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Holiday shopping season could be best in four years, but buyers need to be cautious

November 21, 2003
Curran and Michael McCauley (415) 431-6747;
Reggie James (512) 477-4431

Holiday shopping season could be best for sellers
in four years, but buyers need to be cautious

Tips: Budget carefully, start early, shop online to your advantage

SAN FRANCISCO and AUSTIN, TX – With the holiday season around the corner, retailers’ spirits are improving along with predictions of modest growth this holiday season. The National Retail Federation is predicting the best performance for holiday retail in four years, with sales expected to increase 5.7%. Other noted economists forecast 4 – 8 percent growth sales.
An economy that is starting to rebound, as well as a more favorable job market, has had consumers heading to the stores as early as October of this year. This year Thanksgiving falls on November 27, giving consumers one more day to hit the stores than in 2002.
Consumers appear more optimistic about their holiday shopping plans in 2003 due to a number of factors:
 A rise in the consumer confidence index
 A climbing stock market
 Extra cash from refinancing and tax refunds
 More stability in foreign affairs (compared to Dec. 2002)
This year retailers are maintaining leaner inventories to avoid unloading the abundance of merchandise left over after the holidays, and to avoid having to slash prices. So the golden rule for consumers when they see a needed product at a good price is “buy it when you see it,” according to the National Retail Federation. Consumers will be looking harder for bargains. According to a poll by the NRF, 75% of consumers will shop at discount outlets.
Following are Consumers Union suggested tips for holiday shopping in 2003. Consumers can also visit the free holiday gift giving guide at www.ConsumerReports.org to get expert tips on good holiday health, safe holiday driving, online shopping, and more.
SET A BUDGET AND STICK TO IT. The urge to buy on impulse during the holidays can be detrimental to your pocketbook. Remember that the best gifts are not necessarily the most expensive. A little creativity on your part can go a long way. Make a list of the people you plan to buy for, then record what you purchase, and the amount you spend as you go.
ASSESS SPENDING HABITS. The best method of payment really depends on how you spend money. If you tend to splurge more when you use a credit card, perhaps cash, check or debit is a more viable option to keep you on track. However, for goods that have to be delivered, or may be defective, you get better consumer protection when you purchase by credit card.
PAYING WITH CASH OR CHECKS. Don’t send cash in the mail, and don’t pay in cash or with a check or debit card when a product still has to be delivered to you. Cash does have some advantages, such as keeping your name off of unsolicited mail lists and enabling you to pay in full for an item. However, a check enables you to pay in full without the added risks of carrying cash. When using a check, make sure that you have the money in your account to cover it on the day you write the check. Bounced check fees by the store and bank can be expensive, so carefully monitor your account. It is also possible to stop payment on a check if you have a dispute with a merchant, but you may have to act quickly.
DEBIT CARDS. A debit card is good if you prefer not to carry cash or write checks. But carrying a debit card is like carrying a checkbook full of signed checks, so use extra caution. Purchases made with a debit card are withdrawn directly from your checking account. And once you make a purchase, you cannot stop payment the way that you can with a check.
If you’re an Internet shopper, don’t give our your debit card number online, lest it fall into the wrong hands in cyberspace. Since purchases made with a stolen debit card are equivalent to someone taking cash directly out of your bank account, you may experience financial difficulties while you are working with your bank to reverse the charges.
If your debit card is lost or stolen, report it immediately by phone then follow up with notification in writing. Federal law limits your liability to $50 if you report your loss promptly. Keep receipts and compare them with your bank statements, and immediately report any discrepancies. You will have to work with your bank to get your money back.
CREDIT CARDS. Credit cards can be very useful, especially for items that have to be delivered or that might arrive broken. However, it is much easier to become overextended with a credit card, so try to restrict purchases to what you can pay in full when the bill arrives, and try not to use a credit card if you are already carrying a balance.
By using a credit card, you will have more leverage to return a product than you would if you were to pay with a debit card or cash. The Fair Credit Billing Act gives you the right to defend against payment of a credit card charge if you show that the merchant failed to resolve a problem with the goods or services satisfactorily. This rule applies only if the item cost more than $50 and was purchased in your state, within 100 miles of your home, or from the credit card issuer.
Avoid using store credit cards if you can’t pay the bill in full every month. Store credit cards tend to have higher interest rates than bank-issued credit cards, which most retailers accept. Also, stay away from credit card advances, which can be a costly way to borrow money. There is a fee (generally 2 to 4 percent of the total cost of money borrowed) and often the interest rates on the borrowed money are higher than rates on regular credit purchases.
HOME EQUITY LOANS. Don’t use these to pay your holiday bills or credit card debts. Taking a home equity loan to consolidate your debts could worsen your financial problems. If you can’t pay back the loan, you could lose your house. Rather, use these loans only for specific, planned expenditures, such as school tuition or home improvements.
BUY EARLY. As online shopping continues to acquire favor with American consumers — more than 77 million U.S. adults now buy products online throughout the year — e-tailers are getting a better idea of what to expect during the holiday rush. Most major Web sites now offer live or call-in customer service, or both, in addition to extras such as online order tracking and gift wrapping. The peak buying day for online shopping in 2002 was December 12 and online shopping tapered off approximately seven days before Christmas. So getting your order in early will help ensure that you don’t encounter problems or have to pay extra for expedited shipping.
CHECK OUT CONSUMER REPORTS’ E-RATINGS: ONLINE SHOPPING GUIDE BEFORE MAKING A PURCHASE. Consumer Reports’ online e-Ratings provide our unbiased current assessments of how the most popular e-tailers score on consumer-friendly criteria such as privacy and security, return and shipping policies, ease of navigation and more.
DOUBLE CHECK PRICING AND USE “SHOPPER’S INTUITION“. If a deal seems too good to be true, it most likely is. Comparison-shop both online and off to make sure that you are getting the best deal for your money, particularly if you are bidding in an online auction. Compare the final price, including all shipping and handling charges, between e-tailers.
BE SURE THAT YOUR PERSONAL INFORMATION IS SECURE. Consumer Reports E-Ratings: Online Shopping Guide ranks e-tailers’ privacy policies in addition to other criteria. Consumers Union also recommends carefully reading any merchant’s online privacy policy to ensure that your personal information will not be shared or sold to third parties.
SHOP WITH COMPANIES YOU KNOW. Anyone can pose as a shop online company under almost any name. Ask for a paper catalogue or brochure if you are not familiar with the merchant. Also, become familiar with the company’s return policies before placing your order.
REMEMBER YOUR ABC’s. When exploring online, think “ABC” to remember the privacy and security questions you should ask about a company.
About me. What information does the company collect about you and is it secure?
Benefits. How does the company use that information and what is the benefit to you?
Choices. What choices do you have about the company’s use of information about yourself? Can you opt-out of information uses and how?
PAY ONLINE WITH A CREDIT CARD. Under federal law, your liability for unauthorized credit card charges is limited to $50. In fact, some credit card issuers and web site operators say that under certain circumstances they will even cover that amount. The level of protection with credit cards is also better than with other forms of payment such as cash on delivery, certified checks, and money orders. Credit cards are safer than debit cards, which you should avoid using online because of the additional risks posed if your debit card number is stolen.
 Web pages indicating the company’s name, phone number and address.
 An order confirmation page, or similar page, with a description of items ordered and confirmation number.
 The site’s policies for returns, security, etc.
 Any correspondence you exchange with the merchant, including emails in which you give notification of product defects and the merchant’s responses.
*Make sure that all of these browser-page printout items are dated. If not, write the date on them.
Identity theft is an equal opportunity crime that has been affecting victims of all ages, races, and incomes. The holiday season is a prime time for identity thieves to prowl. Follow these tips to reduce your chances of becoming a victim this holiday season:
CHECK BANK STATEMENTS AND CREDIT CARD BILLS PROMPTLY: Report any unauthorized transactions immediately.
BE STINGY WITH INFORMATION: Never disclose any personal information (SSN, birth date, etc.) unless you initiated the transaction.
TRAVEL LIGHT: Don’t carry around your Social Security number or other personal information unless you have to. Ask your employer and your health insurer not to use your SSN as your card number.
SHRED AND DESTROY: Before throwing out files or receipts containing Social Security numbers or account numbers, cut with a paper shredder.
BEWARE STRANGE ATMs: Avoid using strange looking automated teller machines, because they may be rigged to skim data off your card’s magnetic strip.
 WATCH OUT FOR “SHOULDER SURFERS”: Use your free hand to shield the keypad when using pay phones, public Internet, or an ATM.
BUILD A WALL: Install firewalls and virus-detection software on your home computers to discourage uninvited hackers from accessing your personal information.
Pay attention to gift card ground rules if you intend to give a card this season or if you receive one. Increasingly, card issuers are charging monthly “maintenance fees” that kick in after a certain period of time, which generally run between $1.00-2.50 or more per month. Details about fees are usually on the card itself, or accompanying gift card packaging. VISA and Mastercard gift cards can be used anywhere that those cards are accepted; some include a PIN for use at cash machines.
These bank-issued cards often have an initial fee or other fees. Store cards must be used at the chain that issued them, though sometimes they’re accepted at sibling chains. Keep the receipt you get when you order the card, and write down the card’s ID number in case your card is lost or stolen. Store cards cannot expire in California (current law), and store cards purchased after Jan. 1, 2004 in California also can’t be subject to fees in most instances. To avoid fees and the possibility of the card expiring, consider giving cash or a check instead of a gift card.
SAVE ALL RECEIPTS AND PROOFS OF PURCHASE. If a purchase doesn’t work as advertised, promptly return it and ask for a full refund or replacement. If you are still dissatisfied, contact the merchant and manufacturer in writing. If you are not satisfied, complain in writing to the local district attorney’s office or consumer affairs office. If you buy a gift your recipient might have to return, consider paying cash for it. If you pay for the gift by credit card, some stores will not refund cash to the recipient upon the item’s return.
FOR ONLINE RETURNS, CHECK OUT THE SITE’S POLICY BEFORE BUYING. Return shipping costs can be expensive, and some e-merchants charge a re-stocking fee on returned products. However, many chain retailers will allow you to return or exchange purchases made online to one of their brick-and-mortar stores, provided that you furnish a receipt. Some other e-tailers will pay shipping costs for returned products. With online purchases, you have the same rights as you would if making phone or mail-order purchases, so it is imperative to keep records of all communications with the merchant. You should also ask for a gift receipt with online purchases.


If you have trouble with your debts, contact the nonprofit Consumer Credit Counseling Service in your area to help you budget and to negotiate a payment plan with your creditors. These are usually listed in your telephone directory’s Yellow Pages under “Credit & Debt Counseling.”
It is easy sometimes to get caught up in yearly holiday shopping excess. As the malls become congested, consider alternative gifts. For example, a charitable contribution made in the recipient’s name can be an ideal gift that exemplifies the true spirit of the holiday season. And don’t forget that sometimes the best gifts are homemade ones.

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