What s your Consumer IQ?

Transcription

1 What s your Consumer IQ? How savvy a consumer are you? Take this quiz to see how much you know about consumer issues, laws and scams. 1. You receive a credit card offer in the mail. According to the big print on the outside envelope, the credit card carries an interest rate of 6.9 percent. Your current card has a rate of 12.9 percent. If you sign up for the new card, you will: a. definitely save money. b. possibly save money. c. not save any money. 2. You receive a phone call from someone representing a charitable organization you have not heard of. The caller asks you to support what sounds like a worthy cause and he says your help is needed immediately. He asks you to donate right away by credit card. You should: a. give him your credit card number but ask him to mail an annual report. b. refuse to donate until you have time to review written materials. c. agree to donate but only if you can pay by check. 3. You have finally decided to replace your 12 year old car. You see an advertisement that shows the monthly cost of leasing to be less than the cost of buying. Should you lease? a. Yes, leasing is the least expensive way to drive a new car. b. No, leasing is not a good option because you ll never own the car. c. Maybe. You ll need to know more than the monthly payment to decide. 4. You are buying a new computer. You planned to charge it to your credit card, but the salesman offers a zero percent financing deal. He says you can buy now and take a year to pay with no interest charges. What should you do? a. Read the contract before signing. b. Sign up you have nothing to lose but an interest payment! c. Ignore the offer. It is illegal to lend money without interest. 5. The computer salesman makes another offer. For a small fee, you can purchase a service contract that will cover the cost of repairing the computer if anything goes wrong. Should you buy it? a. Yes. It s worth the money to know you won t have to pay for repairs later. b. No. Appliances are made better now than in the past and they rarely break. c. Probably not. The warranty that comes with your computer is probably adequate.

2 6. When your phone bill arrives you notice it is higher than usual. The long-distance company you signed up with is not listed anywhere on the bill. Instead, a company you have never heard of is listed. What should you do? a. Call your local phone company immediately. b. Wait a month. If the problem continues, call your phone company. c. Call the new company and ask them to reduce your rate. 7. The only time you can get a copy of your credit report is when you apply for a loan or mortgage. True or False? 8. After you sign a contract, including a contract to buy a car, you have three days to cancel if you change your mind. True or False? 9. You receive an that says your bank is updating its security measures and your account will be frozen unless you verify your account information. You should: a. Give the information immediately. b. Check that your bank s logo appears in the message; if it does, give the information. c. Call your bank and ask if the is legitimate. 10. You should only hire licensed contractors to do repair work on your home. This means you should check that the contractor has a valid: a. Commercial driver s license b. Maryland Home Improvement Commission license c. License from the national association for his professional specialty (electrician, plumber, etc.) 11. Your credit card says it has a universal default policy. This means that: a. If you make a payment late to another creditor, it will raise your interest rate/ b. It offers accident insurance when you rent a car. c. If you default on your payments, it will close your account. 12. By law, all pharmacies must charge the same price for a prescription drug. True or False? 13. You agree to co-sign a car loan for your younger brother. If he defaults, can you be held responsible for any of the debt? a. No, as a co-signer you are only acting as a reference. b. Yes, for 50 percent of the debt. c. Yes, for 100 percent of the debt. 14. You are ordering furniture and the store requires a 50 percent deposit. What is the safest way to pay? a. Check b. Credit Card

3 c. Cash 15. You recently had surgery. You received statements showing that the surgeon and the hospital were paid by your insurance plan, but then you receive a bill from a laboratory. You should: a. Assume the lab tests are not covered by your insurance and pay the bill. b. Don t do anything, the insurance plan will take care of it. c. Call your insurance plan to find out why the lab bill wasn t paid. 16. What is the surest sign that a work-at-home opportunity is a scam? a. It gives a post office box as an address. b. It requires you to send money in advance for supplies and instructional materials. c. It advertises on telephone poles. 17. You buy a computer and a week later it malfunctions. The computer store says it only accepts returns within five days of the sale, and that you ll have to deal with the manufacturer. Is the store correct? a. No. If an item is defective, the store must give you a replacement or refund regardless of its return policy. b. Yes, if the store s return policy is clearly posted or printed on the sales receipt. c. Yes, if the item is under a manufacturer s warranty. 18. Your phone bill shows a charge for a paging service. You don t have a pager. You should: a. Call the number of the paging company printed on the bill and tell them to remove the charge. b. Tell the phone company that you did not order the paging service. c. Call the number of the paging company and your local phone company, and then deduct the disputed amount from your payment. 19. After you move out of your apartment, the landlord says he is keeping your security deposit. He can do this if: a. He says the apartment needs to be painted. b. He sends you a written list of damages to the property, with a statement of what it will actually cost to repair them. c. You broke your lease. 20. You call a company that advertises guaranteed loans, even for people with bad credit. The representative approves you for the loan over the phone and says you need to send a processing fee by overnight courier. You should: a. Send the money. b. Ask if the fee will be refunded if you don t get the loan. c. Be suspicious and end the conversation. 21. Because you have a coupon for an oil change, you take your car to a new repair shop. The mechanic says you should have your water pump replaced for $300. You should:

4 a. Tell him to make the repair. b. Take the car elsewhere, to your regular mechanic if you have one, for a second opinion. c. Ignore the advice he s only trying to rip you off. 22. A friend asks you to sign up as a distributor for an organization that sells water filters and nutritional supplements. You should ask: a. Will more of my commissions come from recruiting than from selling? b. Are the organization s products competitively priced? c. Does the company offer a full refund for my initial investment? 23. You ask your doctor for a copy of your medical record. His office says there will be a charge for photocopying. You should: a. Tell them that is illegal it s your medical record. b. Pay the fee, because the record belongs to the doctor. c. Ask if you can photocopy the record yourself. 24. A caller who says she is a representative of your bank tells you she needs some information to set up security safeguards for your account. You should: a. Give her the information she requests, but get her full name and telephone extension. b. Tell her you will call the bank at its listed number to check that she s on the level. c. Agree only to verify information she already has. 25. You can return anything within 30 days as long as you have the receipt. True or False? 26. If you purchase merchandise with a lifetime guarantee, you ll never need to buy another one. Or, if you buy a lifetime membership to anyplace, you can use it until you die. True or False? Answers: 1. B. The new card may be a better deal, but the lower rate might also be a gimmick. For example, the lower interest rate might only last a few months and then be replaced with a higher rate than you now pay. Before you sign up, read the disclosure box that accompanies the offer. 2. B. Before agreeing to give money to any organization with which you are not familiar, you should get information in writing. Also, call the Maryland Secretary of State s office at to find out if the charity is registered and how much of its proceeds are used to cover fund-raising expenses compared with the proceeds applied to the organization s charitable purposes. 3. C. You may want to lease, but don t base your decision solely on the monthly payment. You must also calculate up-front costs, monthly costs, maintenance and repair costs,

5 penalties and end-of-lease costs. And remember, at the end of the lease, you don t own the car. 4. A. Often, no interest offers have strings attached. You might be charged with interest if you fail to make a payment on time or fail to pay the whole balance in the specified time frame. Be sure you understand all of the terms before you sign the contract. One other aspect of no interest promotions is that the price may be higher to compensate for the absence of interest. If you are making big ticket purchases compare the overall costs. 5. C. Most consumers never use their service contracts. You re usually better off not buying one. 6. A. You have been slammed. Call your local phone company immediately and tell them what happened. Ask to be switched back at no charge. File a complaint with the FCC and contact the Consumer Assistance Office of the Maryland Public Service Commission at False. You can order a copy of your credit report at any time. In fact, it s a good idea to review your credit report annually to catch mistakes or to spot signs that someone is using your data to commit identity theft. In Maryland, consumers are entitled to two free copies of their credit report each year from each of the three major credit reporting companies. Call or visit for the first report. The second report must be requested by contacting the credit reporting agency directly. 8. False. There are a few transactions for which the law allows a cancellation period (such as a door-to-sales or health club contract), but most contracts are binding when you sign them. The often-repeated myth that you can cancel a signed contract has given many consumers a false sense of security when making an expensive purchasing decision, like buying a new car. 9. C. Call the bank at the number listed in the phone book. Banks do not ask their customers to verify sensitive information by . Con artists send these messages to try to steal your identity and use it to make fraudulent withdrawals or credit applications. Their phony s can look very authentic. 10. B. Home improvement contractors are required to be licensed by the Maryland Home Improvement Commission. Be sure to check that a contractor you are considering using has a current license. Call the Commission at If a licensed contractor fails to do the job, or does it poorly, you may be able to recover your losses through the Home Improvement Commission s Guaranty Fund. 11. A. Many credit cards have a universal default policy. They monitor your credit file. If you are late paying any creditor, they consider that you are a higher credit risk and they will raise your rate.

6 12. False. Pharmacies can charge different prices for prescription drugs. They Attorney General s website has a Prescription Drug Price Finder that compares prices from pharmacies statewide: C. The bank can hold you responsible for 100% of the amount owed. 14. B. It s safer to use a credit card when paying in advance for an item. If the store should go out of business or something similar happen before you get your furniture, you might be able to get a chargeback from your credit card. If you paid by check, cash or debit, you might never get the money back. 15. C. Call your insurance plan. If you need further help with medical billing, health care question or dispute, you should call the Attorney General s Health Education and Advocacy Unit at B. If a company requires you to pay money up front, beware. It s against state law for a company that advertises a work-at-home opportunity to require advance payments for materials. You ll probably receive worthless materials and find that there s no way to make money. 17. A. If you purchase a defective item, the seller must repair it, replace it or refund your money regardless of its return policy. All purchases, except used cars that are more than six years old, have been driven more than 60,000 miles, and are sold as is, are covered by an implied warranty that goods are in operating condition and will continue to work for a reasonable period of time. Even when an item is covered by a manufacturer s warranty, you can insist that the retailer give you a replacement or refund. 18. C. You do not have to pay for services you did not authorize. Your phone service will not be disconnected while you are disputing the charge. 19. B and C. Landlords may withhold security deposits to pay for damages the tenant has made to the apartment, but not to pay for painting or repairs due to ordinary wear and tear. You have the right to be present when the landlord inspects your apartment for damages at the end of your lease. If you broke your lease, and the landlord is not able to find another tenant for the remainder of your lease, the landlord is allowed to recover his losses from your security deposit. 20. C. Being asked to send a fee in advance, by courier, is a tip-off to a common scam. The consumer sends the fee but the loan never arrives. Legitimate lenders never guarantee or say you are likely to get a loan before you apply, especially if you have bad credit, and never ask you to pay a processing fee in advance. 21. B. It is always a good idea to get a second opinion for major repairs, especially if the first estimate comes from a mechanic you haven t dealt with before. Although it takes extra time, it can save you from spending a lot of money on a misdiagnosed problem--or a

7 completely unnecessary repair. 22. A, B and C. A business in which salespeople earn their commissions primarily from recruiting other salespeople, rather than selling a product, is a pyramid scheme. Often, pyramid schemes market products or services at prices that are higher than retail. Pyramid schemes are illegal, and people lose money when the program collapses, as it inevitably will. Maryland law requires that multi-level marketing companies offers participants at least a 90 percent refund under certain circumstances for an initial 90-day period. Some legitimate companies may offer a 100 percent refund for a longer period (if so, make sure you get that refund offer in writing). If you have a question about a multi-level marketing opportunity, call the Attorney General s Securities Division at (410) B. Providers are allowed to charge fees for copying and providing copies of medical records. These fees are regulated by Maryland law and the Health Insurance Portability and Accountability Act (HIPAA) of You can check with the Attorney General's Office to make sure that the amount your provider is charging you conforms to both state and federal law. 24. B. This sounds like a scam. Never give personal or financial information to someone you don t know. If you want to check out her story, call the bank yourself at its listed number any number the caller gives you may be a set-up. 25. False. Under Maryland law, stores must post their return policies on the wall, on the merchandise or on your receipt. If the policy isn t posted, the store must accept returned merchandise within a reasonable time period. However, a store can refuse to accept returned merchandise if that is their posted policy. Or their policy may allow you to return some items but not others. Or, a store may charge a re-stocking fee on some items, such as electronics. All of these things are allowed under the law, as long as the policy is posted. But, if the item is defective, the store must repair the item, replace it or give you a refund regardless of its regular refund policy. 26. False. From a practical point of view, lifetime doesn t mean your lifetime, but the lifetime of the company from which the product is purchased. If you buy a lifetime membership to a timeshare resort and the company goes bankrupt in two years, you re out of luck. The same is true of a product. If you buy a watch with a lifetime guarantee and the company that makes the watch goes out of business, it won t be able to replace your watch. When you buy any product or service, your best bet is to buy the best quality you can afford at the cheapest price from a reputable dealer. Don t buy it until you know for sure you want it and never allow yourself to be pressured into buying anything. Take your time and make up your mind before you sign on the dotted line.