Working poor at risk in the market place
June 19, 2006 - Merrillville, Indiana
Having served as head of the region's Better Business Bureau for the past 41 years, Morris Cochran is well aware of the potential problems posed by cash advance businesses and other ventures targeting low income consumers.
But he said the real threat is not so much any particular type of business as it is a general lack of consumer knowledge, and low income individuals are at greater risk.
"If you don't know how to flourish in a society, you're going to get terribly hurt," Cochran said.
Consider the large number of credit card applications most people receive, he said. Consumers without knowledge don't bother reading the fine print and end up with high interest rates that add years to the life of the debt when minimum payments are made.
"You just can't get ahead," he said.
The problem is compounded when the resulting poor credit rating leads to higher interest rates on loans and other forms of debt.
Another common problem involves consumers who don't know enough to take time to shop and compare, and end up paying more than necessary, Cochran said. This is more of a problem with men.
Consumers also err in acting as though they know more than they do when making a purchase, he said. Many do this to show off, he said, but the approach can be costly.
This lack of consumer knowledge is more prevalent among low income individuals, he said, who generally don't have as high of an education level and are not surrounded by others "with street smarts of good consumerism."
The good news is help is available and for free, Cochran said.
The Better Business Bureau of Northwest Indiana, which serves Porter and Lake counties and Michigan City, offers educational opportunities, he said. The bureau will also respond to consumer complaints and has strong track record of resolving 92 percent of the concerns brought to its attention.
The most common complaints involve work-at-home business opportunities, which require money up front and yet don't pay back as promised, he said.
Many consumers also fall prey to the promise of a large check in return for submitting a lesser amount of money. The larger check, of course, always bounces after the person has paid their money.
Help is also available at Consumer Credit Counseling Service of Northwest Indiana, Cochran said.
Consumers should also look to the help and knowledge of friends, families, churches and others around them, he said. When making a purchase or looking for home repair, ask first for recommendations.
The Northwest Indiana Times, Bob Kasarda, Staff Writer
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