Angie's 2 Cent$

Even when the chips (blue stock and all) are down, today’s retailer finds a way to make shopping enticing, fun, and still an option! Holiday shoppers are being an offered a trip down memory lane as stores such as Kmart, Wal-Mart, Nike, and other big chains are offering Layaway as a means to buy what you want without running up more debt.

Layaway differs from a credit card in that you select the items you want, you pay in installments over a period of time, but you can’t have your “stuff” until you pay off the total balance.  The buyer typically makes a down payment of 10% - 20% of the total price and may pay a one time service fee. This is great for the consumer as it serves as an incentive to buy what one can afford, pay it all off, and NOT run up those credit card bills – especially at the holiday season.

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BEWARE! Social Networking Scams are on the rise. Just look at some of these numbers…Facebook estimates that users spend more than 2.6 billion minutes on the site every day worldwide. In 2008, the company had over 60 million users and the number of users was doubling every six months. According to comscore, Facebook is the sixth most trafficked site in US. 

To find out how to protect your identity and your pocket book click to read the full blog post.

 Here are my "favorite" six claims you should watch out for: 

• Shampoos that claim to protect against the H1N1 flu
• Dietary supplements that claim to protect infants and young children from contracting the H1N1 flu
• Supplements that claim to cure the H1N1 flu within four to eight hours
• Sprays that claim to leave a layer of ionic silver on one’s hands that kill the virus
• Tests that have not been approved that claim to detect the H1N1 flu
• Electronic instruments that claim to utilize “photobiotic energy” and “deeply penetrating mega-frequency life-force energy waves” to strengthen the immune system and prevent symptoms associated with H1N1 viral infection (yeah, the force is with you alright on this one!)

Make no mistake, some some unscrupulous businesses are trying to capitalize on the public’s fears. 

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According to 2007 FTC information, 36% of complaints filed with the FTC by Marylanders were related to Identity Theft.  In 2008, the Consumer Sentinel Network complaint figures for Maryland identified credit card fraud as the number one complaint (25%) and Bank Fraud ranked number two (14%). 

Because you are a loyal Scam Alert viewer and you are now “consumer savvy”, I am confident you would know what to do if this happened to you!  Using www.annualcreditreport.com, every four months you order a FREE credit report from one of the three Credit Bureaus (Experian, TransUnion and Equifax).  You know you are entitled to one free report from each Bureau per year – so by staggering them, you are actually monitoring your own Credit Report throughout the year. 

Checking your report, you look for any new accounts that have been opened without your knowledge and any inquiries from creditors (someone may be trying to open a line of credit). This unauthorized activity can signal Identity Theft.  So let’s walk through what to do if (a) you receive notice of a security breach and/or (b) by receiving bills you don’t owe but in your name or reviewing your credit report, you suspect someone’s conducting transactions using your identity and hey, it’s not YOU! 

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Here’s Part II of our effort to bring simple clarification to one of the financial industry’s most complex business scheme

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 This “mini-series” of ScamAlerts started when one ABC2 viewer sent in an email because, after asking many friends, she and her social network realized they really didn’t understand a Ponzi scheme.  The concept gets further complicated and confused because people often interchange the terms pyramid scheme and multi-level marketing (which of the three is the only one that’s legal) with Ponzi scheme. So here’s our attempt to explain (wish me luck!).

I found the simplest definition of a Ponzi scheme online, www.newsroom-magazine.com

A Ponzi scheme is a personality driven pyramid scam in which a charismatic individual persuades people to invest money in some bogus financial enterprise. The allure of every Ponzi scheme stems from a contagious belief that all one must do is put in their money and wait for a return. The scammer pays out a substantial amount of new monies to early investors — producing the illusion of reality.

The excitement of quick returns spreads as people share their sure-fire, easy money stories. It is the victims who perpetuate Ponzi scams through enthusiastic stories of quick money — exactly what the perpetrator needs to attract new investors to the scheme.


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An acquaintance shared the following story: Her elderly mother lives alone in a city neighborhood. Her neighbors are of similar age.  Answering a knock at her door, our senior mom is presented with startling (and possibly exaggerated) statistics related to home burglaries, assurance that others in her neighborhood had taken advantage of this offer/opportunity and within an hour, a home alarm system was sold by that age old “door-to-door sales” strategy.  By 9 pm that same night, an alarm system has been installed and now our senior has signed a contract for five years of service, received the alarm system, AND the alarm code was set by the technician (who may or may not have been an actual employee of the alarm service company). 

By the time mom shared the story with her daughter, they realized that (a) by having the equipment installed immediately (a result of high pressure sales tactics), they in essence waived the right to cancel within three days¹, (b) our senior mom had not planned to live in the residence for five more years and (c) while the equipment was free, the monthly plan and any related costs to register the alarm with the local law enforcement made the alarm system a questionable expense for someone on a limited income.

A quick review of BBB complaints (28 in ’09 and 87 in ’08) shows the most common complaints filed by Marylander’s regarding door-to-door sales are:

• Free equipment (questionable quality, sales practices to up-sell the product, bait/switch), but monthly monitoring fees ranging $500 - $2000 per year that are, according to consumers, ineffectively or vaguely explained.
• High pressure sales tactics to those most vulnerable or the use of fear and guilt strategies such as “you want to protect your family don’t you” – hey, who doesn’t?
• Five year contracts without caveats for those who are only renting or leasing a home or for any life altering conditions such as sale of home, unexpected transfers/moves, or loss of income.  In other words – a once you’ve signed the contract, you are generally obligated to its terms so it must be terms you can live with!
• Automatic renewal of contract

BBB received consumer stories of door-to-door sales reps wearing a logo on their shirt of a well known security company only to find the contract written under the name of a much lesser known (and probably based on these sales tactics, a much less reputable/dependable company).  And one of my favorites?  The salesman whose pitch is so good that the homeowner believes he/she is upgrading their current system only to discover that a new system by a different manufacturer AND monitoring company has been installed. The homeowner is now paying a monthly service fee for a system that is no longer in the home and paying for two separate services each month!

What’s the “warning bell” on security system sales?  They are absolute necessities for many residences and most businesses.  There are very good reputable companies out there (check bbb.org BEFORE you sign an agreement).  The biggest problem is actually US – the consumer! We succumb to high pressure sales and deals that really are too good to be true.  And most importantly, we don’t read the contract, we make quick decisions without investigating, comparing prices and considering our long term needs.

If you ARE considering an in-home security system, here are a couple of quick facts to consider:

1. Don’t agree to immediate installation to give yourself time to consider the investment, to do some comparison shopping, and to check up on the company.
2. The company and its sales reps should be registered with Maryland State Police so get background information and confirm they are legit!
3. Read the contract; make sure any verbal promises, commitments, or guarantees are in writing; and, make sure you can live with the terms/conditions related to length of time of the contract.
4. Follow to the letter instructions on canceling when the contract period expires or you’ll find yourself in another billing cycle that could be, another five years! 

Well, that’s my alarming news for the week! Check out a business you can trust at bbb.org and visit our ABC2 Video Directory which lists your BBB’s accredited businesses who are ready to work for you!

¹  Maryland Door-to-Door Sales Act provides consumers a three (3) day period that they may rescind/cancel a contract if that contract is signed within the confines of the home.

 Sadly, I can’t count myself lucky enough to have world travel under my belt (world travel would result in a much larger belt size!).  A lucky local Marylander sent BBB an email in late July notifying us of her recent visit to Montego Bay, Jamaica in July.  But as luck would have it, when our lucky traveler returned home, she discovered BBG Communications had billed her $41.91 for an international collect phone call and lead to a lot of unfortunate financial “mess”!

A quick search for BBG Communications using www.bbb.org reports this international telecommunication company has an “F” rating due to 592 complaints filed within the past 36 months. To top it off, 172 of those complaints remain unanswered.  According to BBB in San Diego (which services BBG’s geographic location), consumer complaints allege extreme rates for international phone calls, failure to provide notification of the rates, and charges for calls when the call was not connected. 

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This week’s story is the proverbial good news/bad news. The bad news is Verizon Wireless has possibly charged millions of dollars to customers for problematic “data usage” charges. If your cell phone carrier is Verizon, check bill ASAP! The good news?  Verizon Wireless, one of the nation’s largest cell phone company with 84 million customers “owned up” to possible consumer billing errors. They stated publicly they are committed to give deserving customers retroactive refunds which could range from a few dollars to more than $100 per phone line.

So, this week your job (should you choose to accept it!) is to pull out your old Verizon Wireless statements and search for charges (usually $1.99) for “data usage.” Consumer’s also report billing errors in the amount of $9.99 for “premium text message charges” – a service that requires a “double opt-in” for consumer agreement to the charge! 

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While Obama’s election has a different meaning for all of us, if you are a credit card consumer, then his election has already touched you – and possibly significantly.  After taking office in January, President Obama signed a new credit-card law on May 22, 2009 to offer greater protection to consumers. The first phase of the new “Credit Card Accountability, Responsibility and Disclosure Act of 2009” went into effect August 19th.  In simplest terms, credit card issuers:

1. must give cardholders 45 days notice before raising card interest rates (previously 15 days) permitting the cardholder to choose to pay off the account balance at the lower interest rate while agreeing to terminate use of the card for future purchases.  This time also enables a smart consumer to shop for other credit card options before the new rate goes into effect.
2. are required to mail bills 21 days before the account is due, giving more time to make payments and avoid late-payment fees. 

Now some damage to consumers may have occurred from May to August of this year because some credit card companies scrambled to last minute modifications to “terms and conditions” to credit agreement prior to the first phase implementation

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 No doubt about it.  Everyone is looking to get ahead and sadly for many, they are just looking to break even in today’s economy.  A new or better job or job training are clearly ways to make some gains.

But, wait!  Didn’t your BBB warn job seekers about rip-offs like CareerHotline who use reputable newspapers like the Post to advertise high paying jobs while requesting upfront fees ($195 is a lot when you don’t have a job) for services never delivered?  What about applying for free government grant money for career training or to start up a new business?    But wait! Didn’t your BBB warn against those ill-fated grant scams making false promises of money that is never paid back only after you pay it forward with again, advanced and upfront fees? 

And of course, there are our favorite opportunities for advancement such as National Medical Academy located in Baltimore. This training program offers LPN/RN training though in June 09, Maryland issued a cease/desist order to discontinue leaving those who paid thousands of dollars for training in the high demand field of nursing were left “holding the bag”. The reason? The Academy’s training credentials were not certified, therefore not accepted by the Maryland Board of Nursing!  

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 Okay, true confession.  How sad is it when we at BBB get excited when we see a new scam?  That’s like emergency room humor!  Sorry to all of you in advance that we were a bit “juiced” about this interesting twist on an old scam.

You know the drill. Money for nothing, our government’s giving it away – just apply! You get a nice letter from “Linda Spaulding,” or another opportunistic “grant broker,” who acquired $10,000 JUST FOR YOU! 

Linda’s letter says you look like someone who could use some financial aid; now who can’t these days? You’re free to use the free money to cover tuition, start a business or pay your bills. Linda sends your first check (BBB reports claim a range from $975.50 to $4,975) with the promise of more, much more, to come.

You don’t have to repay the grant; all Linda asks is a finder’s fee or commission for her trouble. She provides instructions to return her commission by purchasing a GREENDOT® Reloadable/MoneyPak. “Commissions” have varied from 4% to 10%.

Linda provides honest-to-goodness instructions for obtaining the GREENDOT® MoneyPak. The max “load” on a GREENDOT card is $500, so Linda’s commission ironically never exceeds that amount. The instructions become more explicit and more conversational. You are directed to go to a Kinko’s to fax her the activation code.  Linda’s customer service is tip-top, so she even includes directions to help you find a Kinko’s in the yellow pages and tells you where you can find the activation code on the GREENDOT card. 

In no time, Linda drains the card. It’s not until days later you find out her first check bounces (it’s either counterfeit or drawn on a closed account). What about the second check? Well, our victims are still waiting.

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Who would have ever thought that the “Cash for Clunkers” program would run through a billion dollars in a few days by simply offering an incentive to turn in your gas guzzler for a new fuel efficient automobile AND to be part of the economic solution by jump starting the auto industry?

I never dreamed this program would be such a success – but here at BBB, we don’t so much as dream as have nightmares of the potential scams and fraud that result when consumer demand is high! What’s our CARS (Car Allowance Rebate System) nightmare?  Let me count the ways:

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