Here is a list of common phrases you may find in agreements that should cause you to pause and proceed with caution. Obviously the guarantee for a $75 DVD player that is economically easy to replace, isn’t as important as an extended used car warranty or a home service contract; but it's good to know your way around the fine print anyway.
1. FREE: Nothing is free. If you aren’t paying for the product, then you are the product. Your information is likely being sold to advertisers who will barrage you with online solicitations. Or maybe it's free now, but you are committing to pay later.
2. FREE TRAIL: It’s often accompanied by phrases like; we will not charge your credit card (until 30 days from now). This enters you into a game of WILL I REMEMBER TO CANCEL ON THE 29TH DAY? That’s a game the corporations usually win.
3. FOR 6 MONTHS: Along with the similar, “introductory price,” this is a version of the free trail game. Maybe $39 a month for cable TV sounds good to you in January, but if its $139 by August is that really a good deal? Will you remember to cancel and transfer to a new company by July?
4. AUTOMATICALLY RENEWS: The “walking dead” of the consumer universe; such clauses mean you keep paying even if you don’t realize it or want the service anymore. Sure, if you want the convenience, sign up. But beware if such an arrangement is tucked in the fine print.
5. FEES: We rarely compare late payment fees and other penalty charges when shopping, but we should. We all eventually screw up; but the cost of such a mistake shouldn’t be unreasonable.
6. OPT OUT: This phrase means companies can use your data however they wish unless you take a step (you opt out) to stop it. Most people just accept the default opt in setting. If you go with a product or service, opt out if you don’t want them to share or sell your information.
7 THIRD PARTY: This can mean you and your data are being sold to other companies for marketing purposes and you’ll ultimately receive unsolicited mail, Email, or other sales material. Many free offers are bait for third-party marketing tricks.
8. LEARNING MORE ABOUT YOUR INTERESTS: This phrase suggests the company is adding to what you are telling it with outside data in order to know more about you. It might use this to target you with precise advertising in the future.
9: RESTOCKING FEE: Sales people will talk you into taking a product home to try it and promise you can bring it back for a refund. But restocking fees can be high; like 15% for electronics.
10: EXTENDED WARRANTY: Consumers can find premiums for extended warranties snuck into monthly payments. The value of a warranty is debatable and you should know what the manufacturer guarantees with the item before deciding on the value of an extended warranty for you. However, you should always be fully informed of what the cost of an extended warranty is.
11. NOT COVERED: Many warranties are full of exclusions that can lead to disappointment. Wear and tear items like brake pads on a car for instance.
12. VOID THE WARRANTY: Sometimes, warranties became useless if consumers break terms that make them VOID. Such as getting an electronic item wet.
13. MANDATORY ARBITRATION: If a product injures you or you feel misled, you cannot sue in a court of law; you must submit to arbitration.
14: CLASS ACTION WAIVER: If you have been ripped off for only a small amount, it’s not practical to sue a company. Instead you might join a class action lawsuit, which combine your gripe with others. Many contracts force consumers to waive this right.
15. LIQUATED DAMAGES: With this phrase, the corporation attempts to cap potential damages you might be able to receive if you do manage to win a courtroom battle.
16: LIMITATIONS FOR SUIT: This may shorten your window for potential lawsuits. Check your terms and conditions to understand any abbreviation of time periods.
17: HOLD HARMLESS AND INDEMNIFY US: These words can give corporations the potential to force a consumer (or worker) to pay the company’s legal fees in the case of a lawsuit.
Remember, if it sounds too good to be true, it probably is.
Marc has 36 years in financial services and 6 years in teaching.
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