5 (more) top consumer complaints
Every year hundreds of thousands of consumers complain to the FTC. Here's how to avoid some of their most common problems.
As we do, let's keep something in mind: Nobody is immune to being ripped off. Nobody. In addition, while you may not be very vulnerable, you may know someone who is, like an elderly aunt or a friend desperate for cash. So even if you don’t need protection, try to reach out and protect those who do.
Watch the following news story we did on complaints ranking six through 10, then meet me on other side for more.
Here’s a closer look at the list, starting with No. 10, and what you can do to avoid each problem.
Complaints in 2009: 32,443.
FTC description: Deceptive or predatory mortgage lending practices; problems with modification of mortgage terms; miscellaneous customer service and account issues with bank products, including fees and overdraft charges; etc.
How to avoid it: Today’s mortgage landscape is littered with victims who fell prey to deceptive and/or predatory lending. I’ve done lots of stories on this over the years. One example? "Mortgage help: Talk is cheap." In that story I interviewed a person who said she was unaware the mortgage payment was going to adjust upward, to the extent her payments would become completely unaffordable. In another recent story, I met someone who literally signed her house over to a scam artist masquerading as a foreclosure rescue specialist.
Fortunately, there’s an exceedingly simple two-part process for avoiding mortgage fraud and predatory lending. The first step is to shop around, then assume that if any single deal is much better than the others, it’s suspect. Step 2 is simply to read and understand things before you sign them. Obvious? Ask an escrow agent how many homebuyers actually read mortgage notes prior to signing them. Answer: almost none.
If you’re not going to read or understand this stuff, at least bring someone along who will.
As for the other type of complaint in this category -- issues with bank products and fees -- if you hate big banks, don’t use one. Credit unions and small local banks generally offer lower rates on loans, higher rates on savings, lower fees, and a better overall consumer experience. Check out "Hate your bank? 3 steps to ditch 'em."
Complaints in 2009: 41,448.
FTC description: The promise of a loan or credit card that requires you to pay a fee first; worthless credit card loss protection and insurance programs; the promise that accurate negative information can be removed from your credit file for a fee; etc.
How to avoid it: Don’t ever borrow from payday (advance-fee) lenders. If you need a source of emergency cash, open an account with a credit union and start building your credit by getting a small loan and repaying it.
As for credit cards, you can find secured cards that don’t charge an upfront fee at search sites like the one I own, InterestMatters.com. I recently did a story called "Are credit card protection plans worth the money?" (hint: not often) that you should also take a look at.
As for paying someone to clean up your credit history: Balderdash. I’ve done this story many times, as well as written about it in my latest book, "Life or Debt 2010." While there are things you can do to improve your credit history, none requires hiring help. Check out the recent comment I made on that industry.
Complaints in 2009: 41,763.
FTC description: Promotions for “free” prizes for a fee; foreign lotteries and sweepstakes offered by phone, fax, e-mail or mail; etc.
How to avoid it: Simple: Don’t ever pay anything to win a contest. Nothing. Winning something means getting money, not paying money.
Complaints in 2009: 45,203.
FTC description: Account or billing issues, including interest rate changes, late fees, credit disputes and overcharges; fraudulent credit card offers/phishing attempts; etc.
How to avoid it: Pass a law called the Credit Card Accountability, Responsibility and Disclosure Act to protect consumers from banking shenanigans like unfair rate changes and fees. Oh wait! Congress did that.Now let’s hope that this category of consumer complaint falls off the radar this time next year.
As for fraudulent card offers and phishing: Don’t ever give your Social Security number out via e-mail to anyone or any company at any time, period. If in doubt, use the phone and verify who you’re dealing with.
Complaints in 2009: 57,821.
FTC description: Nondelivery or late delivery of goods; delivery of goods that are less valuable than advertised; failure to disclose all the relevant information about the product or terms of the sale; etc.
How to avoid it: Verify a seller’s identity to the best of your ability by talking to that person. If you’re on eBay, avoid sellers who don’t have a long history and/or a high rating. And always use a third-party payment system, like PayPal or a credit card. If the merchandise is expensive (cars come to mind) have it inspected by a local expert of your choice, and try to use a third-party escrow service. Here’s some info from eBay about escrow services.
Well, there you have it. Combine this with my first story and you’ve got 10 of the most-complained-about consumer issues in the country. Just think, if everyone followed these simple tips, the vast majority of consumer losses and complaints would be history. Well, at least until the jerks too stupid or lazy to work for a living find new ways to separate us from our hard-earned money.
Related reading at Money Talks News:
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