Beware of Sales Pitch Offering ‘Valuable Prizes’

“Congratulations!” You have won a trip to Hawaii, a car or one of “several valuable prizes,” according to a phone caller or a notice in the mail.

There are just a few strings attached.

Maybe you need to collect your prize in Bakersfield after listening to a two-hour sales pitch for a time-share, for example. Or, perhaps, you need to buy a year’s supply of vitamins.

Don’t get me wrong. Vitamins or a time-share may be just what you’ve always wanted, and you figure getting a valuable prize to boot is a heck of a deal. But before you pull out your checkbook, let’s talk about what you are probably getting.

First, the prizes: The Council of Better Business Bureaus says BBBs across the country have received a wide variety of complaints about these promotions and giveaways.

The complaints range from relatively minor problems, such as irritation over what’s not included in their giveaway vacation, to outright fraud. In other words, there was no vacation, Jeep or yacht. Some huckster just used that come-on to get your credit card number and charge merchandise to it.

Even when there are real gifts, they aren’t always quite what you imagined by reading the literature. That “power sport motorboat” might be an inflatable dinghy. (The power comes from you.) And the “Malibu spa” you won? That’s probably inflatable too.

Vacation prizes are another story. The problems with these often start with non-refundable “processing and handling” fees that sometimes add up to as much as the cost of your trip. Then some unwary vacationers find that many things are not included--such as air fare. These packages also often require 30- to 60-day advance bookings. No rescheduling. In the end, it is often not such a great deal.

So, if the gifts are not the draw, what about the time-share or campground or vitamins?

There are two distinct categories: The offer of a prize for a purchase of a product, such as vitamins, light bulbs, office or cleaning supplies. Or a giveaway that requires you to listen to a sales presentation for a time-share, campground or similar deal.

If you are solicited by someone in the first category and opt for it, kiss your money goodby. You are probably paying 10 to 20 times more for the product than it would cost you elsewhere, and your prize is almost always misrepresented or non-existent, said Herschel Elkins, chief of the consumer law section of the California Attorney General’s Office.

“No one should ever, ever, ever respond to the offer of a prize for purchasing a product,” Elkins added. “The chances are 99 out of 100 that you are going to be defrauded.”

The time-shares are another story. There are some fly-by-night operators here too, but there are also many legitimate companies, Elkins said.

And although the gifts are not necessarily as valuable as they might seem, they usually do exist. You are essentially getting paid to drive several hours to a remote spot and spend more time--usually 90 minutes to two hours--being pressured to buy something that you might or might not want.

What kind of deal are you getting if you buy? Let’s examine one such deal.

Thousand Trails, a membership campground organization, is currently promoting its wares by telephone and mail solicitations that tell consumers they have “won” one of five prizes--a 1991 Lexus ES250 sports sedan, a vacation to Hawaii, Cancun or San Francisco, or--at the very least--$500 in cash. (According to the odds, 14,996 out of 15,000 win the trip to San Francisco.) But you’ve got to drive to Acton and listen to a sales presentation before you can collect your gift.

When you arrive you get a sales pitch that boils down to: You can, at any time, buy a lifetime membership to one of the company’s campgrounds for about $7,000. Or-- for that day only --you can buy a membership that gives you access to hundreds of campgrounds across the nation, plus discounts on travel and entertainment, for about $8,500.

It is important to note that if you buy, you would own this membership and can sell, transfer or bequeath it to someone else if you want to.

The salesman said you should evaluate the deal by determining whether you like the place, whether you could enjoy it and whether you can afford it.

“If the answers to all those questions are yes, you should say ‘Yes!’ to the membership,” he bubbled. And, he said, the company will make membership affordable--usually through financing plans--for anyone who likes and enjoys the campground.

But is it a good deal?

Clearly, this is an individual decision that will depend on how much you use the membership. But it is possible that you could get the same thing for a lot less money. Check the classified advertisements.

In a recent edition of the Los Angeles Times, there were three campground memberships for sale at prices ranging from $795 to $5,600. Although not all were Thousand Trails memberships, even those that weren’t, offered at least limited access to the company’s campgrounds. (Unlike used cars, club memberships don’t suffer from the wear and tear of previous ownership.)

The other time-share and real estate deals are similar.

When you buy directly from the developer, you’re buying retail. That shouldn’t stop you if it is something that’s valuable to you. But you should realize that you might be able to buy wholesale if you check around a bit.

It is not at all unusual to find time-shares in exotic locales advertised for sale at a fraction of the original price.

That shouldn’t come as a big surprise. The original sales pitch should have been the clue. After all, when have you ever had to give someone a prize to buy something that was a great deal?