FOR IMMEDIATE RELEASE November 18, 1999

Contact: Rob Schneider or Rafael Ayuso (512) 477-4431 Consumers Union's Southwest Regional Office Gail Hillebrand (415) 431-6747 Consumers Union's West Coast Regional Office

AUSTIN, Texas -- As the final holiday shopping season of the 20th century is set to begin, the old-time adage of "buyer beware" is still the best advice for shoppers bombarded with a bewildering array of product choices and advertising blitzes. According to the Southwest Regional Office of Consumers Union, publisher of Consumer Reports, keeping consumer debt in check is the key.

"Staying on budget and resisting the urge to buy impulsively could be the best gift you give your loved ones this holiday season," says Rob Schneider, a senior policy analyst with Consumers Union. "By planning ahead, you can ensure you won't get a financial hangover when the party's over."

In 1999, it could be an unpredictable party indeed. On the one hand, higher personal income and a strong economy have many retailers anticipating hefty sales volumes. According to the Federal Reserve, retailers are anticipating higher sales volume between Thanksgiving and Christmas this year, despite a recent slowing trend in consumer spending.

On the other hand, the new millennium is adding an intrigue factor to the shopping psyche of the American public. Economists remain uncertain about the effects Y2K will have. This is causing some consumers to take a cautious approach to their holiday spending, opting to stockpile items -- such as food and cash -- they feel are necessary to handle Y2K.

As online shopping continues to gain favor with a growing number of Americans, buying choices continue to multiply. And so do the opportunities for many consumers to enter the new year wondering how their debt balances got so out of control. According to a recent study by the Consumer Federation of America, "despite the recent economic boom, half of American households have accumulated less than $1,000 in financial assets, mainly because they're shouldering too much debt."

"Merchants know shoppers are particularly vulnerable during the holiday season," Schneider says. "So it all boils down to common sense. If you won't like the kind of statements you will get in the mail in January, protect your hard-earned cash now and sleep better at the same time."

To help with the busiest shopping days of the year, Consumers Union offers the attached tips:

• Paying with cash can help you stay on budget. But it has drawbacks, too, including concerns about security and the possibility you may encounter difficulty when returning defective merchandise.
  
• Credit cards can be a useful tool, particularly for items that have to be delivered or that might malfunction. Paying with a credit card allows you to stop payment or dispute payment if the goods are defective. In case of theft, you have limited or no liability if you report the theft promptly. It is unwise to take cash advances on a credit card. Cash advances cost even more than credit card purchases since you also pay a fee of two percent or more of the amount of the advance.
  
• Store credit cards are not a good deal for consumers. They usually have higher interest rates than other credit cards and are designed to encourage repeat purchases.
  
• Debit cards are can be useful as long as you understand its risks. A debit card takes money directly from your checking account, and if lost or stolen, your account could be drained. Visa and MasterCard have promised to voluntarily credit accounts, but once again it may not be worth the hassle. Debit cards are more similar to paying with cash than either a check or a credit card. Unlike credit cards, you can't stop payment or have the right to dispute payment if the goods are defective.
  
• Deferred payment plans are another tempting Christmas shopping offer. Unless you can pay off the full balance by the due date, don't fall for this trap. Companies plan to make big profits on finance charges, which may start from the original date of purchase. Be sure to read all the details.
  
• Home equity loans should not be used to pay holiday bills or credit card debts. Rather, they should be used for specific, planned expenditures, such as school tuition or home improvements. 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.
  

Always save your receipts or other proofs of purchase, and ask the retailer about their return policy. If the product doesn't work as advertised, promptly take it back and ask for a refund or replacement. If you are still dissatisfied, contact the seller or manufacturer in writing. Be polite but persistent in pursuing your complaint. If you are not satisfied, complain in writing to the Texas Attorney General's office.

Stores often push extended warranties on their products, but these are usually not a good deal for consumers. Fewer than 20 percent of products covered by an extended warranty are ever brought in for repair. According to a May 1998 Consumer Reports survey, readers who bought extended warranties paid about as much for those warranties as the average repair costs for each item. Instead, buy a high quality product and set aside a repair fund. Sometimes credit cards automatically include extended warranties, so be sure you read the fine print. However, you may want to consider an extended warranty for certain high tech products subject to frequent use like home computers.

Purchasing products from catalogs or over the Internet has advantages: it eliminates time spent traveling from store to store, business hours are more flexible or even 24 hours a day, and many businesses have a better selection of items compared to your local mall.

If you order products by mail, phone, fax, or computer, a federal rule protects you if the seller can't make delivery within the promised time. The seller must notify you and allow you to cancel the order if shipment cannot be delivered in the time stated in the catalog or advertisement (or within 30 days, if no time is stated). This rule applies to catalog buying and to online shopping.

For online buying we recommend:

• Be organized. Know the particular product you are looking for, including the model number. This makes shopping easier and less time consuming. Have backup gift ideas in mind before you go online to shop in case you cannot find the gift you are looking for.
  
• Set a budget. Decide what you are going to spend before you go online.
  
• Check out the merchant. When shopping online for the first time, get in the habit of reading the company's privacy and security policies before you buy. Also check out the seller's policies on shipping fees, returns, refunds, and legal terms. Look for the Trust-e symbol or a Better Business Bureau Online seal, both indicating that the merchant's business practices have been independently audited as consumer friendly. Log on to the BizRate.com site evaluations, at www.bizrate.com, for compilations of other consumers' shopping experiences. Log on to Consumer Reports Online for e-ratings of online shopping sites, at www.ConsumerReports.org.
  
• Start early. Be sure to factor in delivery time, and any problems that may occur, such as the item being back-ordered. Start shopping at least one month in advance. This will help you get the gift in time for the holidays.
  
• Inspect your purchase upon receipt and make sure it's exactly what you ordered. If you send a gift and don't hear from the recipient, call to see if it arrived and was in good condition.
  
• Contact the seller promptly and in writing if you have a problem with an online purchase. If you paid by credit card, you may have a right to charge back in the event of a dispute about the goods.
  
• Shop around in cyberspace; buy locally. To avoid unnecessary visits to crowded malls and save on waiting time, consider comparing products online, calling local retailers for product availability and then purchasing the exact product you want locally, in many cases from people you know and trust.
  

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. Call 1-800-777-7526 (777-PLAN) for a local listing.

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.

Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.