ftc consumer feature

Bureau of Consumer Protection Federal Trade Commission

Contact: Steven Baker, 312-960-5634

Donna Miles, 202-326-3679

June 2000

Auction Guides:

More  And Less  Than Youre Bidding For

Washington, D.C.  An office manager was looking for an affordable place to live near her business in

Jerome, Idaho. Scanning the classified section of her local newspaper, she noticed an ad promising great deals

on government-foreclosed or repossessed homes.

She called the toll-free telephone number in the ad for more information, and listened to the details. For

$43, shed receive a booklet outlining the ins and outs of buying a home at a foreclosure sale, plus current

listings of homes offered through these sales in her area. Best of all, she could review the materials at no cost

for 90 days and could return them if she wasnt satisfied. Her account would be charged only if she decided to

keep the materials at the end of the trial period.

Several weeks later, the woman received the booklet she had ordered, plus one she hadnt, about government automobile auctions. But, as soon as she placed her order, her checking account was charged $98.90 

more than twice the amount she had agreed to pay at the end of the trial period. Efforts to get her money back

turned into a nightmare.

Think this is an isolated incident? Not so. Each year, untold numbers of consumers get lured by ads in

newspapers and magazines, on TV and the Internet, and on coupons sent to their homes promising vehicles

for as little as $500 or foreclosed homes from $5,000, with no money down.

Many consumers take the bait, shelling out their hard-earned dollars for fraudulently marketed auto and

home auction guides.

Thats what happened to a homemaker in Showlow, Ariz., when she responded to an ad in her local

newspaper touting Cars for $100. She was told that she would receive regular listings of the dates and

locations of auto auctions for a full year, and that shed be charged only if she wanted to continue receiving

the list after the one-year trial period. I had nothing to lose, she said she was told. She admits that she

became a bit skeptical when she was asked to provide her checking account information  not to make a

payment, she was told, but to verify that she had a credit history. Soon after the call, her checking account

was debited $98.90.

A 62-year-old retiree in Taos, N.M., experienced similar problems when she responded to an ad pitching

foreclosed or repossessed homes for as little as $5,000. It wasnt until she was about to hang up the phone that

she learned the information would cost her almost $100. I repeated several times that I did not want the

listing information if there was a charge, she said, and that no money should be withdrawn from my checking account. The company sent her the materials and charged her account anyway.

Similarly, a young automotive technician in Beacon Falls, Conn., thought buying a guide to government

auctions of seized vehicles was his ticket to inexpensive transportation. He called the toll-free telephone number in an ad in his local paper, and agreed to pay $48 for an auction guide. As it turned out, his credit card

account was billed more than twice that amount, and the information he received turned out to be, in his word,

useless.
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None of these consumers found the materials they received to be of any value in buying a home or

vehicle at the advertised auction prices. And when they contacted the company to get their money back, not

one was successful.

The Federal Trade Commission, the federal governments consumer protection agency, is cracking down

on companies that fraudulently market auction guides and use deceptive billing techniques.

Everybody loves a bargain, says Steven Baker, director for the FTCs Midwest Region. But when a

company makes alluring promises about the price of cars or homes and then asks you to give out your bank

account or credit card number, it should raise a red flag.

The FTC has these tips for consumers to keep them from being mis-guided by ads for auction guides:

u Avoid giving your bank account or credit card number to company representatives who say

they need it for verification or credit purposes.

u Recognize that seized vehicles often are sold at government auctions, but rarely at the

bargain-basement prices in some misleading ads. Expect to pay what the vehicle is worth, or

just slightly less, and expect to compete against other bidders, including those who are wellfinanced.

u Be aware that foreclosed homes often are sold for slightly less than their appraised values,

but may require substantial repairs.

u Recognize that the auction guide company isnt the only source for the information youre

seeking. Chances are its available from individual government agencies for free or at a low

cost. Ask to be put on a mailing list to be notified of upcoming sales. Some government

sales programs advertise in the media, on the Internet or through postings in government

buildings.

u Get the name and location of the company and check it out with the local Better Business

Bureau or your state Attorney General.

u Get a written copy of the return policy before you pay for an auction guide or list of foreclosed homes. Some fraudulent sellers of auction guides give consumers the impression that

refunds are no problem. But often, the businesses put so many conditions on refunds that

few consumers ever get them.

u Use your credit card to pay for an auction guide. It offers more consumer protections than

other payment methods if you run into problems with your purchase.

For more information about auction guides, call the FTCs toll-free helpline, 1-877-FTC-HELP (382-

4357) for a copy of Auction Guides: Not So Hot Properties. The publication also is online at www.ftc.gov

under Consumer Protection.

Federal Trade Commission Toll-free 1-877-FTC-HELP

 www.ftc.gov For the Consumer