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Saturday, December 12th, 2009

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)

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Posted in Bankruptcy and the Economy | 53 Comments »

Thursday, October 22nd, 2009

MoneyGram to Pay $18 Million to Settle FTC Charges

The Federal Trade Commission announced this week that MoneyGram International Inc., a leading U.S. money transfer service, will pay $18 million in consumer compensation for what seems to be its compliance with fraudulent money-wiring schemes. This can be seen as a minor victory for consumers.

According to the FTC, MoneyGram was complicit in schemes that cheated people out of money by doing the following:

  • Alerting them of false winnings or opportunities: Consumers were told (often via mail) that they’d won the lottery, been chosen for a “Secret Shopper” program or been guaranteed a loan.
  • Prompting them to transfer money: In order to “collect” their money or activate their accounts, customers were required to deposit a check (which had come in the mail with the notification) and wire some of the money to a third party.
  • Taking the money: In these schemes, the checks that consumers were given to deposit were fraudulent and worthless. The money transferred, then, came from consumers’ own accounts.

More than $84 Million Lost

Consumer complaints indicate that as much as $84 million was lost to such schemes, though the FTC’s site indicates that the actual total is likely higher, since many cheated consumers never file complaints.

The FTC’s charges reportedly include that MoneyGram was aware of the fraudulent activity but did almost nothing to stop it, and that 95 to 96 percent of complaints filed about the company were against 131 of the company’s 1,200-plus agents in from 2006–2008.

In addition to the $18 million in consumer redress funds, MoneyGram has agreed to include anti-fraud and agent-monitoring policies in its future operations. Because part of the charges levied by the FTC include MoneyGram’s active ignoring of reports of agent fraud, new agents will be required to complete background checks before being hired.

What to Watch Out For

In general, the FTC warns that wire transfers can be dangerous, and sets these guidelines:

  • Never wire money to a person you don’t know, in the U.S. or another country;
  • Never wire money to someone requesting to keep the transaction a secret;
  • Don’t wire money to those who claim that money transfers are the only acceptable mode of payment; and
  • Don’t wire money to someone who asks you to deposit a check and wire a fraction of that amount.

Additional Resources

Money Transfers Can Be Risky Business (PDF)

U.S. Postal Inspection Guide to Avoiding Mail Fraud (PDF)

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Posted in Financial Literacy | 5 Comments »