Research a Company Before Paying Upfront

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Six months after Angelique Trammel ordered a new computer for her son earlier this year, she finally got it—but it was broken.

"They gave me a very hard time trying to get my money back," says Trammel, a hospital telephone operator who lives in Silver Spring, Md. She was so frustrated that she filed a complaint against the Baltimore-based distributor, BlueHippo, with the Better Business Bureau. She eventually got a refund of about $1,060, the amount she had paid after six months of $41 weekly payments.

Each year, thousands of customers run into problems with ordering and paying for products they never receive. The Better Business Bureau issued an alert against BlueHippo after receiving over 1,400 complaints, largely related to delivery and refund issues. Just last week, Virginia's attorney general filed a lawsuit against another company, Financing Alternatives Inc., alleging that the company took orders and payments for computers that it failed to deliver. Like BlueHippo, Financing Alternatives offers weekly payment plans that appeal especially to low-income consumers.

Consumers often can avoid situations like Trammel's by doing research before making big purchases. Even something as simple as putting the company's name into a Web search can turn up dirt.

In BlueHippo's case, the company had already been the target of investigations by the Maryland, Illinois, and West Virginia attorneys general and had been written about on complaint boards, such as www.consumeraffairs.com. (BlueHippo says that it was surprised by the Better Business Bureau's alert and that it has been working with the bureau to resolve individual complaints.)

U.S. News asked Angie Barnett, president of the Better Business Bureau of Greater Maryland, which released the BlueHippo alert, how to avoid paying for products that never arrive.

How can you prevent getting caught up in something like this?

Consumers should always start by doing some simple research before making any big purchases. One first step is to check with an objective source, like the Better Business Bureau, to see if they have handled complaints about the company.

Also, don't be pressured into saying "yes" before you know all the facts, such as the terms and conditions of the purchase and any long-term costs, such as repairs. High-pressure sales often yield impulsive decisions. An additional few minutes for comparison shopping at local stores and obtaining the exact prices of computers would show a consumer that the computers purchased from BlueHippo are two to four times the price [of] a comparison model at a local store.

If you discover a company has been making unauthorized charges to your accounts, what can you do?

Carefully review your bank and credit card statements each month. If you find an unauthorized charge on your statement, contact your bank or credit card company immediately, and be very clear that you want to report fraudulent activity within your account. If you are speaking with your banking officials, ask them about further protective measures to your account. You may consider changing accounts, as well.

As a final resort, consumers may file formal disputes with the Better Business Bureau and the Federal Trade Commission, as well as their state attorney general's office.

If you order products that never get delivered, what should you do?

According to Federal Trade Commission regulations, a company must ship mail-ordered merchandise within 30 days from the time it receives your order, unless in making the offer the company clearly and conspicuously stated some other time for shipment. This rule applies from the date your completed order is received by the company to the date it is shipped.

If the company cannot ship within a 30-day period or within the advertised time, it must notify you and permit you to cancel or agree to the delay. If you cancel, a full refund of any money paid or a credit memorandum showing your cleared account must be provided within seven days. If you do not respond to the notice, the company has a right to assume you agree to the delay. Good record keeping is a must.

Only two types of merchandise can be sent legally through the U.S. mail without a consumer's prior consent: free samples that are clearly indicated as such, and merchandise mailed by a charitable organization asking for contributions. If you receive unordered merchandise through the mail, you may consider it as your property. It is illegal for a company to bill you for any merchandise you did not expressly order.

Is it always possible to get your money back?

No. Many consumers are surprised that it is perfectly legal to declare "all sales are final"!

To protect yourself, the Better Business Bureau suggests you read and thoroughly understand the contract before you sign. Be wary of vaguely worded provisions, exclusions, or limitations that could later pose a problem. Request that confusing or ambiguous statements be either deleted or clarified to your satisfaction. Keep a copy of the signed contract. Your copy of the contract is the only proof you have of the conditions of the agreement.