7 Rip-Off Tip-Offs

Learn who's after your cash -- and how to keep them from getting it.

By Lisa Collier Cool

From Reader's Digest

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Stop right there. Put your money away. A lot of people are after your cash, and you, quite understand_ably, would like to hold on to as much of it as you can. It won't be easy: Last year, Americans frittered away more than $1.2 billion on dubious deals, an average of $2,057 for every consumer, according to the Federal Trade Commission. How do you tell the bargains from the boondoggles? Here's a look at seven offers that often don't pay off, plus smart ways to save your hard-earned money.

1. Travel Discount Clubs

Vincent and Linda Schreckenberg were vacationing in Branson, Missouri, when they were offered an enticing deal: free tickets to a show in exchange for attending Travel More Now's 90-minute sales presentation. "We had no intention of joining a travel club," admits Linda, 58, "but the sales reps told us we could go anywhere we wanted and that everything-restaurants, cruises, hotels, airfare-would be drastically discounted."

The Schreckenbergs balked at the $8,000 membership fee until the salesperson got it down to $2,604. The couple paid with their MasterCard and signed a receipt for gift cards, for a free celebratory dinner at Red Lobster.

That night, 60-year-old Vincent, who suffers from high blood pressure, was rushed to the hospital with a nosebleed. Worried about medical bills, he and Linda regretted having spent so much. They checked their contract, which had a cancellation period of three business days, as required by Missouri law. Following the instructions, they mailed a notarized cancellation letter to Travel More Now and returned the membership packet.

So why did the club refuse to refund their money? "They said we'd accessed the membership benefits by eating at Red Lobster," says Linda.

Their story didn't surprise Missouri Attorney General Jay Nixon. He had sued the club in 2003 for allegedly "failing to give consumers clear and conspicuous notice of their right to cancel … and, in fact, [advising] consumers that they could not cancel." But a judge ruled against Nixon; he could do nothing for the Schreckenbergs.

"It's outrageous that this club found some loophole to get around the law and nobody can do anything about it," says Linda. Travel More Now spokesman Travis Dunnahoe says, "Anyone who accesses benefits, in any way, at the time they acquire a membership signs a form that is titled in all caps 'Member Benefits Access Form.'"

Consumers have filed thousands of complaints about travel clubs with the Better Business Bureau in the past three years. "The clubs promise insider deals, but people can often get better prices on their own," says Travis Ford, consumer educator at the Missouri Attorney General's office.

The best advice: In general, clubs that charge more than a few hundred dollars are likely to be rip-offs. Avoid going to an in-person sales pitch. "You may think, No way am I going to buy anything, but the salespeople have answers to your every objection," says Susan Grant, director of consumer protection at the Consumer Federation of America. "The deal is good for only one day, or the price keeps going down if you say you can't afford it-those are hallmarks of a scam."

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