Be a savvy consumer
With scams potentially at every turn, it pays to be alert but not alarmed.
We all love a great deal but sometimes it’s not so easy to find. And sometimes that “great deal” turns out to be giant disaster, or even a scam. I got scammed on a recent trip to France when I forked out way more than intended for a “rare” ruby glass piece for my coloured soda syphon collection – only to get back to Australia to discover, to my ongoing angst, that my ruby glass masterpiece was a normal glass syphon doctored by adding ruby-coloured dye to its insides.
I was the archetypal consumer scam victim, too caught up in the excitement of my purchase to do my homework. Doubtless there’s a Gallic conman still having a chuckle over me. Likely you’ve been scammed in a similar fashion – but don’t be too embarrassed; you’re not alone.
Even Christopher Zinn, the very public face of not-for-profit consumer watchdog Choice, admits he’s suffered a few minor scams over the years (but he’s not about to go into details).
According to Christopher, being a good consumer, getting a good deal and avoiding scams is about attitude, training yourself in “the things you should do and the things you shouldn’t”.
Most of us think we know the routine but, at that weak moment, we can all be taken to the cleaners. Or we can miss a perfectly good, money-saving deal through lack of research. Christopher has lots of sound advice.
Seek the best deal
Whether you’re wanting a home loan, a credit card or a major purchase, Christopher stresses the need to “be prepared, be engaged, be mobile, and to keep an eye out for the deal that suits you best”.
Talk to friends who have bought similar and read reviews. “There are lots of online tools that will give you prices – but never rely on just one, use a few of them. You need to realise they don’t all have all of the information.”
You need to add up the benefits. With financial products, for instance, that means comparing what you’re in to what you could be in, and what sort of savings you might make.
A good starting point is the site Compare, Ditch and Switch, a joint project between Choice and online information company Mozo that compares financial products, including home loans, savings accounts, credit cards and transaction accounts.
Christopher quotes the case of a journalist who tested the site and discovered she could save $85,000 over the life of her loan by moving to another provider. “New home loans can give terrific savings because they’re long-lasting and expensive.”
Don’t be swayed by rewards
Holding a rewards-based credit card only makes sense if you clear the balance every month to avoid paying interest. If you don’t, Christopher says, you’re better off having a no-frills card that doesn’t offer points but has a lower interest rate.
Don’t be taken in by Telcos
Choosing or changing a mobile phone plan can seem to have the same complexity as a degree in nuclear physics.
“The Telcos like words such as ‘unlimited’ and ‘infinity’ – words that really belong in Doctor Who, not in live contracts,” warns Christopher. “They promise the earth and beyond, but they do not deliver.
“So be wary of the small print. Make sure that you understand the plan before you get into it – and don’t be too tempted by the shiny new phone that you’re allegedly getting for free. You’re not getting it for free; you’re paying for it because you have been locked in for 24 months – and that means that for 24 months you might miss out on another deal that comes in.
“There are some new people, like Amaysim, where you just pay a $2 SIM charge and 15 cents a minute for calls. And there are no flag falls. That’s really simple, straightforward – maybe not for high-end businesses, but for many that kind of deal is hard to beat. There is no plan, no contracts and you can do it post-paid or pre-paid.”
Avoid credit card chaos
Apart from tempting us to buy beyond our means, too many credit cards can complicate our lives and cost us money.
“Many people have a handful of cards where one would do them,” says Christopher. “Some clever people have a lot of cards and juggle a lot, but a lot more people end up in trouble because of multiple cards than those who enjoy some benefit from them.”
Labels don’t always tell the full story but they can be a good guide.
Be wary, says Christopher, of claims in regard to country of origin on food labels. “It might be packaged in Australia and have a kangaroo on it but that doesn’t mean it is made in Australia.”
Likewise, don’t automatically accept a claim that a product is healthy. “Something might say it is fat-free when in fact it’s laden with sugar.”
The ‘free’ or ‘guaranteed’ flaw
“I would say beware of anything that says ‘free’,” Christopher warns. “It costs money to put that advertisement in the paper or on TV, so how are they going to pay for it if the product is free?”
Also, be wary of people selling allegedly guaranteed schemes in which you “can’t lose”.
“You can lose in any investment. You know, you have to have an appreciation of risk, and a taste for it. I think better than ‘Too good to be true’ is the old saying ‘The higher the risk, the higher the return”. When the return is said to be high, you can be sure the risk is high – because that’s why the return is high.”
Save on health cover / super
It pays to be fully covered with health insurance but often we can be over-insured. “You might be able to lower the premium by tinkering with the excess or the code payments,” says Christopher. “There are ways you can actually reduce your outgoings and make savings – and not make a terrific sacrifice in terms of the cover.”
For many, says Christopher, huge savings can be made in superannuation. “Employees might be put into super funds that have quite high levels of ongoing fees.” So consider changing funds.
Likewise, if you have more than one fund, consider consolidating. “A canny and active consumer will consolidate their super and put it in the place that makes the best sense for them.
“You might need advice to help you do that, which is fair enough. But again, you need to ensure that the person giving the advice is not conflicted by any commissions they might get for giving you that advice.”
It’s not easy being green
It’s wise to shop with environmental responsibility but question those green claims before buying. “There’s eco this and eco that, but how green is it really?” asks Christopher. “How energy-efficient is it? Is solar energy for free? Well, it is free when it comes out of the sun but you have usually got to make some capital expenditure to buy the solar panels or whatever.”
Enticements on the internet are many. “People joke about the Nigerian letter but it must work because it keeps coming,” Christopher says. “The reason is that the point of entry for them is very low. It doesn’t cost much to send out a million emails – and the chances of being caught are unlikely if you’re in some boiler-room in Bulgaria. Yet the rewards can be pretty good. Obviously they found a way that works in some people’s brains, something that makes them override rational commonsense and engage in risk-taking behaviour.
“To avoid that kind of thing, seek advice. As soon as you talk to other parties who know a little bit about life they should soon reassure you that it’s not worth the risk.”
And just because you can’t recognise the online scam straight away, don’t think there isn’t one. “Often the scam is two or three steps away, to get you in, sort you out, build a degree of trust. You know, confidence tricks, as they were once called, are all about that. They gain your confidence and then, bang – the trick!”
New-age scams to avoid
Smartphones might be must-have consumer items but scammers love them, particularly when you download applications to them. Downloaded apps can contain malicious software that allows personal information such as banking details or passwords to be stolen. So only download apps from trusted sources.
Online auctions are all the rage but be aware they can be rigged. According to the ACCC, a common trick is for a scammer to enter a low bid followed by a very high bid under another name. Just before the auction closes, the high bid is withdrawn so the scammer’s low bid wins.
Cheque overpayment scams are when you accept a generous offer for an item advertised online or through classifieds. You get a cheque but it is for more than the agreed price. The scammer explains a mistake has been made and asks that you refund the extra money, usually through online banking or wire transfer. In your eagerness to do the right thing, you follow through ... before trying to cash the scammer’s cheque, which inevitably bounces.
So with all this researching and a need to be cautious, doesn’t it turn you into a super cynic?
Christopher Zinn will have none of that. “I actually think it liberates you. It’s about finding out how the world turns. It shouldn’t make you cynical, it should make you wide-awake. You know, the world goes around on business and goodwill and trust and it’s always a moving mixture of those things.
“Not everyone is out to con you. But one, there are some people who are – so you need to stay aware of that. And two, the higher level of information and empowerment consumers have, the bigger disincentive there is for the conman. The more engaged and aware people are, the less room there is for these guys and girls to operate.
“But they will always find someone – because there are people who gamble, people who for whatever reason think you do get something for nothing.”
Tony Fawcett is a Melbourne writer
New consumer law
From 1 January 2011 there has been a reform of several state consumer laws with the national Australian Consumer Law (ACL). The law is there to better protect consumers and covers several areas. It provides a 10-business-day cooling-off period for unsolicited sales agreements and new powers to deal with those who try to scam consumers. It’s worth looking at – www.consumerlaw.gov.au.
Consumer Affairs Victoria’s has a new free app, MyShopRights, that helps shoppers exercise their rights and resolve disputes under the new consumer law – www.consumer.vic.gov.au.
Handy consumer contacts
- Compare prices for a comparable unit by volume or weight.
- Don’t rush into a purchase; shop around to see what else is on offer. That TV might be dollars cheaper at another store.
- Ask for extras – perhaps an extended guarantee – before agreeing to buy.
- Don’t allow yourself to be coerced into buying by a pushy sales person.
- Don’t fall for “last chance” or “one day only” offers.
- Always check bank statements.
- Pay bills on time to avoid late-payment fees.
- Read and understand anything you sign.
- Be suspicious of advertisements for loans not requiring income or security.
- Don’t give out credit card, bank and driver licence details to anyone you don’t know and trust.
- Be wary of “shrinking products” on grocery shelves, where the contents are reduced but the packaging stays the same.
- Keep copies of all receipts and warranties.
- Regularly visit ACCC’s Scam Watch to become familiar with the latest scams, or to check if once-in-a-lifetime offer you have been made is just a hoax.
- Keep passwords secure and change them often.
- When you receive an online offer or request, Google the key words in the email plus the word “hoax”, “scam” or “rip-off”. Often those words will pop up in reports of just that offer you are being enticed into, or ones very similar.
- Be wary of paying a deposit. The seller may keep all or part of it if the sale falls through.
- When buying from overseas, always check on service warranties within Australia.