Are You Getting Gouged On Line?

Everyone knows that shopping online can save you a lot of money. From kitchen utensils to giant flat screen TVs, you can often find a better price at Amazon or some other Internet retailer than at a local "bricks and mortar" store. Their overhead is lower since they aren't paying a bunch of expensive salespeople and maintaining a nice storefront, and payment processing is less expensive since it's automated. The customer gets a better price and the business still makes money.

The same thing goes for doing other business online. The Internet has changed the entire bill-paying process. I remember that my grandparents usually paid their bills in person. Even with the water bill or electric bill, they would go down to city hall or the nearest payment office, usually with cash, and hand over the money to a clerk. They liked that they immediately got a receipt as proof of payment, and didn't have to trust the post office to get it there on time.

My mom and dad, on the other hand, paid almost all of their bills by mail. Twice a month, dad would sit down with the checkbook and write out all the checks, address and stamp all the envelopes, and trek down to the post office or just leave them in our home mailbox to be picked up. Those were the days when your mailbox was on your front porch, not out at the curb where any and everyone could steal your mail. Dad believed that the Postal Service really lived up to its motto - "the mail must go through" - and back then, for the most part, they did. He was satisfied with his cancelled check as proof that he'd paid, even though it took a while before he got it back.

Today, many of us rarely ever write a check. We pay with credit or debit cards or authorize automatic bank withdrawals. I know some folks who never carry cash. We sit at home (or in a hotel room hundreds or thousands of miles away from home), log onto our computers, and pay our bills without having to write checks, buy stamps or use gasoline. Due date is tomorrow? No problem (at least with many accounts) - there's still plenty of time to pay it and avoid late charges.

Meanwhile, the payee doesn't have to worry about whether your check is good, and doesn't have to pay someone to do the time-consuming work of processing a hand written check. It's more convenient for them, it's more convenient for you, and everybody saves a little money. It's a win-win situation. Except when it's not.

There's one bill that I don't pay online; when it comes to my water bill, I still mail in a check even though the city has an online payment option. Why? Because they charge a ridiculous $2.50 processing fee for online payments. My electric company, gas company, credit card company and others that I pay online charge nothing extra to do so. A couple of times, with various one-time bill payments, I have run into minimal processing fees, on the order of 25 or 50 cents. The whole idea of online payments is that it automates things and makes it less expensive, so why is the city charging a premium to use their system? Is it because they think the people who would pay online probably have more discretionary income and therefore won't mind getting hit up for a little extra? Did they contract with some service to handle the processing and they're getting charged this fee to do it and passing it on to the customer? I don't know, but I know I'm not paying it.

Speaking of getting gouged, when I pay all those other bills online, I do it by credit card (except, of course, for the credit card bill itself). One reason to use a credit card is to get the cash-back rewards (it goes without saying that you also need to pay off the balance of the card at the end of every month so you don't get charged interest). But there's another reason: I've heard too many horror stories from people who authorized automatic payments directly from their banks, and then were unable to stop those payments when they cancelled the service. A friend of mine found that six months after cancelling a membership, the company was still withdrawing that money from her account. When she tried to cancel it through the bank, they told her that the company the payments were going to would have to cancel it, and that the only way she could stop it was to close her bank account and open a new one.

Of course, there are other ways to get gouged online. As mentioned, you can often find low prices from online outlets - but be sure you figure in the total cost. Some unscrupulous web retailers fail to show you the shipping and handling charges until you get all the way through the payment process and have already input your credit card information. That's like asking you for a blank check; in a few cases, I've seen shipping and handling costs that were four times the price of the item itself.

Something else to be careful about when you're buying online is to find out exactly what you're buying. There are some online camera stores that are notorious for advertising incredibly low prices on popular DSLRs, hundreds of dollars lower than the price of the same item on Amazon or at other legitimate outlets - but there's a catch. Sometimes the camera is a "gray market" import (sometimes euphemistically referred to as "international versions"), which means the manufacturer intended them to be sold in other countries where prices are lower. And what that means to the buyer is that the manufacturer won't honor the warranty, and you may find that the on-screen menus and the manuals are written in a foreign language.

Even if the camera is a "genuine U.S.A. model," some online retailers use another scam. That low, low price they quote, when you read the fine print, is for the body only. At an above-board store, "body only" means the lens doesn't come with it, but most digital camera bodies come with various accessories such as the battery and battery charger. These scammers take that stuff out of the box and charge you extra for it - which in many cases raises their price for the whole package so that it's equal to or higher than that same package from a more honest seller.

The key to protecting yourself from these types of scammers, without passing up the truly good deals that you can find online, is to carefully check out the reputation of any company you're considering doing business with, especially when you're spending hundreds or thousands of dollars for an expensive piece of electronics, jewelry or other high-dollar merchandise.

Excerpt from: From: "WXPNews"
Date: March 23, 2009 2:29:35 PM PDT