Living in the rip-off culture
Not so long ago I was working in a job where my pay was dependent on me ripping people off.
Confessions of a car-insurance salesman
Hard to believe? The way it worked was this – I was selling car insurance and when people rang in to buy it, I was on commission to sell a worthless ‘personal accident cover’ policy.
It was worthless because it gave you very little extra than you could claim on your normal insurance anyway, and it only paid out in very specific circumstances. So, if you completely lost the use of an eye, you’d get £10,000, say. But if you suffered an eye injury and could still see slightly, then you wouldn’t get anything.
We knew it was a rip-off; just an extra way of milking £20 out of customers. But our pay depended on it, and so we had to sell as many add-ons as possible. Naturally, it’s made me very wary of ‘additional cover’ or service schemes. And there are loads of them out there.
What's it worth?
Payment Protection Schemes are very popular. Basically you pay an additional percentage of whatever you spend on your credit card and then you don’t have to worry about missing a payment. Or so the theory goes. The reality is most of the time these schemes don’t help very much. If you’re suddenly sacked, they’ll cover your minimum payments, but you’ll still get charged maximum interest on your outstanding balance, and you may be liable to pay back the ‘insurer’ when you’re solvent again.
Or, to put it another way, it’s a rip-off, which many people pay because it gives them a sense of security. A false sense, as it often turns out.
The same is true of aftercare warranties. We have very strong consumer rights in this country. If your toaster blows up after three months of use, you can get a refund, whether you’ve got a warranty or not.
Put them to the test
Here’s a tip – next time you buy something and the salesman asks you if you want a warranty, fix him with a steely glare and ask “Are you saying this product is unreliable and likely to break down?” Now, he’s a sticky situation. He either has to tell you the product he’s selling you is rubbish. Or he has to admit the warranty is a waste of time and money.
Maintenance schemers
Don’t get me started on how my parents were ripped off by a ‘maintenance scheme’ provided by a nationally known gas supplier – which okayed their boiler in October, then said they had to pay up for a new one when it failed in November. It would have been cheaper ringing a guy out of yellow pages.
These rip-off methods are all being run by nationally known, fairly reputable companies. They trade on your fears of bad things happening to sell you useless bits of paper. Yes, you have peace of mind, but only as long as everything is hunky-dory.
Think about it
My advice is – have a good long think about what you’re being asked to buy. And then don’t buy it. Get into the habit of putting a few quid into a spare bank account each month. Then if something happens, you know you’ve got a fall-back you can actually rely on.
Written by Kev Kennedy.
Digg it
Reddit
Delicious
Stumble It!
Furl it
