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CR: Five holiday shopping traps to avoid

November 1, 2010

Plus a Tip Sheet on Holiday Tipping

YONKERS, NY – Finding the right gift at the right price can be challenging, especially during the holiday season when deep discounts and door-buster sales abound. The latest issue of Consumer Reports highlights five traps holiday shoppers can avoid.
“Knowing how to navigate sales, comparison shop, and cut through salespeople jargon is half the battle to stress-free holiday shopping,” said Tod Marks, senior editor at Consumer Reports. “Shoppers need to take precautionary measures before purchasing gifts to make sure they are getting the right product, for the right price, with no strings attached.”
Five Holiday Shopping Traps to Avoid
1. Deep discount come-ons. “Door-buster” sales promise big savings and not just on Black Friday, the day after Thanksgiving, or the following Cyber Monday, when shoppers go online. Consumer Reports found an electric percolator “on-sale” at Kohl’s stores and Kohls.com for $61.99, a discount from the regular $69.99. But those prices are higher than the $59.99 manufacturer’s suggested retail price. Retailers, especially discount stores, commonly sell below MSRP. Using a Web search, Consumer Reports found better deals. The best price was $30.03 plus $8.21 shipping at Salestores.com.
– What to do? Comparison shop before buying and don’t worry about missing a sale, it’s likely that another one will come around before the season ends.
2. Gift-card gotchas. New federal rules for gift cards limit issuers’ ability to charge certain
fees and impose expiration dates. Inactivity and service fees can be charged only if a card hasn’t been used for at least one year. But issuers can still charge fees to buy cards, as they do for bank-issued variety, those that bear a credit-card logo. For example, expect to pay $3 to $7 for an American Express gift card. Also, gift cards are not protected if an issuer goes bankrupt. If that’s the case, the card could be worthless. Beyond that, many people never get around to spending their gift cards. A quarter of people surveyed by Consumer Reports in October 2009 who received gift cards the previous year said they
hadn’t redeemed their almost one year-old cards.
– What to do? Give cash or a check. Cash never expires or loses its value, and is good anywhere. If the check is never cashed, the money stays in your bank account.
3. Extended-warranty pitches. Salespeople push service plans because retailers keep 50 percent or more of what they charge for them, but they are notoriously bad deals. Some repairs are already covered by the standard warranty that comes automatically with the product. Consumer Reports’ data shows that products seldom break within the extendedwarranty window of coverage, when items do break, the repairs, on average, cost about the same as the warranty.
– What to do? Some credit cards automatically extend the manufacturer’s warranty on anything purchased with them, so check the card’s website. Even if the warranty expired, check with the retailer or manufacturer, which might choose or be legally obligated to repair and make good on a product that prematurely fails or otherwise shows signs of a defect.
4. Return-policy limitations. Some retailers relax their return policies during the holiday season, but don’t count on it and always learn the rules before buying. Some companies have different return policies for in-store, online, or mail-order purchases.
– What to do? Keep the receipt and let the recipient know the return policy. If the store provides a special gift receipt, include that with your gift.
5. Restocking fees. Many items, especially electronics and special orders, are subject to restocking fees that range from 10 – 25 percent if they are not returned in a factory-sealed box.
– What to do? Don’t open the package unless you’re sure you want the item inside. Items such as computer software, music CDs, and movie DVDs generally aren’t returnable if the seal is broken. If a fee is charged, try to negotiate a partial refund, but never pay a fee if the item is defective.
A Tip Sheet on Holiday Tipping
How much should you plan to tip your housecleaner, child-care provider, or hairdresser this holiday season? The Consumer Reports National Research Center conducted a nationally representative survey early this year, when memories of holiday tips were fresh, to find out. Despite the recession, respondents who did tip spent at about the same rate as in years past. The highest median tip was $35, for the category of cleaning people, with a few service providers receiving thank-yous as high as $500. If you plan on offering gifts of thanks this holiday season, take these tips from Consumer Reports:
• Give cash equal to the value of one session or a week’s wage to self-employed or
lower-wage earners.
• Gift cards can be useful for tipping mail carriers. They aren’t supposed to accept
cash, but can accept gift cards valued at $20 or less that can’t be exchanged for cash.
Otherwise, you might want to avoid gift cards because of their fees.
• Be sure that food gifts won’t trigger an allergic reaction or violate dietary restrictions.
• If you’re keeping to a tight budget and can’t afford to tip this year, consider writing a
heartfelt note of thanks instead.
Additional information on holiday shopping appears in the December issue of Consumer Reports and online at www.ConsumerReports.org.
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Melissa Valentino, 914.378.2432 or Lisa Bruno, 212.714.7907
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