Don’t get scammed! Top 5 rip-offs

Stop right there. Put your money away. A lot of people are after your cash, and you, quite understandably, 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 five offers that often don't pay off, plus smart ways to save your hard-earned money.

1. Travel discount clubs
While on vacation, you may be offered an enticing deal: free tickets to a show in exchange for attending a 90-minute sales presentation. Turns out it's an opportunity to join a travel club, with promises of significant discounts on restaurants, cruises, hotels, and airfare. Memberships are expensive — up to $8,000 — but you can often talk the sales rep down. You sign a receipt for gift cards — say, for a free celebratory dinner at Red Lobster — and then have second thoughts about joining. But you're not worried about losing your money because there's a law mandating a specific cancellation period. Turns out there's a loophole, though, and if you signed and used those gift cards, you've technically accessed your membership benefits. You can't get out of the deal. The national BBB has received thousands of complaints about travel clubs in the last three years. And often consumers find better deals on their own.

• 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.”
  
  

2. Cell phone replacement insurance
You purchase a cell phone and opt for the replacement insurance. Few people, though, read the fine print. They just assume they'll receive an exact duplicate of their phone should they need to replace it. Actually the policy says that the phone only has to be “comparable.” And you'll usually receive a refurbished phone, not a new one. After you total up the costs — typically $4 to $5 a month for the premiums plus a nonrefundable deductible of $35 to $100 per claim — replacement policies are generally not worth the money.

• The best advice: Skip the cell phone insurance unless you have a high-end device like a BlackBerry or Treo or your teens tend to lose their own expensive phones. Most insurance plans give you up to 14 days to enroll after you buy a cell phone, so take the contract home and read it carefully.

3. Mail-in rebates
Who doesn't love a bargain? And who passes up a rebate offer? But be careful. Typically, rebate rules are confusing yet must be followed to the letter. Some require that forms be filled out by hand. Others ask for a proof of purchase that's located on an inside flap of the box. Still others require multiple mailings, to different addresses, with proof of purchase for each. Fail to complete the requirements perfectly, and you don't get the rebate.

• The best advice: Even if you do collect, a mail-in rebate may not always be the best deal. Shop around to see if you can get a lower price without the hassle. Some companies, including Staples, Costco, and Rite Aid, offer paperless rebates. Just log on to the store's Web site to enter the required information. The advantages: You don't have to bother with proofs of purchase, you can track the status of your claim online, and you'll get your check sooner.

4. Pet health insurance
Americans spend an estimated $195 million annually on pet plans, which typically cost $11 to $50 a month. Over a pet's 11-year life span, that can add up to as much as $6,600 — hefty considering that vet bills for a typical pet average about $4,000 over a lifetime. The policies are loaded with exclusions, and some don't cover vaccinations. The bottom line is that most pets are healthy.

• The best advice: To take the sting out of vet bills, factor the cost of routine care — about $453 a year for a dog and $363 for a cat — into your budget, along with a few hundred dollars extra for emergencies.

5. Extended warranties
Increasingly, car owners are getting urgent-sounding notifications claiming that the manufacturer's warranty on their vehicle is about to expire. Some have paid over $1,500 for an extended service contract even though their factory warranty is still in effect. Often the phony notices come from firms with the word dealer or warranty in their name, to create the illusion that they work for the car's manufacturer or dealer.

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