|Consumer Reports has a useful list of ‘shopping traps’ in its annual Buying Guide — a list of the ten most common scams perpetrated by disreputable corporations.
- Freebies and cheapies with strings attached: If you’re offered something for ‘zero dollars’ or an unbelievably low price “with the purchase of…”, you’ll probably find that the price of the product or service you have to purchase to get the ‘deal’ is inflated accordingly, so you’re not getting a deal at all.
- Gift certificates that expire: A new trend is to put expiry dates on gift cards and certificates. Don’t buy them.
- Overpriced ‘extended warranties’, ‘service contracts’ and similar product insurance: These add-ons are priced to make a profit for the vendor, and usually cost much more than they’re worth. Consumer Reports only recommends buying reasonably priced warranties for goods with historically high after-warranty repair costs, like laptop computers and lawn tractors.
- Credit card insurance: Insurance that pays off your credit cards if you die, become disabled or unemployed is usually priced much higher than regular insurance for the same eventualities. And credit card theft insurance is also a rip-off, since your liability in these cases is usually zero, and rarely more than $50.
- Disposition fees: Car leases, mutual fund purchases, mortgage loans and some other agreements now have flat rate or contingent costs that you pay when you sell or at the end of the contract period, or for early termination of an agreement, hidden in the small print. Most notorious are exorbitant back-end per-kilometre charges if you exceed a ridiculously low mileage limit during your car’s lease term.
- Loss leaders: The items in the flyer are only priced so low because the average shopper ends up buying other items, unneeded or at prices higher than competitors’, once they arrive. And lots of loss leaders mysteriously go out of stock almost immediately after the start of the sale period. Make a list and stick to it.
- Zero percent financing: The actual cost of financing is always built into the price, the service charges, and/or the interest rate you pay if you’re late making even one payment. There is no such thing as a free lunch.
- Items “sold separately”: If the price is low, there are likely other items that you need to go with it that are overpriced to compensate. Before you buy, make a list of all the ‘extras’ you need, comparison-shop for them as a package, and avoid the temptation to add to the list impulsively.
- Automatic renewals: After a free ‘trial’ period, or at the end of an annual subscription period, many products and services now automatically renew, and charge your credit card, unless you specifically act well in advance of the renewal date to cancel.
- Unneeded extras: Once you’re sold on a major purchase, or when you’re at the checkout, with impatient people lined up behind you, the clerk starts asking you if you’d like A, B, and C to go with your new purchase. They know you’ll make decisions too quickly, and they’ll word the extras in glowing terms. If the “extras” are actually essentials, you’ve been had (see scam #8), so cancel the deal and rethink your options. If they aren’t, they’re probably overpriced and you’re better off without them.