Risks of paying a business up front: Dancers lose thousands, jipped of dance class

More businesses are asking you to pay upfront for things like gym memberships or classes.

Even rental car companies and hotels offer better prices if you pay right away. However, I've seen too many times where people pay too much up front and then lose it all in the end.

Paul and Susan Hall felt duped when the dance studio they attended went out of business.

"We sent e-mails, we tried to leave phone messages, the voice mail box is totally full," they said. 

Like other students, they paid several thousand dollars upfront for lessons.

"We had paid initially about  $1,000 for the first group of lessons, and an additional 2,000," the pair said.

The Federal Trade Commission recognizes that these pre-paid scams are a big issue. The commission is telling people to beware.

The FTC encourages people to protect themselves before signing any contract:

  • Ask about refunds, if you are injured or move away.
  • Try to pay month to month, not an entire year upfront
  • Understand that if the company files bankruptcy, you will lose any money you paid
  • Check the business' record with the Better Business Bureau and Ripoffreport.com.

The Hills said the most frustrating part is that the pair paid the days before the business shutdown.

"The fact they asked us for money on a Friday and closed on a Monday is very frustrating."

So whether it's a gym contract or paying a roofer, pay on progress, and as little upfront as possible.

Let me know if you need help. Call the Assistance League of Phoenix volunteers Wednesdays and Fridays from 11-1 at 1-855-323-1515. You can leave a message anytime.

You can also send me an e-mail or "like" my Let Joe Know Facebook page and leave me a message there.

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