MONEY MANAGEMENT 7

Consumer Laws to Protect You

As a consumer, you should remember the old rule that if something sounds too good to be true, it probably is. Anytime someone wants to sell you something without giving you time to think about it or won’t provide the details in writing, steer clear—this is an opportunity you do want to pass up. In fact, to protect yourself, you should steer clear of anything that sounds at all questionable.

Fraudulent companies use a variety of ways, including the promise of a prize in exchange for sensitive financial information, to get you to part with your money. You must be on guard and ask questions to keep your financial information safe. Fortunately, Maria did just that.

Maria received a card in the mail announcing that she was the lucky winner of a cruise. To claim her prize, she simply needed to call the number provided. Maria excitedly dialed the number and was connected to a representative who congratulated her on winning the grand prize cruise and then went on to describe all that she would enjoy on her trip. Maria was ready to set sail, until the representative asked her for a credit card number to hold her reservation.

Maria paused for a moment and asked why it was necessary to give her credit card number if the trip were indeed free. Not satisfied with the answer she was given, Maria refused to give her credit card number and asked that the information detailing her trip be sent to her in the mail. It never arrived.

Maria wisely recognized that if the cruise had been a legitimate prize, she would not have been required to provide her credit card number. Any time a business you are unfamiliar with wants your credit card number or asks for an upfront payment for goods or services, you should get the offer in writing.

Duane and Lina lived in a community hard hit by a tornado, leaving them and many of their neighbors with serious damage to their homes. Because so many homes were in need of repair, the local contractors had waiting lists of people who needed to get their homes fixed.

Duane and Lina had their names on one such list, but one day had two men stop at their door and offer to fix their roof for half of the other contractor’s estimate. The men claimed that they represented an out-of-state company that wanted to help people get a good deal due to the tragic events of the tornado. With a $500 payment for supplies, the men said they could begin fixing Duane’s roof. Duane was interested in getting a good deal, but he first wanted a written estimate for the repairs and proof of their license to do business before he paid them anything.

The men said they would be back later with the information, but never returned. They did, however, stop at a nearby home with the same offer. Unfortunately, Duane’s neighbor paid the men the $500 deposit they were requesting and waited for them to return with the supplies. Again, the men never returned, leaving Duane’s neighbor with a damaged roof and short $500.

To learn more about how to protect yourself from scams, such as false sweepstake appeals, advance fee loan scams, home improvement scams, pyramid schemes, and more, visit the Federal Trade Commission or FTC’s website at www.ftc.gov.

Not all consumer-related problems will be a result of someone trying to scam money from you. In some cases, you may purchase a product of inferior quality and need to take action to have your dispute resolved. Keeping good records is essential to doing so.

If you have purchased a product and are unhappy with it, contact the company where you purchased the item, explaining the problem in detail and telling them what you want them to do to fix the problem. If the first person you talk to is unable to resolve the issue, ask to speak to a supervisor.

Each time you speak with one of the company’s representatives, write down whom you spoke to, the date and time of the call, and what their response was. Give the company adequate time to resolve your complaint. If, however, the company asks you to wait two weeks and you do not hear back from them, write the owner or manager a letter. Use the sample letter that follows as a guide for writing a complaint.

Keep a copy of this letter. If the company does not respond to you in a timely manner, you may want to file a complaint with the Better Business Bureau or the Attorney General’s Office in your state. You will find the Attorney General’s office located at your state capital.

If you are unhappy with a company, you may be frustrated enough with them that you want to stop making payments. However, it is better to try to get the problem resolved. If you stop making payments, the company may send your account into collections, and this may be reflected on your credit report.

Jennifer and Lee were able to resolve a problem they encountered by contacting the company directly. After receiving an offer for a chance to win a free honeymoon to Mexico, Jennifer and Lee agreed to attend a demonstration for cooking pans at a local hotel. Once there, they felt pressured to purchase a set of pans for $2000 and consequently signed a contract agreeing to do so. The next day Jennifer and Lee felt that they would not have purchased the pans had they not felt pressured. Lee immediately called the company and cancelled their order. While unhappy with Lee’s request, the company representative agreed to honor the cancellation.

Under certain circumstances, you may also be able to take advantage of a federal rule known as the “Cooling Off Rule.” Under this rule, you can cancel a business transaction if you do so within three business days. This rule applies to purchases over $25 that are made away from the seller’s regular place of business. There are some exceptions to this rule. (You can read more about this rule on the FTC’s website.) Your state may also have a similar Law. You can check the laws specific to you by contacting the Attorney General’s office in your state.

A number of federal laws are designed to protect you. The following are just a few:

The Equal Credit Opportunity Act requires lenders to extend credit fairly without regard to your race, color, age, sex, or marital status.

The Fair Housing Act prohibits discrimination in the financing, sale, or rental of housing based on race, sex, religion, handicap, marital status, or nationality.

The Fair Credit Billing Act states that if you receive a billing you feel is incorrect, and notify the creditor within 60 days in writing, the creditor must either correct the bill or send you an explanation within 90 days. The Truth in Lending Act requires lenders to tell you what the cost of the credit is that you are using. This includes disclosing the interest rates and finance charges.

The Fair Credit Reporting Act gives you some rights in regard to your credit file. If you are turned down for credit, based on the information contained in your credit report, you can obtain a copy of your credit report from one of the three national credit bureaus at no charge. This act also gives you the right to dispute incorrect information on your credit report. See Chapter 5 for a sample dispute letter.

The Fair and Accurate Credit Transaction Act allows you to get a free copy of your credit report from each of the three national credit bureaus every twelve months. Details on getting your free copy can be found in Chapter 5. The Fair Debt Collection Practices Act regulates third-party debt collectors, prohibiting them from harassing or abusing you, threatening violence, or using profane language to collect the debt. It states that collection agencies must send you a written notice of the amount of money you owe them, the name of the creditor you owe the money to, and what action you should take if you believe you do not owe the debt.

If you are being contacted by a collector who is violating this law, make sure you keep a log of the time the collector calls, who is calling, and what they are saying. You have the right to sue a debt collector for money and damages if they violate the provisions of the Fair Debt Collection Protection Act, provided you can prove it. This law applies only to third-party debt collectors, not to businesses who themselves are trying to collect money you owe to them.

If a third-party debt collector is contacting you at work, you can prevent them from doing so by sending a letter to the collection agency stating when and where they may contact you. Make a copy of the letter you send them, keeping it with your financial records. Keep in mind, however, that this letter will not prevent the collector from collecting the debt; it only stops them from calling you at work.

Sometimes when a collection agency receives an account from a business, they do not verify the account and you can mistakenly receive a collection notice. If you do not owe the money or dispute the bill, you must notify the collection agency. If you owe the money, it is best to pay what you owe.

Consumer laws are there to protect you and to help you resolve disputes, so you should know your rights. You should also be on guard for those who might try to take advantage of you. Ask all individuals or businesses with whom you do business to put the terms of any agreement in writing.

Chapter Review

• If something sounds too good to be true, it probably is. Be careful with your money.
• If you have purchased a product and are unhappy with it, complain to the company where you purchased it from. Explain the problem and tell them what you want them to do to fix the problem. If the first person you talk to is unable to resolve the issue, ask to speak to a supervisor.
• A number of federal laws are designed to protect you, including the following:

--The Equal Credit Opportunity Act
--The Fair Housing Act
--The Fair Credit Billing Act
--The Truth in Lending Act
--The Fair Credit Reporting Act
--The Fair and Accurate Credit Transaction Act
--The Fair Debt Collection Practices Act