Debt Relief and Credit Repair Scams Gain Momentum
January 19, 2012 § Leave a Comment
This excerpt from Avvo.com discusses debt relief and credit card scams which have been growing across the country. With so many Americans facing large consumer debt with the housing crisis, manufacturing reductions and record unemployment, the proliferation of businessesdeveloped purely to scam those who are already desperate and under pressure has risen dramatically. According to Avvo there were 8 such scams reported in 2003. In 2008 more than 2000 were reported.
From Avvo.com
The Scams
Debt relief scams come in a few different forms. Some will tell you they can get your creditors to lower the overall amount you have to pay, while others claim they can get your creditors to lower their interest rates. They may promise to stop creditor calls, or tell you that if you give them a certain amount of money per month, they will pay off your creditors for you. You can count on getting socked with a fee, which is occasionally exorbitant, but you may see little or no improvement in your debt situation and may be left in worse financial shape than ever.
Surprise Fees
Not only are many of these companies unable or unwilling to fulfill their promises of debt relief and lower interest rates, but the fees often go unmentioned or the company lets you think the initial payment will go toward your debt, when it really doesn’t. Occasionally you will be asked to set up an account out of which they are to pay your creditors, but it’s also used as a source for additional fees. Fake credit repair companies promise to repair bad credit for a fee, but don’t actually do so even after you’ve paid them. These companies prey on your desperation and trust, making reassuring promises while collecting your financial information and convincing you that enrolling in their programs will save you.
Making An Example
Last May, the Federal Trade Commission shut down two such companies, Advanced Management Services NW LLC and Dynamic Financial Group, for placing illegal robo-calls to consumers (including those on the Do Not Call Registry) which claimed to dramatically lower their interest rates. After customers paid their fees—up to $1,995—the companies simply sent instructions on early debt payoff. Though Dynamic Financial Group offered a refund to customers who didn’t save a particular amount, they failed to actually pay the refunds. The company heads were banned from offering debt relief services or making robo-calls in the future. They were also fined millions, but not all were able to pay, leaving some scammed consumers out of luck.
Reliable Debt Relief Resources
Fortunately, reliable debt relief and credit counseling services do exist and can help if you are in debt over your head. Here are some things to keep in mind when looking for help:
• Compare at least 3 companies, with an understanding of the differences between debt consolidation, debt settlement, and credit counseling. Find out as much as you can about the services and fees of each company.
• Check the Better Business Bureau and ask for references.
• Know that legitimate companies will spend at least 20 minutes becoming familiar with your finances, and will put together a plan that fits your specific needs. One size does not fit all in debt relief.
• According to the Consumer Federation of America, you should never have to pay more than $50 up front and $25 for monthly maintenance. If fees are significantly higher than that or vague, it’s a red flag.
• A good starting point is the National Foundation for Credit Counseling, which can help you find a legitimate financial counselor in your area.
Read this article in its entirety here.
Paying By Debit/Credit Card May No Longer Be Safe
December 12, 2011 § Leave a Comment
More stories continue to come to light about the number of credit and debit card users victimized after using their cards on legitimate purchases in legitimate stores. Lucky Supermarkets has in recent weeks (SaveMore) had several stores in which fraudulent scanner machines were set up in self-checkout aisles. Customers zipped through scanning groceries and then entering their payment information, including PIN numbers. That information, apparently, was wirelessly transmitted to thieves who began making purchases immediately against the stolen card numbers.
The same happened in Michael’s Arts & Crafts Stores in May of this year. Now stories are popping up from “mom & pop” stores and restaurants as new targets because it is believed security is not as strict as in larger stores. In fact, warnings are being issued to customer to be aware before using your credit card at restaurants in particular.
So, for all you who currently live by the motto, “I never have cash in my wallet anymore. I just pay with my card.” Think twice. A visit to the ATM may keep you financially safer.
Stay Safe When Shopping Online
November 22, 2011 § Leave a Comment
Shopping online can offer some great deals, but keeping yourself safe from fraud takes more and more education these days.Here are some tips from Kiplinger Money Magazine on how you can stay safe when shopping online. These tips are aimed at protecting your identity and your cash.
1. Clicking into unfamiliar sites. Before making a purchase at an unfamiliar site, open another window and search the company name with the word scam. If there has been questionable ethics issues in the past, these are likely to be reported under the company name on scam sites or with the Better Business Bureau. If you’re looking for a particular item, go to a well-known price-comparison site, such as PriceGrabber.com or Dealio.com. Don’t let a search engine pick a site for you because hackers seed search results with fraudulent sites, says Jon-Louis Heimerl, director of strategic security for security-services company Solutionary. Even if you’re using a site that you think is legitimate, look for security labels, such as VeriSign and Cybertrust, and for https:// to appear in the URL on pages
2. Assuming you have the same protections with debit as credit. If a hacker steals your debit-card information and raids your bank account, you must report any misuse within two days to get the same $50 limited liability as you would with a credit card. Miss that deadline but report your loss within 60 days and you could be liable for up to $500. After 60 days, your liability is unlimited. If you don’t like using credit cards, consider using EBillme to make secure cash payments when shopping online.
3. Not monitoring your accounts. If you do a lot of shopping online, review your credit-card statements regularly to make sure there aren’t any unauthorized purchases. Heimerl recommends that you print out your receipts or put e-mail receipts into a separate folder so you can check your credit-card statements against your receipts. He uses one credit card for online purchases only and was able to catch an unauthorized purchase quickly when one of his other credit cards was used for an online purchase.
4. Shopping from a public Wi-Fi connection. Hackers can tap into Wi-Fi connections at hotspots, such as coffee shops, airports and hotels, to capture your personal information. That’s why you should never shop online using a public Wi-Fi connection. Also, never use a public computer to shop or check accounts online.
5. Billing directly to your smart phone. Use a credit card instead of having purchases billed through your mobile carrier, because the card provides more security. If someone gets your credit-card information and goes on a spending spree, your liability is capped at $50 (Visa and MasterCard assume all liability for unauthorized purchases). Also, if you have a dispute with a merchant, you may have an easier time working out a solution. You’ll get the least protection if you use a prepaid retail gift card or have purchases billed to your phone because they are not required by law to offer consumer protection against fraud or billing disputes.
6. Wiring money to pay for an item. If you purchase an item from an online auction site, such as eBay, and the seller asks you to wire your payment, don’t do it. Heimerl says wiring money is inviting yourself to a fraud situation — you have no way to get your money back if the item you purchase never arrives. Pay with a credit card so you can dispute the charges if you don’t get what you paid for.
7. Falling for too-good-to-be-true deals. It’s hard to pass up a deal, especially when money is tight and you really need to make a purchase (such as a car to replace your clunker that just died). But if a Web site or individual is offering a deal better than anyone else, won’t accept credit cards and demands a direct transfer of funds, it’s probably a scam. A common one: Someone claims he’s selling a vehicle at a low price because he needs the money fast (he lost a job or is a soldier going overseas, for example).
8. Clicking a link in an unsolicited e-mail. Don’t ever click on a link in an unsolicited e-mail to go shopping, even if the e-mail looks as if it came from a legitimate retailer, Heimerl says. You’re safer going directly to a retailer’s site to see whether it’s having a sale rather than clicking on a link that could take you to a fraudulent site.
9. Clicking URLs on social-networking sites. Using Twitter can be a smart way to stay on top of deals, but you have to make sure the deals are legit. The URLs on Twitter (and sometimes Facebook) are often shortened, so you don’t know whether you’re going to land on a legitimate retailer’s site by clicking the link. Heimerl says to use a deal notification you see on Twitter as a tip, then find sales on your own.
10. Assuming an escrow service is always safe. If the seller is pushing you to use a particular escrow company to handle a transaction, be suspicious because it might be part of a scam. You can verify a company’s legitimacy by checking with state regulators, or ask to use an escrow company of your choosing, such as Escrow.com.
Better Business Bureau Reports Stub Hub Email Scam
November 1, 2011 § Leave a Comment
Many people have reported being hit by a scam email Halloween morning, that appears to be from StubHub (it isn’t) and says it is charging your credit card a huge sum to pay for boxing tickets to a match in Nevada. By all accounts from both StubHub and the Better Business Bureau this is a scam and should not be replied to or worse, have the link provided in the email used to click through to your StubHub account.
StubHub says this scam has been hitting them since 7 a.m. Monday morning. Anyone who has had a StubHub account (and even some who haven’t) may be at risk.
According to a StubHub, these are the precautions you should take:
- If you receive the scam email, DON’T login. It may steal your passwords and then give thieves access to your StubHub account where valid credit card info may be stored.
- Change your password if you have an account at StubHub – right away. Go directly to the StubHub site to do that, not through an email.
- Send a copy of the scam email you receive to safety@stubhub.com so they can investigate.
Pre-Paid Debit Cards, Check the Balance
September 8, 2011 § Leave a Comment
Imagine putting your entire paycheck on a pre-paid debit and then attempting to use the card to pay bills, only to find your card says the balance is $0. This has happened to consumers. Whether clerical error at the register or computer glitch, it can take weeks to months to get your money back, but by then bills can go into default or cancellation, costing consumers more money to restart their accounts.
How can you protect yourself?
1. Always save the receipt. This is in many cases your only proof that you have added money to the card.
2. After loading money on the card, go to another register to check the balance on the card BEFORE you leave the store. Since stores worry about fraud, if you don’t leave the store and have receipt corrections can be made on the spot.
3. Never put your entire paycheck on one prepaid card. Having cash on hand is smart in case of emergency, as well as back-up in case of store error.
SubPrime Credit Card Charges 79.9% Interest Rate
March 26, 2010 § Leave a Comment
Typically, First Premiere credit card targets users with low income and poor credit ratings who rely on their credit card to make ends meet each month. This creditor, taking advantage of this less advantaged market, had originally been charging annual fees of $256 on accounts with $250 spending limits. As of February, however, the new laws affecting credit card companies limit annual fees to no more than 25% of the allowed credit limit.
First Premiere has found a way to make that money back by further gouging the working poor. According to E-Commerce Times, First Premiere has lowered annual fees to the prescribed legal limit, $75 on a $300 credit limit. However, since the law does not cap interest rates, the creditor is now issuing cards with a 79.9% APR. This insures those unfortunate enough to carry their credit cards will on average pay $23.97 in interest on an item costing $30 when bought using the First Premiere credit card.
Can Bankruptcy Filers Keep a Credit Card?
March 2, 2010 § Leave a Comment
Some people keep a credit card for emergency expenses. Others use credit cards for travel or making up any shortfalls at the end of the month. Whatever the reason you are holding onto your credit card, whether you pay it all off at the end of each month or carry a balance, you cannot keep a credit card through bankruptcy. For one thing, in Chapter 7 bankruptcy, your debts are discharged. You will be very hard pressed to find a credit card company still willing to extend credit on an account when the balance of the debt has been discharged. It’s just not good business practice. Even if you are not carrying a balance on your card, the credit companies will see that you have filed for bankruptcy from your credit report. After which, standard operating procedure would be for the company to cancel your account and send you notification of the card’s account closure.
FYI: A better plan of action is to prepare for emergencies in advance by bolstering your emergency fund. Life will happen, be ready for it!
Credit Card Debts May Be Forgiven, but Not Forgotten by IRS
February 18, 2010 § 2 Comments
All may be forgiven when a creditor settles your account, reducing the amount you owe, but that doesn’t mean you’ve gotten a free ride. Your windfall may be taxable.
The IRS can tax debt forgiveness as Income. So let’s say you owed $15,000 on your credit card. The card company settles the debt with you for $5000. You are overjoyed at the saved money, until you realize the IRS expects you to declare that $10,000 savings. That amount is known as discharge of indebtedness, or DOI, income.
That’s right. A debt forgiven won’t be forgotten by the IRS. The agency considers it earned and taxable income. In fact, your creditor probably will send you a 1099 form detailing your miscellaneous income. Don’t think you’re free from the IRS if you don’t get the form. The creditor may have reported the “income” to the IRS, even though you didn’t receive a 1099.
Credit Card Companies Getting Rich on Charity
January 18, 2010 § 2 Comments
This is re-posted verbatim from MoveOn.org
(Photo by Lisandro Suero / AFP / Getty Images.)
As the tragedy in Haiti unfolds, Americans are generously donating millions of dollars to aid organizations. But when Americans donate to charity with their credit cards, the credit card companies get rich. In some cases they keep 3% of the donation as a “transaction fee,” even though that’s far more than it costs them to process the donation.
It’s outrageous and wrong—and it needs to stop.
Can you sign this petition to the CEOs of the major credit card companies demanding that they waive their processing fees for all charitable donations? Clicking here will add your name:
http://pol.moveon.org/nofees/o.pl?id=18607-15095509-tVA3DVx&t=3
The petition says: “Credit card companies shouldn’t be getting rich off of Americans’ generosity. They should waive all fees on charitable contributions from today on.”
The credit card companies are trying to get ahead of this story, announcing they will temporarily waive the fees they charge on some Haiti-related charitable contributions for the next 6 weeks. But that’s nowhere near enough. Many emergency donations to Haiti will still get hit with hefty bank fees. To give a sense of how limited the exemption is, Doctors Without Borders isn’t on any of the publicly available lists of charities that won’t be charged fees.
Credit Card Companies Working the Letter of the Law
December 15, 2009 § 3 Comments
New federal guidelines for credit card companies go into effect January of 2010. To stay in compliance, creditors are receiving easy to understand one-page information sheets on their accounts. Bank of America is sending out “Clarity of Commitment” statements, which include a guide on how to read the new statements, which tell you how much you owe, credit interest charged and how much you will pay if you miss payments.
Of course, these are credit card companies. They are adhering to the letter of the law, while finding ways to make more money before new rules go into effect. For instance, many companies are raising rates now—before the Jan 2010 deadline. Consumers are finding rates skyrocketing 10-20%. In some cases, new pre-deadline interest rates are as high as 29.9%—just in time for Christmas.
