading price comparison shopping site online, Smarter.com carries top merchants including: Circuit City, Crutchfield, Buy.com, B&H and many other popular online stores."

Selling Energy Credits

2008-07-12T10:09:00.000-07:00

We can’t find it anywhere… us, the experts online researchers. Amazing.

Two weeks ago we had a solar energy inventory of our house. The salesman took measurements of our sun exposure and determined that by putting panels on the west side of the house we could get 80% of the maximum energy possible even though we had no south-facing exposure. We could produce around 60% of our electrical need, but since our daytime surplus would be sold back to the grid, we’d actually only pay for around 25% our annual usage.

Sounded reasonable, as our electric bill has risen to almost $200 a month (our computers are on around 18 hours a day accounting for some of that usage). So, 75% of ten years of energy, assuming a 4% annual increase (should be more than that) might save us around $15,000, and reduce our carbon footprint.

It would cost $77,600 to install. Based on the size of the system we’d need, state rebates that directly reduce the cost, and other incentives, the out-of-pocket costs would actually be $42,600. But wait….

After three years you could sell your renewable energy credits (RECs) and recoup your costs quite rapidly. By producing “green” electricity, with a CO2 savings of 22,000 tons a year, we get energy credits that can be sold for cash on the open market, such as on eBay. The salesman said the state takes the energy credits for the first three years to help offset the rebates they provide. Thereafter they would be ours forever, even after we sell the house.

Based on the size of our grid, we’d qualify for “12 units” a year and they are currently selling for around $250 each, and that will increase each year as companies who pollute buy such credits to offset their federal fines. Thus, after the third year, we’d get credit worth at least $3,000 a year, and the salesman’s company would even purchase the credits from us. In ten years (minus the first three) that would be worth at least $21,000, possibly, he said, more than twice that.

What’s more, even if we sell our house, since we were the ones who initially paid for the system, the RECs would be ours forever (beyond death?) and thus in twenty years, even if the value remained the same, we’d have recouped $51,000, or more than the system’s price.

That certainly made the solar unit seem cost efficient.

But no one was selling RECs on eBay. Our electric company had never heard of households selling energy credits. There is nothing anywhere online about it. We contacted two other solar installation companies and neither of them had ever heard of such a thing.

We pride ourselves in being able to research facts online, but we’re stumped, or we’re being scammed.

Which is it? We seek the public’s help. Is this too good to be true or have we missed something?

Living a Lie

2008-07-04T11:44:00.001-07:00

Truth is as we perceive it. There is no such thing as absolute truth as perceived by human senses. Everything we encounter is tainted by our prejudices, and we all have them. Our parents, teach us inaccuracies, as do our teachers, our religions and history. Yet these inaccuracies together make up our culture and it’s not necessarily a bad thing.

George Washington did not have wooden teeth or chop down a cherry tree. No one ever threw a coin across the Potomac River. Paul Revere never made it to Concord – he was captured partway there… and there were three riders that night, not two. The United States sank the Maine, and used it as an excuse to declare war. If you run with a pencil you’ll poke your eye out.

How many lies are told to us “for our own good” and remain with us as truths? How many fictions are given to us as children to make our parents’ lives easier, and we pass them on to our children even though we know they are not accurate? How many poems or stories are written to honor heroes that contain exaggerations or are twisted to make the protagonist seem worse than he really was? Did the police use excessive force or did my child actually behave like they say he did?

We want to believe that people we know are good and discount stories about them behaving badly. We dislike someone or a group and thus believe the person or people could easily do wrong. Two hundred years ago the British could never be right; 150 years ago the South knew the North was wrong. Many people cannot forgive the Germans for starting the two World Wars or the French for simply being French.

Every person, every group has colored perceptions of other people and groups. Try to persuade someone that one of their “truths” is inaccurate and you become the enemy. No human is exempt from this.

Yet should we always tell the truth? Can it be a kindness to lie to soothe someone’s feelings or to protect someone we love? Is it honesty or dishonesty to present our perceptions as the total truth and possibly harm another person, or cause a country to go to war?

Mark Twain is credited with stating, “Truth is more of a stranger than fiction.” Sir Winston Churchill wrote, “Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened.”

Perhaps we should take the advice of Adlai E. Stevenson Jr., and apply it not only to the political world, but also to all our relationships and thoughts. During his 1952 presidential campaign he suggested: “I have been thinking that I would make a proposition to my Republican friends... that if they will stop telling lies about the Democrats, we will stop telling the truth about them.”

Honesty may be the best policy, but in today’s world it will not help a student pass a test (only studying will do that), it will not help you avoid a ticket, it will not correct a mistake, nor, it seems, will it help certain political aspirants get elected. But honesty and admitting your mistakes may make you a better person.