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Monday, March 21st, 2011

Protect Your Money: Avoid Charity Scams

The recent earthquake and tsunami in Japan have left many people in the United States eager to offer financial aid to the country and its citizens. But, as the Federal Trade Commission warns, it’s easy to get duped by unscrupulous scammers posing as charitable organizations.

Here’s a look at some of the FTC’s tips for making sure your money actually goes to people in need.

What to Look for in a Charity

According to the FTC, it’s important to take these steps before donating to any charity online, in person, over the phone or via postal mail:

  • Ask for the name of the charity, particularly if the solicitor does not immediately provide it. Check online to see whether the charity has a legitimate web site, Better Business Bureau accreditation and/or any consumer complaints posted on discussion forums.
  • Ask what percentage of your money will go towards charitable causes. If the solicitor cannot answer the question or is cagey, this is a warning sign. You have a right to know where your money is going, and if you think too little is slated for the actual cause, simply refuse a donation and find another charity with better donation policies (web sites like the BBB’s Wise Giving page and Charity Navigator can offer you alternatives).
  • Check with the charity that the solicitor is legitimate. In some cases, scam artists might pose as charity workers with a legitimate organization. If you’re uncomfortable giving money or a check to a person you don’t know, call the charity to verify any information you’ve been given. You can also choose to donate directly to the charity online or through the mail.
  • Don’t part with your sensitive information. Nobody should pressure you into revealing your credit card or bank account information. Wait until you’ve made a decision in your own time and only provide such information on secure web sites. This can help you avoid raising your risk of identity theft.
  • Ask for a receipt. Any time you make a donation to a legitimate charity, you should get a receipt indicating that the donation is tax-deductible.
  • Be wary of pushiness. Any person or group that urges you to donate immediately should be viewed with suspicion. Legitimate organizations will still be around tomorrow, after you’ve had time to consider your finances and determine how much money you can afford to donate.
  • Don’t use cash. For a number of reasons, cash donations tend to be the riskiest in the case of charity groups. Instead, write a check to the charitable organization (not to the person collecting donations).

Remember: nobody should use guilt or threats to convince you to donate money. If you don’t like the way a solicitor is making you feel, simply cut off communication with that person and (if necessary) file a complaint with the FTC. You can then donate as much or as little money as you choose to the charity of your choice.

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Posted in Finance 101: Secure Your Future, Identity Theft | 1 Comment »

Monday, March 14th, 2011

Top Consumer Complaints of 2010

The Federal Trade Commission has released a report on the consumer complaints it received from Americans in 2010, and the list illuminates many of the financial and privacy concerns important to the American people.

Here’s a look at the top ten issues that sparked the most consumer outrage, as well as some tips for dealing with a problem new this year.

  • Identity theft: For the 11th year in a row, identity theft earned the top spot for number of consumer complaints, with 19 percent of all complaints filed (a whopping 250,854).
  • Debt collection: If you’ve ever dealt with abusive debt collectors, it may not surprise you to learn that issues with this group caused the second greatest number of complaints among consumers (144,159, or 11 percent of all complaints).
  • Internet services: Whether for fraudulent offers or subpar service, Internet providers landed third for most consumer complaints, five percent of all complaints (65,565).
  • Prizes, sweepstakes and lotteries: In fourth place came this type of scam, which often offers phony rewards after the victim pays a bogus entry fee. A total of 64,085 complaints were filed about this type of issue, or about five percent of all complaints.
  • Shop-at-home and catalog sales: Whether for defective goods, unwieldy return policies or some other act of non-consumer-friendliness, this type of transaction accounted for about four percent of consumer complaints last year (60,205).
  • Imposter scams: A new category this year, this type of scam jumped to sixth place, prompting the FTC to issue warnings about how to spot imposter scams to avoid sending money to strangers (details below).
  • Internet auctions: Perhaps because of the Internet’s vast scope and inability to fit neatly into regulatory areas, online auctions prompted 56,107 people to file complaints with the FTC.
  • Foreign money/counterfeit check scams: Getting blasted when you intended to invest or travel can be especially traumatizing, so it’s no wonder 43,866complaints concerning this category were filed last year.
  • Telephone and mobile services: Varying definitions of service options and quality of service provided prompted 37,388 people to file complaints about their communication tools.
  • Credit cards: This old classic is still causing us plenty of trouble. Despite the new protections instituted by the Credit CARD Act, 33,258 complaints were still filed about credit cards.

Avoiding Imposter Scams

The FTC’s consumer complaints about imposter scams (that is, scams in which someone pretends to be a government agency or loved one in order to convince a victim to part with money or sensitive information) prompted the release of a report on how to spot and avoid such scams.

In general, avoid wiring money to anyone you don’t know, be wary if someone pushes you to act quickly to make a transaction, don’t transmit sensitive information by text message and always confirm a person’s identity before making a major financial move.

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Posted in Finance 101: Secure Your Future, Identity Theft | 1 Comment »

Tuesday, January 25th, 2011

Protect Your Money & Car with Auto Warranty Tips

The Federal Trade Commission recently published tips to help Americans get the most out of their vehicle warranties. The guidelines are fairly simple, but could make a huge difference to your car (and your wallet) should your car need repairs.

And for anyone recovering from bankruptcy or otherwise trying to maintain healthy finances and eliminate debt, these tips should be welcome.

Know What the Warranty Protects

Here’s something that many consumers don’t know about auto warranties:

  • Federal law protects consumers: In fact, it’s illegal for an auto dealer to deny service outlined in a warranty simply because a you had your car serviced by an independent mechanic.
  • The dealer has to offer proof: In order to deny warranty-covered services, a dealer must be able to prove that specific work done on the car caused the damage that you want repaired. And then, only the part damaged by the independent mechanic can be denied warranty services – the rest of the car is still protected.

Make the Most of Your Car’s Warranty

The FTC recommends taking the following steps to make sure your car can get the service and attention it needs and is legally granted by its warranty.

  • Read your warranty or your car’s owner’s manual: In order to take advantage of the terms of service, you have to know what they are, right? So make sure to take the time to look over what is guaranteed in your vehicle – you may even be pleasantly surprised.
  • Keep a note of the end of the warranty period: It’s not “cheating” to have any problems or issues looked at by your dealer right before the end of your warranty. In fact, that’s a smart move: why not get any updates or repairs done for free while you still can?
  • Take regular care of your car: Make sure to follow the guidelines listed in the owner’s manual for maintaining your car. This means changing the oil and air filters, having tires rotated, and getting any strange noises checked out as they occur. This may cost more in the short term than ignoring your car or letting things slide, but better maintenance will mean better longevity (which means you won’t have to pay for a whole new car for longer).
  • Keep your receipts: It’s a good idea to have a file (whether digital or hard) of all the maintenance and repair work you get done. That way, you can use the receipts as evidence that you maintained your car properly if and when you need to take it in to the dealer to have it repaired under warranty.
  • Make some noise: If a dealer refuses warranty-guaranteed service on your car, speak to a manager or another dealership. Consider filing a complaint with your state’s attorney general. The federal government outlines certain rights for consumers regarding their cars and auto warranties, so why not take advantage of those?

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Posted in Finance 101: Secure Your Future | 1 Comment »

Wednesday, December 1st, 2010

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 (onguardonline.gov), 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.

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Monday, November 22nd, 2010

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.

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Wednesday, October 27th, 2010

Take Advantage of Free ID Theft Protection & Education Materials

The Federal Trade Commission has announced that, in honor of National Protect Your Identity Week, it will provide consumers with a wealth of free information and materials about how to fight, avoid and protect themselves against identity theft.

Where to Learn about Identity Theft Prevention

Though federal laws exist to protect the finances of people who are victimized by identity theft, it’s still fairly common for bankruptcy filers to indicate that identity theft contributed to the financial distress that led them to file for bankruptcy. Here’s a look at what the FTC has to offer:

  • Basic information: This “one-stop national resource” provides consumers with information about what identity theft is, how to recognize it, how to prevent it and what to do if they’ve been victimized by identity theft. Additionally, the site has information for businesses and law enforcement groups to help prevent and fight identity theft cases from happening.
  • Informative videos: The FTC has posted some educational videos for consumers interested in learning how to reduce their online risk of identity theft and how to protect their digital lives from exposure to identity threats.
  • Online application of skills: At their game portal, the FTC offers consumers a chance to test their knowledge about the risk factors of identity thefts, basic precautions to take to avoid being victimized by identity thieves and apply identity theft prevention skills by playing online games. This site might prove especially helpful for younger computer users who might be resistant to more traditional information sources.
  • Reminder of your rights: Finally, the FTC has posted a reminder about every American consumer’s right to obtain and view copies of his or her credit report and why staying abreast of what appears in your credit is important to financial health.

Legal Help for Identity Theft Woes

To top off its bevy of useful information about fighting and preventing identity theft, the FTC has also announced that it will offer legal guidelines for identity theft victims. This web page is designed to help victims and their advocates (whether lawyers, credit counselors or other activists) determine how to proceed to maximize the benefit of fighting identity thieves.

As many people who have unfortunately felt the sting of identity theft already know, the crime can lead to hours of headaches as consumers try to sort out their financial situation and reclaim their private information. Generally, there are a few practices can help you avoid identity theft:

  • Shred all sensitive documents before disposing of them;
  • Don’t click on unfamiliar links online and definitely don’t enter your personal information unless you’re sure what web site you’re on;
  • Don’t share your passwords with anyone;
  • Check your free credit report every year for suspicious activity; and
  • Make sure your email has a good spam filter. Be wary of emails from unknown sources.

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Wednesday, September 29th, 2010

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.

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Tuesday, September 28th, 2010

New Debt Relief Rule Means More Truth in Advertising

If you’re struggling with debt and looking for a way to improve your finances, there’s good news on the horizon: beginning Monday, September 27, new rules issued by the Federal Trade Commission prevent advertisers from deceiving potential customers about their ability to offer financial relief.

Here are some of the new protections the FTC’s latest consumer protection rule outlines.

More Honest Disclosures

While bankruptcy is a well-known debt relief option, many consumers try to avoid filing for bankruptcy by opting for debt settlement or credit counseling. While both options work well in many instances, in some cases, dishonest companies pitch too-good-to-be-true offers and consumers end up with more debt than they had before.

Now, advertisers will have to:

  • Announce proposed fees & refund policies No longer will companies be able to get away with advertising how low a price might be (“as little as…”). Now, advertisers will have to base their proposed fees on actual results they can realistically expect to get from a person’s creditors.
  • Estimate likely time frame: After consulting with a customer, debt-settlement companies must offer a good-faith estimate about the likely length of time the process will take, based on a debtor’s individual circumstances.
  • Estimate savings required to settle debts: As with the other new requirements, companies must make estimate how much money an individual customer must save before he has a realistic chance of settling debts based on that customer’s individual circumstances.
  • Disclose potential negative side effects: Rather than glossing over the downsides of debt settlement, companies are now required to review with customers the potential negative impact on their credit reports, the chance that creditors will bring lawsuits against them and any potential tax consequences.

More Honest Advertising

In addition to the above requirements, debt settlement firms are now required to advertise likely savings based on all their clients, not only the most successful ones. Theoretically, this should give potential customers a more realistic picture of how much debt settlement could actually help their finances.

Debt Settlement Vs. Bankruptcy

While there is no one-size-fits-all debt relief option, bankruptcy protection does have some obvious advantages over debt settlement and some other bankruptcy alternatives, which include:

  • Legal protection from creditors: Because bankruptcy functions as part of the federal government, those who file for bankruptcy are legally protected from creditor contact once they file their cases.
  • Federally and state regulated processes: While anyone can start a debt settlement firm, regardless of qualifications, bankruptcy attorneys and judges must meet very specific requirements, so you won’t have to question the background of the people you’re working with.
  • Federally regulated costs: The fees associated with filing for bankruptcy are set by federal laws, so you know you aren’t getting ripped off when you start a case (although fees that lawyers charge may vary). Debt settlement firms, on the other hand, can charge whatever they want – and some unscrupulous firms do, to the detriment of their clients.

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Saturday, May 29th, 2010

Learn from Your Fake Financial Mistakes

Unfortunately, one of the best ways to learn what an online scam looks like is to encounter one. And if you've had too much experience with online scams you could still be reeling financially or considering bankruptcy.

The good news: The Federal Trade Commission has announced a new website to help consumers experience a variety of realistic online scam situations without actually losing money. By experiencing these scams in a risk-free environment you'll be better equipped to avoid them in real life.

The latest of these sites, Esteemed Lending Services, mimics advance-fee loan scams that have been known to drain consumers of their money without offering anything in return.

Know Financial Scam Warning Signs

When you click on any link on the Esteemed Lending Services page, you’re brought to a page that explains that, had the site been real, you could have been scammed. Then, in order to arm consumers with the tools necessary for avoiding scams, the FTC explains what to expect from advance-fee scammers:

  • Professional-looking web sites: Often, the FTC notes, scam companies will have a legitimate-seeming online presence and a trustworthy-sounding name.
  • Guaranteed loans: Any offer that guarantees you’ll be approved, regardless of your credit history, should signal a scam to you. Legitimate lenders need to know your credit history in order to give you reasonable loan terms.
  • Unclear fees: Real lenders disclose their fees upfront and do not require you to pay them until your loan has been approved. Scammers often charge fees upfront – and then never follow through with their promises of loans.
  • Phone loans: In the U.S., it’s against the law to promise a loan over the phone and ask for payment before the money is issued.
  • Slightly off names: One trick some scammers use is to give themselves a name and logo that resemble those of a legitimate company. If you’re not paying attention, you could easily be confused.
  • Lack of proper registration: If a company isn’t registered in your state, chances are it’s not legitimate. Back away.
  • Money wires: Legitimate lenders will not ask you to pay by wiring money – if someone asks you to do so, decline and walk away.

More Financial Help

The FTC also offers helpful hints for avoiding scams in such areas as diet products, male enhancement, medical supplements and work-at-home offers.

For more tips on managing your money and making smart decisions, visit The Debtress blog.

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Monday, May 3rd, 2010

Financial Preparation: Kids and Advertising

The FTC announced this week that it has launched a program to help America’s “tweens” understand how advertising works so they can become critical thinkers and wiser consumers as they begin earning disposable income and saving for the future.

From a financial literacy standpoint, this move could pay big dividends down the road: Teaching kids to understand the promises and claims advertisers may set them up to make well-informed decisions about how to spend their money down the road.

Financial education is a big problem in the U.S. as many consumers struggle to spend within their means. Studies have shown that ads and the method of payment can have an impact on whether someone makes a purchase. Understanding how money works could help keep the next generation out of bankruptcy.

The FTC’s press release highlights some interesting items:

  • Ads are everywhere: These days, it’s hard to get away from advertising – video games, TV shows, movies, web sites, phones and even the grocery store checkout line are jam packed with ads. Understanding how they work is crucial.
  • Learn through playing: The website admongo.gov hosts an interactive game kids can play for free to develop some of the skills necessary for navigating an ad-laden world.
  • Help from the schools: Creators of the Admongo campaign have also developed educational materials that educators can incorporate into classroom lessons to help their students develop a better understanding of the way ads function.

Hot the Financial Game Works

The online Admongo game has several levels that teach children a variety of skills they’ll need to recognize ads and understand how they work. The various mini-games allow kids to create an avatar of themselves and then explore various aspects of advertising, including the following:

  • The Atrium: Gamers run around a city and identify the various ads they see – on billboards, buses, flyers, etc.
  • The Assemblimator: Here, kids can look at the various pieces of an ad separately to understand how they work individually and collectively to persuade an intended audience.
  • The Planadtarium: In this level, kids play to learn about the ways ads are targeted at various audiences and how those audiences are expected to react upon seeing the ads.
  • The Adgitator: Here, kids can create their own advertisements to use what they’ve learned

The brilliance of this game is that it presents the problem of advertising as a puzzle kids can figure out. For parents, this can be an invaluable tool – how often have your kids begun asking for a toy, game or type of food they saw advertised during a favorite TV show?

Helping your kids develop these skills early may set them up to hang onto their money in the future – when advertising will likely get even subtler and more pervasive.

For more tips and tricks related to your finances, check out The Debtress blog.

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