Top 5 consumer complaints (and how to avoid them)
Every year the FTC compiles a list of problems that drew the most complaints. Here's the new list, which still includes the Nigerian letter scam.
If you know where potential problems lie, they should be avoidable. That’s the apparent logic behind the Federal Trade Commission’s report of top consumer complaints. Every spring, the FTC puts out a list of the top reported sources of consumer problems. Unfortunately, however, it normally doesn’t get a lot of national media attention.
That's too bad, because if we all took just a little time to understand the issues on this list, we’d probably be richer, and a lot of scam artists would have to find a real job.
Watch the following TV news story I did on the top five consumer complaints, and be sure to join me on the other side so I can give you the rest of the story.
OK, here’s more information on the top five problems and how to avoid becoming a victim.
Complaints in 2009: 61,736.
FTC description: Letters or e-mails offering the “opportunity” to share in a percentage of millions of dollars that a self-proclaimed government official is trying to transfer illegally out of a foreign country in return for money, bank account numbers or other identifying information from the victim; fraudulent schemes involving foreign lotteries, mystery shoppers or Internet purchases/classified ads in which a counterfeit check overpayment is received along with a request to wire back the difference immediately after check deposit, leaving the victim responsible for the funds withdrawn; etc.
How to avoid it: This category encompasses two different but very common scams. The first is the infamous “Nigerian letter” scam, named for the country in which this fraud started more than a decade ago. You’ve probably seen them, but just in case, here’s an excerpt from one I got just last week:
My Regards to you and Family,
Mr. Oliver Greene, hereinafter referred to as ‘my client’ who worked as an an oil merchant/contractor here in Thailand, On the 21st of April 2003, My client, his wife and their three children died in a car crash in east Thailand.
My late client, had Assets here in Thailand and had left behind a deposit of US$15 Million(Fifteen Million United States Dollars only) with a finance company here in Bangkok Thailand. After the death of my client, the finance company contacted me, as his attorney to provide his next of kin who should inherit his fortune, this according to them is their policy in sure circumstances.
I seek your consent to present you as the next of kin of the deceased so that the proceeds of this account can be paid to you and then both of us can share the money, 50% to me and 50% to you.
[Yada, yada, yada ... give me your bank account number so I can clean you out and disappear.]
It’s amazing that anyone ever fell for this scam once, much less that it’s still common (and thus still working) at least 10 years after it first appeared online. Obvious solution? Don’t respond to e-mails from strangers, especially ones offering you millions of dollars to join an illegal conspiricay to steal from someone else's family, fictional or otherwise.
The next common scam, “counterfeit checks,” most often entails you selling something, say in an online auction, then getting a cashier's check from the buyer for more than the amount owed. The thief asks you to deposit the check and wire the difference. Surprise! That cashier's check was counterfeit. When your bank finds out -- a process that could take weeks -- the deposit is reversed and the crook is long gone. Solution? Don’t accept checks: Use PayPal, an ACH transfer from a bank, an escrow service or some other third-party intermediary. And try not to deal with people you can’t vet in some way.
Complaints in 2009: 74,581.
FTC description: Problems, such as undisclosed costs, failure to deliver on time, nondelivery and refusal to honor a guarantee, with purchases made via the Internet (not including auction sales), telephone or mail.
How to avoid it: At first blush, this one sounds hard to avoid. After all, shopping via Internet, phone or mail by definition requires some leap of faith when it comes to things like delivery, quality and guarantees. But there are things you can do to protect yourself. First, always use a credit card for added protection. A credit card company can refund your money if a product never arrives, or help mediate disputes if it’s not what was promised. Second, deal with stores you know and trust. Finally, before you buy anything from any company, go to the nearest search engine and type in this simple phrase: “complaints (store name).” See what comes up. You can also check if any previous complaints have been filed with the Better Business Bureau.
Complaints in 2009: 83,067.
FTC description: Problems with trial offers from Internet service providers (ISPs); difficulty canceling an ISP account; issues with Internet entertainment services; undisclosed charges; Web site design and hosting services; spyware, adware and malware issues; etc.
How to avoid it: If you ever give a company your credit card number for a monthly subscription and they won’t stop charging you after you've asked to quit, here’s what to do: If the usual (e-mail, phone, etc.) doesn’t work, send a letter to the company canceling your service and demanding the charges stop. Send it certified mail, return receipt requested. If they charge you again, dispute the charge with your credit card company. Use your copy of the letter as proof the charge is erroneous along with your return receipt as proof it was delivered.
You should also try to avoid this situation in the first place by employing the method above: Deal with companies you know and/or check the BBB and complaint sites before signing up.
Complaints in 2009: 119,549.
FTC description:Debt collector calls repeatedly or continuously; falsely represents the amount or status of debt; fails to send written notice of debt; falsely threatens suit; uses profane language; fails to identify self as debt collector; and/or violates other provisions of the Fair Debt Collection Practices Act.
How to avoid it: You have legal protection from these people! Understand your rights and exercise them. We just did a story on this: "Abused by a debt collector? Get a free lawyer." If you’re dealing with a third-party debt collector or know someone who is, definitely check it out.
Complaints in 2009: 278,078.
FTC description: When someone appropriates your personal identifying information (like your Social Security number or credit card account number) to commit fraud or theft.
How to avoid it: Identity theft isn’t just the No. 1 source of consumer complaints, it’s No. 1 by a long shot. In fact, identity theft was responsible for 21% of all consumer complaints last year.
Protecting yourself from identity theft involves a two-part process. First, keep private information private. Second, make life difficult for anyone who successfully steals your information.
As for keeping your private information private, it’s mostly common sense. Whenever you’re about to throw away a piece of paper, imagine that it was posted on a billboard by the freeway or e-mailed to everyone in the world. Would that be bad? Then shred it.
And especially guard your Social Security number. Don’t carry your card with you and provide your number only to those who are entitled to ask for it -- people who pay you and must report that income to the government (e.g., banks and your employer) and people you borrow from so they can check your credit history. That’s not a big list. The video store doesn’t need it. The dry cleaner doesn’t need it. The gym doesn’t need it. In other words, if someone asks for your Social Security number, don’t just hand it out. Challenge them.
And if you want extra protection from identity theft, try Step 2: Put a fraud alert on your account. All that entails is going to the Web site of Equifax or Experian and filling out a simple form. (You have to contact TransUnion via e-mail, letter or phone.) Once a fraud alert is on your credit file, anyone granting you credit is supposed to take extra steps to verify you are who you say you are.
Take a look at the form. It’s no big deal to fill out. The fraud alert lasts 90 days. The cost? Zip (unless you go to any number of heavily advertised companies that will gladly charge you $10 a month for the same service).
And if you’re afraid you won’t remember to renew your fraud alert every 90 days, check out a story I did called "Free ID theft protection." It features a Web site where you can sign up for free e-mail reminders to renew your alert.
Well, there you have it: the top consumer problems and how to avoid them. As a consumer reporter, I’m amazed that people are still getting ripped off by some of these things. The Nigerian letter scam, for example, has been around for a long time, and warnings have appeared on air and in print many, many times. And yet, people are apparently still falling for it.
That leads me to believe that some of the people who need to see these warnings aren't. So if you’re the type to read stories like this, reach out to those around you who don't. The people most likely to fall victim to scams? Young people, uneducated people, older people, lonely people and, believe it or not, people who have already fallen victim to scams like these. If you know anyone like that, talk to them. Show them this article. Encourage them to come to you before they send money to anyone for any reason.
At some point in life, we’ve all been suckers. But if we can become just a little more vigilant for ourselves and on behalf of others, it will happen a lot less often. If not for youself, do it so the sleazeballs who perpetrate this stuff will end up where they belong: either in jail or forced to make an honest living like the rest of us.
Related reading at Money Talks News:
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
ABOUT SMART SPENDING
Editor Bev O'Shea lives and works in the foothills of the Appalachians. A former copy editor for The Atlanta Journal-Constitution and the Orlando Sentinel, she joined MSN Money in 2007. She's a fan of sunsets, college football and free shipping, among other things.
Having worked as a writer, reporter and editor for more than 25 years, Editor Julie Tilsner is the sort of person who can't help but correct grammar in Facebook postings and on billboards. She's written for BusinessWeek, the Los Angeles Times, Parenting, Redbook, AOL and others. She lives in Los Angeles County with her family and loves to drink wine and practice yoga, although not generally at the same time.
A writer for MSN Money since January 2007, Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She also writes about smart money tactics for magazines and on her own site, Surviving and Thriving.
Mitch Lipka has been warning people about scams and shining light on questionable business practices for more than 20 years. Mitch, the consumer columnist for The Boston Globe, has also been a reporter and editor at The Philadelphia Inquirer, Consumer Reports, South Florida Sun-Sentinel and AOL. He won the 2010 New York Press Club award for best consumer reporting online and was honored in 2011 for his reporting on child product safety.
Marilyn Lewis is an award-winning writer with a passion for getting readers clear, straight information that helps them stay out of financial trouble. A former reporter for The San Jose Mercury News, she works from her home in Port Townsend, Wash. Contact her at MarilynLewis@Outlook.com.
LATEST BLOG POSTS
Children from lower income families are at greater risk of suffering accidental injuries and being sickened by food, according to a Consumer Federation of America study.