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Payday Lender Charged with Improper Disposal of Customer Data

A press release from Illinois’ attorney general’s web site notes that an Illinois payday lender, Payday Loan Store, has been accused of dumping consumer’s sensitive information in trash receptacles outside several locations. Lisa Madigan, the attorney general, is reportedly suing the company for “allegedly failing to safeguard consumer data.”

Here’s a look at the details and what you need to know to keep your information safe.

NOTE: If you’re really strapped for cash and feel like you’re at your wits’ end trying to make ends meet, now might be the time to consider filing for bankruptcy.

Sensitive Documents Found in Trash

Reports indicate that various documents, including highly sensitive consumer information, were discovered in trash bins outside some Payday Loan Store locations.

• Enough information to allow identity theft: Police reportedly found documents that included customers’ Social Security Numbers, bank account numbers, canceled check information, credit counseling history and more.
• Earlier promises to protect such information: According to sources, Payday Loan Store guaranteed customers that it would protect their sensitive information. The discovery in the trashcans suggests a breach of both that promise and federal law.
• Fine and penalties sought: The press release notes that Madigan will seek a civil penalty of $50,000 from Payday Loan Store for each incident of improper handling of consumer information. Further, Madigan apparently hopes to permanently bar Payday Loan Store from engaging in deceptive and unfair practices.

More Dangers to Payday Loans?

The news of this improper data handling adds a new element of danger to the already risky short-term, high-interest loans offered at outlets like Payday Loan Store. If you’re contemplating taking out a payday loan, consider this:

• State laws have banned or limited them: In recent years, payday lenders have been outright banned or severely restricted in many states.
• They come with sky-high interest rates: In those states where payday lenders still operate freely, associated fees on cash loans are equivalent to interest rates up to 390 percent.
• They’re excellent debt-cycle promoters: While most people who take out payday loans fully intend to repay them in full at their next payday, the majority of payday lending customers end up in multi-cycle debt traps, paying far too much for the short-term loans they’re getting.

As if all that weren’t reason enough to avoid payday lenders at all costs, Attorney General Madigan’s new suit suggests that the dangers of borrowing from a payday loan store could include identity theft. Yikes.

So what should you do if you’re in need of quick cash and can’t get a loan from a traditional source? Many financial insiders recommend pretty much anything besides a payday lender: asking for a loan from friends and family, asking for a paycheck advance, selling unwanted household items, selling blood or plasma, applying for a new credit card, etc.

Posted in Bankruptcy and Predatory Lending, Consumer Protection, Identity Theft, payday lending | Comments Off

FTC Supports Data Security Legislation

Even though federal law protects victims of information crimes, every year some people who file for bankruptcy cite identity theft or another information crime as one of the reasons for their financial distress. And, in an age of increasing online transactions, we’re more exposed than ever to data breaches that could lead to serious privacy risks.

That’s why it’s good news to hear that the FTC recently testified to Congress in favor of data security legislation.

Your Personal Data & Finances

You probably already know that your Social Security Number, your credit card numbers, your bank account numbers and similar information are valuable and should be guarded carefully. But, it seems, some businesses that collect and store our personal information don’t always take the same precautions we might ourselves.

The FTC testimony specifically suggests the passage of laws that require the following:

• Businesses that make claims or promises about data security must know that these claims are accurate and up to date.
• Businesses should take steps to guard against well-known technology threats to data security.
• Businesses must know the recipients, if any, of sensitive consumer information.
• Once they no longer need sensitive information, businesses must not continue to store it.
• When disposing of sensitive information, businesses must do so properly and completely.

If it surprises you that these laws aren’t already in place, take note. This should serve as a wake-up call to remind you to keep careful track of your personal information at all times.

Protecting Your Information and Money

So how can you reduce the threat of identity theft and thus lower your chances of becoming a victim? Here are some pointers from the FTC:

• Shred sensitive documents when you’re finished with them. This includes medical documents, financial papers, and anything else that has identifying information about you or your family.
• Protect your Social Security Number. Keep your Social Security card in a safe spot (not your wallet) and don’t give this number out unless you’re obligated to by law. If you’re asked for your SSN, question why the company needs it, how it will be used and whether you can give an alternate form of identification.
• Keep your personal information safe. Don’t communicate any sensitive info over the phone, through email or over the Internet unless you’re certain who’s on the other end.
• Be suspicious of strange emails. If you get an email from an unknown source with a link or an attachment, avoid clicking on them – they could be viruses.
• Keep your passwords obscure. Using important dates or family names can make it easy for identity thieves to access your accounts.
• Keep your personal information secure. At home, take special precautions if you have roommates or non-family workers coming and going.

If you’re concerned that you may have been the victim of identity theft, speak with a lawyer today to learn about your rights.

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

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

How to Protect Your Social Security Number

In the computer age, one of the most frightening crimes is identity theft. Here’s a look at how you can protect your personal information to avoid the frustrations and financial setbacks associated with identity crimes.

What Is Identity Theft?

Identity theft occurs when someone uses another person’s identifying information to pose as that person. It can manifest itself in a variety of ways, including these:

• Opening new credit: A thief who discovers your SSN can apply for loans and lines of credit as you. That person can then run up debts and leave you with the headache of contesting all the charges of your credit score and (possibly) paying some of the bills. In some cases, despite laws, consumers have listed identity theft as a reason they had to file for bankruptcy.
• Using existing credit: A thief who discovers information for your bank account or credit card can use that information to drain your accounts or make massive purchases (remember: you don’t have to present a physical credit card to buy stuff online; only the card number is needed).
• Getting medical treatment: The crime known as medical identity theft occurs when someone uses your information to get treated for an illness or injury. This can be especially dangerous to you because it could mean that incorrect patient history information ends up in your file. In emergency situations, that could cause you serious harm.

This article from Get Rich Slowly notes that the 2010 Identity Fraud Survey Report found that 11 million Americans were victimized by identity theft in 2009, for a total cost of $54 billion. The average person reportedly spent 21 hours resolving issues and had to pay $373 to do so.

How to Keep Your Information Safe

In general, it’s best to take some precautions to avoid the nightmare of identity theft:

• Keep your Social Security card in a safe spot (NOT your wallet).
• Avoid writing your SSN on checks; if any institutions currently use your SSN as your account number, ask them to change it.
• Never disclose your SSN over email or over the phone, even if the request seems legitimate.
• Make sure any web sites that require your SSN (such as online lenders) have secure servers.
• Check your free credit report www.annualcreditreport.com every year to make sure nobody else is using your identity.
• Shred documents with identifying information (like bank statements and medical bills) before disposing of them.
• Know who does need your SSN: employers, banks and some government agencies.
• Know that some businesses that request your SSN do not actually require you to give it to them. When you’re asked for yours, ask why they need it, how they’ll use it, whether the law compels you to provide it, how they plan to protect it and what might happen if you refuse to provide it.

Posted in Identity Theft, Social Security Number, annual credit report | Comments Off

New Tips for Protecting Your Money and Identity

Identity crimes—often thought to be the domain solely of tech-savvy online criminals—are on the rise, but thieves are constantly finding new ways to trick people out of their sensitive personal data, and not all of them involve advanced technology.

According to this New York Times article, a new report released by CBS reveals that people who copy sensitive documents on certain photocopying machines are at risk of having their information stolen by unscrupulous thieves.

What You Need to Know

Here’s what the Times report has to say about the risk from photocopiers:

• Hard drive storage: High-end copiers (like those that allow users to make lots of copies relatively quickly) often have hard drives that store digital copies of every document they scan.
• Storage and disposal: Because many photocopier owners may not know that their machines store information in that way, they are unlikely to take steps to erase the digital information before disposing of or selling their machines.
• Easy access: Anyone buying a second-hand photocopier with its hard drive intact could access the stored information without much trouble.

So how should you protect yourself against potential identity thieves from having access to your sensitive information? Take some precautions:

• If using a public photocopier or one at work, ask a technology expert whether the copier stores information, and if it does, how they plan to delete it before disposing of the machine.
• This may seem silly, but always be sure to take your originals with you.
• Consider purchasing a copier/scanner/printer for home use—many computer companies sell such models for relatively little money, and you can rest easy that nobody else will have access to your information.

Improve Your Identity Safety Online

Another Times article offers some handy tips for protecting against the more familiar, online version of identity theft. The suggestions include:

• Update your browser: Makers of web browsers, such as Internet Explorer, frequently release updates of their product. These updates often contain important fixes to security flaws. If you're running IE 6, you could be putting your computer at risk for hacks and malware. You also may consider upgrading to a more sophisticated browser such as Firefox or Google Chrome.
• Get the newest Adobe: Anyone downloading PDF files or watching flash video is likely using Adobe programs. Recent updates have made it much less vulnerable to nefarious infiltration.
• Be careful with ads: Pop-up ads and leading links often lead to dangerous malware or scam offers.
• Use good judgment: Sites like Facebook and Twitter may be hot spots for online scams. Play it safe by accepting friendship only with people you know.

Additional Resources

Preventing Identity Theft

Identity Theft

Posted in Identity Theft, scams | Comments Off

Financial News This Week: More Consumer Protection

The FTC has recently settled several cases relevant to consumer protection and financial stability. Here’s a summary of those cases and how they may impact you.

LifeLock Pays $12 Million, Stops Deceptive Claims

Not long ago, LifeLock ran a campaign offering comprehensive protection against identity theft for consumers. However, the FTC reports that 35 states’ Attorneys General challenged those claims, since the protection LifeLock offered was less than stellar.

In its ads, LifeLock claimed that it:

• Guaranteed protection against identity thieves ever getting their hands on subscribers’ information
• Was the first company to offer such complete and comprehensive protection
• Stopped identity theft before it occurred
• Stored all personal data in encrypted electronic files
• Gave access to sensitive information only to secured individuals
• Used “highly secure” protection (physical, electronic and managerial) to prevent fraud

These services were offered for the price of $10 per month. Because these claims somewhat overstated the actual protection the company offered, many consumers lodged complaints and now LifeLock is prohibited from advertising services they can’t actually offer.

Refund Checks Coming to Victims of Health-Related Scams

The company Roex, Inc. reportedly sold a range of products, including infrared saunas and dietary supplements, which they claimed would cure or alleviate symptoms of numerous serious diseases.

But the results didn't match the advertisements, and the FTC has ordered the company to make payments to past customers. The average amount of the refund check is $500.

Consumers who bought products from Roex, Inc. should be on the lookout for these checks, mailed March 5, 2010, and deposit or cash them – they are not a scam. The FTC notes that 5,700 checks were mailed, with a total value near $3 million.

Credit Repair Scammers Settle with the FTC

An Illinois-based credit repair scammer has recently come to a cash settlement with the FTC for falsely indicating to consumers that it could remove negative entries on their credit reports, even if they were accurate and current, which violates federal laws. Some consumers who filed bankruptcy were targeted by the scam.

To avoid credit repair scams, keep in mind:

• Accuracy isn’t negotiable: Correct information on your credit report cannot be legally removed for seven years.
• Don’t pay upfront: If someone asks for money before performing a service, watch out.
• There’s no easy fix: Credit repair takes time and diligent effort. Shortcuts will only get you way off the track.

Posted in Credit Repair, Identity Theft, consumer scams | Comments Off

LifeLock Fined for Inappropriate Identity Theft Protection Claims

A company that made bold promises about its ability to protect against identity theft has settled with the Federal Trade Commission after the validity of its claims was questioned.

LifeLock is a company that protects customers' identities from theft, and alerts customers about identity theft security breaches, according to the company web site. LifeLock will even help consumers if their identity is stolen, by canceling and replacing stolen cards and verifying information changes.

According to federal regulators, however, LifeLock has made claims about its ability to protect customers from identity theft that it cannot uphold, leading to an agreement for the company to pay $12 million in settlements.

CNNMoney is reporting that the fine will settle charges that LifeLock made deceptive claims about its identity theft protection abilities. $11 million of the fine will go to the FTC, while another $1 million will go to a group of attorneys general from around the country. According to the FTC, this is one of the largest joint settlements between the FTC and the states.

According to the chairman of the FTC, Jon Liebowitz, LifeLock claimed that it could protect consumers against identity theft completely, including all types of identity theft.

The protection it actually provided, said the chairman, left enough holes that you could drive a truck through it.

LifeLock advertises its services in a brash manner, by displaying the social security number of the company's CEO, Todd Davis, on the side of a truck that drives around in public, as well as on national television commercials. This show of confidence is meant to publicize their $10 per month services that they claim will keep users safe from identity theft.

The case that the FTC made against LifeLock was that the company made "deceptive claims" about its protection services. Among these claims were that LifeLock could guarantee protection against identity theft, and that, according to CNNMoney, "it was the first company to prevent identity theft from occurring."

There are certain types of identity theft that LifeLock claimed it could protect against, and the FTC argued that these fraud alerts did not actually protect against one of the most common types of identity theft: the misuse of existing accounts.

There was also the charge that LifeLock claimed, falsely, to be able to prevent changes to customers' address listings that weren't authorized, and that it constantly monitored customer credit report activity.

The FTC also said that LifeLock made untrue statements about data security, claiming that sensitive data was only accessed on a "need-to-know" basis. According to the FTC, however, LifeLock collected social security numbers and credit card numbers on a routine basis.

Davis, the CEO of LifeLock, said of the settlement that he was pleased with it, and that it would help to establish the advertising standards for the identity theft protection industry. He went on to say that the activities in the FTC charges were from several years ago, and that LifeLock agreed to settle the case as a way to put the issues behind them.

We agreed to settle this matter, he said, in order to quickly put this behind us so we can get back to doing what we do best—helping to protect our members from identity theft.

Posted in FTC, Financial Literacy, Identity Theft, lifelock | Comments Off

FTC: Identity Theft Top Complaint in 2009; Potential Data Breach

The Federal Trade Commission recently issued its annual report on consumer complaints filed in the last 12 months (summary available here, for the complete report, see below).

Identity theft was by far the largest complaint category, concerning 21 percent of all complaints filed. The top fifteen list looks like this:

• Identity theft (21 percent)
• Third party and creditor debt collection (nine percent)
• Internet services (six percent)
• Shop-at-home and catalog sales (six percent)
• Foreign money offers and counterfeit check scams (five percent)
• Internet auctions (four percent)
• Credit cards (three percent)
• Prizes, sweepstakes and lotteries (three percent)
• Advance-fee loans and credit protection/repair (three percent)
• Banks and Lenders (two percent)
• Credit bureaus, information furnishers and report users (two percent)
• Television and electronic media (two percent)
• Health care (two percent)
• Business opportunities, employment agencies and work-at-home plans (two percent)
• Computer equipment and software (two percent)

The FTC reports that identity theft complaints also constituted the largest single group of consumer worries last year, but have dropped as an overall percentage of the whole. In addition to the release of 2009’s data, the FTC has posted an animated video detailing how and when to file a complaint (available here).

A Potential Data Breach You Should Know About

In another recent news release, the FTC noted that it has warned almost 100 companies that information they store on peer-to-peer websites (used for everything from playing video games to sharing text, audio and video files to conducting online phone calls) may be vulnerable to data breaches.

Specifically, if peer-to-peer (P2P) software is improperly configured, any sensitive data may be accessible to anyone on the network. This presents a huge security risk, and could lead to identity theft or other costly and frustrating scams.

What this could mean for you is that, if you have given your personal information to one of the companies in question, your information could be at risk.

While no companies have necessarily broken the FTC’s regulations regarding storage of sensitive information, some may be at risk for significant future data breaches.

Additional Resources

FTC 2009 Full Report on Consumer Complaints.

Posted in FTC, Identity Theft, data breach | Comments Off

Is Texting ‘HAITI’ to 90999 a Scam?

Update: 1/20/2010. As aftershocks continue to do damage in Haiti, help is still desperately needed. There's still some confusion on how to donate. Here's what you can do:

• Send a text with the word Haiti in the message. The recipient should be the five-digit number 90999. You should receive a confirmation response. Reply Yes. $10 will be added to your phone bill
• Log on to RedCross.org to make a donation online via credit or debit card (minimum $10) or find a Red Cross location near you.

Watch out for scams that ask you to send your credit card information over text message as well as web sites that prompt you to download software.

In the wake of the traumatic 7.0 earthquake that struck Haiti Tuesday evening, an outpouring of support has been heard across cyberspace. And thanks to developments in technology, donating to important and topical causes is easier than ever. But could a text of support really find you victimized by a scam?

Right now, there are two legitimate ways to donate to Haitian support and relief organizations:

• Text 'HAITI' to 90999: This service was set up by the U.S. State Department. Texting "HAITI" to the number will donate $10 to the International Red Cross, and will appear as a charge on your wireless bill.
• Text 'YELE' to 501501: This will donate $5 to Yele Haiti, a non-profit organization founded by singer and Haiti native Wyclef Jean. A donation to Yele will also appear as a charge on your cell bill. You can also donate larger amounts at Yele's website.

So far, these are the only two legitimate text-to-donate services providing support to Haiti relief, according to consumer watchdog groups. But others may be popping up to take advantage of Americans' generosity.

The Better Business Bureau and the Federal Trade Commission have issued statements warning possible donors to watch out for scams, which tend to pop up after a catastrophe.

The five-to-six digit numbers known as short-codes make it difficult to tell who is on the receiving end of a text. A legitimate charity will not ask you to send your personal information or credit card number through text message.

The devastating earthquake that struck Haiti, the western hemisphere's most impoverished nation, Tuesday hit 10 miles southwest of Port-au-Prince, Haiti's capital and largest city. Haiti's prime minister has issued a statement that hundreds of thousands may have perished in the quake.

The Bankruptcy Blog reports often on consumer affairs and identity theft issues for all consumers, in addition to bankruptcy information.

Posted in 90999, Identity Theft, Uncategorized, haiti, scams | Comments Off