We have all read the auction pitches or seen them on television. These are the pitches that talk about assets like government seized properties or foreclosed homes. According to the pitch, all you have to do is buy a price guide to find millions of dollars worth of items the government or auto dealers are practically giving away. It’s your chance to find a true bargain.
What a deal! Or is it?
The Federal Trade Commission warns consumers that many of these auctions are more like scams. At the least, the pitch fails to give all the information the consumer needs to make a good decision about getting involved in what the company is offering. Two types of assets most commonly sold at auction are cars and homes.
This is how it works. The auction company will show clean looking autos or well maintained homes in their ads. They claim the government or banks or even the auction company has a lot of inventory that “must go”! All you have to do is buy a guide and in there will be a list of the assets that are up for auction.
What many consumers discover is that they pay for a guide that doesn’t have much in it for sale. Or the guide doesn’t provide any valuable information. In some cases the salesperson on the other end of the phone will offer additional guides but forget to mention there will be additional charges for each guide.
Unfortunately some consumers are tricked into giving their credit card or bank information. The pitch person will insist the information is necessary in order to add the potential buyer to purchaser lists or to check credit history to see if the person qualifies as a bidder. What is really going on is that the auction company is going to use the personal information to charge the account for one or more guides.
When the auction guide arrives, it often contains information that could have been found without paying anything. The auto guides are some of the most fraudulent because they often don’t contain any information about specific cars. Instead the consumer finds he or she paid $50 for a list of auction companies – the same information that can be found online or in a phone book.
Here’s the truth about the disreputable auction companies. Most cars that are in decent condition will sell at a fair price based on market value. The foreclosed homes that are in decent shape will sell for close to the value at which they were appraised. Cars and homes that sell significantly lower than market value are usually in very bad condition. Since these assets are clearly sold “as is” it means there are no warranties or other protections. And the seller does not have to disclose known problems either.
Consumers need to be aware of these scams and pitches. Information about government auctions is free to all consumers. You can call a government agency or find government auction information online. It’s important to not give personal account information to anyone on the phone or over the internet when you don’t intend on purchasing anything. If you are not buying a catalogue or guide then the auction company doesn’t need banking or credit card information. Before you buy anything from an auction site it’s important to first check with the Better Business Bureau.
January 5th, 2010 at 07:54
There are some good ideas in this article but one of the main problems is that it all seems so hard. Debt can be so overwhelming that there seems no way out, we think of it first thing as we wake and last thing at night before we sleep and as the problem is so big we don’t know where to start so we do nothing. What I found is that if I just look at one area at a time and start to make changes after a while those small steps become big changes.