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Nothing Says ‘I Love You’ Like Avoiding Identity Theft

With Valentine’s Day around the corner, many Americans are likely thinking about ways to treat their loved ones, or considering their options for meeting a romantic partner. And in the age of online dating and connections, the Federal Trade Commission has issued a guide for keeping your personal information (and money) safe from identity thieves while you enjoy all Cupid has to offer.

Here’s a look at some of the FTC’s Valentine-specific warnings.

Know the Warning Signs for Valentine’s Day Scams

• Online dating & social networking: Online venues for meeting and interacting with people have ballooned in popularity in the last several years, but that doesn’t mean they’re always safe. The FTC suggests proceeding with caution when engaging in any sort of online relationship, especially if you notice any of these identity theft warning signs. The important thing to keep in mind is not to let your guard down even if you’re feeling particularly sentimental around the holiday.
• Flower delivery scams: Another warning the FTC has issued concerns flower delivery services – obviously a classic choice for February 14th. According to the FTC, some flower delivery scams involve telemarketers offering their services over the phone for more money than a local florist’s shop would charge. Naturally, that’s not a good deal for anyone. If you’re thinking of sending blossoms to a loved one this year, make sure you know you’re working with a legitimate company and paying a fair price.
• Financial habit compatibility: While financial matters may not seem like the most romantic topic to broach during a Valentine’s dinner, they are important to any serious relationship. Luckily, the FTC offers a fiscal compatibility quiz for partners interested in seeing how their spending, saving and budgeting habits match up. (Hint: offering to do this quiz together for a Valentine’s Day date might not go over well if it’s the most romantic thing you’ve got planned.)
• Magazine subscription and renewal scams: Thinking of giving a gift that your valentine can enjoy all year long? Be careful if you choose a magazine subscription, because some scammers have begun sending phony renewal notices to subscribers in hopes of tricking these people into sending checks they think are to maintain their subscriptions. Instead, visit the web site of the magazine you want to share with your loved one and make sure that web site is a secure place to enter any financial information.

The Relationship between Love & Money

Americans tend to think of love and money as unrelated subjects, but any serious relationship demands a consideration of financial matters from both partners. After all, the stress of debt problems can wreak havoc on a relationship, so show your partner you care by putting financial matters on the table this Valentine’s Day!

Posted in Consumer Protection, Financial Literacy, Identity Theft, scams | Comments Off

Spend Smarter to Save Time & Money

As anyone recovering from bankruptcy, trying to eliminate debt or otherwise reshaping their finances knows, shopping and buying new things can be a source of stress – after all, we all need stuff now and then (whether it's a new part for a car, a new refrigerator or new shoes for our kids). But we shouldn’t have to worry that our purchase will turn into a nightmare if something goes wrong.

A recent post from WalletPop.com outlines what it calls a “Customer Bill of Rights,” which offers suggestions for what ordinary consumers should look for in their purchasing to make sure they won’t be scammed or led into a labyrinth of red tape should something malfunction.

Know What to Look for in a Company

Here’s a summary of how to better navigate your spending and buying experiences.

• Look for contact information. If a company doesn’t readily display contact information (with email addresses or phone numbers on a web site and actual representatives in a store), you may not want to shop there. After all, if you can’t easily communicate with the company, you’ll probably be in for some serious headaches if you want to ask about a return or repair policy down the road. Before you spend your money, make sure you know how to ask the vendor questions.
• Know your timeframe. If the first person you speak with can’t help you resolve a problem, ask for a manager. It’s easy during customer service calls to get frustrated and give up, but remember that you spent your money on this company’s product, and you need help with it. Customer service reps shouldn’t act like this is a burden; if they do, you’ve learned one company not to buy from in the future.
• Know the policies and ask about changes. Return and warranty policies change frequently at some retailers. Be sure to read such policies and ask how a company handles changes: if, for example, you buy something and the policy changes before you need it fixed, what will your options be?
• Be wary about warranties. Many stores offer expensive warranty deals that are not worth your money. Instead, consider looking at online warranty vendors (like SquareTrade.com) or simply setting aside a fund for all your appliances – that way, you have somewhere to draw money from if you need repairs.
• Do some homework. In an ideal world, we wouldn’t have to worry about whether a retailer would treat us respectfully if we needed to make a return, but in the real world some vendors have better reputations than others. A quick online search should yield lists of companies that have high and low ratings for their customer service. You can also look at forums where customers chat about their experiences.

Posted in Consumer Protection, Financial Literacy, after bankruptcy, saving money | Comments Off

Better Consumer Protections for Mortgage Borrowers on the Horizon?

A recent report from CreditBloggers indicates that the Consumer Financial Protection Bureau (CFPB), the new government body created by the Obama administration to improve consumer protections in the United States, plans to create an easy-to-understand tool that will allow potential homeowners to compare the terms of various mortgage loans with greater ease.

Here’s a look at some of the details.

Easier-to-Understand Mortgage Documents and More

• More transparency in lending: According to a press release from the CFPB, the organization plans to join forces with state enforcers and banks to improve transparency in lending tools such as mortgage documents, student loans and payday loans. The goal of this partnership is to better equip consumers with the tools needed to understand loans before they take on such burdens.
• Clarification of mortgage options: One of the CFPB’s specific goals is to provide consumers with an easy-to-understand comparison sheet for mortgage loans. The current forms, apparently, include too much legal and technical jargon and provide little illumination for the average consumer.

So what might this mean for consumers, once the CFPB produces documents to facilitate various borrowing experiences?

Improved Understanding of Consumer Risk

The goal, it seems, is to put consumers in a position of power when they’re making decisions about their finances. Ultimately, services from the CFPB might include:

• Better disclosures on student lending forms: Most student loans are not dischargeable in bankruptcy, but students continue to regularly take on tens and even hundreds of thousands of dollars in debt in order to get a bachelor’s degree. Improved disclosures, explanations and estimates post-graduation earnings could help young students make more reasonable borrowing decisions.
• Tighter restrictions (or clearer terms) at payday loan stores: While some state laws have banned or greatly restricted the practice of payday lending, in much of the country payday lenders still thrive. The CFPB has announced that it plans to play a role in changing the face of payday lending so that it is less alluring and expensive for already struggling consumers.
• Clearer comparisons of mortgage offers: As stated above, more direct methods of explaining and comparing mortgages could potentially save consumers from taking on toxic debt.

Because the financial turmoil we’ve been dealing with for the last few years has had unarguably negative effects on the lives and livelihoods of millions of citizens, it’s refreshing to see the potential for some good (in the form of increased consumer protections) to come out of the bad.

The CFPB is still a fairly new organization; as it matures and extends its reach, it should be making important changes for consumers across the country.

Posted in Bankruptcy and Predatory Lending, Consumer Protection, Financial Literacy, Mortgages, Student Loans, payday loans | Comments Off

What’s the Latest on Payday Loans?

In the last few years, lawmakers in many states have taken on payday loans as a pet cause, passing legislation that outlaws or severely limits what these predatory lending institutions can charge and how they can operate.

But a recent post at CreditBloggers points out that many payday lending operations are still thriving, for a number of reasons. Here’s a look at the latest payday lending landscape and a reminder of just how expensive these seemingly innocuous loans actually are.

Restrictions on Payday Lending

In recent years, state lawmakers have put a variety of limits on how payday loan stores can operate:

• Ohio: State legislators limited payday lending interest rates to 28 percent (a significant decrease from the 400+ percent some lenders charge annually). The legislation affected the payday lenders, naturally, but apparently did not result in their flight from the state.
• Montana: In November’s election, 72 percent of voters reportedly voted to make payday lending illegal in the state, and a new measure that went into effect on the first day of 2011 limits interest rates to 36 percent. The result, it seems, is that most payday loan stores have packed up and headed out, unable to make sufficient profit under those terms.
• Arizona: When a law permitting high-interest lending was not renewed, sources note that some lenders remained in the state but one national chain (Advance America Cash Advance Centers) quit the state entirely.
• Other states: Elsewhere in the country, legislation has been introduced and/or passed to limit the amount of interest payday lenders can charge and how they can operate their businesses.

So why, with so many restrictions in place and so much public energy devoted to eliminating payday lending abuses, are some payday lenders still thriving?

The Credit Crunch and Payday Lending

Unfortunately, one effect the recession has had on the lending landscape is that many lenders have tightened their lending standards. In fact, while the number of banks in the nation reportedly increased between 2007 and 2009, the dollar amount of loans they issued dropped by a staggering 51 percent.

What does that mean for ordinary consumers (and especially those whose credit is less than pristine)?

• Fewer borrowing options: With banks holding onto their money more tightly, fewer consumers have a chance at getting loans from these mainstream, trustworthy sources.
• Prime ground for alternative lenders: When people need money, though, they have to get it from somewhere. And, because of the way their business model works, payday lenders are often the go-to place for folks who can’t get loans elsewhere.
• Serious danger for serious debt: Unfortunately, just because payday loans may seem like your only option does not mean that they’re any safer than they used to be. Payday loans can lead to a debilitating cycle of debt and can come with interest rates of more than 400 percent over the course of a year! Remember that many financial advisors recommend almost every other source of financing over payday loans.

Posted in Bankruptcy and Predatory Lending, Consumer Credit, Consumer Protection, predatory lending | Comments Off

Lawsuit Challenges Legality of Pre-Employment Credit Checks

The U.S. Equal Employment Opportunity Commission (EEOC) has filed a lawsuit alleging that the practice of conducting pre-hiring credit checks by Kaplan Higher Education Corporation, a company that provides test-preparation and post-secondary services, discriminates against certain classes of Americans and is therefore unlawful.

And, in case that’s a little too much legal information for your comfort level, here’s what that means and why it’s good news if you’re struggling with debt and/or recovering from bankruptcy.

So What’s the Deal with Pre-Hiring Credit Checks?

Here’s a look at the basics of employer-conducted credit checks.

• What they are: As part of the hiring process, many employers (as many as 60 percent, according to some polls) have begun running credit checks on job applicants (in addition to conducting criminal background checks). In theory, these credit checks are valuable to employers because they divulge information about an applicant’s overall capabilities.
• Why they’re controversial: While few people oppose the practice of running credit checks for applicants to positions that involve finance, many consumer advocates have spoken out against credit checks for applicants in non-financial fields. After all, if the current recession has taught us anything, it’s that poor credit can have little to do with a person’s responsibility, intelligence and job worthiness. Further, a few states have already made pre-employment credit checks illegal for non-finance jobs.
• The current lawsuit: The EEOC’s charges against Kaplan include allegations that Kaplan’s practice of conducting credit checks before making hiring decisions constitutes to discrimination, because black and Latino Americans reportedly have statistically lower credit scores than white Americans.
• The legal reasoning: According to a Credit.com piece on the issue, the case has teeth because it applies legal reasoning the EEOC used to show that criminal background checks also disproportionately affected black job applicants because blacks are more likely to be arrested than whites.
• The reason it’s important: If the court rules that pre-employment credit checks lead to discriminatory hiring decisions, such credit checks could be outlawed in more states, potentially making employment easier to find for people who have struggled with debt problems.

Potential Outcomes of the Case

While the lawsuit is still in its early stages at this juncture, it has the potential to change the current state of pre-employment credit checks in the U.S. The court could, depending on the evidence presented, rule that pre-employment credit checks amount to discrimination in the hiring process.

This could be good news for people recovering from a bankruptcy filing or otherwise fighting debt burdens, because being denied employment for credit-related reasons can lead to a frustrating and debilitating debt cycle.

In the mean time, you may want to consult with a bankruptcy lawyer if you have been denied employment because of something in your credit report.

Posted in Consumer Protection, Credit, Credit and Bankruptcy, Financial Literacy, Legal Info, unemployment | Comments Off

Know What to Look for in a Debt Settlement Company

If you’re struggling under what feels like a debt mountain, you’re probably ready to consider a variety of options to ease or eliminate your financial burden. And, if you don’t think bankruptcy is right for you (or if you’re ineligible for bankruptcy because of a recent filing), you may be wondering whether debt settlement could help.

While debt settlement does work for some people, it can be risky to sign on with a debt settlement firm – less-than-scrupulous companies abound and can cheat consumers out of money when they can least afford to lose it.

When Can You Trust a Debt Settlement Firm?

A recent article from WalletPop.com offers some tips for spotting a trustworthy debt settlement company. Here’s a summary.

• Do some background sleuthing: Before you even leave your house to visit a debt settlement firm, use the tools available to you to nose out a trustworthy company in your area. You may want to start with a simple internet search, but be sure to check any company you consider with the Better Business Bureau for its grade (although newer companies may not yet have any useful comments – good or bad – on that site yet). You should also look for consumer comments about the firm to see how others have responded to their services.
• Know what a “reasonable” fee is: If you choose a non-profit debt settlement company, the up-front consultation fee should be $75 or less, according to sources. If the company charges more than that, they’re likely more interested in taking your money than helping you settle your debt woes. And it’s important to note that laws prohibit for-profit firms from charging any up-front fee at all.
• Time your first meeting: Another way to gauge a debt settlement firm is to time your initial meeting with a representative. According to insiders, anything less than an hour should raise a red flag – in order to get a thorough sense of your finances, a representative should take at least 60 minutes to understand your debts and assess your situation. Another bad sign is if the person helping you is distracted or inattentive – your finances require the full attention of the customer service representative, and anything less should signal you to leave.
• Go with your gut: If the debt settlement company or its representative seems to be pushing you hard to sign on, suggests or says that the process of debt settlement will be easy, or acts like the answer to all your problems, you should assume that the situation may be less than ideal. Debt settlement, when it’s done honestly and well, still requires consumers to make financial sacrifices and stay on top of payments – it’s not an easy road out.

Above all, understand that you are the one who will be most affected by whatever happens to your finances, and so you need to take an active role in making sure your finances are on the right path. Use the online resources available to you and follow your instinct – any deal that seems too good to be true most likely is.

Posted in Consumer Protection, Financial Literacy, consumer debt, debt, scams | Comments Off

Bureau of Consumer Financial Protection Overseer Named

The New York Times reported last week that the newly created Bureau of Consumer Financial Protection now has an overseer of enforcement. Richard Cordray, former attorney general of Ohio, was reportedly hired to the post by presidential appointee Elizabeth Warren, who is currently in charge of the bureau.

So what will Mr. Cordray’s responsibilities be in the new post? According to the Times, he’ll be focused on overseeing enforcement actions for a variety of consumer-related financial issues, including the following:

• Foreclosure fraud: Recent financial news like the robo-signing scandal and other questionable foreclosure practices would fall under Mr. Cordray’s purview, it seems. And, as sources note, he ought to be prepared to fight against such questionable bank behavior, since his position as Ohio’s AG included fighting certain kinds of foreclosure fraud.
• Abusive payday lenders: As many debt-laden Americans know, payday lenders can charge outlandish fees and interest rates and lead ordinary consumers into a crippling cycle of debt. As part of his position in the Bureau of Consumer Financial Protection, Mr. Cordray would be responsible for making sure that regulations and laws for payday lenders are sufficient, followed and enforced.
• Questionable bank behavior: On a grander scale, Cordray’s responsibilities may reach as far as making sure larger financial entities like banks and other lenders follow laws designed to keep them from engaging in the sort of risky, fast-and-loose behavior that led to the crash of the housing market and touched off the current recession.

Cordray’s Past Consumer Protection Actions

So how did Cordray get the job? It seems his résumé includes a variety of consumer-friendly moves, including:

• Lawsuits against big financial firms: The Times reports that Cordray managed to squeeze $2 billion from major names in the finance world, including American International Group (AIG), Merril Lynch and Marsh & McLennan.
• Bold strikes at government overseers: Another notch on Cordray’s belt, the Times notes, is that he called out the Securities and Exchange Commission (SEC) for falling down on the job and thus enabling many of the abuses in the finance world that led to our current financial mess.

Role of the Consumer Financial Protection Bureau

Many consumer advocates lauded the creation of the Consumer Financial Protection Bureau, which was outlined in the financial overhaul bill passed early in Obama’s tenure as president. When it is fully up and running, the bureau, headed by former Harvard bankruptcy professor Elizabeth Warren, will be responsible for making sure consumer interests are taken into consideration when lawmakers consider regulatory changes for financial and other matters.

Posted in Bankruptcy and the Economy, Consumer Protection, Economy, Financial Literacy, Foreclosure | Comments Off

FTC Halts Robocall Credit Card Scam

The Federal Trade Commission announced this week that it has shut down operations of a company charged with a scam that involved illegally making robocalls and taking consumers’ money by falsely promising them lowered credit card interest rates.

The scam, according to the FTC, worked like this:

• Automated phone calls: The company, JPM Accelerated Services, reportedly set up robocalls to thousands of homes (some of which were on the National Do Not Call Registry). The calls indicated that the company was a “card services” provider and little else.
• False promises: Telephone respondents who pressed one were apparently transferred to live telemarketers who offered to lower their credit card interest rates and thus save them thousands of dollars. The price of the service, sources note, ranged from $495 to $995, and the company apparently guaranteed a full refund to anyone not satisfied with the results.
• Failure to follow through: Of course, because this was a scam, the company did not follow through, and thousands of consumers in need of financial relief ended up losing even more money they couldn’t afford.
• Serious settlement fine announced: As part of the settlement, judgments of $5.9 million against JPM Accelerated Services and $3.2 million against related scammers have been imposed; however, the defendants at this time are unable to pay the fines, according to sources. The judgments represent the amount of money consumers were bilked out of as a result of the scams.

The Truth about Lowering Your Credit Card Interest Rates

Scams like the one recently halted by the FTC are all too common, perhaps because unscrupulous scammers know that financially strapped consumers are often willing to take even big chances to get out of debt.

But if you’re interested in lowering your credit card interest rates, the truth is that you can negotiate with your creditors yourself. Here’s how:

• Figure out where you stand financially: Look at your monthly budget and figure out what you can afford to pay toward your credit card debt each month.
• Stop charging: When you commit to paying off credit card debt, it’s important to stop putting new charges on your accounts.
• Look at your bills: Lay out your most recent bills and figure out what you owe, what your current interest rates are, and what your current monthly payments are.
• Call your credit card issuers: When you’re armed with all this information, contact your credit card companies directly, explain your situation and ask for some sort of lowered payment. It’s usually a good idea to ask for something specific, like lowered interest rates, lowered monthly payments, or a reduction of the total principal you owe.
• Reassess your situation: If your credit card issuer denies you, you may want to explore other debt-relief options, like filing for personal bankruptcy.

Posted in Bankruptcy and Predatory Lending, Consumer Credit, Consumer Protection, Credit Card, Credit and Bankruptcy, predatory lending | Comments Off

Tiny, Hidden Credit Report Errors Can Lead to Bankruptcy

The Wall Street Journal recently published a new story entitled Hidden Medical Debt Trips Up Homeowners. The report documented several cases in which small medical bills that had been turned over to collection resulted in a more than 50 point drop in a homeowner's credit score.

In one situation, a homeowner attempted to refinance his mortgage, only to discover that two unpaid medical bills totaling less than $50 had caused his credit score to drop.  As a result of the lowered credit score the refinancing bank demanded over $4,000 in closing costs.

In another situation, less than $500 of medical debt reported to a collection agency disqualified a homeowner from a favorable interest rate, which would have resulted in tens of thousands of extra interest charges.

In many of these situations, the consumer never knew about the unpaid medical debt – the provider simply turned the claim over to a collection agency which immediately reported it to the credit reporting agencies as delinquent debt.

According to the Journal, "otherwise well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes marring their credit."

If you or a loved one has been in the hospital, you probably know that a single visit can result in five, ten or even more bills from separate vendors – the hospital, the hospital pharmacist, the anesthesiologist, the ambulance service, etc.  I do not find it surprising at all that a patient would not know about one or more bills.

I think that an important point here has to do with the cascading effect of negative credit.   Even a small late payment on an account can result in a dramatic lowering of your credit score.  Other creditors will receive electronic notice about your lowered credit score and when permitted, they will increase your interest rate, lower your credit limit and increase penalties and fees.

Lenders Often Cause Delinquencies by Changing Terms Unexpectedly

On more than one occasion I have met with a potential bankruptcy client who was forced into Chapter 7 or Chapter 13 because of changed terms, not because of any delinquency.   These changed terms can arise from a tiny delinquency – like the unknown, unpaid medical bill issue discussed in the WSJ story, or for other reasons.  Recently I met with a small business owner who was completely current on his personally guaranteed revolving line of business credit.  His bank was taken over by another bank which conducted an audit and, without warning, the business loan was "called in."

One minute, my client was operating a viable, functioning small business that was current on its obligations – and literally within a matter of days, that business was shut down by a bank for no apparent reason.

The point here: examine your credit reports regularly and challenge even tiny delinquency reports as the damage to your credit will arise from the existence of the delinquency as opposed to the amount of the late payment.  Even small downgrades to your credit score can result in a negative debt snowball.

Posted in Consumer Protection, Credit, Credit Reports, Credit Scores, Credit reporting errors, Discover, FDCPA Claims, General consumer bankruptcy info, a, arise, bank, billing, bills, cases, claim, debt, delinquency, demanded, entitled, hidden, knew, lowered, marring, medical, medical debt and bankruptcy, medical debt and credit reporting problems, mistakes, provider, refinancing, reports, score, simply, small, story, the, tiny, totaling, trips, turned, unpaid | Comments Off

A Stealthy New Threat to Your Credit Card Information?

A recent report from a Memphis news station warns of the latest risk to the safety of your credit card information: a super-stealthy computerized scanner that a tech-savvy thief could use to get your credit card digits while passing you on the street.

RFID Technology in Your Wallet

Here’s how the technology works, according to the story, and why it might pose a problem for ordinary consumers.

• RFID technology: Something called radio-frequency identification is commonly used in passports, credit cards and debit cards to facilitate transactions. Merchants can process information from RFID-enabled cards with a simple scan.
• Portable computing devices: Unfortunately, the technology that allows for quick transactions in the mall and at the airport also, it seems, opens the door to stealthy identity crimes. The news story mentioned above cautions that a person equipped with easy-to-purchase equipment could discretely scan people’s wallets for card information on the street.
• Potential identity theft: Clearly, having your identity stolen is not a pleasant experience – but being victimized by identity theft while you’re walking the streets and have your guard down can be both frightening and financially devastating.

Should You Be Worried about Mobile ID Theft?

The jury seems to be out on whether or not the potential for RFID-fueled identity crimes will actually translate into a rash of such crimes. An estimated 140 million Americans have some sort of card with RFID capabilities, though, generally speaking, you can guard against identity theft by taking certain precautions:

• Check your bank account regularly: Log on to your online account often and review your monthly statements carefully to make sure that no unusual activity is taking place. The more regularly you check your account balance, the more likely you’ll be to catch a withdrawal from an unauthorized source.
• Shred any sensitive documents: Though we’re well into the digital age, plenty of identity thieves still get their information by rummaging through the trash or recycling bins. Whenever you get documents with sensitive information on them (including your Social Security Number, your bank account numbers and your credit card number), shred them before disposing of them.
• Take only what you need: When you leave the house (especially for longer trips) limit yourself to only the credit cards you’ll absolutely need while you’re away. Limiting your chances of losing one or having one stolen is a smart way to play your odds.
• Change your passwords: If your passwords are easy to guess, change them. Even if they’re not easy to guess, still change them regularly.

The news story mentioned above highlighted the potential for this type of crime to lead to identity theft, but it also mentioned that no actual cases of such crimes have yet been reported – though that could be because the RFID scan theft is such a difficult technique to trace.

Posted in Consumer Protection, Credit Cards, Financial Literacy, Identity Theft | Comments Off