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CNN Live Saturday
"Dollar Signs": Are You A Savvy Consumer?
Aired June 19, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: "Dollar Signs" is straight ahead, but here's what's happening at this hour. U.S. Ambassador James Oberwetter says Paul Johnson's family is grateful for Saudi efforts to find the kidnapped American. Saudi officials are still searching for Johnson's decapitated body after photos of it were posted on the web. Johnson was taken hostage in Riyadh last weekend by militants with links to al Qaeda.
Hours after the beheading of Paul Johnson, Saudi forces launched raids in Riyadh killing four suspected al Qaeda members, among them, Abdel Aziz al-Muqrin who was considered the leader of al Qaeda in Saudi Arabia. U.S. officials say the raids are an important achievement, but doubt they will stop the militant's campaign against westerners.
In Fallujah, Iraq, coalition forces launched an air strike today targeting a safe house linked to insurgent Abu Masab Zarqawi. Hospital sources say at least 18 Iraqis were killed and nine others wounded. Officials say Zarqawi's network is responsible for violent attacks against coalition troops and Iraqis.
Welcome to "Dollar Signs." Are you a savvy consumer? Today, we'll look at the biggest consumer myths and major scams out there. There sure are a lot of them.
Elizabeth Leamy and Todd Mark are here to help. Elizabeth Leamy is an investigative reporter with WTTG in Washington and the author of "The Savvy Consumer: How To Avoid Scams and Rip-Offs That Cost You Time and Money." And Todd Mark is with the Consumer Credit Counseling Service right here in Atlanta. Good to see both of you.
TODD MARK, CONSUMER CREDIT COUNSELING SERVICE: Thanks.
ELIZABETH LEAMY, WTTG: Good to see you.
WHITFIELD: All consumers need to be like investigative reporters these days, don't they. They really have to ask a lot of questions, because there is a lot of ways to get had these days. It's not as easy as just finding a product and plunking down your money, right, Elizabeth?
LEAMY: In fact, the key is to do a little bit of homework in advance so you know what you're getting into. And by taking a few steps you can avoid a bunch of scams and rip-offs. But as I preach over and over again in my book, after the fact it is almost impossible to get your money back. I try to help people with that part, too, but really, taking those steps in advance and being aware of the scams, I'm sure you would agree, is really important.
WHITFIELD: And there are a lot of things to look out for when we ask some of these questions, whether it's about return policies or whether it's about warranties, et cetera, or maybe it really may be involving, you know, your writing of checks or the use of credit cards, information that can be stolen from a lot of us, because identity theft is still one of the No. 1 consumer crimes out there, isn't it Todd?
MARK: Oh, identity theft is the fastest-growing theft in the country. And it's so scary how many different ways people can get your information. Used to be people said, I don't want to get my credit card over the Internet, it's very scary, it's a new technology. You know, you're much more likely to get ripped off going to a restaurant, giving a waitress your credit card and she goes in the back, and just skims the card and gets the information like that. But there are so many other ways to get your information, you have to be so protective of it.
WHITFIELD: And Elizabeth, you even mention in your book, ATMs. We are really vulnerable with ATMs nowadays, because particularly at free-standing ATM machines that there is a scam out there which someone can read your PIN number or your card information, right, and be able to withdraw money somehow from your account later. How does that work?
LEAMY: Let me explain how it works. Either a free-standing ATM put somewhere in a public place, or the bad guys will put a false front on a real ATM. So you put your card in and you immediately get a message that says the machine is not in service or something, but, meanwhile, that machine is grabbing not only your ATM card number, but also your PIN number. And then the bad guys can manufacturer a ATM card with all of your information and go and drain your account. And by the way, news flash, they're now starting to do it at gas pumps.
WHITFIELD: Really?
LEAMY: When you pay at the pump. Yep.
WHITFIELD: But then in most cases your recourse is with your bank, if you at least report that something's wrong, or you really got to start looking at your bank account activity more closely these days, right? That if you see a red flag, you most likely will be reimbursed, right?
LEAMY: Look, I hate reading my statements, I shouldn't say that as a consumer reporter, but you really do need to do it. Banks will hold it against you if you don't stay on top of these things and don't report them in a timely manner.
WHITFIELD: So, how much time do you have, then?
LEAMY: Do you know if there is a firm amount of time in this case?
MARK: If you're looking for getting something reversed, you have 60 days, 60 days from the time you get your bill.
WHITFIELD: Wow.
LEAMY: So, there you go.
WHITFIELD: All right. Now, let's talk about credit card information. Perhaps someone, you may get a phone call. You know, we're all getting phone calls these day, although we're on the do not call list, but someone may call and say, we want to confirm information, your name, your address, perhaps last four digits of your Social Security. How do you handle calls like that so you don't take advantage of?
MARK: Fredricka, have you been on the lake today? Because you're talking about phishing. This is called phishing. Now with an F, but PH.
WHITFIELD: And a lot of times they claim to be a credit card company.
MARK: Whether it's by a call or by or an e-mail. And e-mail is the way a lot of this is going on right now. You get an e-mail that looks just like the company you're doing business with. Maybe it's your bank, or ISP provider, anybody you do business with on a monthly basis. And they'll say we need to confirm your information, or something has expired, please reenter your information, or click on our Web site.
The Web site will have this very same domain that you normally click through to do business, but guess what? It's not the sight you normally go to. You click it, it looks it. How do you know you're being had? You don't.
So, anybody you get somebody calling you or via e-mail saying you need to confirm your information, I want you to pick up the phone or call them directly, or go into another browser and type in whatever .com. Make sure you go to the actual site, not a fake that looks like one.
WHITFIELD: There's some banks just recently who have issued some warnings, because people who bank online or pay their bills online, a number of people have been taken advantage of because they may get a little information from someone who sounds legit and maybe there's a logo that looks very similar to their bank only to find out they're providing information to have monies robbed from their accounts.
LEAMY: You know, one thing you can do that I mention in the book that takes care of these kind of problems. Be the hunter, not the hunted. Sounds a little weird, but what I mean by that is, don't do business with anybody who comes after you. You know, whether it's the fisherman or whether it's carpet cleaner who slips a coupon under your door or a stock broker who cold calls you. Only do business with companies that you seek out, where you get referrals and you initiate the call.
WHITFIELD: Why is it we're so much more vulnerable, what has happened in the past five to ten years to make us all more susceptible to getting had?
LEAMY: I think it's because we're an electronic society and we don't know the people, personally, who we do business with so much any more. Maybe we're too trusting. I think sometimes we're kind of lazy. You have to be savvy.
WHITFIELD: More vigilant.
MARK: Savvy is very important. And remember, the scamsters are going to prey on the people that are either desperate, because they're in a bad situation, they're greedy, or they're naive. So they're going to prey on the fact that you're going to believe into whatever scam they're giving you.
Maybe it's a get rich quick scheme. And they're going to say, you know this sounds great. This is what I've been waiting for my whole life and you want it believe and then you send your money and it's ta-ta, bye-bye.
WHITFIELD: Yes, that old adage, if it sounds too good it be true, it really, probably is. We all have to be reminded of that over and over again. We're going to talk more about how to protect our money with Todd Mark and Elizabeth Leamy right after this.
And of course, you can continue to send your e-mails to dollarsigns@CNN.com or call us, as well. The number is right on your screen. 1-800-807-2620. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Well, welcome back to "Dollar Signs." The Internet has made shopping at home more convenient, but it can also open you up to Internet fraud, or identity theft. Helping us to recognize the danger signs, scam expert Elizabeth Leamy. And Consumer Credit Counseling expert Todd Mark.
And you know what, when you're on the Internet, sometimes shopping, a lot of pop-up ads come up with loan consolidation ads or all these different ways in which to help you get out of debt free. Should that raise a red flag, Elizabeth?
LEAMY: Oh, yes. Once again, they're coming after you and that's a bad sign to begin with. Plus, a new thing I just learned about some of these pop-ups are actually sort of like viruses that can grab your information when you close them. The entire thing is like a button saying yes. So, a trick you can hit escape and if it remains on your screen it is just a regular pop-up, but if it goes away, you know you just averted disaster.
WHITFIELD: Wow. Credit counseling is something that you do. And so often you're competing with these groups that are really just trying to get some kind of information, such as for the purpose of identity theft. How does anyone know the difference between the real thing and the fakes?
MARK: First off, there a lot of differences between real credit counselors and some fake ones, but there's also credit repair organizations. And any time you get some false promises of, you know, this is going to sound too good to be true, but we can repair your credit, $500 up front and we're going to give you a new I.D. you're going to be able to qualify for whatever mortgage rate you want and no-interest credit cards.
And you know the old, if it's too good to be true, it always is true. And so, when it comes to credit repair, let's just say it right now, there is no such thing as credit repair. Somebody promises that they can improve your credit score or your credit report and they just want some money up front, don't do it. Anything you can do to improve your credit, you can do on your own for free. Anything else will not be legal.
As far as credit counselors, you should know the good guys, from the NFCC, as I'm with, are going to be charging you little to no money up front. You should be charged a month up front worth of fees for help. As a matter of fact, for the most part, people that come to CCCS are not doing debt management plans, we're just king of giving them budget advice. They go on their own. So, if you are seeking credit help and somebody, if it seems all they're interested in is getting you signed up on a debt management plan, that's one reason to run.
WHITFIELD: It's the whole dangling of the carrot a lot of companies use to lure you to provide some information. It may even come in the form of like prizes. A travel group will say, if you act now, you'll get a free, whatever, five-night stay at some condo somewhere, beachside. How do you identify the real thing?
LEAMY: Well, the trick with those travel offers is in the wording. They don't actually tell you have won a fabulous vacation, they say you have won a fabulous vacation offer. In other words, you're being given the opportunity to spend your own money on a trip. So, that's not very free now is it?
And I actually I fell for that myself back in my college days. So, there's a lengthy thing in my book about that. My own little personal revenge.
But yes, you know, you're better off researching travel opportunities yourself, going through a local travel agent if you want help with it. But anybody who approaches you with one of these things, you know, it's going to be an expensive trip to a roach motel.
WHITFIELD: Yes -- go ahead.
MARK: I was just going to say, remember, what I always say is it's free it's got to actually mean free. Which means you don't pay a penny. So, if you get an offer for a trip and they say, well, you do have to pay several hundred dollars in taxes and some scheduling fees, well, that's not free. If I won a free trip, or a free product it's got to mean you're not paying a dime.
That's the smell test right there, that simple. WHITFIELD: Now what about when you make a purchase of say, a refrigerator, something large, and they offer you an extended warranty, or perhaps they offer some kind of service warranty, and of course it's usually attach with a pretty good fee, is that something that either one of you recommend?
LEAMY: With something like appliances, they last a long, long time anyway, so I really don't recommend extended warranties for that kind of thing. And the other mistake a lot of people do, with cars, for example, they buy an extended warranty, but it begins at the same time that their new car warranty begins. Which is a total waste, totally redundant.
So, if you really must get some sort of extended warranty, at least start it when your other one is expiring.
MARK: I would always recommend self-insure. Don't buy warranties from somewhere else. Have that three to six months of the money in the bank so if something goes and you don't have warranty left on it, you just replace it.
I want you guys to know that most of the appliance stores, electronic stores, they start the day by saying, how many extended warranties are we going to sell. That's what they care about, because they get so much more profit from these warranties than they do from the actual products. The products are almost a loss later. So, that's why they're pushing you out the door, please, will have you have a warranty, please.
WHITFIELD: And speaking of warranties, lifetime warranty is something that comes with some of these appliances and people think, you know what, this is going it be working for me, or I have service until the end of my lifetime, but that's not what it means, right?
LEAMY: Well it depends on the quality of the company. There is no legal definition of lifetime warranty, you would think it means my lifetime, but many companies say they're talking about the lifetime of the product. Which is ridiculous. That's like saying it's warranted to last as long as it lasts. But what they mean is, they've determined their product should last five years and, so, if it breaks during that five years they'll honor your warranty and if it breaks out of that, you're out of luck.
WHITFIELD: Now, what about home warranties?
LEAMY: I had a horrible experience with a home warranty experience...
WHITFIELD: You did?
LEAMY: ...myself. They made it very, very difficult to get service. So, one thing I would say is, call the service number that you have to call in order to tap into that warranty before you buy it and see if you can get through, because that's a really good indication of whether or not they want to hear from you or not. WHITFIELD: OK. Elizabeth Leamy and Todd Mark, hold on a minute, we're going to take a short break and continue our discussion on how to be smart about your money and how not to be had out there. An awful lot of scams. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Well, remember the advice your grandfather or grandmother gave you: if it seems too good to be true, it probably is. We talked a little bit about that, let's talk some more about it. We're taking a lot of questions in. And we apologize for the phone calls. We are reiterating some of the questions, but we're having technical problems that's why you're not hearing the voices of some of our callers.
Elizabeth Leamy and Todd Mark are taking some of your questions right now. And we want to try and cover a lot over the next five minutes or so. Let's talk about gift cards. You give a gift card to someone as a gift, but, you know what, come to find out, there is an expiration date, possibly, on it, right?
LEAMY: Yes. And embarrassingly enough, I didn't know this. So when they first came out, I thought I was being the smart efficient person and I bought a bunch of them, thinking I'll just kind of have them around and when there is an occasion that comes up, I'll give them to my friends. Well, I would hold on to them for months before giving them, luckily my friends are too polite to have say anything. And of course, I was too mortified to confess.
WHITFIELD: So, how do you know if it is printed on the card?
LEAMY: It is print on there, but people didn't know to look for it. But there are a couple states where it is illegal for gift cards or gift certificates to expire, like California. There are others that are considering that, but typically after 18 months they start to lose value, or some have a hard deadline where they're not worth anything any more.
WHITFIELD: And important for people to know that when you're giving a gift, a gift card might be a store that goes bankrupt in a few months. Think about all the big companies that have gone bankrupt. So, you're taking hard-earned cash that you can spend anywhere in the country and trading in for a card that is only good at one store. Why would you do that?
WHITFIELD: Which is a perfect segue into these big going out of business signs that you see on some stores, retail stores. They say, going out of business, slashed prices, 30 to 70 percent. Are they really going out of business, or they just trying to get you in there?
LEAMY: You know, some are going out of business, but believe it or not, in some jurisdictions, they actually have to file paperwork with the local government in order to request permission to go out of business and then they really have to do it. But many times, they don't actually file that paperwork. And another thing people don't realize, is that there are professional companies that run going out of business sales at these other stores. So, they'll leave that store's sign up, they bring in new merchandise and they'll milk this for a couple of years. And they'll jack prices up, just so they can say things are 75 percent off, but, really, it was a higher price than when it was in business still.
WHITFIELD: OK. We talked a little bit earlier about online banking and how some times people get taken advantage of. We had one caller who said he got a bill for $400 for a personal Internet banking and he doesn't even do Internet banking. What do you suppose is happening is to too him? Is he a victim of identity theft?
MARK: He might be an identify theft victim, or somebody might have just started throwing in some charges on one card. It doesn't mean that they've opened up other accounts on his name.
WHITFIELD: So, what should he do now?
MARK: What he needs to do is go immediately to the credit provider, put it into dispute. Say, this is not me, I did not receive this service. You have 60 days to do that within writing, 60 days from the moment you get the bill. And unless this company can prove that he's using the service, then it gets wiped out.
WHITFIELD: And a lot of people these days, whether you're making a purchase, or whether you're making an inquiry, they want to know your Social Security number. When do you know when it's safe to provide your Social Security number, under what circumstances?
LEAMY: It really wasn't designed to be for these financial transactions, it was just supposed to be for the Social Security administration. But it really has gotten out of hand. And in the consumer credit counseling area, I'm sure you know...
MARK: Well, you know, something that is so important is a lot of states were using your Social Security number as your driver's license number. So if you get your wallet stolen, all somebody needs is your I.D. and that's all they need to completely steal your identity: they've got your name, your address your SOC. And they can start opening up credit cards, buying cars, even homes in your name.
So it is very important, A, make sure your driver's license doesn't have your SOC on it. You can always have that changed if your state still permits it. Don't keep your Social Security number on your person in case you do get robbed. And just have to know that if you're online, or even over the phone, don't give it to anybody unless you know you're doing business with them. You have an ongoing relationship with them.
WHITFIELD: Wow, so many ways to get scammed. You mentioned investment scams is another way. What happens?
MARK: Oh, well there's so many easy ways for people to hear, you know, you're going to get rich just like me and all my friends. Look at us with our nice cars and our fancy clothes, all you have to do is pay $2,000 to get in and, guess what? A few people under you are going to give you $8,000.
WHITFIELD: Fast money, it sounds enticing.
MARK: Yes, it's a traditional ponzi (ph) scam. As a matter of fact, great information in Elizabeth's book about this. But ponzies and pyramids, ill gotten gains for the people that do get money, but for most people, they get in and they don't get their money back. They're just ripped off.
WHITFIELD: What about the myth of, you go and purchase a car, you drive it off the lot, you know that it depreciates right away, but do you have a couple days in which to take that car back if you decide you don't like it?
LEAMY: No, this is the biggest...
WHITFIELD: Where did that rumor come from.
LEAMY: It is the biggest consumer myth and it's terribly damaging because people believe they have the three days to return the car, so they don't scrutinize the car enough, they don't scrutinize the financing package enough and once you sign on that dotted line for better or worse that car is yours.
WHITFIELD: And I guess it's like wearing a piece of clothing, your not supposed to take it back, you shouldn't be able to take it back.
LEAMY: You know, retail stores can set their own return policies in the car industry they have chosen not to let you make returns. And it's the second biggest purchase we make in our lives. So you really need to be careful and not be counting on that three-day time to return it. It doesn't exist.
WHITFIELD: All right, Elizabeth Leamy -- you had a thought on that Todd.
MARK: No -- I just...
WHITFIELD: Ten seconds left.
MARK: No return policies, whether it's cars or any product. And also be a smart shopper, know what the going price is for whatever it is. Even furniture on going out of business sales.
WHTIFIELD: All right, good advice. Todd Mark, Consumer Credit Counseling Service and Elizabeth Leamy of "The Savvy Consumer," that's the book. Thanks very much for helping us to save money or at least avoid, yet, another scam, because there are a lot out there.
MARK: Thanks.
WHITFIELD: And that's all we have time for right now. But stay with CNN, up next "PEOPLE IN THE NEWS." Then at 6:00 Eastern "CNN LIVE SATURDAY" followed at 7:00 with the "CAPITAL GANG."
And I'll be back after a quick break with today's top stories.
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Aired June 19, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: "Dollar Signs" is straight ahead, but here's what's happening at this hour. U.S. Ambassador James Oberwetter says Paul Johnson's family is grateful for Saudi efforts to find the kidnapped American. Saudi officials are still searching for Johnson's decapitated body after photos of it were posted on the web. Johnson was taken hostage in Riyadh last weekend by militants with links to al Qaeda.
Hours after the beheading of Paul Johnson, Saudi forces launched raids in Riyadh killing four suspected al Qaeda members, among them, Abdel Aziz al-Muqrin who was considered the leader of al Qaeda in Saudi Arabia. U.S. officials say the raids are an important achievement, but doubt they will stop the militant's campaign against westerners.
In Fallujah, Iraq, coalition forces launched an air strike today targeting a safe house linked to insurgent Abu Masab Zarqawi. Hospital sources say at least 18 Iraqis were killed and nine others wounded. Officials say Zarqawi's network is responsible for violent attacks against coalition troops and Iraqis.
Welcome to "Dollar Signs." Are you a savvy consumer? Today, we'll look at the biggest consumer myths and major scams out there. There sure are a lot of them.
Elizabeth Leamy and Todd Mark are here to help. Elizabeth Leamy is an investigative reporter with WTTG in Washington and the author of "The Savvy Consumer: How To Avoid Scams and Rip-Offs That Cost You Time and Money." And Todd Mark is with the Consumer Credit Counseling Service right here in Atlanta. Good to see both of you.
TODD MARK, CONSUMER CREDIT COUNSELING SERVICE: Thanks.
ELIZABETH LEAMY, WTTG: Good to see you.
WHITFIELD: All consumers need to be like investigative reporters these days, don't they. They really have to ask a lot of questions, because there is a lot of ways to get had these days. It's not as easy as just finding a product and plunking down your money, right, Elizabeth?
LEAMY: In fact, the key is to do a little bit of homework in advance so you know what you're getting into. And by taking a few steps you can avoid a bunch of scams and rip-offs. But as I preach over and over again in my book, after the fact it is almost impossible to get your money back. I try to help people with that part, too, but really, taking those steps in advance and being aware of the scams, I'm sure you would agree, is really important.
WHITFIELD: And there are a lot of things to look out for when we ask some of these questions, whether it's about return policies or whether it's about warranties, et cetera, or maybe it really may be involving, you know, your writing of checks or the use of credit cards, information that can be stolen from a lot of us, because identity theft is still one of the No. 1 consumer crimes out there, isn't it Todd?
MARK: Oh, identity theft is the fastest-growing theft in the country. And it's so scary how many different ways people can get your information. Used to be people said, I don't want to get my credit card over the Internet, it's very scary, it's a new technology. You know, you're much more likely to get ripped off going to a restaurant, giving a waitress your credit card and she goes in the back, and just skims the card and gets the information like that. But there are so many other ways to get your information, you have to be so protective of it.
WHITFIELD: And Elizabeth, you even mention in your book, ATMs. We are really vulnerable with ATMs nowadays, because particularly at free-standing ATM machines that there is a scam out there which someone can read your PIN number or your card information, right, and be able to withdraw money somehow from your account later. How does that work?
LEAMY: Let me explain how it works. Either a free-standing ATM put somewhere in a public place, or the bad guys will put a false front on a real ATM. So you put your card in and you immediately get a message that says the machine is not in service or something, but, meanwhile, that machine is grabbing not only your ATM card number, but also your PIN number. And then the bad guys can manufacturer a ATM card with all of your information and go and drain your account. And by the way, news flash, they're now starting to do it at gas pumps.
WHITFIELD: Really?
LEAMY: When you pay at the pump. Yep.
WHITFIELD: But then in most cases your recourse is with your bank, if you at least report that something's wrong, or you really got to start looking at your bank account activity more closely these days, right? That if you see a red flag, you most likely will be reimbursed, right?
LEAMY: Look, I hate reading my statements, I shouldn't say that as a consumer reporter, but you really do need to do it. Banks will hold it against you if you don't stay on top of these things and don't report them in a timely manner.
WHITFIELD: So, how much time do you have, then?
LEAMY: Do you know if there is a firm amount of time in this case?
MARK: If you're looking for getting something reversed, you have 60 days, 60 days from the time you get your bill.
WHITFIELD: Wow.
LEAMY: So, there you go.
WHITFIELD: All right. Now, let's talk about credit card information. Perhaps someone, you may get a phone call. You know, we're all getting phone calls these day, although we're on the do not call list, but someone may call and say, we want to confirm information, your name, your address, perhaps last four digits of your Social Security. How do you handle calls like that so you don't take advantage of?
MARK: Fredricka, have you been on the lake today? Because you're talking about phishing. This is called phishing. Now with an F, but PH.
WHITFIELD: And a lot of times they claim to be a credit card company.
MARK: Whether it's by a call or by or an e-mail. And e-mail is the way a lot of this is going on right now. You get an e-mail that looks just like the company you're doing business with. Maybe it's your bank, or ISP provider, anybody you do business with on a monthly basis. And they'll say we need to confirm your information, or something has expired, please reenter your information, or click on our Web site.
The Web site will have this very same domain that you normally click through to do business, but guess what? It's not the sight you normally go to. You click it, it looks it. How do you know you're being had? You don't.
So, anybody you get somebody calling you or via e-mail saying you need to confirm your information, I want you to pick up the phone or call them directly, or go into another browser and type in whatever .com. Make sure you go to the actual site, not a fake that looks like one.
WHITFIELD: There's some banks just recently who have issued some warnings, because people who bank online or pay their bills online, a number of people have been taken advantage of because they may get a little information from someone who sounds legit and maybe there's a logo that looks very similar to their bank only to find out they're providing information to have monies robbed from their accounts.
LEAMY: You know, one thing you can do that I mention in the book that takes care of these kind of problems. Be the hunter, not the hunted. Sounds a little weird, but what I mean by that is, don't do business with anybody who comes after you. You know, whether it's the fisherman or whether it's carpet cleaner who slips a coupon under your door or a stock broker who cold calls you. Only do business with companies that you seek out, where you get referrals and you initiate the call.
WHITFIELD: Why is it we're so much more vulnerable, what has happened in the past five to ten years to make us all more susceptible to getting had?
LEAMY: I think it's because we're an electronic society and we don't know the people, personally, who we do business with so much any more. Maybe we're too trusting. I think sometimes we're kind of lazy. You have to be savvy.
WHITFIELD: More vigilant.
MARK: Savvy is very important. And remember, the scamsters are going to prey on the people that are either desperate, because they're in a bad situation, they're greedy, or they're naive. So they're going to prey on the fact that you're going to believe into whatever scam they're giving you.
Maybe it's a get rich quick scheme. And they're going to say, you know this sounds great. This is what I've been waiting for my whole life and you want it believe and then you send your money and it's ta-ta, bye-bye.
WHITFIELD: Yes, that old adage, if it sounds too good it be true, it really, probably is. We all have to be reminded of that over and over again. We're going to talk more about how to protect our money with Todd Mark and Elizabeth Leamy right after this.
And of course, you can continue to send your e-mails to dollarsigns@CNN.com or call us, as well. The number is right on your screen. 1-800-807-2620. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Well, welcome back to "Dollar Signs." The Internet has made shopping at home more convenient, but it can also open you up to Internet fraud, or identity theft. Helping us to recognize the danger signs, scam expert Elizabeth Leamy. And Consumer Credit Counseling expert Todd Mark.
And you know what, when you're on the Internet, sometimes shopping, a lot of pop-up ads come up with loan consolidation ads or all these different ways in which to help you get out of debt free. Should that raise a red flag, Elizabeth?
LEAMY: Oh, yes. Once again, they're coming after you and that's a bad sign to begin with. Plus, a new thing I just learned about some of these pop-ups are actually sort of like viruses that can grab your information when you close them. The entire thing is like a button saying yes. So, a trick you can hit escape and if it remains on your screen it is just a regular pop-up, but if it goes away, you know you just averted disaster.
WHITFIELD: Wow. Credit counseling is something that you do. And so often you're competing with these groups that are really just trying to get some kind of information, such as for the purpose of identity theft. How does anyone know the difference between the real thing and the fakes?
MARK: First off, there a lot of differences between real credit counselors and some fake ones, but there's also credit repair organizations. And any time you get some false promises of, you know, this is going to sound too good to be true, but we can repair your credit, $500 up front and we're going to give you a new I.D. you're going to be able to qualify for whatever mortgage rate you want and no-interest credit cards.
And you know the old, if it's too good to be true, it always is true. And so, when it comes to credit repair, let's just say it right now, there is no such thing as credit repair. Somebody promises that they can improve your credit score or your credit report and they just want some money up front, don't do it. Anything you can do to improve your credit, you can do on your own for free. Anything else will not be legal.
As far as credit counselors, you should know the good guys, from the NFCC, as I'm with, are going to be charging you little to no money up front. You should be charged a month up front worth of fees for help. As a matter of fact, for the most part, people that come to CCCS are not doing debt management plans, we're just king of giving them budget advice. They go on their own. So, if you are seeking credit help and somebody, if it seems all they're interested in is getting you signed up on a debt management plan, that's one reason to run.
WHITFIELD: It's the whole dangling of the carrot a lot of companies use to lure you to provide some information. It may even come in the form of like prizes. A travel group will say, if you act now, you'll get a free, whatever, five-night stay at some condo somewhere, beachside. How do you identify the real thing?
LEAMY: Well, the trick with those travel offers is in the wording. They don't actually tell you have won a fabulous vacation, they say you have won a fabulous vacation offer. In other words, you're being given the opportunity to spend your own money on a trip. So, that's not very free now is it?
And I actually I fell for that myself back in my college days. So, there's a lengthy thing in my book about that. My own little personal revenge.
But yes, you know, you're better off researching travel opportunities yourself, going through a local travel agent if you want help with it. But anybody who approaches you with one of these things, you know, it's going to be an expensive trip to a roach motel.
WHITFIELD: Yes -- go ahead.
MARK: I was just going to say, remember, what I always say is it's free it's got to actually mean free. Which means you don't pay a penny. So, if you get an offer for a trip and they say, well, you do have to pay several hundred dollars in taxes and some scheduling fees, well, that's not free. If I won a free trip, or a free product it's got to mean you're not paying a dime.
That's the smell test right there, that simple. WHITFIELD: Now what about when you make a purchase of say, a refrigerator, something large, and they offer you an extended warranty, or perhaps they offer some kind of service warranty, and of course it's usually attach with a pretty good fee, is that something that either one of you recommend?
LEAMY: With something like appliances, they last a long, long time anyway, so I really don't recommend extended warranties for that kind of thing. And the other mistake a lot of people do, with cars, for example, they buy an extended warranty, but it begins at the same time that their new car warranty begins. Which is a total waste, totally redundant.
So, if you really must get some sort of extended warranty, at least start it when your other one is expiring.
MARK: I would always recommend self-insure. Don't buy warranties from somewhere else. Have that three to six months of the money in the bank so if something goes and you don't have warranty left on it, you just replace it.
I want you guys to know that most of the appliance stores, electronic stores, they start the day by saying, how many extended warranties are we going to sell. That's what they care about, because they get so much more profit from these warranties than they do from the actual products. The products are almost a loss later. So, that's why they're pushing you out the door, please, will have you have a warranty, please.
WHITFIELD: And speaking of warranties, lifetime warranty is something that comes with some of these appliances and people think, you know what, this is going it be working for me, or I have service until the end of my lifetime, but that's not what it means, right?
LEAMY: Well it depends on the quality of the company. There is no legal definition of lifetime warranty, you would think it means my lifetime, but many companies say they're talking about the lifetime of the product. Which is ridiculous. That's like saying it's warranted to last as long as it lasts. But what they mean is, they've determined their product should last five years and, so, if it breaks during that five years they'll honor your warranty and if it breaks out of that, you're out of luck.
WHITFIELD: Now, what about home warranties?
LEAMY: I had a horrible experience with a home warranty experience...
WHITFIELD: You did?
LEAMY: ...myself. They made it very, very difficult to get service. So, one thing I would say is, call the service number that you have to call in order to tap into that warranty before you buy it and see if you can get through, because that's a really good indication of whether or not they want to hear from you or not. WHITFIELD: OK. Elizabeth Leamy and Todd Mark, hold on a minute, we're going to take a short break and continue our discussion on how to be smart about your money and how not to be had out there. An awful lot of scams. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Well, remember the advice your grandfather or grandmother gave you: if it seems too good to be true, it probably is. We talked a little bit about that, let's talk some more about it. We're taking a lot of questions in. And we apologize for the phone calls. We are reiterating some of the questions, but we're having technical problems that's why you're not hearing the voices of some of our callers.
Elizabeth Leamy and Todd Mark are taking some of your questions right now. And we want to try and cover a lot over the next five minutes or so. Let's talk about gift cards. You give a gift card to someone as a gift, but, you know what, come to find out, there is an expiration date, possibly, on it, right?
LEAMY: Yes. And embarrassingly enough, I didn't know this. So when they first came out, I thought I was being the smart efficient person and I bought a bunch of them, thinking I'll just kind of have them around and when there is an occasion that comes up, I'll give them to my friends. Well, I would hold on to them for months before giving them, luckily my friends are too polite to have say anything. And of course, I was too mortified to confess.
WHITFIELD: So, how do you know if it is printed on the card?
LEAMY: It is print on there, but people didn't know to look for it. But there are a couple states where it is illegal for gift cards or gift certificates to expire, like California. There are others that are considering that, but typically after 18 months they start to lose value, or some have a hard deadline where they're not worth anything any more.
WHITFIELD: And important for people to know that when you're giving a gift, a gift card might be a store that goes bankrupt in a few months. Think about all the big companies that have gone bankrupt. So, you're taking hard-earned cash that you can spend anywhere in the country and trading in for a card that is only good at one store. Why would you do that?
WHITFIELD: Which is a perfect segue into these big going out of business signs that you see on some stores, retail stores. They say, going out of business, slashed prices, 30 to 70 percent. Are they really going out of business, or they just trying to get you in there?
LEAMY: You know, some are going out of business, but believe it or not, in some jurisdictions, they actually have to file paperwork with the local government in order to request permission to go out of business and then they really have to do it. But many times, they don't actually file that paperwork. And another thing people don't realize, is that there are professional companies that run going out of business sales at these other stores. So, they'll leave that store's sign up, they bring in new merchandise and they'll milk this for a couple of years. And they'll jack prices up, just so they can say things are 75 percent off, but, really, it was a higher price than when it was in business still.
WHITFIELD: OK. We talked a little bit earlier about online banking and how some times people get taken advantage of. We had one caller who said he got a bill for $400 for a personal Internet banking and he doesn't even do Internet banking. What do you suppose is happening is to too him? Is he a victim of identity theft?
MARK: He might be an identify theft victim, or somebody might have just started throwing in some charges on one card. It doesn't mean that they've opened up other accounts on his name.
WHITFIELD: So, what should he do now?
MARK: What he needs to do is go immediately to the credit provider, put it into dispute. Say, this is not me, I did not receive this service. You have 60 days to do that within writing, 60 days from the moment you get the bill. And unless this company can prove that he's using the service, then it gets wiped out.
WHITFIELD: And a lot of people these days, whether you're making a purchase, or whether you're making an inquiry, they want to know your Social Security number. When do you know when it's safe to provide your Social Security number, under what circumstances?
LEAMY: It really wasn't designed to be for these financial transactions, it was just supposed to be for the Social Security administration. But it really has gotten out of hand. And in the consumer credit counseling area, I'm sure you know...
MARK: Well, you know, something that is so important is a lot of states were using your Social Security number as your driver's license number. So if you get your wallet stolen, all somebody needs is your I.D. and that's all they need to completely steal your identity: they've got your name, your address your SOC. And they can start opening up credit cards, buying cars, even homes in your name.
So it is very important, A, make sure your driver's license doesn't have your SOC on it. You can always have that changed if your state still permits it. Don't keep your Social Security number on your person in case you do get robbed. And just have to know that if you're online, or even over the phone, don't give it to anybody unless you know you're doing business with them. You have an ongoing relationship with them.
WHITFIELD: Wow, so many ways to get scammed. You mentioned investment scams is another way. What happens?
MARK: Oh, well there's so many easy ways for people to hear, you know, you're going to get rich just like me and all my friends. Look at us with our nice cars and our fancy clothes, all you have to do is pay $2,000 to get in and, guess what? A few people under you are going to give you $8,000.
WHITFIELD: Fast money, it sounds enticing.
MARK: Yes, it's a traditional ponzi (ph) scam. As a matter of fact, great information in Elizabeth's book about this. But ponzies and pyramids, ill gotten gains for the people that do get money, but for most people, they get in and they don't get their money back. They're just ripped off.
WHITFIELD: What about the myth of, you go and purchase a car, you drive it off the lot, you know that it depreciates right away, but do you have a couple days in which to take that car back if you decide you don't like it?
LEAMY: No, this is the biggest...
WHITFIELD: Where did that rumor come from.
LEAMY: It is the biggest consumer myth and it's terribly damaging because people believe they have the three days to return the car, so they don't scrutinize the car enough, they don't scrutinize the financing package enough and once you sign on that dotted line for better or worse that car is yours.
WHITFIELD: And I guess it's like wearing a piece of clothing, your not supposed to take it back, you shouldn't be able to take it back.
LEAMY: You know, retail stores can set their own return policies in the car industry they have chosen not to let you make returns. And it's the second biggest purchase we make in our lives. So you really need to be careful and not be counting on that three-day time to return it. It doesn't exist.
WHITFIELD: All right, Elizabeth Leamy -- you had a thought on that Todd.
MARK: No -- I just...
WHITFIELD: Ten seconds left.
MARK: No return policies, whether it's cars or any product. And also be a smart shopper, know what the going price is for whatever it is. Even furniture on going out of business sales.
WHTIFIELD: All right, good advice. Todd Mark, Consumer Credit Counseling Service and Elizabeth Leamy of "The Savvy Consumer," that's the book. Thanks very much for helping us to save money or at least avoid, yet, another scam, because there are a lot out there.
MARK: Thanks.
WHITFIELD: And that's all we have time for right now. But stay with CNN, up next "PEOPLE IN THE NEWS." Then at 6:00 Eastern "CNN LIVE SATURDAY" followed at 7:00 with the "CAPITAL GANG."
And I'll be back after a quick break with today's top stories.
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