8 Retail Ripoff Tactics
.
If you're new here, you may want to subscribe to my RSS feed. That way you'll always stay up to date with what's happening here at The Wisdom Journal. Thanks for visiting! If you aren't sure how to use an RSS feed, read this post.
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!
5. Bait and switch. This is one of the oldest ripoffs in the book. Retailers will advertise an incredibly low price on a high demand item to drive traffic into the store. But once you’re there…no product remains. So, since you’re already there, the sales person shows you the next step up in quality. Conveniently, it cost quite a great deal more as well. To be fair, some retailers DO run out. Honest ones will allow you to pre-purchase the product at the sale price until more arrives (I do this at ALL my stores). Variations include: low balling you on the phone or over the Internet to get you into the store.
Your key to defeating this tactic: Ask for a rain check. Ask to pre-purchase the product. Take the advertising flyer to competitors and make them match the price. Do not take no for an answer. Ask to speak with the District Manager, the Regional Manager, or even someone at their corporate office. Press the issue. Do not let up if you want that product at that price. Bait and switch tactics are illegal and if you use the term, you might be surprised what sill suddenly be made available to you and what “rules” will be ignored.
6. Does paperwork=contract? Many retailers, and car dealers in particular, are fond of referring to their contracts as “the paperwork.” This one isn’t so much a ripoff as a psychological manipulation. Seems that many sales people are frightened of the word contract. They ask you to initial the paperwork here, here, and here. Sign the “offer” right here and “I’ll go talk to my sales manager on your behalf. Wish me luck!” You may have just made your purchase without realizing it. The “three day cooling off period” that allows you to cancel a contract within three days usually applies only to “in home” sales presentations, in most states. Check locally to be sure of the laws that apply in your area. Just remember, if you sign ANYTHING, you could be obligating yourself to buy it.
Your key to defeating this tactic: Refuse to sign anything until you’ve worked out all the details and you are 100 percent ready to buy. If the sales person won’t play your game, again, the willingness to walk away is your best weapon so use it!
7. Yes, yes, yes, yes, yes, yes, yes. Salespeople believe that we’re stupid buffoons. Their training manuals suggest that if they can get the customer saying yes enough, sheer momentum will propel them to buy. What a crock of bologna. Maybe it works on someone who has been sniffing glue, but for the most part, people just aren’t that dumb. Are you interested in a low maintenance home? (who isn’t?). Are you concerned about car safety for your family? (puh-leeze) The flip side of this tactic is the obvious NO answer. Do you currently have a burglar alarm? No? No? You don’t have one? (I’m shocked, SHOCKED I tell you). This particular tactic is used to embarrass you into buying the system.
Your key to defeating this tactic: When a sale person uses these tactics, stop them in their tracks and say, “Look, there’s no need to ask me questions that the obvious answer is yes (or no). Just show me the features and benefits of this product/home/car. Does your product not sell itself? Do you not have faith in your product? Do you know how to demonstrate your product to new customers? Turn the tables and watch them squirm.
8. The hand off. When junior can’t seem to handle you, he will turn you over to Guido, his cousin who closes every sale and knows how to cut to the chase and get you to sign. Some stores even require this procedure. You might hear the term T.O. which stands for “turn over.” When you see the TO man coming to your table to talk to you, get ready. Usually his first question is, “What will it take to get you into that car today?” They he will shut up. You better have an answer or else things will get very uncomfortable very quickly.
Your key to defeating this tactic: know what you want and stand your ground. If you want the vehicle for $15,500, then $15,501 will not do. If you want an interest rate of 7.5% then 7.51% will not do. If you want the extended warranty for free, then paying one red cent for it will not do. So decide what you want before you have to face Guido.
Around the web:
Gather Little By Little has a three part series on How to get a great deal on a new car.
Gen X Finance has his own 10 tips for dealing with car salesmen to make sure you don’t get hosed.
For a fascinating look at what it’s like to actually be a car sales person, this story from Edmunds. It is an article that written after an undercover investigation about what it was like to be a car sales person. It is fascinating. It is very ong, but I highly, HIGHLY recommend you read this story.
Editors note:
Though I’ve painted a pretty dismal picture of retail and automobile sales people, the fact is that there are many who are trustworthy, honest, dependable, and hardworking, but they aren’t as interesting to write about. This article wasn’t referring to them.
Technorati Tags: retail, ripoff, tactics, car dealer, used car salesmen
If you liked this post, would you consider buying me a cup of coffee? Sphere: Related Content
Try reading these:
17 Comments »
My StumbleUpon Page
This is great advice for anyone even thinking of stepping on a car lot!
Frugal Dad’s last blog post..Resisting Financial Peer Pressure
Thanks for commenting!
Jeff@My Super-Charged Life’s last blog post..Life Is An Adventure - Here I Go!
Until then, BEWARE!
It’s people like this that gives Sales and Marketing a bad name. This is why so many of my clients FEAR selling, even though they aren’t trying to pull one over one anyone.
Shama Hyder’s last blog post..The Number#1 Marketing Mistake
Yes, it does give sales people a bad name, but we can combat it as sales and marketing professionals by using a true needs based selling technique, rewarding salespeople in for sales AND customer satisfaction surveys, and by using some of the tactics that Envirosell uses. It’s founder, Paco Underhill, wrote a fantastic book called Why We Buy and I plan to review it in the near future.
As consumers, we have to do our homework before we step foot on a car lot, in a furniture store, or (as Jeff reminded us) into a travel agency. No one cares about our finances like ourselves!
Thanks for stopping by and especially for commenting!
I had a really bad dealing with a car salesman and most likely will never return to a dealership. I did all my research, had a cashiers check in hand to pay CASH and knew exactly what I wanted to buy. I was single at the time, and in hindsight I should have brought by Dad or Brother along, but I was too proud at being able to buy a car on my own.
The guy pulled every trick you listed out of his hat. I ended up in tears and without that car I wanted. They tried to convince me to lease, they tried to get me to use my cashiers check as a down payment, yada yada. It was awful!
So, I ended up driving my car for another year, and after getting married, my Hubby went and bought me a new car!
I guess I did get to save all that money, though I probably spent it all on clothes and makeup, I wasn’t quite frugal then!
Great Post!
Take Care
LJ
If there’s one thing that irritates me, it’s to see salesMEN taking advantage of women. As a father to two girls (make that young women, they’re 13 and 14) I cringe at the thought that they might be treated unfairly. I want to protect them, yet I want them to be able to stand up for themselves at the same time without me around. I hope I can educate them enough to be able to do that.
Their private school offers a wonderful course in consumer education, teaching about checking accounts, budgeting, and other life skills. Maybe they should teach about buying a car as well!
Michael from Germany here.
Thanks for this super collection of Retail Ripoff tactics.
Recently, when looking for a TV, i nearly became victim of the of the warranty scare tactics …lol.
Reading your post, i realized that most of the described tactics and the defense could be used in online business too.
Regards,
Michael
[...] Wisdom Journal - 8 Retail Ripoff Tactics. Great tips for shopping - especially applicable to big ticket [...]
[...] Mrs. Micah had an interesting post about talking/advising relatives on their investments. The Wisdom Journal lists some retail ripoff tactics (by salespeople - not the shoppers!). Canadian Dream is skeptical [...]
[...] I start shopping for gym equipment I’ll take Ron’s advice to avoid 8 Retail Ripoff Tactics. Exercise equipment sales people are notorious ripoff artists, but now I’m armed with [...]
[...] I was reading Ron’s article at the Wisdom Journal about retail ripoff tactics, I was reminded of my dad’s purchase of an ill-fated [...]
[...] at The Wisdom Journal shares some sales tactics to watch out for. This is a good one to bookmark and come back to for the [...]