Beware of Free Lunches

During the first day of Introduction to Microeconomics courses, students become acquainted with the ominous phrase, “There is no such thing as a free lunch” – no wonder that cynicism results from years of economic study. With the knowledge that everything has a “price,” whether or not that price has a denomination attached, certain skepticism is needed to navigate purchasing options, especially the tempting offers that seem “too good to be true.” 

With recessionary worries on the forefront of everyone’s minds, the promise of “free money” is especially alluring. With vulnerability at an all-time high, malicious businesses can pounce on unsuspecting victims in pursuit of keeping in the black.

Despite my scrutiny of questionable corporate tactics, even I was astonished at a recent scheme that hit too close to home.

My dad received a small refund check in the mail from his credit card company. Assuming that he must have overpaid the bill, he deposited the check – big mistake. On the next month’s bill, while perusing the list of charges, he spotted an anomaly – there was a charge to an unknown company for credit card insurance. Though the charge was relatively small, my father immediately called the company to inquire about the charge.

Apparently, by the depositing the “refund check,” the company immediately enrolls the customer for credit card insurance. The customer receives the money from the check, but is then charged for the insurance – indefinitely – until the service is cancelled. Of course, at least one month of coverage is charged before the statement is released. Luckily, early scrutiny of the bill staved off any further charges, but I am sure that many unsuspecting customers are not so fortunate and wracked up more charges before realizing their error.

The lesson to be learned from this entire debacle is not only the deceptive methods that struggling agencies stoop to in order to cull business, but also the absence of free lunches, especially during these economic times. If something seems too good to be true, it probably is.