Posted by Jake on Saturday, February 09, 2013 with 1 comment | Labels: Article, Guest, sales techniques
We get ripped off because the world is becoming an increasingly perilous place financially, but also because we allow ourselves to be conned out of our cash. Don’t worry - it’s never too late to change basic human nature
By Anne Caborn
The answer to the question: ‘Why do we get ripped off?’ can appear simple. The world seems to be filling up with financial cowboys, cynical retailers and suspect service providers who use a growing array of dubious practices to part us from our cash.
- Any journey down the high street is a master class in highly sophisticated and sometimes morally suspect marketing techniques.
- Everything from financial products to consumer durables are increasingly complicated, making choosing between options ever harder.
- Traditional sources of impartial (if limited) advice are almost extinct. The smartly dressed bank official talking to you about refinancing your home loan may well have their salary linked to commission. Not something an old style bank manager had to worry about.
This new world is full of cowboys and every single one of them is after your horse. This is borne out by the facts and figures. Complaints to the Financial Ombudsman Service went up 75% in 3 months. Mobile phone regulator Ofcom announces a review into terms and conditions that allow price increases during a ‘fixed’ contract. The Chancellor takes banks to task over their failure to ring fence investments from high street banking. And that’s just one month’s headlines.
Do we allow rip-offs to happen?
There’s plenty of evidence that it’s a jungle out there but we’re not without blame in all this. To quote a Money Fight Club motto: In a world full of sabre tooth tigers you shouldn’t leave home without your club.To understand the ‘why’ a little better it’s worth looking at some of the psychology. There are two major points worth making here.
- Human beings have a desire to trust their fellow man. For example, you’d never manage to make it into a flow of traffic on a busy roundabout if you didn’t trust you fellow motorist to give way appropriately.
- It’s easier to be lazy. Saving energy is a cave man instinct. It’s much easier to let someone else do the work. So if the person in the smart suit tells you to buy this phone or that loan - who are we to argue?
As well as ‘trust bias’ and ‘cognitive laziness’ he also mentioned the ‘norm of reciprocity’ and the strong human inclination to pay someone back if they do us a favour. Have you ever wondered why you get offered everything from pens to carriage clocks just by applying for financial product?
In her book, The Ponzi Scheme Puzzle - A history and analysis of con artists and victims*, Tamar Frankel at the Boston University of Law points out that warning people about con artists and scams doesn’t seem to make that much difference. What we need to do is recognise: “the subtle signals that mimic truth and honesty”, which con artists use to play to our own vulnerability.
(* A Ponzi scheme is a fraudulent investment that entices in new money by offering impressive returns. In fact the money is not invested, funds are misappropriated and the scheme eventually collapses. They’re named after Charles Ponzi, who came up with the idea back in the 1920s.)
So, what makes a money fighter?
The good news is we all have the ability to become money fighters. We just need to tap into the survivor instincts that kept our ancient ancestors alive and to stop assuming that just because today’s tyrannosaurs wear suits they have our best interests at heart.
Most critically - we need to be wary. It's ok to trust people we know well but should we trust a stranger who just dresses smartly or works in a bank? If something doesn't sound right, investigate. Ask questions. Look for evidence.
It’s also important not to get distracted by the small print, the free gifts, or the pleasant banter about the weather or our families.
Ultimately, we need to be prepared to tough it out. Ask questions and then more questions. If you don’t like the answers - ask some more. If you don’t understand the waffle or techno-speak get the organisations you're pitting yourself against to go over it again, and again, and again. Sometimes you win because you pack a bigger punch. Sometimes you win because you wear your opponent down.
Take your time and stay in control. It’s better to miss a deal than snap one up and regret it. If you’re in the market for a new conservatory, do your research - don’t just opt for the company whose literature just happens to drop on your door mat at that time, or whose advert in the local paper catches your eye. By all means accept recommendations from reliable friends - but do you own homework as well.
Are you Money Fight Club fit - take the mini test below
Answer ‘Never’, ‘Sometimes’ or ‘Always’ to the following statements.
- Q1. You always check till receipts and get mistakes corrected.
- Q2. You take time to read any small print before you sign something.
- Q3. You ask questions and more questions until you understand something completely.
- Q4. If you believe you are in the right you’ll fight until you get what you deserve.
Count up how many times you said ‘Never’, or ‘Sometimes’ or ‘Always’.
More ‘Always’ responses: You already understand a lot of the Fight Club basics and probably carry a few battle scars to prove it. But now’s the time to raise your game.
More ‘Sometimes’ responses: Chances are the recent headlines around financial mis-selling and retail scams have put you on your mettle. But there’s still more you can do.
More ‘Never’ responses: You have a tendency to accept things at first glance and assume they’re right. You need to prioritise.
You can find the complete version of this test, which includes more detailed feedback, in the Money Fight Club book.
So, in practice, what does fighting back boil down to? Here’s a quick 1.,2.,3. (Or Biff, bash, bosh, as we like to say.)
- At a practical level when you buy a product or service you’re buying a product or service - not looking for a new friend. Conversations about the weather, or your family, just distract and create an emotional bond that can cloud decision making. Be on your guard.
- You don’t owe the seller of any goods or services anything and certainly you don’t owe them for the Parker pen, stylish carriage clock or prize draw that seems to be part of the deal.
- Do the home work. Wade through the jargon and small print. Use the internet and suck it dry for peer reviews and ombudsman rulings. Take nobody’s word that it’s the right product for you. And if you’re sold a dud fight for your rights with every last ounce of energy.
Now, here’s your club - go hunt yourself a sabre tooth.
This article was written by Anne Caborn, co-founder of Money Fight Club, which shows you revolutionary tactics and techniques for battles with supermarkets, banks, utilities, mobile phone companies... Don’t get angry - get even. Find out more on their website [http://moneyfightclub.com/]