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The State of California - State and Consumer Services Agency

LEGAL AFFAIRS
400 R Street, Suite 3090
Sacramento, CA 95814-6200

Legal Guide F-2

PROTECTING YOURSELF AGAINST CONSUMER FRAUD AND OTHER DECEPTIVE PRACTICES

September 1993

DEALS THAT ARE "TOO GOOD TO BE TRUE"

First, avoid deals that seem too good to be true--such as "free" gifts. If the deal sounds too good to be true, it probably is too good to be true...and you can be sure that there will be a surprise or some bad news down the line.

KNOW YOUR OWN WEAKNESSES

Second, know yourself. Know what kinds of sales presentations you just can't resist. Don't put yourself in a situation where you will buy what you don't need, don't want, or can't afford.

For example, if you are vulnerable to high-pressure sales pitches, then don't accept an invitation to visit somewhere to get a "free" gift. You now you'll be subjecting yourself to a high-pressure sales pitch to which you might succumb.

Again, if you have a habit of abusing credit, don't accept another credit card. If you have it, you may find it difficult not to use it. And never buy anything expensive on credit without giving it a lot of thought.

SHOP AROUND

Third, shop around for goods and services, especially those that cost a lot. Our market economy expects you to do this. Don't buy on impulse.

Check at least two or three sources for both quality and price. Use the buying guides that consumer groups provide. For instance, go to the library and look through the Buying Guides that Consumers Union provides each year. Call Consumer Action in San Francisco. Consumer Action conducts surveys and publishes the results on many consumer services. It's worth your time to shop wisely, especially when you are buying an expensive item.

DEAL WITH BUSINESSES YOU KNOW

Try to deal with businesses that you know and can trust--especially if you are extending them credit, or if you expect them to do anything for you later.

You may not realize it, but whenever you pay in advance, you are extending credit to the merchant. If you pay in advance for a mail order purchase, for a health club membership, for dental work, or for anything else, you are extending credit to the merchant. Even if you receive immediate delivery of what you buy, you still may be relying on the seller's or manufacturer's promises to honor a written warranty in the event that the service or product is defective. Just like the merchant evaluates your credit standing when you apply for credit, so should you consider the merchant's credit standing whenever you extend credit to the merchant in any of these ways.

PROTECTION IN SMALLER TRANSACTIONS

Try to protect yourself in the small transactions, even if it is not worth your time to shop around. For instance:

• Check the store's return policy before you buy. A few stores allow unrestricted returns, but most don't. The store may be required by law to post it's return policy. (#1)
• Consider paying by check or credit card, rather than by cash. If you do, you may be able to stop payment if you have a legitimate claim against the seller. However, you should use this protection sparingly, being careful that you have a legitimate claim, and not simply that you changed your mind. (Also, you must act quickly, and be aware that if you paid by check and decide to return the item, some stores will not provide a refund for at least ten days following the purchase in order to assure that your check has been honored by your bank.)
• If there is a three-day (or longer) right to cancel, use your right to cancel. That's why it's there. Reconsider the deal you've made. Read over the documents you have signed. And also check other sources for a better deal. But remember, you have a right to cancel in only a few kinds of situations--mainly, sales made away from the seller's regular place of business, and credit transactions in which you give your home as security, but not auto sales or most other kinds of purchases. There also are laws which require that certain types of sellers give you a three-day right to cancel, such as health clubs and dance studios, but the types of sellers to which these laws apply are strictly limited. If you do have a right to cancel, the right will be described in the written contract you receive. Should you decide to exercise your right to cancel, you should do so in writing, and either send it certified mail, so that you obtain written confirmation that you sent it and that the seller received it, or deliver it in person and insist upon a written receipt.

INVESTMENT DECISIONS

The same rules apply to investment decisions. In fact, except for insured accounts offered by financial institutions, never invest without competent advice, and never invest over the telephone.

Also, don't invest by loaning money on real estate or by putting your savings into any kind of high-risk venture, unless you are willing to lose your investment if the investment doesn't pan out, and then only after checking it out thoroughly. High returns always reflect high risk--which always includes the risk of outright loss of your investment.

Unfortunately, thousands of people have lost their financial savings and sometimes even their homes, trying to make a fortune quickly after jumping at one of these so called "investment deals."

IF YOU RUN INTO TROUBLE

If you run into a problem, or think you may have a problem, act quickly. Often, delay can be your worst enemy. Many people are unable to satisfactorily resolve such disputes because they waited too long to let the seller know there was a problem.

First, get more information. Read your contract, warranty or sales receipt. Then contact the business. Use the telephone. Call everyone who may have information, including your local consumer protection agency. Find out what is really happening.

Second, after contacting the business in person, send the business a follow-up letter. Make your request for action clear. Keep a copy of your letter.

Third, if things are not going well, get some advice. Call a consumer protection agency, or possibly a lawyer. Your local county bar association's lawyer reference service will refer you to a lawyer if you don't already know one.

Fourth, follow through quickly. If the dispute is less than $5,000, consider filing a small claims court action, even if the seller is a large organization, or is located in another state. (Most out-of-state companies have agents for service of process here.)

GOVERNMENTAL AGENCIES

If these steps do not resolve the problem, notify any appropriate local, state or federal governmental agency that has the authority to take action. Send a letter, and enclose a copy of the letter that you sent to the merchant. Also send copies of any other documents needed to fully explain the situation.

If the other person must be licensed--for example, a bank, savings association, insurance company, auto repair facility, contractor, real estate broker, pest control operator, lawyer, doctor, nurse, barber and so on--send your complaint to the agency that licenses that person.

If you are not sure if the firm or individual must be licensed, contact your local city or county consumer protection agency. Also, check the white pages of your telephone directory under "Consumer Complaint and Protection Coordinators."

Remember that people in your own community usually know more about local firms than those based at a distance. Therefore, you may be able to get results better and faster from a local firm.

1. Civil Code Section 1723

Prepared by:

Richard A. Elbrecht
Supervising Attorney
Virginia J. Taylor
Staff Counsel
Legal Services Unit.

NOTICE: We attempt to make our legal guides accurate as of the date of publication, but they are only guidelines and not definitive statements of the law. Questions about the law's application to particular cases should be directed to a specialist.

Department of Consumer Affairs
Post Office Box 310
Sacramento, CA 95802

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