How Holiday Shoppers Are Going To Get Screwed This Year

shopping shoppers retail returns line black friday sales upset sad

Everyone wants a deal during the winter shopping season, especially this year.

But the usual surge of purchasing combined with a zeal for savings means that Americans will likely get burned. Happy holidays.

“The holidays are all about giving for most of us, but for scammers, it’s a time of taking,” says Alison Southwick, a spokesperson for the Council of Better Business Bureaus. “That’s why it’s more important than ever to be vigilant when shopping online and opening emails — even if you think it’s from a company you deal with or someone you trust.”

There’s more than fraud. From “gotcha” late fees to wasteful warranties to gift card rip-offs, here are the dozen ways consumers are getting ripped-off right now. Consider yourself warned.

SEE HOW HOLIDAY SHOPPERS ARE GETTING SCREWED>>>

[slideshow]
[slide
permalink=”new-credit-card-fees-1″
title=”New Credit Card Fees”
content=”Lots of holiday financial trouble comes from credit card use, and it’s not just from spending too much.

Consumers plan to cut their holiday spending and reduce their usage of credit cards, says Bill Hardkopf, CEO of card rating site LowCards.com. But many are still reeling from large interest rate increases and other new fees that banks are jacking up before new credit card rules take effect in February.

Issuers are adding fees they never had before, according to the centre for Responsible Lending. For example, like inactivity fees, or charges if activity falls below a certain level (a low activity fee).

Another is the annual fee. Hardekopf says now only about 20% of cards have yearly dues, but that will go up. According to a Federal Reserve study, almost 40% of the banks had increased or will increase the annual fees on credit cards. Already, some Bank of America cards for existing customers now have $29 to $99 annual fees, according to LowCards.com

‘Now is the time to budget and plan for your holiday shopping so you don’t get caught up in the moment and spend more than you can afford,’ says Hardekopf. ‘Credit cards rates are now too high to just charge something and assume you will be able to pay it.'”
image=”http://static.businessinsider.com/image/4af9e10a0000000000698e64/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”expensive-gift-cards-2″
title=”Expensive Gift Cards”
content=”Gift cards are a favourite of the holiday season. But some cost more than their value, and many are never used by those that receive them.

General purpose cards from Visa, MasterCard, and American Express can be used anywhere the cards are accepted. but come with a $2 to $7 purchase fee, according to LowCards.com. And many cards charge a monthly maintenance fee that is typically $2 or $2.50 and starts after six or twelve months.

Another option, store gift cards, usually have no fees or expiration date, but are limited to that retailer or family of stores, notes LowCards.com. And not all store cards can be used online, and you’re out of luck if it gets lost.

Regardless, many of the cards never get used. According to a Consumer Reports survey, 25% of adults that received a gift card in 2008 have yet to redeem at least one of the cards.

Fortunately, there’s help on the way. In August 2010, new rules will make all gift cards good for five years and ban inactivity fees, dormancy fees and service fees unless there hasn’t been any activity on the card for a twelve month period.

But not yet. As Hardekopf warns, ‘consumers need to be aware that gift cards they buy this Christmas can expire relatively quickly and there can be these fees on the cards.”
image=”http://static.businessinsider.com/image/4c37544ba90b204a0a7e6b00/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”identity-theft-3″
title=”Identity Theft”
content=”Recessions and holidays are a nasty combination for identity theft.

The number of identity fraud victims increased 22 per cent from 2007 to 2008 to 9.9 million adults, according to the 2009 Identity Fraud Survey by Javelin Strategy & Research.

“The hustle and bustle of the holidays creates the perfect opportunity for thieves bent on stealing your credit cards or other financial information,” says Jeanne M. Salvatore of the Insurance Information Institute. “Shoppers are tired, stores are crowded and it’s easy to become less guarded about personal information that appears on personal checks, drivers licenses and credit cards.”

Identity theft expert John Sileo calls it the ‘Grinch Effect’ — ‘Unfortunately, the abundance of the season attracts malcontents who try to take advantage of our happiness and busy-ness.’

Sileo says keep identity information organised, close and ideally under lock and key. Other tips include shredding, using fraud-protected credit cards, and computer lock-downs.”
image=”http://static.businessinsider.com/image/4afd6a2f0000000000e820d1/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”nasty-debit-card-fees-4″
title=”Nasty Debit Card Fees”
content=”Wary of high credit card fees, many shoppers are using debit cards. But trying to spend only what you have can backfire.

Many debit cards have high overdraft fees, even for tiny purchases. A $3 coffee can end up costing nearly $40 if you swipe your card without knowing your account is out of funds.

Some banks, like JPMorgan Chase and Bank of America are cutting back, and the Federal Reserve has blocked some of the nastier debit and ATM overdraft practices.

But there are still plenty of charges. Banks and credit unions collected nearly $24 billion in overdraft fees last year (which average $34), an increase of 35 per cent from just two years earlier, according to a study by the centre for Responsible Lending.

Here’s how to avoid them, from Consumer Reports:

‘Use a credit card for large purchases, especially if you pay the full balance each month. Credit cards give you a lot more protection than other forms of payment if your account number falls into the wrong hands or if you have a legitimate beef with a seller and want to dispute a charge. Use a debit card only for small purchases if you’re relatively certain you won’t need the extra protection a credit card provides and you’re sure you won’t go over your balance.’

Or, just use cash. ‘Paying with cash is the best way to add a safety brake during holiday shopping,’ says Hardekopf of LowCards.com. ‘Studies show that consumers typically spend 12 to 18% less when we use cash for payment. Counting out and handing over cash is a sobering reminder of how much items really cost.'”
image=”http://static.businessinsider.com/image/4af9e1470000000000d860fe/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”gotcha-late-fees-5″
title=”Gotcha Late Fees”
content=”Late fees are understandble for paying late, but what about settling up ahead of time?

Consumer Warning Network says that electronics retailer Best Buy engages in tricky billing that slaps a customer with a late fee for paying early.

Florida resident Ron Jordan paid his Best Buy bill for an instalment plan on a new TV on the first of the month but got repeated $39 late charges, more than his minimum payment.

Apparently, by paying on the first of the month it was applied to the previous month, which was viewed as a double payment.

After a complaining, Jordan got the fees removed, but others have faced similar charges, according to CWN.”
image=”http://static.businessinsider.com/image/4af03d4a000000000081460d/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”tricky-rebates-6″
title=”Tricky Rebates”
content=”There’s a reason stores offer rebates instead of giving you an instant discount.

In the previous 12 months, 70 per cent of consumers have taken advantage of manufacturer rebates on products, according to a recent survey by Consumer Reports. The national telephone survey also found that, of those who applied for a rebate, 21 per cent of people were unsuccessful.

Typically, consumers simply didn’t receive anything or were turned down because of a technicality.

Also, many retailers and manufacturers provide pre-loaded cards instead of cash for rebates. Sometimes, the cards can only be used at one store, but many have expiration dates and added fees that can whittle down their value, according to Connecticut Better Business Bureau.”
image=”http://static.businessinsider.com/image/4b1589af00000000009e6972/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”fake-electronic-shopping-sites-7″
title=”Fake Electronic Shopping Sites”
content=”The Internet is full of sketchy electronics sellers, but people still fall for their frauds.

Better Business Bureau warns online shoppers that some deals online for electronics are too good to be true.

“Despite the economy, consumer electronics are still expected to be on many holiday shopping lists,” says Alison Southwick, a BBB spokesperson. “Everyone will be looking for the best deals this year and scammers know that they can take advantage of that by using low prices to lure in victims.”

She says watch for five red flags of unscrupulous consumer electronics stores.

The prices for items are too good to be true. Everyone is looking for a bargain on electronics and scammers use tantalizingly low prices to lure victims in. If the prices for items are well below those of trusted competitors, it’s a sign to walk away.

Spelling and grammatical errors abound. Some phony electronics Web sites are created by scammers overseas. As a result, the Web sites, or spam e-mails directing shoppers to the site, might have many grammatical mistakes or spelling errors.

The business accepts payment via wire transfer only. Scammers often ask victims to wire payment through Western Union or MoneyGram because the money cannot be easily tracked or retrieved in the case of fraud. BBB recommends always using a credit card to pay for electronics online. If the Web site turns out to be fraudulent, you can dispute the charge with your credit card carrier and hopefully get your money back.

The business has a bad rating with BBB. Always review the business’s reliability report online at www.bbb.org to find out what rating it has received from BBB. If you don’t find a BBB Reliability Report®, it doesn’t necessarily mean the business is fraudulent, but it may indicate the business has not been around for long or has yet to develop a track record with consumers.

The Web site fraudulently uses security seals. Scam websites will often display the seals from certification organisations such as VeriSign, IQNet or TRUSTe without authorization or falsely claim to be accredited by BBB. When shopping online you want to look for the seals of trusted organisations and confirm that the business’s use of the seal is legitimate. Double check your conclusion by visiting the Web site of the certifier to find their list of legitimate seal holders.”
image=”http://static.businessinsider.com/image/4aeaed370000000000d06ed8/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”wasteful-extended-warranties-8″
title=”Wasteful Extended Warranties”
content=”Part of holiday shopping is being pushed to buy extended warranties. They’re often a waste of money.

According to Consumer Reports, extended warranties are notoriously bad deals because:

  • Some repairs are covered by the standard manufacturer warranty that comes with the product.
  • Products seldom break within the extended-warranty window–after the standard warranty has expired but within the typical two to three years of purchase–our data show.
  • When electronics and appliances do break, the repairs, on average, cost about the same as an extended warranty.

The hard sell for extended warranties is coming at the same time that some manufacturers’ warranties are getting skimpier, especially for labour, on pricey goods like laptop computers, says CR. Terms have shrunk from 1 year to 90 days in some instances, making repairs potentially expensive even if the parts are free.”
image=”http://static.businessinsider.com/image/4b15799d0000000000ac1718/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”expensive-store-credit-cards-9″
title=”Expensive Store Credit Cards”
content=”At first glance, signing up for a store card seems like a great deal when you’ll get 10% off your entire holiday purchase.

But store cards usually have a much higher APR than a regular credit card, notes Bill Hardekopf of LowCards.com.

‘Consumers need to be very aware of this if they typically carry a balance. Also it can hurt your credit score if you open up too many of these accounts at once.'”
image=”http://static.businessinsider.com/image/4af9e12800000000001e9fa0/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”phony-sales-10″
title=”Phony sales”
content=”Exaggerated sales are one of the oldest tricks, but people still fall for ‘50% Off The Originally Doubled Price!’ and other highly promoted ‘door buster’ sales that are actually phony come-ons.

As Consumer Reports notes, ‘the goal is to get you to buy something else and spend much more. If you try to buy just the sale item, you’ll often find that the retailer cancels the sale, claims the product has been back-ordered for months, or sends you lower-quality merchandise or items that you never ordered. Returns can be difficult, if not impossible.'”
image=”http://static.businessinsider.com/image/22b9b9147d9c654a26b02f00/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”return-fees-11″
title=”Return Fees”
content=”Having second thoughts about buying some items is expected, but be careful about getting ripped off unnecessarily.

As Consumer Reports explains, many electronics items are subject to a 15 to 25 per cent restocking fee if they are returned opened or if they’re not in a factory-sealed box. If you return a refurbished item, it might be subject to a restocking fee, too. You might even be charged a 15 per cent restocking fee for some appliances, tools, and lawn-and-garden products if you don’t return them in their original packaging.

See Spot return gotchas for more on which retailers have the best-and worst-return policies.”
image=”http://static.businessinsider.com/image/4af88f150000000000230d25/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”other-annoyances-12″
title=”Other annoyances”
content=”Besides getting ripped off, the holiday means plenty of annoying practices by retailers.

Consumer Reports surveyed shoppers and found the worst of them, by percentage who dislike the practice:

  • 72% Stores that never open all of the checkout lanes
  • 68% Fake ‘sales’. If something is always 20% off, it’s not on sale
  • 67% Coupons that exclude almost everything in the store
  • 62% Being endlessly hounded with the extended warranty sales pitch
  • 58% Cashiers that ask for your phone number or other personal information
  • 56% In-store prices that do not match the same company’s on-line prices
  • 53% Employees required to up-sell you at the register
  • 52% Pushing store credit cards at the register
  • 50% Mail in rebates
  • 48% Stores that require loyalty cards to get discounts
  • 43% Stores that have a minimum purchase requirement for credit cards
  • 26% Receipt checkers

‘Shoppers are fed up with pushy retailing practices and it is further magnified during the holiday season,’ says Tod Marks, a Consumer Reports editor. ‘Consumers are sick and tired of having to be bombarded with questions and offers when all they want to do is pay and leave the register.'”
image=”http://static.businessinsider.com/image/4b0ff6650000000000b59902/image.jpg”
caption=””
credit=””
credit_href=””
]
[slide
permalink=”see-also-13″
title=”See Also”
content=”New ways credit cards are taking your money.
image=”http://static.businessinsider.com/image/4afa0f5300000000009a9c76/image.jpg”
caption=””
credit=””
credit_href=””
]
[/slideshow]

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.