Be afraid. Be very afraid! (Make sure that deal is good for YOU and only you)

This week, we got a familiar phone call: 

Homeowner:  I responded to an ad on TV that said that they were helping run the ‘Obama plan for Mortgages’ and they would knock my payment down by ½.

Consumer Courage: Did you meet w/anybody?

H/O: No, they had offices in Chicago and Nevada.  They were very nice over the phone.  I gave them all of my financial information (Social Security Number, Date of Birth, and such)  and sent them a check for ½ of my monthly payment. They said they were going to put it in escrow and then talk to my mortgage company about getting a deal.  And that they were part of a government program.

CC: Didn’t your mortgage company say anything when your payment didn’t arrive?

H/O: Oh yes.  They called me right away.  When I told them what I was doing, they said that they hadn’t received anything. 

CC: How long has it been since you’ve made your last payment?

H/O: About 4 months.  I wasn’t even behind. But, the ad said that they could knock my payment down by ½.  Now, the company from the TV ad has shut off their phones and I have no way to reach them.  The bank says they are going to put me into foreclosure.

CC: Oy vey.

Unfortunately, this happens all the time.  Some company promises the moon on a TV ad, or in a radio spot – the info is part half-truth, part-wives tail and part internet-fear.  All they need is a consumer who is just a little too trusting for their own good.   The shame of it is, this poor woman wasn’t even behind when she responded to the ad.  Now, at 68, she blames herself because she fell for a scam that is run by some very nasty, remorseless folks who view money taken from somebody’s Nana as righteous bucks. 

What could she have done?

We think that ‘Be More Skeptical’ isn’t really advice. (more to the point, it’s probably actually advice. The problem is, the only people who will listen to this advice are already skeptical…)  However, there are practical changes that could help somebody who is wrestling with the idea of whether or not to send people like this their money.  

    • TV & Radio Ads contain lies – Don’t ever forget this.  Advertisements & ad-campaigns cycle through production, airing and to the scrap heap waaaaay to quickly for there to be any meaningful inquiry into whether the claims they make are true or not. Is the truth being stretched or fantasized?  The answer isn’t so clear.  What IS clear is that your first bit of research on anything should be to remind yourself to be very reluctant to believe claims that are made in an ad;
    • Ask a friend – Don’t underestimate how much benefit there is from saying this phrase to a friend that you trust “Hey, can I bounce this off of you?  Does this sound like a good idea?”  What this does it give you two perspectives on what you’re about to do.  You hear what a trusted friend thinks and you get to hear it come out of your own mouth.  Too often, once we brand something as ‘good news’ (like a sweet new deal on a type of milkshake that will cause us to drop weight that we’ve been carrying around since the mid-80s) our minds filter out the warning flags that are on the road to decision-making.  Hearing yourself say it out loud will give you one more chance to test out the idea on the BS meter.
    • Do SOME research – Check out
      • Government agencies – For starters, your State’s Attorney General and The Federal Trade Commission both compile lists of people who report that they’ve been scammed.  They can also tell you if the company that you’re dealing with is supposed to have a license to operate inside your State.  If they have to be licensed, you can call THAT other agency and see if they are.  Having a license doesn’t mean that everything about you is legit.  But, if they don’t have the license that they are supposed to have, it can be a red-flag.
      • Non-Profit Watchdogs – To name a few: Better Business Bureau, National Association of Consumer Advocates, Consumer Federation of America, Center for Responsible LendingNational Consumer Law Center all have valuable insight on scams, Consumer Rights and bad guys.  They don’t know all of the scammers who are out there, but they can probably tell you whether what you’re about to do sounds more like you are about to buy magic beans, than the thing that’s gonna solve all of your problems.
      • Try Googling the name of the company you want to deal with and add the word ‘Scam’ or ‘Ripoff’ and see what comes up.

What could we all do to stay away from these scammers?

    • 1.  Start acting paranoid. We don’t mean you should wear sunglasses and never take the same route to work twice. We mean that you should start thinking “How can this go south?” and “if it does, how bad could it be for me?”  Rethink your willingness to spend and to ‘go along with things.’  As the price goes up, your willingness should go down.  If the claim is ‘this is the best candy bar ever!’ you don’t have to be too skeptical.  If you make a mistake, you’re only out a dollar and a half.  But, if the claim is ‘this investment opportunity is once in a lifetime!’ and what your risking is all of your savings or exposing our Social Security number, slow down and give in the desire to worry. 
        • Editor’s Note of motherly advice: the official Mom of Consumer Courage always says “You have to know when to worry.”  Indeed.  Don’t worry about buying the wrong candy-bar.  DO worry about whether or not there will be a problem if you divert your mortgage payment to some voice on the phone who you’ve never met 8 states away.
    • 2. This one’s a two-parter: Don’t act until you have the whole story AND Understand that the pitchman/salesman is only telling you half of it. One thing that all scammers have in common is that they talk fast, use carefully crafted language that includes just enough ‘internet wisdom’ to grab you and are going to say anything to get you to say ‘YES.’ Your job is to wait and make some effort to see for yourself. 
      • Did they say they were helping manage some new ‘Obama mortgage plan?’ Great! After you get them off the phone, go on the net (or call somebody at some government agency) and look up the plan.  Does it exist? Which ones are the places that are actually ‘helping the government?’ Does the REAL Federal Mortgage Help Program involve stopping your mortgage payments and depositing half of the amount into somebody else’s account?
      • Remember: The idea here is that you learn NOT to take the saleman’s word for it. 
    • 3.  Time is your friend: quick action is your enemy – if they have a problem with the phrase “I have to sleep on it. Let me think about it and I’ll call you back,” there’s something wrong.  The only hurry is for the scammer to hurry and get your money, before you get wise.  They know that you really want to believe them.  Why? Because (like our homeowner) you called THEM, which means that you fell for the ad. (or if they called YOU, they know you want to believe - because you haven’t hung up yet). 
    • 4.  When can we meet – one of the problems with the internet is that our system for deciding who to do business with is all out of whack.  Twenty years ago, nearly everyone would have been afraid to give personal financial information out over the phone to somebody across the country who we weren’t ever going to meet.  Now? It’s what’s expected.  Keep this in mind: the more money it could cost you the more necessary it is for you to find, meet and touch the person you are paying.  If they have an office, you can at least drive there if you feel you’ve been ripped off.  If the office is ‘somewhere in Nevada,’ good luck with that.  (it also goes much better in your report to the police if you can give them a local address)
    • 5.  If THEY started the call – don‘t tell them anything at all!  They could be anywhere working for anybody.  “Send me something in the mail and I’ll take a look at it” is the antidote to unsolicited calls seeking your personal info.
    • 6. Let’s exchange information….You first! – we’ll keep on saying this: your social security number, date of birth, account number and credit card number are all gold to you.  If I pulled up to you on the street, rolled down my window and asked for you to empty your wallet into my lap so I could drive away and never call you again, would you do it?  Of course not.  So why should this thinking change because you’re on the phone?  Even if you’ve been on the phone w/them for an hour, they helped deliver your grandson (AND used to have dinner with Mother Theresa) don’t give them anything until they give you basic information.  Expect them to give you their:
      • a. Their own name;
      • b. The company’s name;
      • c. Address;
      • d. Phone Number;
      • e. E-mail;
      • f. The deal they want you to agree to IN WRITING, on official letterhead;
      • g. Their website address
        • But Remember:  anyone with opposable thumbs and a hundred bucks can make a website.  Look at how much information their website has.  If there’s a ton of promises and flowy language, but no information on the people who work there or how to get ahold of them, there’s a problem.

Remember, until you pay, you have all of the power. Once the money is in the mail (or on its way) much of that power turns to ether. 

Posted by Mark Wiseman (who really DOES have a Mother….and she really DOES remind him what to worry about)