How to protect yourself from rip-off artists,
con-men, frauds and unethical negotiators.
by Peter Wink
Here's a startling fact - while you're reading this notice, millions of vulnerable people are being ripped off on cars, homes, clothes, jewelry, businesses, and every other type of purchase you can imagine. And it doesn't stop there!
Rip off artists are everywhere! There in restaurants, hospitals, furniture stores, taxicabs, and even the local car mechanic may be taking you to the cleaners. And sadly enough, these con-men aren't going away anytime soon! In other words...you have to know how to defend yourself?
The following are two of the most notorious strategies used by rip off artists and unethical negotiators - and how you can defend yourself:
1. Contract Additions or Omissions - This refers to clauses, amendments, and various other types of verbiage that seem to mysteriously show up in contracts, warranties, and guarantees without your consent or any other warning. This usually happens when the "other side" prepares the contract.
The following all need to be checked and then double checked:
* Price of the product - Always check to make sure the price you agreed to pay is the same as the price you're being charged. Always check your purchase orders and contracts very closely. Rip off artists and unethical negotiators will try to change prices on contracts.
* Exclusive agreements - Sometimes fraudulent businesspeople will try to get you to agree to let them exclusively sell your product or service. This means that they're the only vendor that can sell the product or service on your behalf. By agreeing to exclusives, you may lose all rights to your own product! Beware of these types of agreements!
* Discount rates - Make sure the contract clearly spells out the discount rate that you previously negotiated. Many times you'll negotiate discounts based on the quantity purchased. For instance, you may buy 100 units at $50 each and if you purchase 150 units, the price drops to $45. Sometimes they'll be expressed in terms of percentages like 50% or 75% off. Many con artists will write the contract using a smaller discount rate, hoping you won't catch the change.
There are two types of discounts you can negotiate:
A. Cumulative Discounts - To have a cumulative discount means the quantity for each order is added for a specified time period. The discount will be based on the running total. The typical duration for this type of discount is one year. This means if you place three orders over a year, one for 50 units, another for 75 units, and the last for 200 units, your final discount is adjusted by adding the total quantity already purchased to the new order quantity. Your discount would be based on a total of 325 units.
B. Per Order Discounts - This means you only get a discount based on the quantity you purchase at one time. (All previous purchases are irrelevant.)
* Payment terms - Make sure your agreement contains payment guidelines. Payment terms refer to how many days the "other side" has to pay you for products and services. On the other hand it also refers to the amount of time you have to pay your suppliers for their products and services.
Make sure a con artist doesn't try sneaking terms like 90 or 120 days into the agreement. Many businesses go bankrupt everyday due to insufficient cash flow. At the same time, you should request 60 or 90-day payment terms for yourself. Why? In many cases, you can sell the merchandise before you put out any of your own money. You'd be surprised how many companies will issue you 60 or 90-day terms just because you ask.
* Indemnity clauses - These clauses guarantee that if one of the parties is in breach, or does something illegal, they're responsible for all damages. Many rip off artists enter into illegal agreements for products and services they have no right to. And when lawsuits fly, you'll be named! With an indemnity clause, you're protected. Always get the "other side" to agree to an indemnity clause. If the "other side" refuses to add an indemnity clause or omits it from the contract, you know you're dealing with a classic con! Run in the other direction.
* Guarantees - Guarantees (written or implied) are formal promises or assurances that a product or service will meet the promised or implied expectation. A guarantee will usually state the refund, return, or maintenance procedure. Rip off artists will do everything possible to omit guarantees from contracts.
There are two types of guarantees you must know and understand:
A. Written Guarantee - This is a formal written document that comes from the manufacturer or distributor. Written guarantees usually state some sort of promise (100% satisfaction guaranteed), and return procedure (if you're not satisfied, we'll issue you a prompt, courteous refund). Cons will rarely put a guarantee in writing. And if they do, they never sign their name to it!
B. Implied Guarantee - Implied guarantees are either verbal or tacit. If a salesperson states that you can return merchandise you're not satisfied with, it's considered an implied verbal guarantee. Con artists will never usually make any sort of promise whatsoever. This is a sure sign that you're dealing with an unethical person or company.
BEWARE: Because we live in such a litigious society, you have to do everything possible to make sure that you obtain all guarantees in writing. Implied guarantees are not as stable in court as a written one. If someone doesn't want to issue you a written guarantee, then you have to question their reasoning. Usually, it's because they know they're selling you a product or service that's inferior or won't meet your expectations.
Now that you understand the difference between written and implied guarantees, I want alert you to a subset of them. They are conditional and unconditional guarantees.
To protect yourself from con artists, you have to know and understand each of these guarantees:
A. Unconditional Guarantee - An unconditional guarantee is a written or implied guarantee stating that you can return merchandise and receive a refund for any reason whatsoever. Unconditional guarantees vary with the purchase, but for the most part, you can receive a refund for any reason.
B. Conditional Guarantee - A conditional guarantee is a written or implied guarantee that requires you to meet some sort of obligation before returning merchandise or obtaining a refund. Some of the conditions include obtaining return authorization numbers (stores will be hoping that you're too lazy), trying the product, or paying stocking and re-handling fees. Many con artists will try to get you to all sorts of ridiculous things, hoping you'll not meet their requirements to return the product!
* Purchase orders - Make sure that every part of a purchase order is filled out correctly and draw a line through any blank areas. Never let the "other side" have an opportunity to write in information on your behalf.
* Ownership clauses - Check to make sure the "other side" has legal right to sell you their goods and services. You'd be surprised how many fraudulent negotiators distribute product illegally to unsuspecting companies in the United States and abroad. Always make sure the "other side" agrees (in writing) to a clause in the agreement or contract stating they have full right to distribute and sell merchandise to you for redistribution.
* Down payments - Check to make sure the amount of the down payment that is written on the contract or agreement, matches the agreed upon amount. Rip off artists are notorious for changing figures.
* Contract duration and expiration date - Always make sure you and the "other side" agree on the duration of the contract. Keep in mind, many contracts will work out and many won't. By setting the duration, you can adjust your business strategy if you run into any problems. Most contracts run between one and two years. Usually high priced goods and services require a longer contract duration.
BEWARE: Make sure that your contracts always have an expiration date. It's not enough to know the duration. You need to know the exact expiration date so you can have plenty of time to renegotiate terms in the future. (This is especially important in union and labor contracts.) * Handling damages or faulty merchandise - Make sure that the "other side" agrees on terms for handling merchandise that's delivered broken or contains imperfections. You'll find that a great deal of rip off artists will send your merchandise that's smashed, cracked, and broken. Who's responsible? Make sure you get in writing!
As far as faulty merchandise - you need to make sure that the manufacturer backs their product's quality in writing. Also demand in writing, proof that they carry product liability insurance. Don't sign a contract without it. It's a small investment that can save your business from disaster.
BEWARE: Always write down detailed notes during every negotiation, regarding any and all agreed upon terms. Before you finish the negotiation, make sure to read the terms back to the "other side" and ask them if they have any questions. If they have any challenges with the terms, you can settle them on the spot. Then, when the contract arrives or is drawn up, take the time to make sure all of the agreed upon terms are in the document and check for any non-authorized additions or omissions.
If you find that a con artist has added fallacious information or omitted terms or conditions, bring the mistake to their attention and ask them to clarify their reasoning. As they're answering, check their physiology, tone of voice, and body language for signs of nervousness. If they seem nervous or uncomfortable, it was probably deliberate instead of an honest mistake. At this point, call their bluff and renegotiate a better deal or walk away!
ABOUT THE AUTHOR
By: Peter Wink