Photo Credit: Shutterstock.com
April 29, 2013
|
In the wake of the financial crisis, there was a moment
of
hope that predatory businesses would no longer be able to pick at our
bones like vultures. Instead, we've seen Dodd-Frank weakened and
stalled, and the newly created Consumer Financial Protection Bureau
stymied at every turn. In the latest round, Republicans are thwarting
the confirmation of Richard Cordray to lead the Bureau. Meanwhile, we
continue to get fleeced. Here are a few egregious scams to watch out
for, along with ways to protect yourself.
1. Auto-renewal scams
The rip-off:
You sign up for a product or service for a limited time period. Then,
long after that time has passed, you notice mysterious charges appearing
on your credit card bill. Very likely, you have been the victim of the
auto-renewal/automatic billing scam. Somewhere in the fine print of the terms you agreed to was a note saying that your credit card would be charged
whether you decided to continue or not.
But of course, you didn’t see it, because the company didn’t want you
to. This is a blatant scam, and a very common one, generating big bucks
for many well-known companies, including Match.com, XM Satellite Radio
and DirecTV. Time Warner has come under fire for screwing customers on
magazine subscriptions, and GoDaddy, the domain registrar, is another
notorious offender.
The remedy: With a little knowledge
and persistence, you can fight back. In some states, like New York, it
is totally illegal for a company to do auto-renewing on your credit card
without notifying you in advance in writing.
Find out what the law is in your state, then call the company and ask
to speak to a supervisor. If the supervisor pretends that the law
doesn’t apply (which they probably will) and refuses to refund you, then
ask to be connected to the corporate or legal departments. Tell them
that if you don’t get resolution, you will be filing a complaint with
the Better Business Bureau (which will contact the company) and also
with your state attorney general’s office. Often the company will change
its tune and refund your money. The law is not on their side: The giant
company Bloomberg, provider of financial data was
successfully sued for pulling this fast one.
2. The out-of-network doctor trap
The rip-off:
You need medical treatment. You dutifully check the listings from your
insurance provider to choose an in-network doctor or hospital. After
your treatment, you receive a surprise in your mailbox—a giant bill,
perhaps for many thousands, or even tens of thousands of dollars. Why? A
person involved in your treatment, unbeknownst to you, is considered
out-of-network. This is the out-of-network doctor trap, a.k.a. the
surprise billing scam.
This
can happen in a doctor’s office for a simple scheduled procedure or in a
hospital for an emergency. Sometimes it’s the assistant surgeon. Others
times it’s the radiologist, pathologist or anethesiologist. In a
practice called “balanced billing,” your insurer is supposed to
reimburse you for 70 percent of out-of-network costs, but that really
means only 70 percent of what the insurer determines is "usual,
customary and reasonable.” And what does reasonable mean? Whatever the
insurer says it means, which is often far less than what the
out-of-network doctor charges. Insurers often manipulate claims and data
just to screw you: In 2009,
UnitedHealth had to pay a big settlement for this type of fraud
when then-New York Attorney General Andrew Cuomo investigated and sued.
But fines don’t stop these big insurers – the money they make from
scamming is too good.
The remedy: As a precaution, always
try to find out in advance whether your healthcare providers, including
hospitals, clinics and other facilities, are contracted with your
health plan. You can ask that a contracted provider be assigned to your
care, but unfortunately, this is not always possible. Sometimes the
identity of the contracted doctor -- the anesthesiologist, for example
-- isn’t even known until the day of the service, at which point it’s
often too late. Other times you’re having a medical emergency and don’t
have the ability to screen for out-of-network doctors.
Fighting
this scam if you get hit takes fortitude, because you’ll find that the
insurers, hospitals and doctors are all blaming each other. Contact your
insurer to discuss the issue, and ask to submit an appeal if they
refuse to adjust the charges. Ask the doctor or facility to provide a
discount on what you owe. If you can’t get any resolution, check to see
what agency receives complaints in your state. (In New York, it’s the
Department of Financial Services.) Make sure you keep a detailed record of all phone calls, emails and letters associated with your situation.
3. Cable TV is for suckers
The rip-off:
All you really desire is basic cable, but you’ve somehow ended up with
an overpriced bundle of channels featuring shows that you will never,
ever watch, like “Here Comes Honey Boo Boo.” Maybe you signed up for a
teaser rate, and then find that after a few months your bill has
skyrocketed and you’re now signed up for every premium channel in
existence. Even without the premium channels, you're still probably
getting screwed. Sports channels, for example, are extremely expensive,
and you pay for them whether you watch them or not:
ESPN alone adds $5 to your cable bill.
The remedy:
Either call your company and get back to the basic rate, dumping the
premium channels you don’t watch, or opt out altogether. Network
websites often allow you to watch programs for free, and there’s lots
available on YouTube. Hulu.com offers thousands of videos, TV episodes
and full-length movies at no cost. At Netflix you can watch a variety of
content for as little as $8 per month. If your cable TV is bundled with
other services, like a landline, look for other individual providers,
which are often much cheaper.
(Magic Jack
charges $20 per year for a landline.) Or you could just Skype for free.
Cable companies count on your inertia, betting that you won’t bother to
find a better rate for individual companies that provide the services
you need. Prove them wrong.
4. Electronics warranty game
The rip-off:
You just want to buy a freaking TV, but there’s the sales rep, trying
to pressure you into purchasing an extended warranty. Warranties may
seem like a prudent buy, covering a variety of failures, but they can
also be a ginormous rip-off. Two-year coverage on a laptop or an air
conditioner could cost you nearly as much as the product itself.
The remedy:
First you’ll want to understand what kind of warranty the manufacturer
provides, because sometimes they are identical. Are parts included in
the repairs? Labor? Generally, the extended warranty should go into
effect after the manufacturer’s warranty expires. Also, find out exactly
who is providing the warranty – is it really the store or some outside
entity that could disappear? Make sure you compare the cost of the
extended warranty with the cost of just replacing the item. If you feel
you need an extended warranty, check third-party warranty providers like
SquareTrade.com, which often offer better coverage for much better
prices.
5.
Rent-to-own schemes
The rip-off:
In tough economic times, rent-to-own can sound very alluring. No credit
check required; take it home today! Millions of Americans get
victimized by this scam every year, which is so ubiquitous it even has
its own
rap song. The
customer usually ends up paying several times the retail cost for things
like furniture, computers, appliances, electronics. You’ll find
yourself hit with exorbitant interest rates and other surprises you
didn’t bargain for. And if you can’t continue the payment, the repo man
will soon be a-knocking. Rent-a-Center has frequently been cited as a
company whose business model depends on preying on those down on their
luck for cash-extraction.
New twist: Since the foreclosure crisis, rent-to-own schemes
featuring housing
have been proliferating, offering you a chance to live in the home for a
specified period and then buy. Sounds good until you realize that the
home you’ve moved into is really a foreclosed property a scam artist has
"sold" you. Often such deals are
advertised on Craigslist.
The remedy:
It’s best to avoid these schemes altogether, but if you must, make sure
you get explicit information about interest rates and other fees. Look
up any rent-to-own service on the Better Business Bureau to see if
complaints have been lodged. In the case of housing, never sign any
agreement unless you have shown it to a lawyer. The paperwork should be
clear on what happens to money paid if you decide not to purchase the
home.
6. Bank fees for the 99%
The rip off:
Banks have been increasingly passing on the costs of fines they receive
for wrongdoing to customers, and generally concocting new ways to rip
us off since the financial crisis. Every time regulators try to crack
down on a specific fee, like overdraft charges, they simply change
tactics and invent another fee. Customers now find themselves smacked
with large fees when their balance dips below an arbitrarily assigned
minimum. There are fees for excess activity, fees for not enough
activity, special fees for "maintenance," and the list goes on.
The remedy:
When your bank sends a letter -- open it. It may contain information
about "changes" to your account (read: fees). If you don't understand
something, call and speak to a bank representative. Sometimes the bank
will offer to waive fees for things like minimum balance if you do
direct deposit, but I have never liked this -- it's just a way of
"capturing" you as a customer and making it harder for you to go
elsewhere. Moving your money to a smaller bank or a credit union is
worth exploring, but be careful. When I moved my money to Amalgamated
Bank (touted as "America's Labor Bank") I was shocked to find that it
would not give me a line of credit on my checking account because it did
not use Experion, which my credit card reported to. Therefore
Amalgamated deemed that I had no credit history -- go figure! I was in
more danger of overdraft charges there than at HSBC. Unfortunately,
because banking has become an oligopoly, the entire industry has been
poisoned and you're not necessarily better off going around the corner.
Vigilance at all times is required.
Lynn Parramore is an
AlterNet senior editor. She is cofounder of Recessionwire, founding
editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt
in Nineteenth-Century Literary Culture.' She received her Ph.d in
English and Cultural Theory from NYU, where she has taught essay writing
and semiotics. She is the Director of AlterNet's New Economic Dialogue
Project. Follow her on Twitter @LynnParramore.
No comments:
Post a Comment