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Payday Lender Forks Over Cash to Settle with FTC

The Federal Trade Commission announced this month that it has settled charges with two men who allegedly bilked consumers out of hundreds of thousands of dollars by using an online payday loan “matching” scam. Here’s what the FTC says happened:

• The web site offered to match consumers with payday lenders in their areas.
• As part of the online application process, consumers were reportedly sent to a page that had an offer for a debit card. The “yes” box to order the debit card was pre-checked on this page.
• Consumers who clicked through to the “finish” page without realizing they’d agreed to the embedded debit card offer were automatically signed up for the debit card. Clicking through reportedly also meant consumers granted authorization for their bank accounts to be charged for the funds.
• Victims of the scam were apparently charged up to $54.95 extra for the debit card they did not intend to apply for.

Terms of the Settlement

The newest settlement, which reflects an amended charge filed in April 2010, means that the men charged with the offenses, Matthew Patterson and Mark Benning, will be prohibited from doing the following:

• Presenting false or misleading information about any product or service, including information about how customers will be charged or billed;
• Misrepresenting the cost or status of a product or service (e.g. incorrectly suggesting that something is free or a “bonus”) for any of its terms and conditions;
• Charging consumers without complete disclosure of how much will be charged to them, all terms and conditions of the transaction, what billing information will be used and to what account the payment will be charged; and
• Failing to keep track of affiliates to make sure that they comply with all the above terms (and those laid out in the court order).

In addition to these restrictions, the FTC settlement imposes a $5.2 million judgment on the two men, which will reportedly be suspended for Patterson once he pays $800,000 over a period of 10 years and for Benning when he provides the court with money raised from the sale of his house.

Protecting Your Finances from Predatory Lenders

While a number of consumer protection groups and government organizations exist to police the market and keep scammers from finding new victims, perhaps your best defense against predatory lenders is knowledge.

Take a look at this predatory lending glossary to get an idea of what kinds of loans and offers qualify as “predatory” and how you can keep your money from falling into the wrong hands (and keep yourself from falling into bankruptcy).

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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

What You Can Learn from 2010’s Top Scams

While many people are looking forward to the new year, it’s also important to take time to look back on what we learned from 2010. So here’s a review of some of the major scams that we saw in the past year (listed on WalletPop.com) and what you can do to protect your finances from similar ones.

Protect Your Finances from Future Scams

• Mortgage Relief Scams: Scammers know that people who are feeling desperate make good targets, so times of economic distress provide scam artists with plenty of opportunities for ripping people off. Scams offering fake mortgage relief take advantage of people in danger of losing their homes by offering fake services to negotiate with lenders or change mortgage terms, and real opportunities for struggling homeowners to throw away money they can’t afford to lose. Lesson: You are the only one responsible for saving your home and/or mortgage. If you want help, you must ask for it and do some work to find the right group to provide it.
• Debt Relief & Reduction Scams: Like mortgage relief scams, debt relief scams work by charging consumers steep upfront fees for debt-reduction services that the scammer never delivers. Though new rules have strengthened consumer protections against debt settlement companies (which are sometimes little more than dolled-up scammers), many groups are apparently still finding ways to get around these rules. Lesson: Do your homework before committing to any debt relief firm. Visit the Better Business Bureau, compare fees among companies, and consider your alternatives (like credit counseling and bankruptcy). Most importantly, if something sounds too good to be true, don’t believe it.
• Robocall Scams: These scams work by contacting vast numbers of consumers with recorded telephone messages and promising some attractive service (like quick debt reduction) – naturally, for a steep price. Lesson: Getting out of debt is almost never a quick process. If someone promises a quick fix for your debt, turn the other way and run (and don’t write any checks in the meantime).
• Identity Theft Scams: Identity theft is perhaps one of the most troubling crimes of the information age – correcting the damage done by identity thieves can take hours of time and lead to anger and frustration. And identity thieves are masters at taking advantage of new technologies to get our information – emails, text messages, online buying sites and other popular media have all been used by identity thieves to lure in unsuspecting consumers. Lesson: Guard your personal information carefully. Don’t ever wire money to strangers, reply to unfamiliar emails, text sensitive information or otherwise reveal too much of your personal data.

Keep Your Money Safe in 2011

The sad truth about scams is this: there will always be a new scam out there – the nature of legislation is that it is slow and retroactive, meaning that unscrupulous individuals will always be able to outpace laws. But if you approach your everyday transactions and interactions with reasonable skepticism, you should be able to keep yourself and your money safe.

Posted in Financial Literacy, Foreclosure, Identity Theft, predatory lending, scams | 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

Scam Watch: Avoid Dating & Social Networking Money Scams

The Federal Trade Commission recently published a warning about scams that have been reported on dating and social networking web sites. Here’s what you need to know to identify and avoid these potential money-suckers (and identity thieves).

It’s Probably Not True Love

According to the FTC's OnGuard Online site, a typical online networking or dating scam works something like this:

• The scammer creates a fake profile.
• The scammer develops a relationship with someone he’s never met face to face and convinces that person that they’re in love.
• The scammer asks his “love” to wire money for one reason or another – usually to a location outside the United States.

So how can you distinguish between someone who is honestly interested in friendship or a relationship and someone who only wants to drain your bank account or steal your identity? The FTC provides a list of warning signs that your digital romance might be less than ideal.

• The scammer expresses a desire to move away from the dating or social networking site and use instead a personal email or instant messaging account. This suggests that the person wants to fly under the radar of whatever body governs the site, or wants to use a less-secure (and perhaps less traceable) method of communication.
• The scammer begins to claim feelings of love early on in the relationship. This should raise a red flag, particularly if you’ve never met the person face to face – claiming to be in love sets the stage a little too neatly for asking for favors from that loved one.
• The scammer indicates that she is from the U.S. but is currently living overseas. This provides a handy explanation for why she would want a victim to send funds outside of the country (presumably to an account regulated by less stringent laws than those in the U.S.).
• The scammer insists that he wants to visit the victim, but is unable to do so because of some unfortunate life event (such as the death of a loved one, job loss, or similar).
• The scammer offers seemingly “valid” reasons why she needs money, such as a relative’s sickness, a minor financial setback, or similar – and, after the victim sends money, the scammer continues to ask for more.

Watch Out for Requests from Friends and Family

Of course, not every scam involves establishing a new relationship. Another popular scam involves requests from close friends or family members for money to be wired overseas - usually the story involves an international vacation gone bad, and the friend needs money wired to pay for an emergency. In reality, the friend's account has been compromised by a scammer.

The Dangers of Identity Theft

So why are scams such as these so treacherous? The obvious answer is that a scammer could take in an unsuspecting victim and drain his or her bank account. But the risk of identity theft might put a victim at even greater risk.

Identity theft can cause long-term damage to your finances and credit, which can make it difficult to get loans, apartment rentals, credit cards and more. In general, be wary any time a person you’ve never met asks for money – particularly if you’re being asked to send it outside the U.S.

Posted in FTC, Identity Theft, scams | Comments Off

Protection from Mortgage Relief Scams from the FTC

The Federal Trade Commission announced this week that it has published new rules for companies that advertise themselves as mortgage foreclosure relief outfits. The rules, it seems, are designed to eliminate scammers from taking money from struggling homeowners.

Here’s a look at the details.

FTC: No Advance Fees, More Disclosures

The FTC’s rules include a number of provisions designed to bring more transparency to the world of foreclosure relief companies. These include:

• A ban on upfront fees: This rule will prevent companies from taking homeowners’ money without actually offering any help. When the new rules take effect on December 13, foreclosure relief firms will be required to present consumers with a written agreement from the lender or servicer indicating that the proposed changes are acceptable and approved, as well as a written document detailing the changes.
• Increased disclosures: In addition to the ban on advance fees, the new rules will require foreclosure rescuers to disclose more information and in a clearer format. Specifically, firms must explain that they are not affiliated with the government, that a customer’s lender might not agree to the proposed mortgage modification and that if a customer stops making regular mortgage payments it could adversely affect her credit rating and/or cause her to lose her home. Further, these companies have to disclose that customers have the right to stop doing business with the firms whenever they choose and that they have the right to reject an offer made by these firms.
• Prohibited claims: Besides being required to disclose certain information, foreclosure rescue firms will be forbidden from making any kinds of false or misleading claims, which might include claims about their likelihood of helping a client, government affiliation, a client’s obligation to pay, refund and cancellation policies and how much the company’s services cost.
• Attorney exemption: It should be noted that the FTC rules provide an exemption for lawyers who are properly licensed and actively practicing law in the state where the client or the client’s home is located.

More Hope for Struggling Homeowners?

The new rules come as welcome news to a nation gripped by a flailing housing market, where millions of citizens are in some phase of the foreclosure process. Hopefully, when the new rules take effect, they’ll decrease the prevalence of foreclosure rescue scams, which would in turn mean that American families would stand a better chance of finding workable solutions to keeping and staying in their homes.

It should be noted that these rules are in a similar vein to those passed earlier this year for the debt settlement industry, which, like the foreclosure rescue industry, has historically been plagued by fraudsters and scammers who wreak financial havoc on cash-strapped customers.

Posted in FTC, Mortgage Foreclosure, scams | 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

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

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

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Consumer Protection Alert: Scammers Using BBB Name

The Better Business Bureau (BBB) is a private company that works to promote honesty in the marketplace so that both buyers and sellers can conduct business in a trusting environment. The various branches of the BBB assess businesses on their dependability and warn consumers about scams.

Unfortunately, according to msnbc.com, a new scam cropping up has been using the BBB’s logo to swindle people out of money. Here’s what you need to know to protect yourself and your money.

• It starts with an email or phone call. Like many similar scams, the one using the BBB’s logo reportedly involves a scammer contacting you and indicating that you’ve won a lottery or contest.
• It pays attention to detail. Some victims have noted that scammers used names of real BBB employees and even included in their emails links to bios on real BBB websites.
• A check will arrive. When it does, the scammers will ask that you deposit it and wire them a certain amount of money to cover taxes or fees or some other imaginary cost associated with the imaginary contest.

If you deposit the check, it may clear, but that doesn’t mean the scam is legitimate. If you wire away money, consider it gone forever—this is a classic maneuver some scammers make.

Protect Yourself: Know the Facts

While this scam can be devastating for those who lose money, it’s entirely avoidable. The following are classic warning signs that what you’re being offered is a scam:

• Unknown contest: If you’ve been told you’ve won something you don’t remember entering, ignore it. Hang up the phone, delete the email and walk away. Consider filing a complaint with the FTC.
• Money wires: Any time you have to pay to collect your winnings, know that something is up. Federal law prohibits charging to join sweepstakes and any legitimate organization would take out taxes and fees before sending you a check – how do they know you’d send the money back?
• High emotions: Many scammers rely on drumming up excitement or fear in their victims because when we’re in elevated emotional states, even the savviest among us can make poor financial decisions.

Be on the lookout for any of these signs or anything else that strikes you as off. Sources indicate that some scammers have gotten very sophisticated and use realistic-looking seals, watermarks and color printing, but remember: legitimate offers will still be good after you review them with a trustworthy source.

Be sure to check out businesses on the BBB web site. Legitimate businesses will also let you know their BBB rating. Total Bankruptcy has a BBB A+ rating, its highest rating.

Posted in BBB scam, Better Business Bureau, Financial Literacy, scams | Comments Off