Thursday, November 23

What's the Catch? Five Popular "Offers" to Beware

Enticing offers pop up frequently online, on TV, and in stores for services or goods that you might actually use if they were legitimate. But are they?

Is there a catch? If so, what is it? What are your real alternatives? This report looks at five of the most popular advertising come-ons.

"Get Your Free Credit Score Here"

Most consumers now know that you can get a free credit report once a year from all three major credit reporting agencies at annualcreditreport.com, but you still have to pay a modest fee to get your current credit score. Since your credit score affects the interest rate you pay on auto loans, home mortgages or credit cards, as well as insurance rates and employability, that's something you want to know and keep an eye on. So "free" sounds good. Is there a catch?

Yes, companies offering you a "free" credit score report are typically offering you an "estimated" score or a mock FICO score, not the real thing. Also, these "scores" are often based on out-of-date information.

What should you do? Talk to a good financial institution. If you are planning to buy a new car or home, for instance, most financial institutions are happy to help you look at appropriate loans and to share your credit score with you. If you need to work on improving your credit report and credit score, they can discuss that with you. Here is another resource to help: Tips for Improving Your Credit Score.

"Scan and Clean Your PC for Free! Optimize Performance"

Open your Internet browser and a banner ad like this may pop up several times weekly. The ad usually implies that your computer is probably running too slow if you don't "clean" the "registry" or "system" regularly. What are the facts?

The first catch with such ads is that they typically overstate the likelihood of computer problems and what their software can do for you. In addition, there is usually a problem with the "free" part. For example, the "download" of the cleaner program may be free but you have to pay a fee to actually run it or the "scan" may be free but you have to pay a fee to have the "cleaning" done. Poorly designed programs could actually cause more problems than they fix.

Rather than click on such banner ads, do a little homework and read reviews of PC "registry" or "system" cleaner software programs. There are some good programs out there for free and at modest cost. For example, PC Mag and Macworld have reviews for these types of utilities.

"The President Wants You to Refinance Your Home Today"

Well, that's not exactly what the ads say but they imply that there is a special government refinance program just for the ad's targeted audience, such as seniors, families with kids, or stressed homeowners. The ads seem to suggest that refinance deals are there for the asking—all you need to do is apply. What's the deal?

In fact, there is a government-sponsored program called Making Home Affordable that is designed to help homeowners hurt by the collapse of housing values in the Great Recession. You can find information about Home Affordable Refinance Programs at the official website makinghomeaffordable.gov. If you qualify for the program and you owe more on your current mortgage than your home's current value, you may be able to refinance up to 125% of the home's current value. However, the program's qualifications and requirements are fairly complex. Only certain types of mortgages are covered. So start by reading more at the official website, not by clicking on any advertisement.

Five Popular Advertising Come-Ons

  1. Get your free credit score here.
  2. Scan and clean your PC for free! Optimize performance.
  3. The President wants you to refinance your home today.
  4. Fill out our online survey and get a free combo.
  5. Lease this popular new vehicle for only $149 a month.

What's the catch? Read on.

"Fill Out Our Online Survey and Get a Free Combo"

Or "get entered in our drawing for $1000." You are grabbing a quick meal or buying some new clothes and the cashier circles the bottom of the receipt and points out their survey and benefits. Is there any problem with filling out these surveys?

Many companies use such surveys as a way to evaluate customer satisfaction. Using customer feedback to improve products and services can certainly benefit both the company and you the customer. However, many companies also use such surveys to capture more information about you, including your contact information, so that they can send you more advertising and marketing offers. Before you provide any contact information, check out how the company plans to use your information and its privacy policy.

You may also have seen an ad touting "make easy money filling in online surveys." Are they for real? While there are a few marketing research firms that do pay for surveys, an estimated 9 out of 10 offers that you see in online ads or come in emails are bogus—it's just a scam to get your money. Even the legitimate companies typically pay very little per survey and you may qualify for only a few. So before signing up, research any firm and program thoroughly. If any wants you to pay money up front to participate, don't—that's a sign of fraud.

"Lease This Popular New Vehicle for Only $149 a Month"

Automotive leasing ads usually dangle a monthly payment like a choice morsel in front of customers hungry for a new ride. For some people, leasing may be a sensible alternative to buying a vehicle (see Chapter 7 in our FoolProof Car Buying Guide).

The catch in these ads is that there are many more factors in getting a good lease than just a low monthly payment. While automotive manufacturers regularly sponsor some good lease deals, dealerships need not participate or lease you a vehicle on those terms. Even if the lease deal is available, you may not have the very high credit score required—very few people do.

Leases with very low monthly payments typically come with other potential drawbacks. For example, the lease terms may require a very high initial payment (often thousands of dollars), allow a very low annual mileage, and have an unusually strict definition of "normal wear and tear." If the lease allows only 10,000 annual miles, and you drive 14,000, many leases require payment of 18 to 25 cents for each mile over the limit. Your 4000 extra miles could cost $1000 extra dollars at lease end. A scratch or two could cost big money for "excessive" wear and tear. Before leasing, look at all the terms carefully.

Keep Cool and Consider Before You Click or Call

The whole objective of advertising is to get you to respond to the offer. Carefully considering offers such as these I've profiled before you respond will help you protect your personal information and your pocketbook.


Originally published July 2014.

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