Consumer Tips

Is debtors prison real? Can I go to jail for debt? Many consumers ask the same questions and the answer may scare you a little. Actually, the answer may scare you a lot.

Debtors Prison

Historically, debtors prisons were used to incarcerate debtors who were unable to repay debt. Although it defies logic to lock someone up instead of letting them remain free to earn the money needed to repay the debt, that is how our forefathers handled the problem. Many states allow consumers to be arrested for debt under certain circumstances.

Jail for Unpaid Child Support

In Utah, failing to pay child support payments can get you arrested. It only happens in extreme cases however. Judges are understandably reluctant to jail someone for debt, even child support, because doing so deprives that person of his earning ability. Debtors prisons defy logic in that sense. Accordingly, failing to pay child support usually results in garnishment of wages rather than incarceration.

Jail for Debt

Strictly speaking you cannot be arrested for failing to pay a debt in Utah. Unfortunately, you can be arrested for failing to obey a court order. This de facto debtors prison occurs when a creditor sues you successfully and you fail to appear at a hearing for a supplemental order. Even if the debt is relatively small most judges will issue a bench warrant for your arrest for failing to appear at that hearing. The warrant is typically around $300 but can be thousands of dollars if the situation deserves a higher amount. If you are arrested under a bench warrant the police will indeed take you to jail for debt. You will be released only upon payment of the amount of the warrant. That amount will then go to your creditor to apply it to the outstanding debt.

Jail for Bad Checks

You can also go to jail in Utah for writing bad checks. In this case the punishment is actually more of a criminal penalty but deserves a mention here because a lot of consumers write checks they cannot cover not realizing that doing so can land them in jail for failing to repay a debt.

Conclusion

The sad fact is that although debtors prison doesn’t technically exist in Utah you can go to jail for debt under certain circumstances. Use caution in your financial dealings and you should be fine. Of course, always appear when a court summons you. Ignoring a court order is the fastest way to go to jail for debt.

The Consumer Financial Protection Bureau (CFPB) is a new government agency created to handle consumer complaints about deceptive or fraudulent companies. In the past I have advised clients not to waste any time filing a complaint with any government agency. The CFPB may change my mind, though the jury is still out.

Consumer Complaints with the Consumer Financial Protection Bureau

Consumers can file a complaint directly with the Consumer Financial Protection Bureau. In the past, consumers could file similar complaints with the FTC, FCC, and their State Attorneys General but those complaints rarely resulted in relief for individual consumers. Indeed, each of those agencies primary purpose in gathering complaints is to search for only the largest scams and even those are rarely pursued.

The CFPB however appears to be different. Filing a consumer complaint with the Consumer Financial Protection Bureau may actually result in a refund or other relief for the consumer. I say may because the CFPB is still very new and largely unproven.

Company Accountability

One reason why a consumer complaint with the Consumer Financial Protection Bureau may be good for consumers is because the CFPB contacts the companies involved and expects them to respond. This is similar to filing a complaint with the BBB but with the added backing of the federal government.

CFPB Data Sharing

Another advantage of filing a consumer complaint with the Consumer Financial Protection Bureau is that the CFPB shares data with federal and local law enforcement agencies. This should result in better prosecution for criminal acts and better enforcement in administrative proceedings. Shared data means less privacy for deceptive companies and less privacy makes it harder to defraud consumers.

CFPB Congressional Reporting

One area that greatly concerns me is that the CFPB reports to congress. No, this is not a good thing. Reporting to congress is highly likely to result in tighter regulations and more oppressive government restrictions. Yes, scam artists should be held accountable but no, congress should not get involved. When it does we get more laws, rules, and regulations which inevitably require higher taxation and less liberty. Simply put, congress should keep its hands off our business. Individuals, not government, should hold companies accountable if necessary.

Conclusion

Until we have more information about the Consumer Financial Protection Bureau we cannot know for sure whether or not it is a useful consumer tool or just another bloated, useless, oppressive government agency. My initial guess is that, on some level, the CFPB is both. Until we know for sure it would be prudent to file consumer complaints with the CFPB as one part of the consumer complaint process. A CFPB complaint, however, should not be used as a substitute for hiring a consumer protection attorney. Like the BBB the CFPB has no authority to enforce state laws protecting consumers and therefore cannot adequately represent consumers’ legal interests. For now, file the CFPB complaint but do it only after consulting with a good attorney for best results in your individual case.

Is a door to door salesman knocking at your door? Here are some simple tips to help you deal with door to door salesmen.

Stopping a Door to Door Salesman Before they Knock

The best method for keeping a door to door salesman at bay is to put a “No Solicitation” sign on your door. The sign is like garlic to a vampire. With a sign posted, door to door salesmen are legally prohibited from knocking or attempting to sell to you at your home. Yes, some will break the law and knock anyway but read on to learn how to stop them.

Stopping a Door to Door Salesman After they Knock

Ok, someone is knocking on your door but you don’t know who. What next? Don’t answer. That is your simplest solution. Just don’t answer the door. They will eventually go away. The problem with that approach is that you often don’t know the person knocking is a door to door salesman. It could be a package delivery, neighbor, or family member at the door. You get more visits from people you know than people you don’t know after all. So in most cases you answer the door. Now what? Read on of course.

Ok, You Answered. Now What?

Once you have answered the door and realize you are facing a door to door salesman what are you supposed to do next? First, be polite. They are people after all. Once you are face to face you should politely decline to buy whatever garbage the solicitor is selling. In many cases the door to door salesman isn’t even selling garbage, he is selling a scam.

Whether it is an alarm system, painting by a foreign exchange student trying to earn his way through school, or a miracle cleaning solution it is essentially a scam. That’s why the product is selling door to door. Indeed, I once had a client who paid over $3,000 for a vacuum cleaner from a door to door salesman that was only worth about $600. Indeed, the vacuum and the deal both sucked.

Not all home solicitation sales are scams however. Small businesses and school groups often go door to door to legitimately pitch lawn care services, concrete refinishing, charity collection drives, and cookies. High school age students just starting out or working part time through school are a prime example of when home solicitation sales are a valid sales method. Even in these cases, however, don’t buy anything unless you know the person and don’t pay anything unless they have already fully performed the agreed upon service.

After the Purchase

You opened the door and just couldn’t resist. You bought the cleaning solution, vacuum, or other garbage and now you realized it is overpriced, cheaply made, or just an all out out scam. The good news is that you can cancel the purchase and get a full refund as long as you cancel in writing within three days. Yes, the time frame is short but you shouldn’t have bought anything from a door to door salesman in the first place.

First, call the company and cancel the purchase. Don’t stop with just a phone call. Always follow up the call with a written notice of cancellation and confirm the telephone call in the letter. They are required by law to cancel and issue a refund. If they refuse, call me. If the door to door salesman gave you false contact information and you can’t contact the company then you have been scammed. Cancel payment on the check or credit card you used to pay. You didn’t pay in cash did you? If so, you won’t ever see that money again.

Way After the Purchase

If you made the purchase more than three days ago but have realized what you purchased is garbage you should still be able to get a refund in some cases. Contact the door to door salesman and request a refund. If he refuses be persistent and contact his supervisors and even the company owner if he won’t budge. If all else fails follow through with a small claims lawsuit as a last resort.

Penny auction scams are rampant and insidious. Don’t gamble away your hard-earned money.

Penny auction websites purport to offer consumer goods at steeply discounted prices. They advertise pretty much everywhere that consumers can save up to 95% off of retail prices on popular electronics and other consumer goods. With prices that good many consumers ask me if penny auctions are a scam. If you are shopping rather than gambling then the answer is an unabashed and resounding yes. Penny auctions are a scam. There is simply no other way to put it. Read on if you disagree with my opinion.

Penny Auction Scam: Reviews on Penny Auctions

If you search for penny auction websites online you will see literally hundreds of websites with what look like positive reviews. Don’t be fooled. Most of the websites posting positive reviews about penny auctions are actually paid advertisements on websites owned, operated, or controlled by penny auction companies or one of their paid affiliates. Those ads and fake reviews are typical marketing practices used by many online businesses and I consider the practice to be a scam. Unfortunately, those fake reviews are just the tip of penny auction scam iceberg.

Penny Auction Scam: How Penny Auctions Work

The penny auction scam works like this. Penny auctions put a consumer product up for “auction” on their websites. Consumers bid on the purchase price of the item while a clock counts down to zero. The bidding starts at $0.01 and raises by another penny every time a consumer (sucker) places a bid. Once a new bid is placed, the clock resets to 20 seconds to allow more bids to occur. Since the clock resets, penny auctions typically go on for hours with 20 or fewer seconds showing on the clock. Eventually the clock expires giving one, and only one, consumer the right to buy the item for pennies on the dollar. It sounds good if you are that one customer that won, but what about the others? What happens to all the money they paid to “bid” on the right to purchase the items?

Let’s do the math. Each bid costs the consumer $0.60. Yes, you read that right. Consumers purchase bids at a rate of $0.60 each. Astounding isn’t it? Now let’s say an item is worth $300.00 and you buy it for $22.00 on a penny auction site after making 200 bids. Those 200 bids cost you $120.00 so you did in fact save money if you win the auction. If you lose the auction you lose all $120.00 you paid for your bids. How can anyone argue with a straight face that such a process isn’t gambling?

More math reveals how the penny auction scam works. To get an item from $0.01 to $22.00 requires bidders to place 2199 bids. At $0.60 each that $300.00 item cost consumers collectively $1319.40. The worst part is not the obscene profit penny auction companies make by selling each product at such an inflated price, however. Remember there are other bidders and they all lost. If the auction had 100 active bidders then they each paid an average of over $22.00 for absolutely nothing.

Under my reading of Utah law, the penny auction business model is plainly considered gambling. The players all paid money for a chance to win something and all the losers walked away with nothing.
That is the definition of gambling. No, I don’t know why the Utah Attorney General allows penny auction scams to operate. Vote for me; I wouldn’t allow it. Many other states have similar gambling laws which is why legitimate contests always allow you to enter without making a purchase. They have to. It is required by law. Because penny auctions have no process for entering to win an auction without paying for the chance it is gambling.

The Penny Auction Scam: QuiBids Response

Not surprisingly, one popular penny auction website, QuiBids, does not consider it’s business model to be gambling. At least not publicly. Instead, QuiBids calls its service “gamification” and argues that their auctions are a game rather than gambling because the QuiBids auctions somehow take “skill” to win. Shame on you QuiBids. Poker takes skill too but if you pay to play it is considered gambling.

Even if the involvement of skill somehow changed the definition of gambling (which it doesn’t), what skill could possibly be required to win a penny auction? Bidders can’t possibly have any insight into when the bidding will stop on a particular item and there isn’t any way to bluff other bidders into giving up. If bidders did have some special system for winning a penny auction that system would have to be called cheating and I doubt QuiBids has ever banned a user for cheating. Sorry QuiBids, this argument doesn’t fly. Your bidding process is pure luck.

Penny auction scam sites also argue their services are not gambling because they offer a “buy it now” option on their products. The buy it now option allows consumers to purchase the item at full price minus the bids they already placed on that item. Nice try, but the penny auction model still reeks of scam. Think about it. Consumers are led to the penny auction websites by representations that the sites are discount shopping outlets. They are drawn to penny auction sites by the promise of saving money on a purchase, not to pay full price or to play games. As a result, the buy it now option actually places the consumer in a lose-lose situation. They either have to walk away from a product they just wasted money and time trying to win or they have to pay full price (or higher). That isn’t a meaningful choice at all. Penny auction sites are basically forcing their bidders to pay full price for an item they were led to believe they could purchase for a steep discounted price. Bait and switch anyone?

Avoiding the Penny Auction Scam

Here is how to avoid the penny auction scam. Don’t bid at penny auctions. Avoiding the scam is that easy. A savvy consumer should simply buy consumer goods from legitimate shopping sites and be done with it. No batteries included. No scam included.

Today’s world is full of scams, rip offs, and cons. If you are a victim of a company who scammed you, you know exactly what I mean. Most companies who scam consumers target venerable consumers such as those who are elderly, uneducated, unemployed, disabled, or do not speak English as their primary language. Not all scams target these groups however. Some cons target affluent and educated consumers as their main victims. Some scammers saturate the market to pull in anyone they can regardless of education or income. Anyone hear from a Nigerian Prince lately? If a company scammed you the only thing that matters is how to handle it and how to get back the money you lost.

The worst approach in my professional opinion is to let it go. This is actually a very easy approach to take though it is not the approach I would recommend because you allow the company who ripped you off to keep your money. Why would you do that? I have had clients go against my advice and lose thousands of dollars as a result and I just can’t understand why. Don’t let it go. Don’t let a thief keep your hard-earned money.

Sue the Company Who Scammed You

The best way to handle a company who scammed you is to simply sue. Yes, it sounds harsh at first but suing a company who scammed you is far more effective than the alternatives. For example, you could simply ask the company who scammed you to give you a refund and you should to bolster your lawsuit. The problem with that approach is that when a company rips you off it has no intention of ever refunding your money. That’s the whole point of scamming you. Asking the company who ripped you off for a refund is likely to lead nowhere though it does strengthen your case when you sue the company who scammed you.

Suing the company who ripped you off also has the added benefit of helping other consumers. When a company is held accountable for its actions by a consumer watchdog it is less likely to scam other consumers. Yes, in some cases it actually regrets scamming consumers but in most cases simply wants to keep the public unaware of its scams. Filing a lawsuit makes the matter public and therefore sheds light on a scam company that would rather stay in the shadows.

File an FTC Complaint or Attorney General Complaint

Another approach is to file an FTC complaint or attorney general complaint. My advice is don’t bother. Both are a waste of time. FTC complaints are gathered and usually lead nowhere unless the company who scammed you has thousands of complaints. If the FTC gets enough complaints they may investigate and even fine the company but even then you won’t normally see a dime. An attorney general complaint is a little better but similar in outcome. The attorney general will gather the complaint and typically only investigate when it gets multiple complaints. Again, you don’t normally get a dime.

Conclusion

If you really want your money back you probably have to sue. Don’t waste time with FTC complaints or attorney general complaints. Ask for a refund but realize that the company who scammed you won’t give your money back. You ask only to strengthen your case and to give legitimate companies a way to resolve the problem without a lawsuit. Don’t be afraid to assert your rights in court but more importantly don’t let a company who scammed you get away with it.

Thinking of filing an FTC complaint? Don’t bother. Yes, the FTC is the federal agency charged with helping consumers resolve complaints but the simple fact is that they will not actually help any individual consumers. Indeed, they will not help you.

This is not necessarily a bad thing, however. The FTC shouldn’t be handling individual consumer complaints — no government agency should. Government simply shouldn’t have that kind of authority or control over our daily lives. Instead, consumers should be in charge of advocating their own disputes whether on their own or by hiring a private attorney. Indeed, numerous state and federal laws empower consumers to act as private attorneys general for that very purpose. Consumers are simply better at advocating their own interests than the government could ever be.

Filing an FTC complaint is not a total waste of time however. The FTC complaints filed by consumers each year are helpful to consumers as a whole so it may be worthwhile to file one if you want to help other consumers as a group. Don’t be fooled however, the FTC will do literally nothing to help you in your individual complaint.

Filing an FTC complaint is only a waste of time if you are trying to get a refund or other monetary compensation for a deceptive sales practice. In that case, the far better approach is to hire an experienced consumer protection attorney. A lawyer with experience in consumer complaints will be able to obtain results where filing an FTC complaint will lead nowhere.

The bottom line is that if you are a victim of a deceptive sales practice and you are considering filing an FTC complaint because you think it will help you get a refund, think again. If you want a refund hire a consumer protection attorney or file a consumer complaint in small claims court. You are your own best advocate. Filing an FTC complaint will not help you get a refund or other compensation you deserve.