Simple Debt-Free Finance » Scam

14.95 Reasons To Not Use ProFlowers This Mother’S Day.

Joe — Tue, 03 May 2011 16:04:18 +0000

Mother’s day is upon us once more, and that means flowers!

I know, it’s tempting to head over to the ProFlowers website and order a special delivery for mom. Especially with television, internet and radio ads everywhere you turn. But there’s a big reason (in my opinion) not to do so.

It’s not that ProFlowers has a bad product or shoddy service, though that certainly seems to be the case for some people.

For the record, the flowers that I ordered were in excellent condition and lasted quite a long time. My problem was far worse than poor quality flowers..

In fact, my problem with ProFlowers was that the process of ordering flowers on their website led to my being enrolled in a “coupon program” resulting in a monthly $14.95 charge on my credit card – without my knowledge!

You don’t need to be enrolled in some credit card billing scam. You can bypass ProFlowers and support local florists.

LocateAFlowershop.com lets you search for florists by City and State or by zip code.

FTD.com lets you schedule a floral delivery online and hands that delivery off to a local florist to complete. TeleFlora is yet another online floral site.

With so many alternatives, why risk unauthorized monthly credit card charges with ProFlowers?

Proflowers Click Fraud Scam Hits The Big Time.

Joe — Tue, 12 Oct 2010 13:25:58 +0000

A while ago I shared how I had been the victim of an unauthorized credit card billing scam after ordering some flowers from the Proflowers website. It seems that Proflowers is not the only company to associate itself with these scam companies, and they’re finally getting some heat put on them.

According to this article, Orbitz, Priceline.com and VistaPrint have all partnered with similar “click fraud” companies in the past – and now they’re disassociating with them, due to customer complaints!

“ last year a federal judge in Boston approved a $10 million class-action settlement against marketer Webloyalty; the New York State Attorney General’s office recently reached $18.5 million in settlements with two separate marketers and some of their retail partners; Congress and the Federal Trade Commission have investigated. And in spite of the profits it yields, even online shopping sites have started to realize that subjecting their customers to these kinds of scammy offers is bad for business”

The article goes on to explain exactly what happened to me (and many others) at ProFlowers.com:

“These offers look harmless enough. After shelling out $75 for a bouquet of flowers .., internet shoppers are presented with an offer: “Click here to save” $5 or $10 on your next purchase. But there’s no coupon to be found, only an invitation to join a discount club for a small monthly fee.”

So far, so good – IF the customer could just say “no” to joining the “discount club”. The problem though is that the initial click to save on your next purchase transfers your credit card information, and they “enroll” you automatically! In the case of “Ez Saver” (the fraud company that got me on my ProFlowers order), that enrollment resulted in the automatic billing of $14.95 a month to my credit card. How anyone thought this wasn’t fraud is beyond me, but I’m glad to see the authorities cracking down on the practice.

All told, in my case I was charged for 2 or 3 months before I caught on. For their part, the Ez saver folks agreed to cancel my “membership” and completely reverse the charges since I discovered them in time. Incidentally, this is one of the reasons it’s good to have a credit card. If I had made this initial purchase with my debit card instead, I would have had a harder time not paying those charges if Ez Saver was not cooperating and I had to tell my bank I didn’t authorize those charges. At least by paying with credit, I could have disputed the charges with my credit card company and there would be no loss of money on my part while the matter was being settled.

Is Peachtree Settlement Funding Scam?

Joe — Mon, 26 Apr 2010 16:04:46 +0000

I’ve been hearing another round of obnoxious commercials on the radio again. This one is for Peachtree Settlement Funding, and they definitely play to the “I want it now” mentality of people.

With lines like:

It’s your money, and you should have it!

Why wait?

Get your money in one lump sum.

Life doesn’t wait, why should you?

It’s a compelling come-on. It’s also quite obnoxious due to the whiney voice of the guy who plays the customer, but such is life in the radio ad world I suppose.

As far as the ad itself goes, it makes many implied emotional pleas. For example, It’s your money, and you should have it! This is an example of sort of implied argument made throughout the ad, namely that someone else is unfairly keeping your money from you, and that Peachtree will right that wrong for you. The remaining 3 quotes all play to the sense of urgency and immediate gratification – you shouldn’t have to wait for your money.

So the ad is annoying and uses the sorts of advertising tools and techniques designed to convince the customer to use their service. That’s fine, no crime there. But are they a scam?

Let’s back up a bit first and look at what it is they offer.

What is structured settlement funding anyway?

A person can acquire a structured settlement when he wins a court case, the lottery or is the beneficiary of an annuity. All that means is that the person is entitled to a set amount of money on a regular basis for a specified amount of time. For example, if you win the lottery you may be entitled to $1,000 per month for the next 20 years.

That’s the concept behind a structured settlement annuity – a sum of money has been invested on the person’s behalf in exchange for regular payments. What a structured settlement purchaser like Peachtree does is to buy that annuity at a discount and provide the person with a one-time, lump sum payment.

So, is it a scam?

To be honest, I don’t know. this guy clearly thinks they are. He claims to be a former employee of Peachtree, but who knows if that’s true. They do have an A+ rating from the Better Business Bureau, and much of what the “former employee” writes about are aggressive sales tactics.

But what about the underlying service? Is settlement funding worth the cost?

I suppose that depends on the cost. some things to consider about settlement funding:

You will receive a substantially lower amount than what the settlement promised. This is because you are exchanging future value and interest payments for a larger sum (larger than the monthly payments) today. It will also be less due to whatever fees and costs are associated with the settlement company.

Your monthly payments will be worth less over time. This is simply because the structured settlement is not likely to have a provision for indexing to inflation, so your dollar will be worth less in 15 years than it is today.

It’s a bit of a numbers game and will be different for every case, but for me it comes down to the cost of the settlement funding service. If there was no cost, or a nominal one, then I’d take the lump sum payment today and invest it to keep ahead of inflation. That’s all the insurance company that holds the structured settlement is doing anyway, but they keep the profit.

No Related Posts

2009, year in review.

Joe — Thu, 31 Dec 2009 03:23:55 +0000

What a year it’s been!

As the history books close on 2009, I thought it might be nice to take a look back on the topics that were hot on Simple Debt-Free Finance over the past year.

401(k) Plans.

2009 saw a lot of talk about the future of the 401(k). It seems only natural, given that it is one of the major means of saving for retirement for many American workers who had just seen those savings drop like a stone in the 2008 stock market crash. A lot of the talk was centered around ways to “fix” the 401(k) when it isn’t broken. This bothered me enough to blog about it in that post as well as Fixing What Isn’t Broken and Why 401K Retirement Plans Really Don’t Work And How To Fix Them

Many workers, like myself, saw their company contributions to 401(k) plans cut or “temporarily” suspended. My response to that was to give my 401(k) some TLC, a move which paid off when my balance returned to pre-crash levels in the 3rd quarter of 2009.

Bank Failures.

Another hot topic of the beginning of the year was bank failures. So many failures naturally led many to wonder what the FDIC insurance limits cover.

Investing.

2008 was a big year for gold, and 2009 was even bigger. Such a bullish environment for gold led Rosland Capital to offer Gold Eagle coins for IRA accounts.

The 2008 crash created an historic opportunity for investors to “buy low”, but it also offered many reminders of what not to do. To that end, I shared Jim Cramer’s 10 commandments of stock trading.

Since the crash created a great opportunity for new investors to get into stocks at levels unseen in a decade, I put together a list of 10 investment tips for beginners:

1 Follow The Rules
2 Be Aware Of Taxes
3 Don’t Confuse Investing With Trading
4 Tune Out The Media
5 Don’t Tune Out Too Much
6 Pay Attention To Risk
7 Don’t Avoid Reality
8 Don’t Fall For Hot Stock Tips
9 Don’t Try To Time The Market
10 Try Before You Buy

In other news, some investing sites seemed to want to attack index fund investing in all the wrong ways. I had to respond to their criticism of index fund investing.

Credit Cards.

Kiplinger was nice enough to provide a 1st phase of credit card consumer protection rules went into effect.

I had a couple of posts about 0% balance transfer offers, mostly because 0% balance transfer offers were coming to an end at the same time my wife received a 0.99% balance transfer offer.

Since it seemed to be a hot topic, for me anyway, I decided to share 6 things you should know about 0% APR credit card offers.

And all this at a time when Bank of America began imposing fees for paying off your balance… idiots!

Government Bailouts.

2009 is likely to be remembered best for the bailout craze that gripped the auto sector, bank sector, heck – the entire nation!

credit card consumers got a bailout, the NASDAQ released a “government relief index” for tracking bailed out companies and cash for clunkers gave charities some competition

Debt.

What would a debt blog be without posts about, well, debt?

The year started out with discussions about toxic debt and ended with the mortgage debt relief program going until 2012.

In between was some discussion of whether debt settlement is a good idea, and why debt consolidation is (sometimes) a scam. When it’s not a scam, debt settlement and loan consolidation just doesn’t work, and you’re much better off taking a DIY approach to debt consolidation.

And just to round out the debt consolidation talk, I shared how it affects your credit score.

I asked, “Why are you in debt?”, but not too many people answered, so I got the top 10 causes for debt from BankRate.com.

Nationwide Asset Services – Debt Settlement You Should Avoid!

Joe — Wed, 23 Dec 2009 12:00:48 +0000

Here’s an MSNBC article that showcases why debt settlement and debt consolidation companies are often scams.

The article profiles a nurse named Judy and her experience with a debt settlement company called Nationwide Asset Services.

Judy was $30,000 in debt, divorced and raising 5 children. She’s the text book mark for debt settlement companies like this.

She was contacted by Nationwide Asset Services in 2006. Here’s what she says about that in the interview:

“They told me I’d be debt free in 18 to 24 months and my credit would be better than it was before I got into the program,” Orlando, 52, recalls.

Sounds great. The problem is that it isn’t true, or if it is true then it’s only because she would pay off the debt and get her finances in shape afterward so that she would not get back into debt again.

Here’s the big, red warning sign of a scam:

“Orlando agreed to pay a $1,300 enrollment fee and send the company $350 a month. They told her to stop paying her credit card bills, cut off all contact with her credit card companies and to change her phone number, which she did.”

Most debt settlement companies will charge some fee, but any debt settlement company that tells you to stop contacting and stop paying your creditor is running a scam and playing a dangerous game – with your financial well being!

She ended up paying Nationwide Asset Services about $10,000 over a 2 year period, and they lowed the balance from $30,000 to $3,000. Sounds great, but they didn’t tell her that the interest and late charges were still piling up, and since the credit card companies weren’t getting paid, they put a lien on her home!

See, the problem with companies like Nationwide Asset Services is that they charge you a lot of money to do what you can do yourself, and they jeopardize your home and financial future while doing it.

In May of 2009, New York State Attorney General Andrew Cuomo sued Nationwide Asset Services for “false advertising and fraudulent business practices”. One of the main points of that lawsuit was that only 0.33% of the customers ever got the 25-40% debt reduction they were promised.

“People think they’re reaching out for a helping hand, and it turns out to be a hand that pushes them further under,” Cuomo said at a news conference.

For their part, Nationwide Asset Services released this statement:

“Right now our local attorney is currently reviewing a copy of the complaint and at this time we can not comment on the allegations contained in it.”

As of this posting the company is not accredited with the Better Business Bureau and they have a BBB rating of “F”

Beware ezsver rw and the proflowers scam!

Joe — Tue, 27 Oct 2009 19:58:02 +0000

I can’t believe it and I’m a bit embarrassed to admit it, but I was scammed. I used Proflowers.com recently to send flowers to my wife (our anniversary) and my mother (her birthday) and thought I got a great deal. The flowers were beautiful, and they seemed to last forever. It wasn’t until two months later that I realized I was scammed!

Here’s how it happened.

At the end of my order process, I was asked if I wanted to sign up for additional coupon offers from a 3rd party service. Since I make it a rule to try to spend as little as possible at all times (ask my wife), I selected “No thank you” and continued with my order.

Despite my having selected “No thank you”, I was enrolled in this bogus program anyway.

The program is called “Easy Saver“, and as near as I can tell they charge you $14.95 a month to grant you access to a web site that contains coupons.

The problem is that not only was I being billed for a service I wasn’t using, I was being billed for a service I didn’t even know about! I was never contacted by the 3rd party (Easy Saver) to congratulate me on my enrollment, much less notify me of how to make use of their program. They seem to exists solely for the purpose of skimming $14.95 off unsuspecting proflowers customers.

I’m lucky I noticed the $14.95 charge on my credit card with an odd business name next to it:

“$14.95 ezsver rw 1-800-355-1837″

It was only after I went back to the previous month that I really became suspicious. There I saw a charge for $3.95 – and that was the month after my proflowers purchase appeared on the credit card.

I called the 1-800 number to talk to “ezsver” and that’s when I discovered they were really “easy saver rewards”. I asked the customer representative who easy saver is and how they got my credit card number. She told me that they partner with a number of popular Internet and 1-800 companies, like proflowers…

All in all, there were 2 unauthorized purchases beginning 1 month after my proflowers purchase – 1 charge was a small, almost unnoticeable $3.95, and after that came the monthly $14.95.

I must say that the customer rep at easy saver was very pleasant and very helpful, and I was able to cancel my “subscription” as well as have the previous charges reversed without any problem. But the way the whole thing went down is what bothers me the most.

The fact that proflowers signed me up when I explicitly opted out, and the way that easy saver never sent any correspondence to inform me that I had been entered into a subscription service bothers me so much that I will not be using proflowers again, nor will I be recommending their services to others.

Income at Home 55 is a Scam! (maybe)

Joe — Sat, 01 Aug 2009 22:57:53 +0000

I know, I know, like you didn’t know it already, right?

Well it’s one of those thoroughly obnoxious radio ads I hear day in and day out during my commute, so I thought I sign up and check it out. But first, the ad.

The Radio ad:

“Financial Freedom Awaits You!”

“A simple way to earn ‘quit your job’ kind of money”

“One of the few work at home companies with an A+ BBB rating”

Here’s the details:

They mention being an A+ BBB rated company, but they don’t specify what that company is or what the affiliation is – not even on the website they direct you to.

Speaking of the website, incomeathome55.com redirects you to: Premier Team Online Home Business System website https://leadingincome.com. Incidentally, Premier Team Online Home Business System IS listed in the BBB, but they are not accredited and have an F rating.

Anyway, the Premier Team Online Home Business System website provides additional flashy, marketing type logos and text proclaiming the multitudes of people who now make 6 figure incomes with their “system.”

About 23 pages down, at the very bottom is a form section that asks for your personal contact info so they can “rush your free kit” out to you.

On June 29, I singed up for :

Free Online Package – Video, Workbook, and Audio

Package $0.00, Shipping & Handling $0.00

(the DVD package required $9.95 shipping, and I wasn’t down with that.)

Within a few minutes I received an email:

“Dear George, (I never use my real name for these things, until I’m sure it’s a real deal)

Congratulations for ordering the Home Business Information Package! Your Personal Mentor will be contacting you soon to send your Free Online Package. You will also receive a confirmation email. Be sure to check your screened mail if the confirmation does not show up in your email inbox.

For fastest service contact your Mentor now. Below you will find their contact information.”

A couple hours later I received a follow up email, containing a link to a 30 minute video title “The 5 Key Elements to Financial and Time Freedom in a Depressed Economy.”

The video was really nothing more than a number of testimonials from people who got rich using the system – with the following phrase floated at the bottom on the screen:

“Income applicable to the individuals (in examples) depicted are not average”

No doubt.

Anyway, the video opens with a guy on the beach talking about how great and wonderful and transformative the system is. It them goes into more glitz and glam about being wealthy and free, and ends with the obligatory testimonials.

The testimonials are filled with the usual stories of everyday people who were fed up with their mundane and stress filled jobs. They were tired of working to “make somebody else rich” and went off on their own. Within 6 months of using the system, they were able to quit their day jobs. Pretty standard stuff really, where these type of scams are concerned.

So the video references these “Five Rules of Financial and Time Freedom”, and asks if they really work, but takes forever to actually outline what they are. Instead, they talk about the “rewards for playing by the new rules” and show lavish lifestyles, big houses, SUVs and yachts. – they even threw in some women in bikinis and island resorts! Again with the caption “Income applicable to the individuals (in examples) depicted are not average.”

Eventually they do get to the Five Rules:

1. Find a large and growing industry

2. Have a consumable product that people need.

3. Create income leverage (get paid for other people’s time)

4. Follow a proven model for success.

5. Associate with successful people.

In short, this is a complicated, maze-like pyramid scheme designed to keep stringing you along with abstract promises of a better life and vague references to “the new rules” of wealth, retirement and so on. I suspect that all roads eventually lead to a collection point where you sign up and fork over your hard earned money to get a video tape of how to make your own “work at home” sites and string unsuspecting people along to buy a similar kit from you, and so on…

The large and growing industry is a pool of suckers who are disgruntled with their 9-5 jobs and dream of getting rich quick with some new method or technology (like a work at home kit on the Internet!).

The income leverage is the pyramid scheme. You likely get more residual income (commission) for signing up a certain number of suckers and have them work for you signing up ever more suckers.

The proven model of success is the “system” that you follow. Sites like these give you a template or pattern to follow. You create some unique branding to make it look just different enough, and the more unique and different it is the more suckers you will likely attract.

Associating with successful people ties back into the pyramid scheme. You want to stick with the person who signed you up (your “mentor”) because you view them as successful. That means they get to keep a higher number of suckers under them, and hence earn more money.

UPDATE: Since originally writing this post, incomeathome55 now redirects to http://radio.theonlinebusiness.com/goland45/CITADEL-STRM-45. The mere fact that the site keeps changing is a major scam red flag!

UPDATE (3/15/2011): It’s been a while since I heard the radio ads and I had forgotten all about Income At Home. It seems like they disappeared for a while, but have come roaring back. Since I originally posted this on August 1st, 2009 they seem to have done a lot to get their act together as the Better Business Bureau now rates them at A (since3/4/2010). It looks like they aren’t a scam after all, or are have ceased whatever practice(s) gave them an F before….

Suze Orman Explains Why Debt Consolidation is a SCAM. (VIDEO)

Joe — Wed, 27 May 2009 12:52:25 +0000

Suze explains why Debt Consolidation is a scam, and provides detailed steps to consolidate credit card debt on your own – without paying a 3rd party. She also details how to cover your bases and make sure your credit score benefits from the consolidation.

The striking part to me is how much sense it makes from a purely common sense approach! For example, the credit card company will settle with you if your situation is bad enough because some money is better than no money, and the credit card company knows they can’t get the full amount from you.

NOTE: This is largely true of for profit debt consolidation companies. Not-for profits are a different creature and may be beneficial to you. Check out the FTC website on Choosing a Credit Counseling Organization.

MSNBC Thinks U.S. Fidelis Auto Warranty is a Scam! (Video)

Joe — Fri, 24 Apr 2009 12:41:24 +0000

I get A LOT of reader comments on my December post, Is us Fidelis auto warranty a scam?.

When I wrote that post, I was honestly just asking a question about Auto Warranties in general and U. S. Fidelis was my foil since they were on the television literally every time I turned around (they still are!).

Well, it seems many people are convinced that U. S. Fidelis IS a scam, and they’re not alone.

NBC’s The Today Show did a piece on Wednesday highlighting some of the dishonest practices employed by U. S. Fidelis.

Here’s the vid:

MSNBC's Today Investigates piece on U. S. Fidelis.

It’s pretty damning.

Is Debt Settlement a Good Idea?

Joe — Thu, 19 Mar 2009 13:09:54 +0000

It’s a common scenario. You find yourself over your head in debt and see an offer like the one pictured here, promising to get you out of debt, fast and easy! Most debt settlement companies are little more than a scam.

The plan is that you enroll in the settlement service for a fee. You then pay the settlement company a monthly fee, with the understanding that the company will in turn, negotiate either a smaller payment or smaller overall amount to be repaid.

Unfortunately, many debt settlement companies tell you to stop communicating with and sending payments to your creditors while you make payments to them. This is, in effect, diverting your debt payments from your creditors and sending them to the settlement company.

This simply causes you to rack up interest and pile on late fees, all the while the settlement company collects a monthly payment.

So, is debt settlement a good idea? For most people, no. In the worst case, debt settlement is a scam. In most cases, debt settlement is just not a good idea.

The reason is that you can do for yourself what the settlement company promises. Call your creditors and negotiate. This is especially effective in the current economic climate. Creditors are taking huge losses, and will make meaningful compromises to get at least some of what you owe back. Tell them you simply cannot pay back what you owe, or at least not at the current monthly payments. Negotiate for a lower payment, or overall outstanding debt amount.

However, some people are so far gone that debt settlement is the only way to go. If you are one of these people, be sure to find a nonprofit credit counselor through National Foundation for Credit Counseling. Their services might be free, but they should cost no more than $25 enrollment and $50 monthly fee.

You may also want to check out how I dug myself out of over $10,000 in debt in 7-steps.

Are reverse mortgages a Scam or a Good Deal?

Joe — Tue, 17 Mar 2009 12:03:12 +0000

Reverse mortgages have gotten a lot of buzz over the past 6 years or so, but are reverse mortgages a good thing?

First of all, to answer that question, you need to know exactly what a reverse mortgage is. A reverse mortgage is a home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can then be paid to you.

Sounds great, right?

Well, maybe not.

There’s the little matter of paying this money back. You see, it’s not truly the reverse of traditional mortgage. If it were, you would “loan” the bank your equity stake in the home in exchange for monthly payments to you until that equity “loan” was paid off. At that time, the bank would lay claim to the full value of the home. But in a reverse mortgage, you get to live in the home as long as you can make tax and insurance payments on the home. When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

There are literally hundreds of disreputable individuals and companies who use reverse mortgages as a scam. They load them up with so many fees, that you really end up with very little left in payments and you or your heirs may even owe more once the home is sold!

One such company, Financial Freedom Senior Funding Corporation, was hit by a lawsuit for their hard-sell tactics. The suit essentially alleges that they scammed seniors out of their homes and equity, pushing them to use the money for the “special things you’ve always wanted to do, such as travel or hobbies.” Financial Freedom Senior Funding Corp. also encouraged seniors to take out the maximum allowed under the law, regardless if it was wise, and even engaged insurance agents to sell insurance products on top of the reverse mortgage, tacking on more fees.

Despite this, the company sports a rating of C from the BBB and has 0 complaints in the past 36 months.

It sounds like reverse mortgages are not such a good deal. I suppose they would be for seniors who have no heirs and don’t plan on ever selling their home, but that may not be the most responsible thing to do.

For more info on Reverse Mortgages, head over to the U.S. Department of Housing and Urban Development website.

Photo by docsplatter

Tips to Avoid Foreclosure Scams!

Joe — Thu, 12 Mar 2009 11:54:12 +0000

Do you know how to spot a foreclosure scam?

When a public notice of impending foreclosure of your house is released, this can generate unwanted solicitations from unscrupulous agencies that promise to help you avoid foreclosure.

Sometimes these scam artists can take the guise of a mortgage restructuring firm, and often times promise their “clients” they have received a high success rate of stopping foreclosures.

If some one contacts you offering foreclosure assistance, chances are they do not have your best interest at heart. This is especially true if any of the following apply:

They require an up front fee.

They tell you to stop communicating with your bank or mortgage company.

They press you to transfer the title to your home to them.

The problem is that most of these scammers are either looking to bilk you with extra fees, or take your house out from under you!

As a general rule of thumb, don’t trust anyone contacting you. A better solution if you find yourself in such dire straights is to contact a housing counseling agency certified by HUD (Department of Housing and Urban Development) There you should find free or low-cost foreclosure assistance.

Photo by respres

Is us fidelis auto warranty a scam?

Joe — Tue, 23 Dec 2008 13:12:53 +0000

One of my vices, when I’m up late and my wife and kids have all gone to bed, is watching bad science fiction, or bad science programs on late night T.V.. Yes, I know I’m a tremendous geek, but thank you for the compliment anyway.

About a week or two ago I saw a commercial for U.S. Fidelis, an auto warranty program. I thought it was hokey, and scammy and didn’t think anything of it. But I must have seen it 5 times in the space of 2 hours last night. To be fair, it was a very long 2 hours, since I was watching something about the edge of the Universe narrated by Alec Baldwin who was apparently attempting to deliver his poorly written lines like William Shatner doing a parody of himself as Capt. Kirk! But I digress…

The U.S. Fidelis auto warranty program.

The commercial goes something like this:

“An alternator can be a $825 repair… throw in a new transmission and you’re out almost $2500…”

Then the words:

“Repair bill paid!”

Flash on to the screen, followed by:

“Customized warranties – you choose deductable “

It goes on to show some couple and a young woman who look about ready to slit their wrists (It’s never that bad people!) because of the outrageous repair bills. But if they got an auto warranty through U. S. Fidelis, they wouldn’t pay a dime. Sounds great. An auto safety net.

It got me wondering how many people think this auto warranty program is a good idea. Is U.S. Fidelis a scam, or just a bad deal?

It seems that there are few sites out there that question these companies and their ads. So, I went down the rabbit hole, and this is what I found…

According to the Better Business Bureau (BBB) website, U.S. Fidelis is really a company called “Dealer Services”, and they have 809 complaints against them over the past 3 years alone.

U.S. Fidelis obviously has some unhappy customers, but that doesn’t make them a scam. But what about the concept? Are extended auto warranties a good deal?

Playing the odds.

The basic idea behind any warranty is the same as insurance: it’s a gamble. It’s a mathematical function of the odds that you’ll need the service vs. what the service costs.

These companies offer extended warranties to make a profit. The cost of the warranty that you pay minus the cost of repairs they pay out, is profit for the company. Ask yourself, if that many transmissions go belly up on cars today, why would the warranty company charge you much less than the cost of replacing the transmission? They’d go out of business, unless the quality of cars today is such that most don’t need the kind of staggering repairs profiled in the commercial.

I’m pretty sure companies like these also limit their coverage to cars less than 10 years old, or they cover less on older cars to limit their loss.

A better deal.

It’s a shame, because the likelihood of a major repair is so low on newer cars that people would be better off setting up an emergency fund as their own “safety net”.

If people took the money they pay companies like U. S. Fidelis, or “Dealer Services”, for the warranty, and put it in a high yield savings account from ING, they would have the money when they needed a costly repair AND they’d earn interest while they didn’t need the money.

UPDATE:

NBC had a story on U. S. Fidelis earlier this week. I’ve posted a link to it at the post: MSNBC Thinks U.S. Fidelis Auto Warranty is a Scam! (Video).

Simple Debt-Free Finance » Scam

14.95 Reasons To Not Use ProFlowers This Mother’S Day.

Related Posts:

Proflowers Click Fraud Scam Hits The Big Time.

Related Posts:

Is Peachtree Settlement Funding Scam?

What is structured settlement funding anyway?

So, is it a scam?

Related Posts:

2009, year in review.

401(k) Plans.

Bank Failures.

Investing.

Credit Cards.

Government Bailouts.

Debt.

Related Posts:

Nationwide Asset Services – Debt Settlement You Should Avoid!

Related Posts:

Beware ezsver rw and the proflowers scam!

Related Posts:

Income at Home 55 is a Scam! (maybe)

Related Posts:

Suze Orman Explains Why Debt Consolidation is a SCAM. (VIDEO)

Related Posts:

MSNBC Thinks U.S. Fidelis Auto Warranty is a Scam! (Video)

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