Fraud Alert! Six Common Consumer Rip-Offs
By John Persinos
Even if you think of yourself as a savvy consumer, it's likely that you've felt cheated from time to time by a product or service that fails to live up to its claims.
Every year, the annual survey of state and local consumer protection agencies conducted by the Consumer Federation of America and the North American Consumer Protection Investigators finds that the prevalence of consumer rip-offs has reached epidemic proportions.
You can fight back by staying informed. Here's a list of six worthless offerings that confront consumers every day. They're among the most common — and insidious — rip-offs around.
1. Credit insurance.
This type of insurance is such a waste of money, it borders on outright fraud. Here's how it works: When you obtain a new loan or credit card, the lender will attempt to sell you credit insurance, promising that should anything bad happen to you, such as unemployment, illness or death, the insurance company will pay off the remainder of your debt.
Some lenders aggressively push this type of insurance, using the fear of passing mountains of debt along to your loved ones as a selling tactic. Don't fall for it. The statistical odds of something adverse happening don't justify the expense. The protection tends to be costly and riddled with loopholes that allow the insurer to wriggle off the hook. File this financial product under "bad deal."
2. Debt management plans.
These scams are all the rage on late-night television. The ad usually starts with a montage of average people, tormented by too much debt. A distinguished-looking fellow in a suit suddenly appears and in resonant tones, promises to slash your debt by dramatic amounts. All you need to do is call the 1-800 number on your screen and salvation from debt is yours.
Here's the reality: Debt management companies solely exist to pick your pocket. They charge sky-high fees and don't eliminate your debt; they repackage and consolidate it. At the end of the day, you still have the same debt—but now, on top of your debt, you've just spent a large fee to a company that merely played paper games with it.
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