"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 the most notorious strategies used by rip off
artists and unethical negotiators - and how you can defend yourself:
- 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:
- 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.
- 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:
- Written Guarantee - This is a formal written
document thatcomes 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!
- 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:
- 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.
- 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!
This information is an excerpt from Peter Wink's A-Z
guide to deal making and negotiation skills called "Negotiate
Your Way to Riches". It'll teach you 36 ethical and 5
unethical negotiating strategies, how to gather inside information
about companies, trust and confidence-building techniques, communication
strategies, conflict management techniques, people skills, 11
characteristics of all successful negotiators, how to use power
and leverage, skills to successful salary negotiation, and so
much more!
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