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Auction Guides: Not So Hot Properties

Seized Cars May Not Be Such a Great Deal

Ads like these in newspapers and magazines, on television and the Internet, and in coupon mailings to your home may sound like the ticket to your dream home or car. They offer the chance to buy a big-ticket item at auction — for well below its market value. What deals! Just call the toll-free number for more information.

Is there a catch? You bet!

Don't Be Mis-Guided
If you respond, you're likely to hear pitches for guides to cars and homes being sold in your area at great prices. But the guides aren't always what they're promised to be. And if you buy one, you may end up spending more than you planned.

You'll be charged about $50 for each guide, either to your credit card or through a withdrawal from your checking account. You may even be billed for a guide you didn't order. When you place an order, the salesperson might offer to include another guide as well. What you won't be told is that you'll be charged for the second guide, even though you never agreed to buy it.

In many cases, the businesses bill your credit card or debit your checking account even if you never agreed to buy anything. They get your bank account or credit card information under false pretenses, sometimes claiming that they need the account number to verify your credit history or to "hold" your order.

And when auction guides arrive in the mail, chances are that they contain far less information than you expected. Actually, it's information that is readily available elsewhere for free.

The bottom line: While it's possible to buy cars at auction and homes through foreclosure sales, you won't find the "deals" advertised in auction guides sold by fraudulent promoters.

Some government sales programs also advertise on local radio and television. Or you may see notices posted at post offices, town halls and other government buildings. You also might want to contact individual government agencies and affiliates about their sales programs. Look for listings in your phone book under "U.S. Government," or check out these websites:

  • U.S. Department of Housing and Urban Development

  • U.S. Customs Service

  • U.S. Marshals Service

  • General Services Administration

  • Freddie Mac

The Best Defense

If you respond to an ad for auction guide:

  • Avoid giving your bank account or credit card number to a representative who says it's necessary for verification.

  • Recognize that seized vehicles often are sold at government auctions, but rarely at the bargain prices quoted in some ads. Expect to pay what the vehicle is worth and to compete against other bidders, included used car dealers.

  • Be aware that foreclosed homes are sold for slightly less than their appraised values, but may require substantial repairs.

  • Recognize that the auction guide company isn't the only source for info. Contact individual government agencies for information about their sales programs. Ask to be put on a mailing list to be notified of upcoming sales. Some government sales programs advertise through the media, on the Internet or through postings in government buildings.

  • Get the name and location of the company and check it out with the Better Business Bureau or state Attorney General.

  • Get a written copy of the return policy before you pay for an auction guide or list of foreclosed homes. Some fraudulent sellers of auction guides give consumers the impression that refunds are no problem. Often, the businesses put so many conditions on refunds that few consumers ever get them.

  • Use your credit card to pay for an auction guide. It offers more protections than other payment methods if you have a problem with the purchase.

For More Information
The federal Consumer Information Center has several publications about government property sales:

  • U.S. Real Property Sales List

  • Guide to Federal Government Sales

  • National Sellers List

  • How You Can Buy Used Federal Personal Property

Where to Complain
If you have been victimized by an auction guide scam, contact your local postmaster or the U.S. Postal Inspection Service.

Other organizations that investigate fraud include your state Attorney General, state and local consumer protection offices or your local Better Business Bureau.

(Source: Federal Trade Commission)