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Protect Your Money and Credit: Scams to Watch For

The ever-evolving technology that makes our lives easier and more fun has a flip side: it gives the “bad guys” and endless stream of options for tricking us out of our hard-earned money, racking up debts on our accounts and even stealing our identities.

Here’s a look at some of the latest scams that can pose a threat to your money and identity, adapted from this post from WalletPop.com.

• Infant Identity Theft: This dastardly scam involves stealing the Social Security numbers of children and selling them to people. Once these people have “bought” the “clean” numbers, they can then run up debts they might have no intention of paying back, which can mean serious trouble for the children down the road. The most frightening part? It’s possible that nobody would discover the scam for years: when the child applies for a driver’s license, when the parents open a savings account for him or when he applies for college (more information here).
• Fake Timeshare Relief: As many financially struggling Americans look for ways to shed debts, many have sought to unload their timeshare properties. Unfortunately, scammers have caught on to the trend and are reportedly posing as sales agents, demanding upfront fees to help sell the homes, and running away with the money without offering any real help. As with other types of scams, proceed with caution any time a seller approaches you and/or demands payment before performing services (more information here).
• Phony Online Car Sales: This scam advertises used cars at steep discounts, claiming that the vehicles have been repossessed to explain the low prices. Interested buyers are prompted to wire part of the purchase price up front and send the remainder when the car is delivered a few days later—but, of course, the car never is delivered, because the whole thing is a scam. This one can be especially deceptive because scammers apparently use information from the web sites of legitimate auto dealers to make themselves look more credible.
• Busy Phone Lines: If you begin to notice that your phone lines are inexplicably busy (with dead air, prerecorded messages or similar), you could be the victim of a scam. It works like this: fraudsters collect personal information (such as bank account numbers, passwords or other sensitive info), usually by trolling social networking sites, using phishing emails or calling your number and posing as someone else. Then, they tie up your line and drain your accounts of money by asking for transfers or other transactions—usually the bank calls to verify such activity, but it cannot when your phone is busy. In some cases, the scammers even call the banks pretending to be their victims and ask for the transactions to go through. By the time you realize what has happened, it can be too late, so take a tied-up phone seriously—get to a free line and call your bank and credit card issuers!

For more details about these scams and how to protect yourself and your money, visit the FTC’s web site and check out the consumer protection information.

Additional Resources

Online Software Scams

Recognizing and Avoiding Email Scams

Posted in Fraud, Identity Theft, online scams, scams | Comments Off

Personal Finance: What Troubles Us the Most?

A recent study by a consortium of advocacy groups reveals interesting data on what aspects of personal finance cause American consumers the most frustration. According to reports, a large number of consumer complaints were related to problems with car sales, credit issues, and debt, reports the Wall Street Journal.

To tap into the mind of the average consumer, the study polled a variety of state consumer agencies, which are facing record-breaking numbers of complaints while struggling under the weight of lowered budgets. A majority of the agencies polled reported a higher volume of complaints in 2009 than they received in 2008.

The list of the five areas that received the most consumer complaints reads like a “Who’s Who” of American economic ills. They are listed below:

1. Car Sales: Auto dealers earned the dubious distinction of being the focus of the most consumer complaints in 2009. Car buyers complained about misleading advertising tactics, poor repairs, towing disputes, and used cars that turn out to be lemons.
2. Credit and Debt: A large number of consumers experienced problems with predatory lending, harsh debt-collection practices, billing and fee disputes, and fraud related to home mortgages.
3. Home Construction: This represented the second largest source of consumer complaints in 2008, but fell to third last year as the overall amount of home sales plummeted. With so little construction, there was less to complain about, though contractors would likely welcome more complaints if it meant more business was on the horizon.
4. Utilities: The country’s utility services likely rank so high due to their necessity in most American homes. Still, consumers alleged service problems in a wide range of utilities, from phone and cable services to electric and gas.
5. Retail sales: Here, consumers typically complained about deceptive practices in the retail industry, like misleading newspaper advertisements, problems with coupons and gift card, and complications with the delivery of products.

Rounding out the top ten of most frequently cited areas of consumer complaints were general services, Internet sales, common household goods, disputes with landlords, and problems with health-related goods and services.

The Hottest Topic

The fastest growing complaint in 2009 centered on the increasingly popular scams offering to save homeowners from foreclosures. Susan Grant, a leading advocate with the Consumer Federation of America, observes that most consumers "are desperately trying to fend off foreclosure and in many of these offers to help them, [scammers] take their money, and in some cases, their homes, and run."

Additional Resources

To learn more about how to resolve your own consumer complaint, check out this handy guide issued by consumerfed.org.

If you are beyond the complaint stage and are experiencing severe financial distress, personal bankruptcy may prove to be a financial lifesaver.

Posted in Financial Literacy, Fraud, Personal Finance, scams | Comments Off

Examples of Bankruptcy Fraud

Last October, I wrote a post on this blog about bankruptcy fraud, and pointed out that everything included in a bankruptcy filing is subject to scrutiny by the office of the United States Trustee, which is an arm of the United States Department of Justice.  In other words, false statements on a bankruptcy petition could land a debtor in hot water – dismissal of the bankruptcy case, fines and even prison.

Because the bankruptcy process can seem informal, it can be easy to forget that a Chapter 7 or Chapter 13 filing is made up of documents filed in a federal district court and subject to investigation by the F.B.I.

Attorney Gini Nelson, a New Mexico bankruptcy lawyer, recently published a post about bankruptcy fraud in the Bankruptcy Law Network blog.  Gini's post includes a link to the IRS.gov site containing examples of bankruptcy fraud investigations.   I found the IRS.gov link especially interesting in that one can get a sense of the type of fraud that bankruptcy debtors have attempted and the level of fraudulent activity that generated prosecution.  Given the highly interconnected and electronic public record access that is available to bankruptcy trustees as well as government investigators I can't believe any of these folks believed that they would not be caught.

Posted in Bankruptcy, Blog, Chapter 13 issues, Chapter 7 issues, Debtors, Fraud, Fraudulent Transfers, access, and, bankruptcy and perjury, bankruptcy fraud, department, easy, electronic, examples, examples of prosecution for bankruptcy fraud, f b i attorney, gini, highly, informal, interconnected, investigation, investigations   , nelson, public, record, states, the, united | Comments Off

Choosing Your Card Wisely to Protect Yourself from Fraud

Odysseas Papadimitriou is founder and chief executive officer of Evolution Finance, which is the parent company for Wallet Blog and Card Hub—an online marketplace for credit card offers.

‘Credit or Debit?’ You’re used to hearing this question when checking out at the grocery store, but have you ever stopped to think about what your choice means in terms of your financial security?

Using a credit or debit card makes you vulnerable to fraud, but 62 percent of purchases in 2009 made using electronic payment methods* suggests that this fact is not stopping consumers from using their cards. Cash may be safer in terms of fraud, but it is simply not a practical option for our day-to-day needs. So this begs the question, ‘credit or debit?’ when it comes to fraud protection.

Fortunately, the major credit and debit card networks (i.e. VISA and MasterCard) adhere to a strict 0 percent liability policy for victims of fraud. That means that whatever money is stolen from you via your debit or credit card will be returned to you in full. That does not mean, however, that you will have the same experience getting your money back with both your debit and credit card.

Your debit card, as we all know, is tied to your checking account. This is your actual money – the money you use to pay for groceries, gas, utilities, and major expenses like your mortgage payment. If someone wipes out your checking account, you have a serious cash flow problem. You won’t have access to the money you need to make these important purchases or payments until your debit card issuer is able to sort out the fraud claim. While you’ll get your money back eventually, that doesn’t mean you’ll get it before you bounce your rent check or need to do your weekly grocery shopping.

Your credit card, on the other hand, isn’t tied to real money at all. If someone maxes out your credit card, you’re not out anything that you’ve earned. Simply dispute the charge and your credit will be restored. In most cases, you won’t even become responsible for the debt for one to two months after the fraudulent charges have been made. This is more than enough time for your credit card company to sort out the fraud claim before the debt becomes your responsibility.

Because of these factors, it is my recommendation that you use a credit card for day-to-day purchases. Not only are you risking less in terms of fraud, but if you have a rewards credit card you also have the opportunity to earn extra cash or airline miles on your purchases. Your debit card is simply withdrawing your money and giving you nothing in return.

I also recommend signing up for ACH to have your credit card payments automatically withdrawn from your checking account every month. This way you won’t have to worry about paying your credit card bill on time and your bill will be paid in full.

Of course, a credit card is not a good option for a person who is not capable of managing their credit responsibly. For everyone else, though, a credit card can offer less hassle and more peace of mind when it comes to protecting your money.

* Source: CSCU, The Nilson Report, VISA

The views and opinions expressed in this post are those of the author only, and do not reflect the views and opinions of Total Bankruptcy. If you are struggling with credit card debt, you can explore your bankruptcy options with a local attorney.

Posted in Credit Cards, Credit and Bankruptcy, Fraud, credit vs debit, debit cards | Comments Off

Failure to Disclose Assets Lands Chapter 7 Debtor in Prison

Because the bankruptcy system operates efficiently and quickly and it serves hundreds of people every day, I sense that many bankruptcy debtors forget that everything they submit to the bankruptcy court is done so under penalty of perjury. I recently ran across an article from a Texas newspaper about a Chapter 7 debtor who ended up in federal prison, convicted of bankruptcy fraud, because he failed to disclose an $84,000 insurance payment, proceeds from the sale of a vehicle and several bank accounts.  This particular debtor used Chapter 7 to discharge over $1 million in liabilities.

I bring this case to your attention for several reasons.  First, you should recognize that Chapter 7 trustees are very conscious of the likelihood that a certain percentage of debtors will fail to disclose assets.  While it may seem that your Chapter 7 trustee is not paying much attention to any particular case, I suspect that trustee training programs provide trustees with profiles of the types of debtors likely to omit important information as well as resources to search for evidence of hidden assets.

In the Texas debtor's case I wonder how he thought that a vehicle sale would be missed by the trustee, given that vehicle liens are public record, as are vehicle registrations.

These days almost any sale of real estate or motor vehicles will generate a paper trail of tax forms, insurance records and title documents.  Further I have personally seen situations where an unhappy ex-wife or a former friend will draft a "poison pen" letter to the trustee will allegations about improper activities by a bankruptcy debtor.

Second, be aware that Chapter 7 trustees and the U.S. trustee like to pursue fraud cases periodically to send a message to debtors and debtors' lawyers that the trustees are paying attention.   Bankruptcy lawyers may be tempted to say "don't worry about it," to avoid extra expense and complication but playing fast and loose with disclosure rules can create major problems for both debtors and their lawyers.

Occasionally I meet with a client who may say something like "between you and me, no one knows this but…."    This type of statement is the last thing that any bankruptcy lawyer wants to hear.  From my perspective that client is really saying "I am thinking about committing a federal crime and I want you to help me."  My license to practice law is not worth the fee for any one case and I have and will continue to decline representation for any client who wants to use my office to file inaccurate schedules.

Nobody likes to surrender assets, especially in a bankruptcy case that may have come about because of factors beyond one's control (such as a layoff, unfair treatment by a lender, a lawsuit judgment that you did not know about).   In most bankruptcy cases you will not lose in assets.   However, losing a few hundred or thousands of dollars is a far better fate than federal prison.

Posted in 84, Chapter 13 issues, Chapter 7 issues, Debtor, Discharge issues, Fraud, Fraudulent Transfers, General consumer bankruptcy info, Insurance, Trustee, a, an, and, assets in, assets nbsp, bankruptcy crime, bankruptcy fraud, cases, committing, crime, disclose, documents nbsp, ended, evidence, failed, failure to disclose assets in bankruptcy, federal, hidden, periodically, prison, programs, provide, pursue, records, texas, the, title, training, trustees | Comments Off

Debt Settlement Fraud and How to Avoid It

The era of easy credit has left more Americans than ever struggling with overwhelming debt and few options for escaping.

Rather than filing for bankruptcy, many consumers seek credit counseling or visit a debt settlement firm.

But, according to the Washington Post, more and more people are finding that unscrupulous firms are cheating them out of their last dollars rather than helping them escape debt.

What Is Debt Settlement?

Debt settlement is a bankruptcy alternative that, in theory, works like this:

• You contact a settlement agency: You’ve determined that your debts are a bit beyond your control, so you seek the services of a debt settlement firm.
• You pay a fee: Because they’ll be doing you a service, most debt settlement firms require you to pay a fee upfront, before they’ve done anything.
• They work out a plan: Generally, these plans require you, the debtor, to pay a certain amount of money into an account or directly to the firm every month.
• They contact your creditors: When they do so, they bargain with them, offering to send them a certain amount of cash (generally the amount you’ve sent the company thus far) in exchange for canceling the rest of your debt.
• Your debt is considered paid: Because your creditors “settled” what you owed with the firm, you will no longer owe those debts.

In reality, though, complaints to the Federal Trade Commission and other consumer protection groups show that many debt settlement firms do not operate as they claim to, and rather than help consumers eliminate debt, they keep the money paid to them and do little or nothing to contact creditors.

The scariest thing, perhaps, is that even though such actions are illegal, debt settlement scams continue to abound and seriously damage the financial wellbeing of Americans.

What You Need to Know

The best protection against debt settlement scams is knowledge. Keep in mind:

• You can negotiate with creditors: There is no law preventing you from calling each of your creditors and attempting to negotiate for lower payments or for them to excuse part of a debt. While this may be difficult or uncomfortable, it requires no special training (and may be more than a scamming debt collection company will do for you).
• Be wary of fees charged upfront: Companies that ask for money right away should raise a red flag. There are plenty of free credit counseling services offered around the country – look for one in your area.
• Bankruptcy is still an option: Some Americans think that BAPCPA, the bankruptcy law that took effect in 2005, made it extremely difficult to seek bankruptcy protection, but many sources suggest that’s not true. If you truly need help from bankruptcy, it’s likely available to you.

Additional Resources

Growth of the Debt Settlement Industry (PDF)

Consumer Protection & the Debt Settlement Industry (PDF)

Posted in Bankruptcy Alternatives, Bankruptcy and Predatory Lending, Debt Settlement, Fraud | Comments Off

Personal Finance News Roundup: 12/12/2009

This week, many November numbers about money and credit were released, with some surprising findings. Here’s a summary of a few important figures.

November Consumer Bankruptcy Filings Down 18 Percent

The American Bankruptcy Institute (ABI) reports that personal bankruptcy filings decreased 18 percent last month, compared to October’s numbers. Specifically:

• Total filings: 112,152 consumers filed for bankruptcy in November 2009, compared with 135,913 in October.
• Increase from 2008: A year ago, in November 2008, 99,925 consumers filed for bankruptcy. This year’s figure represents a 12 percent jump.
• Chapter 13 filings: Only 29 percent of consumers who filed for bankruptcy did so under Chapter 13 of the U.S. Bankruptcy code last month, a rate unchanged from October.
• Yearly estimate: Sources predict that total bankruptcies in 2009 will total more than 1.4 million.
• Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
• Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
• Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

Retail Sales Drop Surprise 0.3 Percent in November

However, this figure is not considered comprehensive, and will be reevaluated after the government releases its sales data on December 11th. Still, the initial figure has some retailers worried that this year’s holiday shopping season will mirror last year’s, when many Americans were holding onto their money after the tumult of the stock market’s crash.

The retail figures, quoted in this msnbc.com article, apparently don’t include online sales, sales from electronics chains or sales from Wal-Mart Stores, Inc., three groups the government’s figures will cover.

Report: Online Fraud Down Overall

In a survey out this month on online scams, the security company CyberSource reports that web fraud has decreased by about 18 percent in the United States in Canada since 2008. Here’s a closer look at the findings:

• Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
• Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
• Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

The dip in fraud doesn’t mean you should be any less vigilant when shopping online, though. Be sure to guard your credit card numbers carefully and only shop on secure web sites!

Additional Resources

2009 Online Fraud Report (PDF)

Posted in Bankruptcy, Bankruptcy and the Economy, Fraud, retail, statistics | Comments Off