December 14, 2007

Sen. Carper Shares Tips on How to Avoid Holiday Scams

Urges Shoppers to be Smart When Shopping Online, Buying Gift Cards and Donating to Charity

This holiday season, consumers should be aware of financial and charitable scams, Sen. Tom Carper (D-Del.) warned as he opened Thursday’s hearing of the Committee on Banking, Housing and Urban Affairs, entitled “Shopping Smart and Avoiding Scams: Financial Literacy for the Holidays.”

The hearing on holiday spending and charitable giving focused on tips and advice for consumers on how to avoid financial scams. Witnesses also provided information to improve consumers’ financial literacy and to help them make more informed decisions when making purchases and charitable donations this year.

Chairing the full banking committee hearing, Sen. Carper stressed that during this season, many consumers will fall victim to a scam or will make an uneducated purchase. Some scams even involve fraudulent charities or investments.

Holiday shopping accounts for about 20 percent of all annual consumer spending, and this year Americans are expected to spend about $475 billion in November and December alone.

According to the National Retail Federation, 40 percent of Americans start their holiday shopping sometime before Halloween, but only 10.8 percent are completely finished 10 days before Christmas.

“During this season, many consumers will fall victim to a scam or will make an uneducated purchase,” said Sen. Carper, chairman of the Subcommittee on Economic Policy. “And with 90 percent of Americans still doing their holiday shopping between today and Christmas we hope to reach more consumers with these good financial tips.”

The Federal Trade Commission and the National Cyber Security Alliance recently issued a brochure urging buyers to use common sense when shopping and make sure the seller is legitimate.

Last year, for example, Americans purchased over $24 billion in gift cards. Many of these cards have no restrictions and expiration date, but consumers should check the terms and conditions of the card before purchasing.

There are some one million charities in the United States and last year Americans donated $265 billion. Roughly 25 percent of all donations are made in December, mainly for tax reasons. Surveys show, however, that up to 70 percent of donors had difficulty determining if their charity was legitimate.

“Consumers have a right to know whether charities are adhering to a reasonable standard,” Sen. Carper said. “And, shoppers also need to be aware of gift card policies, warranties offered by retailers and credit card companies, and also the legitimacy of their on-line purchases, which are expected top $33 billion in sales this year.”