Rip-off Detector

Bob Leggitt | Wednesday, 6 July 2011 |

The Rip-off Detector is a 15-point checklist which covers the primary indicators of a rip-off, a scam, or just a poor deal. It's a branch of my Scams, Why They Work, and How to Avoid Them article. It should be used in conjunction with any other information you can find about the specific company you're dealing with. If it's possible, begin by Google-searching the company name coupled with the word "scam", and again coupled with the word "rip-off". Read what comes up, and know that there's no smoke without fire. If you're still considering buying, or if you haven't immediate access to a search engine, ask yourself the following questions...

1. Did you approach the business or did the business approach you?

The business approached me: The predominant motivation for this potential sale/purchase exists on the part of the business, and not you the customer. It is not advisable to buy when the business seems keener for the sale to progress than you the customer. End the conversation immediately and try to forget about the proposition for at least a week. Only if you still remember the proposition a week later and feel you really need the product/service should you consider calling the company back.

I approached the business: Please continue.

2. Are you mostly asking the salesperson questions, or is the salesperson mostly asking you questions?

The salesperson is mostly asking me questions: The tide of information here is going in the wrong direction, and you’re in a classic hard sell situation. You need to find out about what you’re buying – not give the salesperson an insight into your circumstances, likes, dislikes and fears. Salespeople are trained to exploit the information you give them, using it to create a misleading picture of what you’re buying, and to maximise the price you end up paying. Based on what you say, the salesperson can hide information which would put you off, and exaggerate or lie about features which would impress you. Ensure that you stop answering questions immediately, and start asking questions about the product or service. Be insistent and do not allow the salesperson to turn your questions back on you.

I am mostly asking the salesperson questions: Please continue.

3. Have you been asked to fill in a survey form or provide personal information at the start of the sales process?

Yes: You should not provide a salesperson with any information about yourself until he/she has fully explained the product/service and confirmed the price, and you are satisfied that the deal is fair and meets your requirements. Refuse to fill out any forms until you have all the information necessary for a purchase decision. The same applies online. Don't give any information until you know exactly how a service works. If the first thing you get is a "Sign up now! Type your details here!" screen, get rid of it and search for the FAQ, Terms and Privacy pages.

No: Please continue.

4. Are the prices displayed/published/advertised, or only given to you verbally by the salesperson?

The prices are only given verbally by the salesperson: Never pay the first price you are given if prices are not displayed, published or advertised. In an instance such as this, pricing is ‘dynamic’ and will change according to what the salesperson thinks he/she can get away with. He/she will always start at the top and work his/her way down to the minimum. Keep stating that the price is too high until the salesperson reduces it to something you consider reasonable and which can be justified in terms of the materials and likely manufacturing costs of what you’re buying. Never state what you’re prepared to pay. Place the onus on the salesperson to quote a price you will accept. Sometimes, you won't actually get the absolute lowest price until you've walked to the door and set one foot on the pavement.

The prices are displayed/published/advertised: Please continue.

5. Did you wake up this morning with the intention to buy this product or service?

No: You don’t need this product or service. Do not buy it.

Yes: Please continue.

6. Have you been asked what your budget is?

Yes: Never tell a salesperson your budget. He or she can and very probably will cut out every option priced below your budget, even if it is perfectly suitable for your needs.

No: Please continue.

7. Have you been advised that quantities are limited or that stock is about to run out?

Yes: Unless you can confirm it’s true, ignore this advice. It’s a standard sales tool used to prompt a hasty decision, and rarely does it mean that stock is genuinely at risk of running out in the time it takes for you to properly think the deal through.

No: Please continue.

8. Have you been advised that prices are due to go up imminenty?

Yes: Again, unless you can confirm it’s true, ignore this advice. It’s another standard sales tool used to prompt a hasty decision. It does not necessarily mean that prices are genuinely due to go up, and in some instances where this line is spun, prices are in fact about to fall!

No: Please continue.

9. Have you been advised that the deal on offer is for ‘today only’?

Yes: Unless there’s a fully published advertisement attesting to a one-day promotion, ignore this advice. In dynamic pricing environments, ‘Today only’ deals are almost invariably meaningless instances of empty rhetoric. Provided the value of money doesn’t take a drastic turn for the worse overnight, you’ll be able to get the same deal tomorrow – if not an even better one!

No: Please continue.

10. Have you been advised that in making this purchase you’ll be saving money?

Yes: When you buy you’re spending money – not saving. The way to save money is not to buy.

No: Please continue.

11. Can you clearly see how the company makes money from the deal on offer?

No: Businesses are there to make money. If you can’t see how the company makes money (or worse, if it appears to be losing money) something is wrong. Remember that advertising costs money, staff and salepeople need to be paid, and many other overheads will need to be met by a business. The company must recover all of that money, and make a healthy profit on top. Does this appear possible? If not, you need to read the terms and conditions more carefully and hunt for hidden charges or lock-ins. If you still can’t see how the business makes money, the deal may straightforwardly be a scam. Ask a company representative to explain how the business makes money on this deal, and if you don’t get an explanation which makes sense to YOU, do not under any circumstances part with your cash. Do not accept that any company is making a loss or acting out of the goodness of its heart. Be as suspicious as you possibly can, and assume the deal is a scam until you can see where the company makes its money.

Yes: Please continue.

12. Have you won something without paying an entry fee?

Yes: Please refer to Point 11 above. No business could function if it gave away prizes without first collecting entry fees or a variant thereof. The business would go bankrupt. ‘Winning something’ without first paying an entry fee is a surefire precursor to a rip-off and you should ignore any claims to this effect – no matter how professional the presentation seems. Con artists prey on greed, and will usually claim you have, or probably/possibly have, won something very grand and wonderful. The more spectacular the prize, the more suspicious you should be. Reject the proposition if the company only takes fees from those who have already ‘won prizes’ – economically, this system could not possibly work. Please be assured: YOU WILL NOT WIN A REAL PRIZE WITHOUT FIRST ENTERING A COMPETITION OR DRAW.

No: Please continue.

13. Have you been given a free scratchcard, which claims you have won a prize?

Yes: If a company you’ve never dealt with has given you a scratchcard free of charge, it must recover all its printing and distribution costs before giving away a prize. In other words, you’ll pay more to find out what you’ve won and make your claim, than the actual value of your prize. You have not been in any way lucky to ‘win’, because with free scratchcards, everyone ‘wins’. Having hundreds of thousands of winners, all paying more to stake their claims than the value of their prizes, is the only way free scratchcards can work economically. Put yourself in the business’s position. Would YOU pay out a fortune printing and distributing free scratchcards, and then give away a load of prizes, in return for a handful of entry fees from winners only? Of course not – and no one else would do it either. Throw the scratchcard away.

No: Please continue.

14. Have you chosen to ignore the small print?

Yes: STOP!!! It’s imperative that you read the small print. A business is not going to tell you any bad news in large print. All of the most serious drawbacks in a deal (and there’ll always be serious drawbacks) will be hidden away in the smallest print you can find. When you read an ad or brochure, start with the smallest print you can find. If you don’t understand the small print, get assistance, and don’t accept any deal until you’ve understood all the small print. By reading the small print you may find that a deal advertised at, say, £15 per month, is in fact, with necessary auxilliaries, going to cost you £45 per month. The small print may tell you that your ‘completely free’ PC checkup is in fact subject to a £60 callout fee. Reading and understanding the small print can save you more financial difficulty than you could possibly imagine. As a general rule, the better a deal seems in the large print, the more catches there’ll be in the small print. Never be persuaded by claims that ‘there is no catch’. If there’s small print, there’s a catch. It’s that simple.

No: Please continue.

15. Have you yet said “No” to this deal?

No: Saying “No” devalues a product, so if you don’t do it, you’ll probably pay too much. Any salesperson with a degree of flexibility on price will inevitably start at the top and work his/her way down. If you say “Yes” straight away and don’t object to anything, you’ll pay the very highest price. The more objections you make, and the more you reject the deal on offer, the more likely it is that the price will be reduced. If you genuinely want what’s on offer, it’s important to appear open to making the purchase, because if you say you flat out don’t want the product/service then the salesperson may categorise you as an 'unqualified prospect' and give up. Make it clear that you’re open-minded about the product/service, but that you have certain reservations, and the price is too high. Never feel that angling for a reduction in price will make you look ‘financially-challenged’. The most affluent people in the world are so rich because they always refuse to pay the initial asking price.

Yes: Keep at it until you feel the price is reasonable.

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