Consumer Problems

Three Day "Cooling Off" Periods On Consumer Transactions

Many consumers think they have three days to cancel any contract they enter into. That is not true! You, as a consumer, do have the specific right to cancel certain transactions under Tennessee Law. Two of those situations are (1) "home solicitation", and (2) "prepaid entertainment sales". If it is a prize promotional (music, books, videos, magazines), you have 7 days to review or cancel.

What is a home solicitation sale? Simply put, a home solicitation is a door-to-door sale. The seller either invites himself or herself to your home or tries to sell you something in a place other than his or her usual place of business. The sale must cost you more than $25.00 in order for the cancellation right to apply. The law defines what is and what is not a home solicitation sale.

Let’s look first at those transactions that are not home solicitation sales:

1. If you order something through the mail there is no three day cancellation period.
2. If YOU call a seller to come to your home in order to sell you something, there is no cancellation period UNLESS the seller does not have an office in Tennessee.
3. If YOU call the seller on the telephone and the entire sale takes place over the phone, there is no cancellation period.
4. If you need the seller’s goods or services for an emergency, and YOU write a statement saying that you are waiving your rights to cancel the transaction, obviously, you no longer have the right to cancel, even if the transaction falls within the definition of a door-to-door sale.
5. If you call a seller to come to your home specifically to perform repairs or maintenance to your property, you have no right to cancel within three days.

Let’s turn to some of the situations which DO give you three days to cancel:

1. If the SELLER makes the first contact and everything takes place in your home, or over the telephone, you have three days to cancel.
2. If YOU call the seller for repairs, but when he or she comes to your home, he or she sells you something more than the repairs, the sale of those additional goods can be canceled within three business days.
3. If the seller does NOT have a fixed business location in Tennessee and sells you something out of a hotel room or some other temporary location, you may cancel within three days.

It’s important to understand that these are only the most common examples. If there is a question about whether your situation qualifies for the three day "cooling off" period, you should talk to an attorney.

What happens if the sale is determined to be a home solicitation sale or a prepaid entertainment contract? Under Tennessee law, the seller is required to tell you of your right to cancel a door-to-door sale. All door-to-door sales are required to be accompanied by a written contract which has an easily detachable form explaining how you can cancel. This form should be captioned in bold type ‘BUYER’S RIGHT TO CANCEL" and in duplicate, so you can keep a copy for yourself. All you should have to do is sign and date the form, tear it off, and send it to the seller, preferably by certified mail. If the contract does not have the detachable form, you may still cancel by writing the seller. Your notice or cancellation must be sent in by midnight of the third business day after signing the contract. If you mail the cancellation, it must be postmarked by the third business day.

If the seller does not give you proper notice of your right to cancel, you may cancel the door-to-door sale at any time until you are provided with the proper notice. Make sure you cancel in writing! It is also a good idea to make a copy of your cancellation for your records and to mail the original by certified mail.

If you cancel, the seller has ten business days to return any deposits or down payments you might have made. If the seller has already delivered goods to you, the seller has 20 business days to come and get them. If the goods are not picked up by that time, you may keep them!

If you have questions about the 3-day waiting period or any other law that protects consumers, call the Tennessee Division of Consumer Affairs at 1-800-342-8385.

CONSUMER RIGHTS

When you get a loan or buy on time, make sure you understand exactly what you're responsible for. Read all of the contract and read it carefully. Make sure all the details are spelled out for you. Don't ever sign a contract that you don't understand and always keep a copy of every contract you sign.

If you make application for credit and you are turned down, you can get the name and address of the Credit Bureau which prepared the report used to deny you credit. That Credit Bureau has to tell you the nature, substance, and, in most cases, sources of the information in the report--in other words, just exactly what's been said about you and who said it. There is no charge for this information (if it is requested within 30 days after turned down).

You can take anyone you like with you to the Credit Bureau--this includes an attorney. If there is information on your report which is incomplete or incorrect, you can, in most instances, have this information re-investigated, and if it is found to be false, you can have it removed from your file. And if after all this you are still not satisfied with the accuracy of the report, you can have your own version of the material included in the report.

You can find out who has received a credit report on you within the last six months. If incorrect information has been sent out, the Bureau will let you know whom it's been sent to.

You may have your credit report withheld from any business which does not legitimately need it, and you may sue an agency that uses a report dishonestly. If you sue and your suit is successful, you may also collect your own attorney's fees from the company.

Finally, there can be no unfavorable information about you reported after seven years. There are several exceptions to this rule, and the major one is bankruptcy, which can be reported for fourteen years.

If you are applying for a credit card, there are several things to watch. Credit cards usually don't have the conditions and liabilities involved in their use printed on the card itself, so before signing a credit card, you should read carefully all the information that comes along with it. Be aware of finance charges, expected monthly payments, and types of accounts or use the card is limited to.

Notify the credit card company at once if your card is lost or stolen. If someone else is using your card, even if they don't have your permission, you may still be held responsible for up to $100.00 charged on your card. So, let the credit card company know right away--in writing--if your card disappears. Keep a list of your credit cards. You won't be responsible for any charges on the card if you promptly notify the company about its loss. Failure to notify the company may result in you being liable for $100.00 of unauthorized charges on the credit card. Federal law provides for liability of a cardholder where the liability is "not in excess of $50".

Credit cards are often stolen, so take care of your cards just as you'd take care of your money.

Remember, credit has responsibilities and rights. Make sure you always know those responsibilities and rights so you get the most for your money.

Collection Agencies

Persons or corporations that do not get paid often turn debts over to a collection agency. Collection agencies are licensed and regulated by the state. There are also federal regulations that a collection agency must obey. These regulations are for the protection of the public and to insure fairness in debt collection practices. For instance, in trying to locate a debtor, the agency cannot state that the debtor owes a debt nor contact a person other than the debtor more than once, nor can the mail sent to that person indicate that the information sought relates to debt collection. An agency cannot call a debtor after 9:00 p.m. or before 8:00 a.m. If the debtor tells the agency, in writing, that he or she refuses to pay a debt or that he or she wishes no further communication, the only communication that the agency is allowed, is to say that further efforts will stop or that certain legal actions or remedies may take place. A collector may not badger or abuse a debtor or use or threaten violence to the person or property or use obscene or profane language. The agency cannot cause a telephone to ring or engage anyone in conversation repeatedly or continuously to annoy, abuse, or harass anyone. No false representations may be made by the agency, nor can they threaten to take any illegal action or any action they do not intend to take. The collection agency must send written notice containing the amount of the debt and the name of the creditor to whom the debt is owed.

Failure to comply with these regulations subject the agency to a law suit for damages and a fine.

Now you know some of the things a collection agency cannot do. But what can they do? The agency can make reasonable inquires to find out where a debtor is living; they can contact a debtor and ask him or her to pay the debt; they can hire an attorney to sue to collect a debt and to exercise all the rights of the original creditor to garnish wages or property after getting a judgment. They can call a judgment debtor to court to reveal information about his or her property, living expenses and income.

What should a debtor do if he or she is contacted by a collection agency? If the debtor owes the bill, arrangements for payment can usually be made. Any agreement to accept monthly payments is an accommodation on the part of the agency, not their legal obligation. However, most agencies, while they have a right to immediate payment of the entire balance, will accept reasonable efforts to pay. Remember, not having the money to pay does not relieve the obligation to pay, and a creditor may get a judgment against a debtor regardless of his or her ability to pay.

If a debtor does not owe the bill he or she should let the agency know it. If the agency insists that the debt is owing, they may have to sue to prove it. If a debtor receives papers from a court, he or she must do something within the time specified by law. Ignoring the papers because a person does not owe the bill can lead to a default judgment and loss of the opportunity to contest the claims of the agency.

Collection agencies are a legitimate, useful part of our commercial society. Without them, the cost of doing business would be much higher, and all consumers would pay for the few who abuse their credit. The vast majority of consumer pay their bills and have no contact with collection agencies. Since agencies charge the people who turn over accounts to them a percentage of the amount collected, most creditors would prefer to settle with their customers before their accounts are assigned to a collection agency. Most creditors also are understanding about legitimate inability to pay and are willing to make arrangements with their customers.

In conclusion, a collection agency must operate within certain guidelines, but has the power to act on behalf of a creditor and may even have a lawyer take a debtor to court. If the debtor does not owe a bill, he or she should protest and quickly respond to any legal action. If he or she does owe the bill, every effort should be made to pay it in order to avoid further obligations of time, money and emotional energy.

Don't Be Fooled By Illegal Sales Gimmicks

Sales gimmicks are simply ways stores or retailers use to get customers. Some are honest and some are not. In order to protect yourself and to be a wise consumer, you need to know about some of the dishonest and illegal ways retailers and salesmen often trap unsuspecting customers. Two methods are called "referral selling" and "bait and switch."

The bait and switch scheme is one of the hardest sales gimmicks to prove dishonest. The idea behind the gimmick is to advertise a product at a low and attractive price to get the customer in to the store. The salesman can then say the product advertised is not very good--you'd be better off spending more money and getting a better model. Or, he can say that so many people have come in the store that the supply of the special product has run out--and then he'll try to interest you in the more expensive model. The salesman will try very hard to sell you the expensive model instead of the advertised product. The law requires that a store have enough items they've advertised on sale to meet an expected demand, and if the store is a reputable firm and honestly has run out of the advertised special, they'll usually give a due bill entitling you to get the item at a later time but at the special sale price. Remember, bait and switch is a common trick--and it is a hard one to prove fraudulent--that is, to prove that the store has intended to trick the customer.

Referral selling is illegal in many states, but there are still some dishonest salesmen who will try to use it. Often people who know referral selling is illegal will find themselves tricked into agreeing to it. Listen carefully to any sales scheme and make sure you do not fall for anything. The idea in referral selling is that the salesman asks you for names of your friends who might also be interested in his product. The salesman tells you he'll give you a discount on your own purchase for every friend who buys one of the items, too. The salesman may make you these promises, but you won't find them in writing in your sales contract. And usually, the price you pay for a product in a referral scheme is even more than you would pay for the product in a normal sale.

The "free offer" gimmick may be another attempt to take advantage of you as a customer. This time they tell you you've won a free TV set, a free sewing machine, or a free course of dance lessons. The only little catch is that you have to buy a service policy or a cabinet for the sewing machine or some other service that goes along with the prize. The cost of the cabinet or the service policy will often equal or even be greater than the normal price of the "free product." Remember, a company that gives its products away won't remain in business very long. And remember, too, if you win a price, you do not have to pay anything for it--except to Uncle Sam at income tax time.

Another area to watch out for is mail order. Before you deal with any mail order firm, check the background of the company with your local Better Business Bureau. Be prepared to wait for quite a while before your product arrives. And remember, too, that products advertised by mail are often less attractive or well-made than they looked on an illustrated advertisement. If the item arrives and it is completely different from the advertised product and you feel that it has been lied about and you have been cheated, then you may have a case against the company which sold it to you. You will have to call your Better Business Bureau for some information about how to file a complaint and get your money back.

Some really fraudulent mail order firms will even send merchandise you didn't order and then try to nag and harass you for payment. Remember you never have to pay for anything you haven't ordered. Contact your Better Business Bureau or the office of your District Attorney and ask for advice.

One last gimmick to be aware of is fear-sell. A man pretending to be a state inspector or offering a free inspection may come to your house and tell you your furnace or chimney is a hazard to your health. He will say you have to get it fixed right away. Do not be scared and do not be rushed. Check the Inspector's credentials first. Get another estimate on the work from a reputable firm before you decide what to do.

Most retailers want to please their customers, but if you think you have been taken advantage of by sales gimmicks, you can go to your Better Business Bureau, your local consumer protection agency, or even, in some cases, a consumer ombudsman at your local newspaper, radio or TV station.

Remember to avoid trouble whenever you can. Deal with responsible firms. Do not be rushed into signing or buying anything ever. Never sign any contract unless you understand it thoroughly. Make sure you understand the guarantee and service policy on any item you buy. Find out about the company's credit policy and their policies concerning exchanges and returns. And check more than one place before you buy. Learn how to protect yourself by shopping wisely.

Facts About Tennessee's Lemon Law

The Tennessee Division of Consumer Affairs receives hundreds of complaints each year about defects in new cars that the dealers can not seem to repair.

What is a lemon?

"A lemon" is a motor vehicle sold or leased after January 1, 1987, that has a defect or condition that substantially impairs the motor vehicle; and the manufacturer, its agent, or authorized dealer cannot repair the vehicle after a reasonable number of attempts. Under the statute, the manufacturer must replace the motor vehicle or refund the purchase price (less a reasonable allowance for use).

Substantially impair means to render a motor vehicle unreliable or unsafe for normal operation, or to reduce its resale market value below the average resale value for comparable motor vehicles.

The law presumes that a reasonable number of attempts to repair have been made if the same problem has not been repaired after 4 attempts, or the vehicle is out of service for repairs for a cumulative total of 30 or more days during the term of protection.

Term of protection is defined as one year from the date of original delivery or the term of the warranty, whichever comes first.

The law is unclear about whether you have to have reported your problem during the "term of protection" in order to have a claim under the "lemon law". The Tennessee Division of Consumer Affairs has adopted a position that the problem essentially has to be reported within the first year or within the term of the warranty, whichever comes first.

What should you do if you have a lemon?

If you have a lemon, you must notify the manufacturer of the problem in writing by certified mail. The manufacturer has an additional opportunity to repair your car within 10 days. If the manufacturer cannot repair your car and the manufacturer has an informal dispute settlement procedure that complies with Federal Trade Commission regulations, the refund and replacement provisions of the lemon law won’t apply until you submit to the procedure. You are not bound by the decision and can still seek available legal remedies, including asking a court to award a replacement vehicle or reimbursement of the purchase price (less a reasonable allowance for use), plus attorney fees and court costs.

When can you take action?

You can file a lawsuit at anytime within one year from the date of original delivery of your car or within six months from the expiration of your expressed warranty, whichever is later. Extended warranties are not considered. You should consult an attorney well before the expiration of your time limit to be sure of preserving your legal rights.

For more information, please write the Tennessee Division of Consumer Affairs, 500 James Robertson Parkway, Nashville, TN 37243-0600, or call toll-free 1-800-342-8385.

Telemarketing Scams

A telemarketer is someone who attempts to sell you a product or service by telephone. Many telemarketing scams start with notification that you have won a valuable prize and now the caller wants to convince you to give information about yourself so that you can claim your prize. Everyone should exercise extreme caution when giving credit card numbers or checking account information over the phone. If a telemarketer or anyone else calling by phone asks for your checking account number, the name of your bank, or your credit card number, you should avoid giving this information until you have checked out the company. For example, if you give your checking account number over the phone, an unscrupulous telemarketing company may prepare a debit memo and send it to its own bank as if you had written the company a check. The debit memo is then sent to your bank. If the bank honors the debit memo, the money will be taken from your account often without your knowledge or consent. This is how many people are ripped off by telemarketers who are not reputable.

Scam artists are always trying to stay one step ahead of the law by using new schemes that sound too good to be true. Remember - if it sounds to good to be true, it usually is.

Most fraudulent telemarketers work out of "boiler rooms." This is simply rented space with a bank of telephones. This kind of setup makes it extremely difficult to track down companies that have scammed consumers out of money because it is so easy for them to move on to a new location or town.

Because enforcement is so difficult, it is essential that you follow these helpful tips in order to avoid being victimized by unscrupulous telemarketers.

1. Do not give checking account information to anyone over the phone.
2. Do not give your credit card number over the phone unless you have checked out the organization and know that it has a good reputation.
3. Do not assume an organization is legitimate solely on the basis of impressive looking brochures or enthusiastic testimonials.
4. Call the Better Business Bureau or the Tennessee Division of Consumer Affairs in order to find out if any complaints have been registered against the company.
5. Ask questions and demand straight answers on the name, address and history of the company. If the caller is uncooperative in answering your questions, simply hang up the phone. Remember you have a right to know specific information about the caller and the company. Then you should verify the information given to you by conducting your own investigation or by calling the Better Business Bureau or the Tennessee Division of Consumer Affairs Consumer Hotline.

Be alert to fraudulent telemarketers who engage in phony charitable solicitations. Be alert, too, about your consumer rights. Going back to the prize situation which began this discussion, you should know that, under Tennessee law, a company may not condition the consumer’s receipt of a prize upon requiring the consumer to pay a service charge, handling charge, mailing charge, or similar charge. You are entitled to receive the prize without paying a penny.

We need to recognize that selling products or services by phone is not illegal in and of itself. Legitimate telemarketers provide useful and helpful information about services and products. The convenience of doing business by phone is exactly what makes telemarketing an attractive tool for unscrupulous salespeople and companies.

For more information on telemarketing laws and other laws that protect consumers, call the Tennessee Division of Consumer Affairs Hotline at 1-800-342-8385. The telephone number for the Better Business Bureau in Knoxville is 692-1600.