Think you’ve seen every retail ripoff? Think again. Here are 8 common tactics used by retailers and car dealers to separate you from your hard earned dollars. Read these and be prepared for the next time!
1. Warranty scare tactics. An extended warranty may or may not be a good idea depending on the product purchased, it’s history, the planned usage, and the original price paid for it. Extended warranties are cash cows for the companies that sell them and are one of the top retail ripoffs. The Washington Post says that only 20% of the money spent on extended warranties ever goes to pay claims. Even if a product does break, the cost to repair or replace it is usually not much more than the warranty cost.
Your key to defeating this tactic: Deposit the amount that the warranty would cost into your emergency fund. Over the course of time, you’ll have your own “self insured” warranty protection for almost every item you buy.
2. I think we have one left in the warehouse (or on the lot). This one plays on your fears of missing out on a great deal. You want that ONE. Truth is, there is usually 12 or 15 left in the warehouse and the salesperson was trying to play you like a banjo. We’re naturally afraid of limiting our choices and regretting it. Salespeople know this and play on those fears.
Your key to defeating this tactic: Ask several different people how many they have in their warehouse. If you can get the model number, call a competitor in front of your salesperson, asking how many they have in their warehouse and if they match prices.
3. Wear them down. This retail ripoff is commonly used when you’re making a very large purchase and the sales person puts you in a little room, avoiding you for 30 minutes at a time. He claims to be working on getting you a better deal, but in reality he’s in the employee lounge drinking horrible coffee and watching Oprah arm wrestle Dr. Phil. He and his sales manager are just trying to get you to say yes to their terms so you can finally get outta there. Watch for this tactic in car dealerships in particular to insure you don’t “get taken for a ride.”
Your key to defeating this tactic: Arrive late in the day. If you do get there early, have the courage and the willingness to walk away. Force the time issue on the front end. My father in law used to buy a car by telling the little sales guy, “I don’t have time for this. I have three other dealerships I’m visiting today and they have a better selection than you and probably better prices. Do You Want My Business OR NOT?”
4. I didn’t add this up right. Some salespeople will quote you an estimated price and promise to “work out the details later.” What they’re really trying to do is to get you to fall in love with the product at a certain price range. Later, when the true price is computed and it’s significantly higher, the sales person will compare the new price to the old price. With a car he might say, your total “investment” will be only $1,200 more than the original number. Isn’t it worth it to have what you really want for only $1,200? Other variations of this ripoff include: the printer wasn’t aligned, my calculator was broken, I didn’t know you wanted THAT option.
Your key to defeating this tactic: Answer no. It’s not worth it. Have the willingness to walk away from any deal that doesn’t go your way. It is YOUR money. Other people want it, but you only have to give it to them when you feel you are getting the best deal. This willingness is your most powerful weapon. Use it!