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Gas and grocery freebies can hook us — but beware

Is $500 in free merchandise for buying a $1,200 flat-panel TV a good deal?

How about $500 worth of gas when you buy your new Hyundai or $500 of free groceries for purchasing a brand-new leather sofa?

With gas prices again on the rise and grocery bills chipping away at consumers' ever-shrinking budgets, a rebate offer seems too good to ignore.

But making purchase decisions based on an incentive or rebate might cost you more than you ever bargained for.

"If you're talking gas and groceries, those are hot-button items," said Jack Gillis, a spokesman for the Consumer Federation of America.

"There's a promotional come-on that comes with that," he said. "You don't want to be lulled into thinking it's a good deal until you have checked it out."

Tens of thousands of consumers across the United States and Canada continue to get hit hard by incentive programs that offer free gas and groceries.

Countless retailers gave vouchers to their customers for purchasing cars, furniture, electronics and other big-ticket items, but the marketing companies responsible for fulfilling the offers have failed to deliver millions of dollars in rebates owed to consumers.

Largo-Clearwater-based Tidewater Marketing Global Consultants and Arizona's BBZ Resource Management ran the programs. Now both companies and those who ran them are under investigation by attorneys general nationwide and the U.S. Postal Inspection Service for deceptive business practices and fraud.

It is perhaps the worst recent case of consumers getting duped by an incentive offer.

But consumer and marketing experts say it serves as a reminder that no one should rely even on retailers — which in this case included the likes of Ashley Furniture, a Comcast cable retailer, Tire Kingdom, La-Z-Boy and Thomasville Furniture as well as Hyundai, Nissan, BMW, Ford and Lincoln car dealerships — to just hand them a good, honest deal.

"I think … that trust in the brand made consumers less diligent in examining the terms of the promotional offer," said Jim Lattin, a marketing professor at Stanford University.

"Perhaps this was all too cleverly concealed for these companies to see through the offers; in other words, 'caveat emptor' (let the buyer beware) is not necessarily a surefire defense against fraud," Lattin said.

Amy Peterson thought she had covered herself. She researched cars and dealerships before a salesman at Hyundai of New Port Richey made an offer.

"He said, 'I can beat any price by $200 and I'll even throw in a $500 gas card,' " Peterson said. "I said, 'sold.' That was definitely the deciding factor."

The 49-year-old Odessa resident went to pick up her Hyundai and asked for her $500 gas card. When the salesman handed her a gas voucher from Tidewater Marketing, she felt taken.

"He hands me a piece of paper," Peterson said. "I said, 'What's this?' Right from the get-go I was upset."

But since that purchase in October, Peterson has never received "a thin penny from this."

In February, the state shuttered Tidewater's operations, accusing the company of defrauding the public. The Pinellas-Pasco State Attorney's Office opened a criminal investigation into the company and its president, Crystal M. Clark of Seminole.

Clark, who had an early run-in with the court in 1990 when she pleaded no contest to publicly exposing herself, now is a felon after pleading guilty June 9 to illegal sale of drugs.

Because of Tidewater's troubles, Peterson was given a new gas voucher from BBZ Resource Management after she complained about not receiving what was promised.

She said she was told, "For customers like you, we're going to switch you to this 'ClaimYourGas' " voucher distributed by BBZ. "They're really good," she said she was told.

But Michael Pouls, a Pennsylvania philanthropist who helped fund BBZ, filed a lawsuit this month against the company, calling its incentive program a "Ponzi scheme." Pouls said the company was behind some 100,000 cards since January.

Following the lawsuit, BBZ began laying off employees and announced it had suspended sales of its vouchers as it evaluated "false claims" against it.

On Wednesday, the Better Business Bureau issued a public warning, urging consumers and retailers not to do business with BBZ.

The bureau said it had determined that Troy Warren — an Arizona businessman who has battled a series of tax liens, bankruptcy, a federal investigation and multimillion-dollar lawsuits — was running BBZ.

Scott Fink, the owner of Hyundai of New Port Richey, said customers will be compensated, despite all the troubles.

"I'm angry, too," Fink said. "We paid for a benefit that we did not receive."

Experts say the fact that Tidewater and BBZ were able to deliver a product to countless, everyday retailers all over North America is testament to the need for consumers to be vigilant no matter who or what company is making the offer.

Said Lattin, the Stanford marketing professor: "I think this proves the old saw: If it sounds too good to be true, it usually is."

Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332.

Gas and grocery freebies can hook us — but beware 06/27/09 [Last modified: Saturday, June 27, 2009 5:31am]

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