Reader Larry writes in with a complaint about a commonly used “scam.” We call it a “scam” because we believe it’s misleading and designed to take advantage of people who do not read things carefully, but you judge for yourself. Here’s how it works:
- A company you’ve done business with partners with a company that offers some sort of service. Life insurance. Coupons. Whatever.
- The company you’ve done business with solicits your enrollment in the service by sending you a check that, if cashed, automatically enrolls you.
- After the “risk-free” month (or whatever), you are charged for the service via whatever credit card they company has on file for you (or whatever). It is possible that you did not understand that by cashing the check you were enrolling in a pay service, but since you agreed to be enrolled by cashing the check, all you can do is nicely ask for a refund.
Larry has scanned an example for us. If you see these checks, we recommend destroying them.
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@FatLynn and SAVVY9999,
You’re fine, both of you. I have Auto and Life insurance through State Farm, and yes, they really DO send out dividend checks. I have one in my wallet right now for $55, waiting to be deposited at my bank. It’s not the first one, either, but they don’t send them out on a regular schedule. Go read the check, and the letter it came with and you’ll find there’s no small print or any conditions. State Farm, yes, an *insurance company* is really giving you back part of your premiums.
Yeah I know, strikes me as way out of the norm for what you expect from insurance companies, too…
Hi,
I received one, too. Or rather, one came for the person who used to live in my apartment.
I know a bit about her: immigrant, nurse, nice person. But not necessarily the sort with the ability to read the fine print.
Could this scam be making money off people whose English skills are poor?
Back in the long-ago days when I worked as a bank teller, we would (very occasionally) see the person-to-person example of this principle: someone putting qualifications on a personal check to someone else. As far as the bank was concerned, enforcing the “contract” on such checks was none of our business, and purely an issue between the person who wrote it and the person cashing/depositing it.
This makes sense, right? Because I can write you a check that says “valid only if so-and-so loses 15 lbs. as promised.” But the bank teller isn’t going to weigh you.
Presumably, though, these companies have better capabilities for enforcing their back-of-the-check conditions than you or I do. I mean, try writing this on your next check to those thieves at Verizon: “By depositing this check, payee agrees never to bill me again.” And see what happens. Probably not much.
As for those folks commenting on the “writing a contract on a check” deal I know that this is true as a recently reviewed a credit card “change in terms” where the cc company specifically mentioned this issue and said that they wouldn’t honor this action or something to that effect.
The info was pretty buried in the micro text of the “change in terms” but what drew me to it was the quote “Paid in Full” which you rarely see referred to on credit card terms….
To those people who insist this ‘isn’t technically a scam’, I beg to differ.
This scam is not that different than the short change scam that is perpetuated against any number of retail workers every day.
There’s a world of difference between entering into a mutually beneficial business relationship and getting bum rushed into a losing proposition using the same sorts of switch ups used by confidence men.
This transaction is obviously a scam because of 2 major earmarks: a) it is not mutually beneficial and b) it uses misdirection to get the mark to participate in the transaction.
@Sidecutter: Thanks for the advice. The State Farm letter and check looked to be on the up & up, so I deposited it on Friday. It’s rather stupefying that any company would out of the blue give $ back because they ‘made too much’.