Answers from AARP and

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These matters are addressed below:

Lemon Law

Illegal Sales Gimmicks

Your Rights and Responsibilities When Applying for Credit or Loans

Telemarketing Scams

The Bill Consolidation Loan: Where Rights Become Risks

Three-Day "Cooling Off" Periods in Consumer Transactions

Collection Agencies

I am not satisfied with the work done by a home improvement contractor. What are my rights?

I paid for auto repairs and my car still isn't working properly. What rights do I have?

I ordered something by mail two months ago and I still have not received it. What can I do?

Mail Fraud

How long should I keep canceled checks and receipts?

I have the basic cable service in my area. The cable company has notified me that it is adding new stations to the basic service and charging an increased fee. Do I have to pay for the extra stations if I donít want them?

I received a bill that has a mistake in it. How do I get it straightened out?

Can a creditor attach my Social Security or private pension benefits?

Protecting Your Home from Creditors

What You Need to Know Concerning Mobile Homes

Lemon Law

"A lemon" is a motor vehicle sold or leased after January 1, 1987, that has a defect or condition that substantially impairs the motor vehicle; and the manufacturer, its agent, or authorized dealer cannot repair the vehicle after a reasonable number of attempts. Under the statute, the manufacturer must replace the motor vehicle or refund the purchase price (less a reasonable allowance for use).

Substantially impair means to render a motor vehicle unreliable or unsafe for normal operation, or to reduce its resale market value below the average resale value for comparable motor vehicles.

The law presumes that a reasonable number of attempts to repair have been made if the same problem has not been repaired after 4 attempts, or the vehicle is out of service for repairs for a cumulative total of 30 or more days during the term of protection.

Term of protection is defined as one year from the date of original delivery or the term of the warranty, whichever comes first.

The law is unclear about whether you have to have reported your problem during the "term of protection" in order to have a claim under the "lemon law". The Tennessee Division of Consumer Affairs has adopted a position that the problem essentially has to be reported within the first year or within the term of the warranty, whichever comes first.


If you have a lemon, you must notify the manufacturer of the problem in writing by certified mail. The manufacturer has an additional opportunity to repair your car within 10 days. If the manufacturer cannot repair your car and the manufacturer has an informal dispute settlement procedure that complies with Federal Trade Commission regulations, the refund and replacement provisions of the lemon law won't apply until you submit to the procedure. You are not bound by the decision and can still seek available legal remedies, including asking a court to award a replacement vehicle or reimbursement of the purchase price (less a reasonable allowance for use), plus attorney fees and court costs.


You can file a lawsuit at anytime within one year from the date of original delivery of your car or within six months from the expiration of your expressed warranty, whichever is later. Extended warranties are not considered. You should consult an attorney well before the expiration of your time limit to be sure of preserving your legal rights.

For more information, please write the Tennessee Division of Consumer Affairs, 500 James Robertson Parkway, Nashville, TN 37243-0600, or call toll-free 1-800-342-8385.

Illegal Sales Gimmicks

Sales gimmicks are simply ways stores or retailers use to get customers. Some are honest and some are not. In order to protect yourself and to be a wise consumer, you need to know about some of the dishonest and illegal ways retailers and salesmen often trap unsuspecting customers. Two methods are called "referral selling" and "bait and switch."

The bait and switch scheme is one of the hardest sales gimmicks to prove dishonest. The idea behind the gimmick is to advertise a product at a low and attractive price to get the customer in to the store. The salesman can then say the product advertised is not very good--you'd be better off spending more money and getting a better model. Or, he can say that so many people have come in the store that the supply of the special product has run out--and then he'll try to interest you in the more expensive model. The salesman will try very hard to sell you the expensive model instead of the advertised product. The law requires that a store have enough items they've advertised on sale to meet an expected demand, and if the store is a reputable firm and honestly has run out of the advertised special, they'll usually give a due bill entitling you to get the item at a later time but at the special sale price. Remember, bait and switch is a common trick--and it is a hard one to prove fraudulent--that is, to prove that the store has intended to trick the customer.

Referral selling is illegal in many states, but there are still some dishonest salesmen who will try to use it. Often people who know referral selling is illegal will find themselves tricked into agreeing to it. Listen carefully to any sales scheme and make sure you do not fall for anything. The idea in referral selling is that the salesman asks you for names of your friends who might also be interested in his product. The salesman tells you he'll give you a discount on your own purchase for every friend who buys one of the items, too. The salesman may make you these promises, but you won't find them in writing in your sales contract. And usually, the price you pay for a product in a referral scheme is even more than you would pay for the product in a normal sale.

The "free offer" gimmick may be another attempt to take advantage of you as a customer. This time they tell you you've won a free TV set, a free sewing machine, or a free course of dance lessons. The only little catch is that you have to buy a service policy or a cabinet for the sewing machine or some other service that goes along with the prize. The cost of the cabinet or the service policy will often equal or even be greater than the normal price of the "free product." Remember, a company that gives its products away won't remain in business very long. And remember, too, if you win a price, you do not have to pay anything for it--except to Uncle Sam at income tax time.

Another area to watch out for is mail order. Before you deal with any mail order firm, check the background of the company with your local Better Business Bureau. Be prepared to wait for quite a while before your product arrives. And remember, too, that products advertised by mail are often less attractive or well-made than they looked on an illustrated advertisement. If the item arrives and it is completely different from the advertised product and you feel that it has been lied about and you have been cheated, then you may have a case against the company which sold it to you. You will have to call your Better Business Bureau for some information about how to file a complaint and get your money back.

Some really fraudulent mail order firms will even send merchandise you didn't order and then try to nag and harass you for payment. Remember you never have to pay for anything you haven't ordered. Contact your Better Business Bureau or the office of your District Attorney and ask for advice.

One last gimmick to be aware of is fear-sell. A man pretending to be a state inspector or offering a free inspection may come to your house and tell you your furnace or chimney is a hazard to your health. He will say you have to get it fixed right away. Do not be scared and do not be rushed. Check the Inspector's credentials first. Get another estimate on the work from a reputable firm before you decide what to do.

Most retailers want to please their customers, but if you think you have been taken advantage of by sales gimmicks, you can go to your Better Business Bureau, your local consumer protection agency, or even, in some cases, a consumer ombudsman at your local newspaper, radio or TV station.

Remember to avoid trouble whenever you can. Deal with responsible firms. Do not be rushed into signing or buying anything ever. Never sign any contract unless you understand it thoroughly. Make sure you understand the guarantee and service policy on any item you buy. Find out about the company's credit policy and their policies concerning exchanges and returns. And check more than one place before you buy. Learn how to protect yourself by shopping wisely.

Your Rights and Responsibilities When Applying for Credit or Loans

When you apply for credit, you'll be asked for information about yourself that covers several different areas. The person to whom you are applying for credit will want to know your past credit record and whether or not you have a large enough income to meet all your expenses. They'll want to know if your income is steady and how long you've been at your job.

They'll want to know whether or not you've shown signs of poor money management in the past. They'll also want to know how long you've been living in the community, how long in your present home, and whether you are renting or buying. And they'll want to know about your assets--your home, your furniture, and your automobile. And they'll want references.

These are the most important things the person to whom you are applying for credit will need to know about you before they will let you borrow money. Usually your age isn't important unless you've just reached the age of eighteen and don't have an employment history. Or if you are a senior citizen who can't offer a steady job as proof of your ability to repay a loan, then you may have some difficulty also. Usually, however, even people in these categories can get credit if they meet all the other requirements. And don't forget that good references do matter.

Before you decide to buy or borrow from anyone, become a comparison shopper--look around for the best deal in goods and for loans. Deal only with recognized companies and agencies, however, and if you are in doubt about a company, ask for information at your Better Business Bureau.

When you get a loan or buy on time, make sure you understand exactly what you're responsible for. Read all of the contract and read it carefully. Make sure all the details are spelled out for you. Don't ever sign a contract that you don't understand and always keep a copy of every contract you sign.

If you make application for credit and you are turned down, you can get the name and address of the Credit Bureau which prepared the report used to deny you credit. That Credit Bureau has to tell you the nature, substance, and, in most cases, sources of the information in the report--in other words, just exactly what's been said about you and who said it. There is no charge for this information (if it is requested within 30 days after turned down).

You can take anyone you like with you to the Credit Bureau--this includes an attorney. If there is information on your report which is incomplete or incorrect, you can, in most instances, have this information re-investigated, and if it is found to be false, you can have it removed from your file. And if after all this you are still not satisfied with the accuracy of the report, you can have your own version of the material included in the report.
You can find out who has received a credit report on you within the last six months. If incorrect information has been sent out, the Bureau will let you know whom it's been sent to.

You may have your credit report withheld from any business which does not legitimately need it, and you may sue an agency that uses a report dishonestly. If you sue and your suit is successful, you may also collect your own attorney's fees from the company.

Finally, there can be no unfavorable information about you reported after seven years. There are several exceptions to this rule, and the major one is bankruptcy, which can be reported for fourteen years.

If you are applying for a credit card, there are several things to watch. Credit cards usually don't have the conditions and liabilities involved in their use printed on the card itself, so before signing a credit card, you should read carefully all the information that comes along with it. Be aware of finance charges, expected monthly payments, and types of accounts or use the card is limited to.

Notify the credit card company at once if your card is lost or stolen. If someone else is using your card, even if they don't have your permission, you may still be held responsible for up to $100.00 charged on your card. So, let the credit card company know right away--in writing--if your card disappears. Keep a list of your credit cards. You won't be responsible for any charges on the card if you promptly notify the company about its loss. Failure to notify the company may result in you being liable for $100.00 of unauthorized charges on the credit card. Federal law provides for liability of a cardholder where the liability is "not in excess of $50".

Credit cards are often stolen, so take care of your cards just as you'd take care of your money.

Remember, credit has responsibilities and rights. Make sure you always know those responsibilities and rights so you get the most for your money. 

Telemarketing Scams

A telemarketer is someone who attempts to sell you a product or service by telephone. Many telemarketing scams start with notification that you have won a valuable prize and now the caller wants to convince you to give information about yourself so that you can claim your prize. Everyone should exercise extreme caution when giving credit card numbers or checking account information over the phone. If a telemarketer or anyone else calling by phone asks for your checking account number, the name of your bank, or your credit card number, you should avoid giving this information until you have checked out the company. For example, if you give your checking account number over the phone, an unscrupulous telemarketing company may prepare a debit memo and send it to its own bank as if you had written the company a check. The debit memo is then sent to your bank. If the bank honors the debit memo, the money will be taken from your account often without your knowledge or consent. This is how many people are ripped off by telemarketers who are not reputable.

Scam artists are always trying to stay one step ahead of the law by using new schemes that sound too good to be true. Remember - if it sounds to good to be true, it usually is.

Most fraudulent telemarketers work out of "boiler rooms." This is simply rented space with a bank of telephones. This kind of setup makes it extremely difficult to track down companies that have scammed consumers out of money because it is so easy for them to move on to a new location or town.

Because enforcement is so difficult, it is essential that you follow these helpful tips in order to avoid being victimized by unscrupulous telemarketers.

1. Do not give checking account information to anyone over the phone.

2. Do not give your credit card number over the phone unless you have checked out the organization and know that it has a good reputation.

3. Do not assume an organization is legitimate solely on the basis of impressive looking brochures or enthusiastic testimonials.

4. Call the Better Business Bureau or the Tennessee Division of Consumer Affairs in order to find out if any complaints have been registered against the company.

5. Ask questions and demand straight answers on the name, address and history of the company. If the caller is uncooperative in answering your questions, simply hang up the phone. Remember you have a right to know specific information about the caller and the company. Then you should verify the information given to you by conducting your own investigation or by calling the Better Business Bureau or the Tennessee Division of Consumer Affairs Consumer Hotline.

Be alert to fraudulent telemarketers who engage in phony charitable solicitations. Be alert, too, about your consumer rights. Going back to the prize situation which began this discussion, you should know that, under Tennessee law, a company may not condition the consumer's receipt of a prize upon requiring the consumer to pay a service charge, handling charge, mailing charge, or similar charge. You are entitled to receive the prize without paying a penny.

We need to recognize that selling products or services by phone is not illegal in and of itself. Legitimate telemarketers provide useful and helpful information about services and products. The convenience of doing business by phone is exactly what makes telemarketing an attractive tool for unscrupulous salespeople and companies.

For more information on telemarketing laws and other laws that protect consumers, call the Tennessee Division of Consumer Affairs Hotline at 1-800-342-8385.  

The Bill Consolidation Loan: Where Rights Become Risks

Consumers who purchase on credit have rights which they often give up without even knowing it. These rights are included in a "Retail Installment Contract," which is an agreement between the buyer and the seller, and which deals with the payment terms.

Suppose you went into a store to buy a refrigerator. The cash price for the appliance is more money than you have, so you ask the seller about credit terms. He tells you that by financing the refrigerator through him, there will be no downpayment, and you can pay a certain amount of money each month for 24 months. At the end of that time, you will have paid the seller the total cost of the refrigerator, plus a charge for financing. This charge is based on an annual percentage rate. Since you have already shopped around, you decide that his price is fair, his credit terms are reasonable, and his reputation good. After reading the "Retail Installment Contract," you may decide to make the purchase on his credit terms.

At this point, your rights in the contract are between you and the seller, and deal specifically with the purchased appliance. Read it carefully.

But often, after you make your first or second payment to the refrigerator seller, you'll get a notice from a finance company telling you that you should make your future payments to them. The seller has assigned your contract to the finance company, which means that he has sold it to them so that he could get a lump sum of cash at once. The finance company usually pays less for the contract than even the cash price of the refrigerator; but the seller has his money immediately, and the finance company can make money when you pay them the finance charges. This is also a source of new customers for them.

So far, your rights, as under the original Retail Installment Contract, have not been changed. But it is important to understand that your contract has gone from the seller to a finance company, because that step is what could lead to your losing certain rights in the contract.

After you make your next few payments on time, you may start getting letters from the finance company suggesting a "Bill Consolidation" loan. Such a loan would take all of your Retail Installment Contracts, and possibly other bills, and combine them into one bill, with one monthly payment. Sometimes, you are told that the one monthly payment will be lower than the amount you are now paying.

It is the finance company's business to loan money, and so they might approach you for a bill consolidation loan without you ever having even requested information about one. It is important to realize that this new contract is a personal loan contract between you and the lender. The original Retail Installment Contract and the old seller are no longer a part of this, and here is where you give up certain rights concerning your purchase of the refrigerator.

One such right is that under the Retail Installment Contract anyone to whom the seller assigns or sells your contract is still subject to the same defenses you had against the seller. If something goes wrong with the refrigerator, the seller and the assignee both are subject to this defense. But with a personal loan contract, the lender has no responsibility should something go wrong with the appliance. But you, as the buyer, are still personally indebted to the lender who has loaned you money to pay the seller off.

A second right you have under a Retail Installment Contract is that no lien or security interest can be taken by the seller in any property other than that originally pledged in the contract. However, in a loan contract a lien or security interest usually is taken in property other than that which was originally purchased. Often, the family car and all the household furniture become security for the loan, whereas only your refrigerator (or whatever items are being paid off) was security in the Retail Installment Contract.

Finally, under a Retail Installment Contract, there is a limit on the finance charges. But a loan contract, the finance charges the lender can charge may be more than can be charged on Retail Installment Contracts.

Remember that, for the "privilege" of consolidating Retail Installment Contracts, you give up certain important rights, and in addition, it almost always costs you more money. 

Three-Day "Cooling Off" Periods in Consumer Transactions

Many consumers think they have three days to cancel any contract they enter into. That is not true! You, as a consumer, do have the specific right to cancel certain transactions under Tennessee Law. Two of those situations are (1) "home solicitation", and (2) "prepaid entertainment sales". If it is a prize promotional (music, books, videos, magazines), you have 7 days to review or cancel.

What is a home solicitation sale? Simply put, a home solicitation is a door-to-door sale. The seller either invites himself or herself to your home or tries to sell you something in a place other than his or her usual place of business. The sale must cost you more than $25.00 in order for the cancellation right to apply. The law defines what is and what is not a home solicitation sale.

Let's look first at those transactions that are not home solicitation sales:

  1. If you order something through the mail there is no three day cancellation period.

  2. If YOU call a seller to come to your home in order to sell you something, there is no cancellation period UNLESS the seller does not have an office in Tennessee.

  3. If YOU call the seller on the telephone and the entire sale takes place over the phone, there is no cancellation period.

  4. If you need the seller's goods or services for an emergency, and YOU write a statement saying that you are waiving your rights to cancel the transaction, obviously, you no longer have the right to cancel, even if the transaction falls within the definition of a door-to-door sale.

  5. If you call a seller to come to your home specifically to perform repairs or maintenance to your property, you have no right to cancel within three days.

Let's turn to some of the situations which DO give you three days to cancel:

  1. If the SELLER makes the first contact and everything takes place in your home, or over the telephone, you have three days to cancel.

  2. If YOU call the seller for repairs, but when he or she comes to your home, he or she sells you something more than the repairs, the sale of those additional goods can be canceled within three business days.

  3. If the seller does NOT have a fixed business location in Tennessee and sells you something out of a hotel room or some other temporary location, you may cancel within three days.

It's important to understand that these are only the most common examples. If there is a question about whether your situation qualifies for the three day "cooling off" period, you should talk to an attorney.

What happens if the sale is determined to be a home solicitation sale or a prepaid entertainment contract? Under Tennessee law, the seller is required to tell you of your right to cancel a door-to-door sale. All door-to-door sales are required to be accompanied by a written contract which has an easily detachable form explaining how you can cancel. This form should be captioned in bold type 'BUYER'S RIGHT TO CANCEL" and in duplicate, so you can keep a copy for yourself. All you should have to do is sign and date the form, tear it off, and send it to the seller, preferably by certified mail. If the contract does not have the detachable form, you may still cancel by writing the seller. Your notice or cancellation must be sent in by midnight of the third business day after signing the contract. If you mail the cancellation, it must be postmarked by the third business day.

If the seller does not give you proper notice of your right to cancel, you may cancel the door-to-door sale at any time until you are provided with the proper notice. Make sure you cancel in writing! It is also a good idea to make a copy of your cancellation for your records and to mail the original by certified mail.

If you cancel, the seller has ten business days to return any deposits or down payments you might have made. If the seller has already delivered goods to you, the seller has 20 business days to come and get them. If the goods are not picked up by that time, you may keep them!

If you have questions about the 3-day waiting period or any other law that protects consumers, call the Tennessee Division of Consumer Affairs at 1-800-342-8385. 

Collection Agencies

Persons or corporations that do not get paid often turn debts over to a collection agency. Collection agencies are licensed and regulated by the state. There are also federal regulations that a collection agency must obey. These regulations are for the protection of the public and to insure fairness in debt collection practices. For instance, in trying to locate a debtor, the agency cannot state that the debtor owes a debt nor contact a person other than the debtor more than once, nor can the mail sent to that person indicate that the information sought relates to debt collection. An agency cannot call a debtor after 9:00 p.m. or before 8:00 a.m. If the debtor tells the agency, in writing, that he or she refuses to pay a debt or that he or she wishes no further communication, the only communication that the agency is allowed, is to say that further efforts will stop or that certain legal actions or remedies may take place. A collector may not badger or abuse a debtor or use or threaten violence to the person or property or use obscene or profane language. The agency cannot cause a telephone to ring or engage anyone in conversation repeatedly or continuously to annoy, abuse, or harass anyone. No false representations may be made by the agency, nor can they threaten to take any illegal action or any action they do not intend to take. The collection agency must send written notice containing the amount of the debt and the name of the creditor to whom the debt is owed.

Failure to comply with these regulations subject the agency to a law suit for damages and a fine.

Now you know some of the things a collection agency cannot do. But what can they do? The agency can make reasonable inquires to find out where a debtor is living; they can contact a debtor and ask him or her to pay the debt; they can hire an attorney to sue to collect a debt and to exercise all the rights of the original creditor to garnish wages or property after getting a judgment. They can call a judgment debtor to court to reveal information about his or her property, living expenses and income.

What should a debtor do if he or she is contacted by a collection agency? If the debtor owes the bill, arrangements for payment can usually be made. Any agreement to accept monthly payments is an accommodation on the part of the agency, not their legal obligation. However, most agencies, while they have a right to immediate payment of the entire balance, will accept reasonable efforts to pay. Remember, not having the money to pay does not relieve the obligation to pay, and a creditor may get a judgment against a debtor regardless of his or her ability to pay.

If a debtor does not owe the bill he or she should let the agency know it. If the agency insists that the debt is owing, they may have to sue to prove it. If a debtor receives papers from a court, he or she must do something within the time specified by law. Ignoring the papers because a person does not owe the bill can lead to a default judgment and loss of the opportunity to contest the claims of the agency.

Collection agencies are a legitimate, useful part of our commercial society. Without them, the cost of doing business would be much higher, and all consumers would pay for the few who abuse their credit. The vast majority of consumer pay their bills and have no contact with collection agencies. Since agencies charge the people who turn over accounts to them a percentage of the amount collected, most creditors would prefer to settle with their customers before their accounts are assigned to a collection agency. Most creditors also are understanding about legitimate inability to pay and are willing to make arrangements with their customers.

In conclusion, a collection agency must operate within certain guidelines, but has the power to act on behalf of a creditor and may even have a lawyer take a debtor to court. If the debtor does not owe a bill, he or she should protest and quickly respond to any legal action. If he or she does owe the bill, every effort should be made to pay it in order to avoid further obligations of time, money and emotional energy.

I am not satisfied with the work done by a home improvement contractor. What are my rights?

Method of Financing

In dealing with defective home repairs, the first matter to be established is whether the cost of the repairs has been financed. If financing is involved, determine whether the client obtained financing purely on his or her own, or whether the financing was arranged for by the contractor (or done through a lender referred by the contractor). If the client obtained the financing on his or her own, the client may have to continue payments, and pursue remedies against the contractor as discussed below. However, if the contractor arranged the financing directly, or referred the client to a certain lender, federal law provides that defenses and remedies good against the contractor can be used against the third party lender (limited to the extent of payments to the lender). The lender cannot be held liable for consequential damages. The client should be advised to send written notices of the defense to the lender, and should suspend further payments.

In most cases, the client will have paid all, or most of the price directly to the contractor. In these cases, and in those financed cases where an action against the contractor for consequential damages is indicated, the client needs to be advised as to how to proceed. First, establish what the problem is and whether it has been reported to the contractor. In most cases, clients have attempted to get a contractor to respond without success, but it is important to make sure of this before advising a client to proceed with litigation.

Second Estimate

If the client has attempted and failed to get a response, or has received a negative response from the contractor, the client should get a written estimate from another contractor as to the cost of the repair. This cost must be measured against the work description in the original contract. That is, if a client wants a second contractor to do additional work, only the cost of correcting or completing the original contract is measurable as damages. The client may choose to have the work actually completed by the second contractor, or proceed with legal action on the basis of the written estimate. Actions for amounts for $25,000 or less can be brought (without need for an attorney) in general sessions court.

Filing Reports

Clients should be advised to file reports of all home repair complaints with the Tennessee Attorney Generalís Consumer Protection Division and their local Better Business Bureau. Clients must also be advised that such agencies will not actually represent them in suits against contractors. They may attempt to mediate some of the more serious problems, but clients should be aware of the need not to prolong any settlement attempts and that ultimately they will have to pursue cases on their own.

I paid for auto repairs and my car still isn't working properly. What rights do I have?

Consumers have the right to have the repairs for which they have paid performed in a proper, workmanlike manner. If the car does not function properly after repairs are made, it must be determined whether this is the result of poor work or whether it is a result of some other malfunction, unrelated to the repairs in question.

The first step should be to bring the problem to the attention of the garage where the work was done. In some cases, the garage will be able and willing to correct the problem at no extra charge.

If the garage maintains that the problem is unrelated to the work the garage performed, and will charge for any additional work, it is necessary to get another opinion before authorizing the new work. If, in the opinion of another reputable garage, the problem is a result of defective repair work, there is a basis to demand that the problem be remedied by the original garage at no extra charge. If the garage will not do so, a written estimate of the cost to correct the problem must be obtained. It may be necessary to bring a suit in general sessions court (if the amount is $25,000 or less) or circuit court to recover the cost of completing the work.

The client can also make a complaint with the Tennessee Attorney General's Consumer Protection Division who will try to resolve the situation if possible.

I ordered something by mail two months ago and I still have not received it. What can I do?

When merchandise is ordered by mail, the seller must ship the goods no later than 30 days after receipt of a properly completed order (unless the advertisement specifies otherwise) or the buyer applies for credit (50 days in this case). Delivery may take three or more weeks from the date of the shipping. A consumer can cancel the order and get a refund if this time limit is exceeded. If the seller is unable to meet the required shipping date, the seller must send the consumer a notice giving the consumer the option to consent to a delay in shipping or cancel his or her order and receive a full refund.

These rules do not apply to all orders. Toll-free telephone credit card purchases, magazine subscriptions after the first issue, photo finishing services, C.O.D. orders and seed and plant orders are exempt.

Mail Fraud

You have received a chain letter in the mail. You recognize the last name on the list, and wonder whether or not that person is counting on you to continue the chain. You would rather not be bothered with it, but would also prefer not to disappoint the sender.

The best action you could take for your friend would be to advise him or her the U.S. Postal service warns against participation in chain letter schemes. Any chain letter that requires payment of anything of value, even if it is only a handkerchief, is illegal under Federal Lottery Laws. Chain letters are also considered to be fraudulent, because they promise the possibility of large returns for only a small investment.

The mail has made it possible to obtain almost anything without leaving home. But in doing so, it has also created a market for many dishonest activities. In addition to the chain letter, another type of mail fraud is the Lonely Hearts Club. Also known as Matrimonial or Pen Pal Clubs, they all have the same purpose: that is, to have correspondence with members of the opposite sex, which would lead to the possibility of marriage.

People seeking romance and companionship are offered memberships and mailing lists from companies which call themselves Lonely Hearts Clubs. In some cases, the mailing lists provided by these clubs have been used to solicit money for various reasons. For example, a man might ask for travel expenses from a woman with the promise to join her, and then never show up.

Probably one of the most vicious of fraudulent schemes, aimed particularly at senior citizens, is the sale of worthless medicines and remedies through the mail. The worst schemes advertise a quick recovery. A desperate victim, imagining one of the gimmicks will work, might try one after another. The result could be that proper medical attention is delayed until it is too late.

Other rackets promise cures for obesity, baldness and loss of virility. Medical frauds are so widespread that the postal inspection service has a group of specialists to investigate this type of illegal activity.

Another common type of mail fraud involves the real estate swindle. Dishonest promoters can sell almost worthless land by mailing attractive brochures and placing advertisements in newspapers and magazines. They claim the land is suitable for homesites, retirement or investment purposes. Anyone considering such a purchase is urged to inspect the parcel of land. It should be determined that the seller can produce a legitimate title to the property, and that they land can be legally used for whatever propose it is being bought.

Along with these mail fraud warnings, the postal service has laws which forbid the mailing of unordered merchandise by insured or C.O.D. mail. Since the person receiving a C.O.D. article must pay charges before delivery, he or she may mistakenly pay for something that was not ordered or wanted. Notify your postmaster at once if unordered C.O.D.'s are addressed to you. Postal inspectors will investigate.

It is not against the law to simply mail unordered merchandise, provided it is neither insured nor C.O.D. So you may received unordered items in your mails. These items commonly include greeting cards, books, neckties, pen and pencil sets, key rings and religious medals. If you do not desire to pay for the merchandise, you may write the word "REFUSED" on the cover and return it to the Post Office. If return postage is guaranteed, this action should cause your name to be removed from the mailing list. If the return postage is not guaranteed the matter will be treated as waste. You may, however, keep the unsolicited merchandise and are under no obligation to pay for it.

In all cases of mail fraud or misuse of the mail, the Post Office itself has no authority to recover money or property which the victim has lost. The Post Office does not have the power to take any action to adjust transactions which are unsatisfactory or which have left a customer feeling that he or she did not get his or her money's worth.

However, where there seems to be a violation of postal laws, the matter is presented to a U.S. Attorney for proper action.

If you have reason to believe that you are the victim of mail fraud, contact your nearest U.S. Postal Service Office.

How long should I keep canceled checks and receipts?

Generally, keep most records for ten years, although certain records should be maintained for longer periods. The statute of limitations on contracts is six years. Receipts for tax payments (where there may not be any limitations on actions), and records of capital expenditures, both on investments or improvements to real property (which may be needed to calculate gains or losses at time of sale), should be kept indefinitely.

I have the basic cable service in my area. The cable company has notified me that it is adding new stations to the basic service and charging an increased fee. Do I have to pay for the extra stations if I donít want them?

Cable companies do business under contracts with local government units that grant the companies exclusive rights to do business in their communities. A customer would have to check with the local authorities to see if the conduct complained of violated that contract.

The customerís rights and responsibilities are controlled by the contract signed with the cable company. These contracts usually offer cable services on a subscription basis, with payments due in advance of services. When full payment is not received by the company, the services may be discontinued. Often, the contracts allow the cable company to increase services by adding channels and charging additional fees. In such circumstances, the customerís only options might be paying the extra charge or canceling the contract by notifying the company and surrendering all equipment belonging to the company. A contract that is silent on the issue of increases and does not contain specific provisions giving protective rights to the customer when changes are made by the company will leave the customer in no better position.

Standard form contracts that do not allow the customer to bargain for particular terms are written to favor the business and not the customer. Such contracts of "adhesion" have occasionally been ruled unenforceable, but in the context of cable TV, licensed by local governments, this is unlikely.

I received a bill that has a mistake in it. How do I get it straightened out?

Individual debtors have rights under federal law to have disputed bills from creditors on open-end credit transactions verified. The law establishes procedures for complaining about alleged errors and it requires creditors to respond by either correcting the error or by explaining its position and rejecting the debtorís complaint.

A billing error is any mistake made in billing, including misstated charges, failure to credit payment, unauthorized charges, or inadequate identification of a transaction. In order to benefit from the provisions of the law, the debtor must assert his or her rights in the following way:

bullet notify the creditor in writing of the error within 60 days of receipt of the billing statement;
bullet provide the written notice on a separate piece of paper and not on the billing statement itself;
bullet provide his or her name and account number (if any) on the written notice;
bullet describe the type, date and amount of the billing error in the notice; and
bullet explain the reasons for believing there is an error.

Once the debtorís rights have been asserted in this way, the creditor is obliged to act. Within 30 days of receiving the written notice, the creditor must either

1. acknowledge receipt of the notice, or

2. "resolve the dispute."

If the creditor chooses just to acknowledge the dispute rather than take an immediate position, the creditor must resolve the dispute within two billing cycles or 90 days at the most.

To "resolve the dispute" only means that the creditor must follow the procedures set out in the law. It does not mean resolving the dispute to the debtorís satisfaction.

To "resolve the dispute" the creditor may:

bullet fully agree with the explanation and make appropriate corrections; or
bullet reject the claim completely (in this case, the creditor must send a written explanation or clarification); or
bullet agree in part and disagree in part (in this case, the creditor must make appropriate corrections and send a written explanation or clarification).

Until the dispute resolution procedures have been completed, the creditor must stop attempting to collect the disputed amount. The creditor is forbidden from charging interest or late fees for the period during the resolution, or from making an adverse credit report or taking retaliatory action during the period. Once the procedures have been completed, the creditor must promptly notify the debtor of when payment is due.

A debtor disagreeing with the creditorís position, should promptly submit any supporting documents (e.g., copies of monthly statements, invoices, receipts and canceled checks).

Clients must always be advised to keep copies of any correspondence pertaining to the dispute. This correspondence will help in proving any violation of state or federal law by a creditor or collection agency.

Can a creditor attach my Social Security or private pension benefits?

Social Security

Social Security benefits are not subject to levy, garnishment or attachment except in special circumstances. The most common exception is where there is enforcement of a recipient's obligation to make support or alimony payments. In this case, up to 60% of the benefit may be garnished (50% if the beneficiary is supporting a family). An additional 5% can be garnished if child support or alimony payments are more than 12 weeks in arrears. Social Security benefits can also be garnished for federal tax indebtedness. Also a recipient may not assign Social Security benefits.

Private Pensions

Under federal law, an employee generally is not permitted to assign or alienate benefits in a private pension plan. One exception is that a voluntary and revocable assignment of no more than 10% of a benefit payment is allowed. Another exception is that payment of all or part of the pension benefit in accordance with a qualified domestic relations order (QDRO) is allowed. A QDRO is a judgment, order or decree of court that creates or recognizes the existence of the right of an alternative payee (spouse, former spouse, child, other dependent) and assigns to that party the right to receive all, or part of, the benefits payable to a pension plan participant.

The anti-assignment provision has been generally held to preclude a judgment creditor from garnishing a debtor's pension benefits. State law may also exempt pension and profit sharing plans from attachment or execution by creditors.

The U.S. Supreme Court has held that a debtor's interest in an ERISA-qualified pension plan is excluded from the property of the estate and thus not subject to creditors' claims. (Patterson v. Shumate, 504 US 753, holding that an anti-alienation provision in an ERISA plan is a restriction on a transfer enforceable under "non-bankruptcy law" so that the property is excluded from the debtor's estate.)

There is no restriction against garnishment of pension benefits for federal tax indebtedness.

Protecting Your Home from Creditors

For most of us, a home is our most valuable investment; and the possibility of losing it to a creditor in an unforeseen financial catastrophe is terrifying. But there are several ways you can protect your home.

First, let's look at which creditors can threaten your home.

The first type of creditor to consider is the government: If you don't pay your city or county property tax, the government can sell your property to raise the money to pay the tax.

The State of Tennessee and the IRS can also seize your home if you don't pay your personal or business taxes. There could also be a tax obligation attached to a house that is inherited from someone who dies.

The government also has the right to seize property that is used for illegal purposes (such as the sale of drugs).

The second group of creditors to consider are those who obtain a judgment against you. If someone sues you and gets a judgment, that person becomes a creditor. The judgment could be for an unpaid debt, for example, or for injuries received in an accident. If you do not pay the judgment, the judgment creditor can request the court to sell your property to satisfy it.

The third group of creditors includes those who have not sued you but who are nevertheless owed money. If you (or your creditors) file a petition to have the bankruptcy court administer your assets, your home is one of the assets that can be sold to pay those debts. Your creditors can also join together to request that a state court (rather than the bankruptcy court) initiate a similar procedure. Seizure of your home in this situation is subject to the protection of an "exemption," which we will discuss further in a moment.

The fourth type of creditor is the lender who takes a mortgage against your house as collateral for your loan.

Some of these creditors may be able to seize your home outright. Others can take it only subject to the "exemption."

In deciding how to protect your home, you first need to consider which creditors you want to protect yourself against. Some creditors just cannot be avoided.

For example, you have little recourse to prevent the state from selling your property for unpaid property taxes.

You also probably cannot prevent your mortgage holder from selling your house through foreclosure if you have not made your mortgage payments. There are two ways that a mortgage holder is protected. First, the law gives special treatment to the lender who loans the money you use to buy your house or to make improvements to your house. Second, even if your mortgage was created after you bought your house, your lender probably required you to sign a form that said that you could not take any "exemptions" to avoid foreclosure.

If you are concerned about the possibility of someone suing you in your business, you might want to incorporate your business or create something called a "limited liability company" or a "limited partnership." Very specialized rules govern how these businesses are created, and there are also tax consequences to each of them. You need to consult a lawyer (and perhaps an accountant) before taking this step.

In many cases, you can protect your home from loss to a judgment creditor simply by having insurance on your home and car and business. A good insurance policy will pay judgment creditors when the judgment arises from such things as a car accident or an injury occurring on your property.

Sometimes people try to shield their home from creditors by putting title to the property in someone else's name. If you transfer property for the purpose of hindering a creditor, however, the creditor may be able to void the transfer. To prove fraud, the creditor will look at such things as whether the person who obtained title actually paid for it and whether you were insolvent when the transfer was made.

It is also possible for a creditor to void transfers made shortly before you file for relief in bankruptcy.

If you own property with your spouse, and a creditor has a judgment against only one of you, the creditor cannot seize the property outright. However, the creditor can seize the "survivorship" interest of the one who owes the money. What this really means is that you will have a problem selling or borrowing money on your house if either you or your spouse owes a creditor who has obtained a judgment in court.

You can protect at least a portion of the value of your home against seizure by creditors under Tennessee's "exemption" law. A married couple can claim up to $7,500 in their principal residence and an individual (married or single) may claim up to $5,000 in the principal residence used by that person or that person's spouse or dependents. The exemption does not protect you against debts for taxes or most mortgages, but it would protect you against judgment creditors.

What You Need to Know Concerning Mobile Homes

Buying a Mobile Home

Buy your mobile home from a reputable dealer. You may want to check out a dealer by calling the Better Business Bureau before you buy.

When you buy your mobile home, you will sign a contract with the seller. Be sure you understand what the contract says and what happens if you miss a payment.

If you finance your mobile home, you will also sign a loan contract. It will be more like a car loan contract than a home loan contract. It may or may not give you a grace period for late payments. You will get a title like a car title and not a deed like a house and land. The lending company will have a lien on the title.

When can a mobile home be repossessed?

The loan contract should explain most of the rules about repossession. The laws about repossessing a car also apply to a mobile home.

The lender can repossess a mobile home for missed payments. A home can also be repossessed for other reasons, such as failing to insure it properly.

Moving Permits

Before moving a mobile home on public roads, you must first get a permit. If you move a mobile home without a permit, you can be fined up to $100. A permit is good for 6 days. You get it from the Department of Transportation. A permit costs $3 to $5, depending on the size of the mobile home.

Generally, you can move a mobile home only during daylight hours Monday through Saturday. However, there may be times when you cannot move your mobile home, depending on its size.

The company that moves your mobile home must follow the laws about which roads to use. They must make sure that the mobile home has good brakes and an escort car, if needed.

Deciding Where to Put Your Mobile Home

You may already own the land where you want to place your mobile home. Maybe your family wants you to place your mobile home on their lot. You may be able to rent a lot in a mobile home park. There are legal considerations for each option.

If You Own the Land

Before moving your mobile home onto a piece of land, find out about the applicable zoning ordinances, if any. The law says where you can and cannot set up a mobile home. Even if you own the land, you may not be able to put a mobile home on it. In counties where there are zoning ordinances, your mobile home must be set up on land that is within the proper zone.

When purchasing land, you should ask if there are any covenants of restriction. In some areas, these agreements prohibit setting up mobile homes in single-family housing developments.

Questions to Ask the Owner of the Land or Mobile Home Park

Before you sign the lease, be sure to ask about anything that could affect your living area, such as flooding, and noise from nearby railroad tracks, airports, or traffic.

Ask if there are late charges for being late in paying your rent. Ask if pets are allowed and if there is a pet fee.

Also ask about any hidden charges such as hook-up fees, or cleaning fees or deposits. Ask what it will take to get your deposits back when you move out.

If you do not have a written lease, you may have to move quickly if the landlord tries to evict you. Moving a mobile home can be very costly. It can take a long time to get a mobile home mover to come for your home. Movers will not move in bad weather and when the ground is soft. Moving can be delayed for weeks.

If the landlord gets a writ of possession, your mobile home can be towed out of the park to a storage place. You could have storage fees and moving costs can accumulate quickly.

Without a written lease, the landowner can evict you after giving you a certain amount of time to move. If you pay by the month, the landowner only has to give you 30 days written notice to move your mobile home.

Property Lines

Find out exactly where your yard begins and ends. Also find out what the county and the owner will let you have in your yard. Ask about having cars, childrenís pools, and fixtures in your yard. Find out what you have to do to keep the property and lot. Also find out about the ownerís right to be on the property without getting your OK. A written lease usually spells this out.

Security Deposits

The landowner may or may not make you pay a security deposit. If you pay one, ask for a receipt with "security deposit" written on it. Also ask the landowner if the deposit is refundable. If it is, ask what could keep you from getting it back.

Even if the owner does not ask for a security deposit, you can be held responsible for damages you or your guests have caused, except for normal wear and tear. The owner can require you to pay a reasonable amount for repairs. The owner cannot make you pay for damage that was already there when you moved in.

In some counties, landowners must give you a list of the damages and repair costs before they can keep your security deposit.

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