Chapter 5

Equifax isn’t calling

Ring, ring. “This is Equifax calling to verify your account information.” Stop. Don’t tell them anything. They’re not from Equifax. It’s a scam. Equifax will not call you out of the blue.

That’s just one scam you might see after Equifax’s recent data breach. Other calls might try to trick you into giving your personal information. Here are some tips for recognizing and preventing phone scams and imposter scams:

  • Don’t give personal information. Don’t provide any personal or financial information unless you’ve initiated the call and it’s to a phone number you know is correct.
  • Don’t trust caller ID. Scammers can spoof their numbers so it looks like they are calling from a particular company, even when they’re not.
  • If you get a robocall, hang up. Don’t press 1 to speak to a live operator or any other key to take your number off the list. If you respond by pressing any number, it will probably just lead to more robocalls.

For more information about the Equifax breach, go to Equifax’s website.

 Teaching Suggestions

  • Ask students if they know someone who has received such a call. If so, how the victim responded to the imposter?
  • What advice can you provide to a victim of a scam?

Discussion Questions

  1. What should you do, if you have already received a call that you think is fake?
  2. What must you do if you gave personal information to an imposter?
  3. What can you do to protect yourself from such scams?
Categories: Chapter 5, Consumer Complaints, Credit Scores, Frauds and Scams | Tags: , , | Leave a comment

Know your debt collection rights

Know someone who’s behind on their bills? Maybe debt collectors are calling for payment? The Federal Trade Commission’s new debt collection video can help you understand your legal rights – and may lower your stress level.  In the video, you’ll see how bad debt collectors try to get you to pay up. Bad debt collectors will say anything to get you to pay – and they’ll make it feel urgent to get you to pay immediately. But there are laws to protect you. Debt collectors:

  • Can’t call you before 8 a.m. or after 9 p.m.
  • Can’t use profanity, threaten violence or harass you to pay
  • May not lie or pretend to be someone they’re not
  • Cannot ask you to pay a debt that doesn’t even exist
  • Can’t threaten you with arrest or deportation
  • Cannot tell anyone – except your spouse or attorney – about your debt

If a debt collector calls and uses any of these tactics, hang up and report it to the FTC. Remember: you have the right to be treated fairly – no matter what.

For more information go to: consumer.gov/debt.

To view the video, click here.

Teaching Suggestions

  1. Ask students to summarize the steps they may take if a debt collector calls.
  2. Let students make a list of danger signals of potential debt problems.

 Discussion Questions 

  1. Which federal law regulates debt collection activities and protects consumers from abusive collection practices?
  2. Does the law erase the legitimate debts consumers owe?
Categories: Chapter 5, Consumer Complaints, Debt | Tags: , | Leave a comment

Free credit freezes from Equifax

Many people have had very sensitive personal information exposed in the Equifax breach — Social Security numbers, account numbers, even drivers’ license numbers. Equifax is offering free credit freezes until November 21, 2017.

If you’re thinking of placing a freeze, consider the following:

  • A freeze means that no one (including you) can access your credit file until you unfreeze it, using a PIN or passphrase. That makes it harder for identity thieves to open new accounts in your name.
  • To be effective, you must place a freeze with all three credit reporting agencies — Equifax, TransUnion and Experian.
  • A freeze can cost you money every time you freeze and unfreeze your file- at a cost of $5 to $10 per agency each time, depending on your state’s law.

Fraud alerts are free.  With a fraud alert, creditors must try to verify your identity before extending new credit.  The alert lasts for 90 days, You can renew it but you will need to remind yourself or it will expire automatically.  Identity theft victims, however, are entitled to an extended fraud alert which lasts seven years.  To place an alert, contact any one of the three major credit reporting agencies, either by phone or online.

For more information, click here.

Teaching Suggestions

  • Ask students if they are willing to pay about $5 to $10 each time they freeze or unfreeze their accounts with each credit agency.
  • Let students debate the issue: “A fraud alert is better than a credit freeze.”

Discussion Questions

  1. What are the differences between a fraud alert and a credit freeze?
  2. Should you consider a fraud alert or credit freeze if you become a victim of an identity theft? Why or why not?
Categories: Chapter 5, Identity Theft | Tags: , | Leave a comment

Phantom Debt Collectors

Consumers across the country report that they’re getting telephone calls from people trying to collect loans the consumers never received or on loans they did receive for amounts they do not owe.  Others are receiving calls from people seeking to recover on loans consumers received but where the creditors never authorized the callers to collect them.

The FTC is warning consumers to be alert for scam artists posing as debt collectors.  It may be hard to tell the difference between a legitimate debt collector and a fake one.

A caller may be a fake debt collector if he/she:

  • is seeking payment on a debt for a loan you do not recognize;
  • refuses to give you a mailing address or phone number;
  • asks for personal financial or sensitive information; or
  • exerts high pressure to try to scare you into paying, such as threatening to have you arrested or to report you to a law enforcement agency.

For more information, click here.

Teaching Suggestions

  1. Ask students to make a list of protections provided by the Fair Collection Practices Act.
  2. Ask students to prepare a list of steps they should take if the harassment continues.

Discussion Questions

  • If you think that a caller may be a fake debt collector, why is it important to ask the caller for his name, company, street address, or telephone number?
  • If you think that a caller may be a fake debt collector, should you stop speaking with the caller? Why or why not?
Categories: Chapter 5, Debt, Frauds and Scams | Tags: , , | Leave a comment

Cash or Credit?

“Currency still has its place, despite the pervasive use of plastic.”

Today, it seems that more people are using credit or debit cards to pay for everything.  And yet, this article provides reasons why cash may be a better payment option.  Those include

  1. A cashless society? Not so fast.  According to a recent Federal Reserve Bank of San Francisco study, 40 percent of consumer transactions involve cash–a higher percentage than for debit cards (25%), credit cards (17%), electronic payments (7%), and checks (7%).
  2. Currency comes in handy. Most vending machines don’t take plastic, and cash works best for all small purchases.
  3. Hamiltons can’t get hacked. With data breaches of major retailers becoming common, some consumers pay by cash to protect their credit card information.
  4. A cash fix can cost you. If you get a cash advance from an ATM outside your bank’s network, you’ll pay more than $4, on average.
  5. Cash is a great budgeting tool. If you have trouble controlling your spending when you pay with credit cards, then cash or a debit card is best for your finances.
  6. Paying by cash may be a good option, but it won’t help build your credit history. Using a credit card now and then for routine purchases can help build a good credit history.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Reinforce the concept of paying by cash.
  • Discuss what happens when people use their credit cards and overspend.

Discussion Questions

  1. Would you prefer to pay for merchandise and services with cash or credit? Explain your answer.
  2. How could paying with cash help you balance your budget and control spending?
Categories: Chapter 5, Credit Cards, Frauds and Scams | Tags: | Leave a comment

Fraud Victims Vulnerable to Severe Stress, Anxiety and Depression

The FINRA Investor Education Foundation issued a new research report, Non-Traditional Costs of Financial Fraud, which found that nearly two thirds of self-reported financial fraud victims experienced at least one non-financial cost of fraud to a serious degree—including severe stress, anxiety, difficulty sleeping and depression. While the Stanford Financial Fraud Research Center estimates that $50 billion is lost to financial fraud every year, the FINRA Foundation’s innovative research examines the broader psychological and emotional impact of financial fraud.

“Fraud’s effects linger and cause distress well after the scam is over. For the first time, we have data on the deep toll that fraud exerts on its victims, and the results are sobering. This new research underscores the importance of the FINRA Foundation’s work with an array of national, state and local partners to help Americans avoid fraud, and assist consumers who have been defrauded,” said FINRA Foundation President Gerri Walsh.

The research report found that:

  • nearly two thirds (65 percent) reported experiencing at least one type of non-financial cost to a serious degree; and
  • most commonly cited non-financial costs of fraud are severe stress (50 percent), anxiety (44 percent), difficulty sleeping (38 percent) and depression (35 percent).
  •  Beyond the psychological and emotional costs, nearly half of fraud victims reported incurring indirect financial costs associated with the fraud, such as late fees, legal fees and bounced checks. Twenty-nine percent of respondents reported incurring more than $1,000 in indirect costs, and 9 percent declared bankruptcy as a result of the fraud.

Additionally, nearly half of victims blame themselves for the fraud—an indication of the far-reaching effects of financial fraud on the lives of its victims.

For more information, click here.

Teaching Suggestions

  • Ask students to list a few suggestions to protect themselves from financial fraud.
  • Explain how FINRA can assist consumers who have been the victims of financial fraud.

Discussion Questions

  1. What are a few indirect financial costs associated with funds?
  2. Why nearly half of victims blame themselves for being victims of financial fraud?
  3. How and where should you report financial fraud?
Categories: Chapter 5, Frauds and Scams | Tags: , , | Leave a comment

The Credit Repair Organizations Act

The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you, and to charge you before they’ve performed their services.  The CROA is enforced by the Federal Trade Commission and requires credit repair companies to explain:

  • your legal rights in a written contract that also details the services they’ll perform,
  • your three day right to cancel without with any charge,
  • how long will it take to get results,
  • the total cost you will pay, and
  • any guarantees.

What if a credit repair company you hired doesn’t live up to its promises?  You have some options.  You can:

  • sue them in federal court for your actual losses or for what you paid them, whichever is more,
  • seek punitive damages—money to punish the company for violating the law,
  • join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney’s fees.

For more information, click here.

Teaching Suggestions

  • Ask students to make a list of major provisions of the Credit Repair Organization Act.
  • Ask students if there is a time limit on reporting negative information about criminal convictions.

Discussion Questions

  1. Where and how can you report credit repair frauds?
  2. Can the FTC resolve individual credit disputes? If not, why should you file the complaint with the FTC?
Categories: Chapter 5, Credit Scores | Tags: , | Leave a comment

IRS: Protect Yourself Online

The Internal Revenue Service, the states and the tax industry urge taxpayers to take steps to protect themselves online in the fight against identity theft.  Scammers, hackers and identity thieves are stealing taxpayers’ personal information and ultimately their money.  But, there are simple steps you can take to help protect yourselves, like keeping computer software up-to-date and being cautious about giving out your personal information.

Here are some best practices you can follow to protect your tax and financial information, click here.

  1. Understand and Use Security Software. Security software helps protect computers against the digital threats that are prevalent online.  The operating system will include security software from well-known companies or Internet providers.
  2. Allow Security Software to Update Automatically. Set security software to update automatically.  Malware–malicious software—evolves constantly, and your security software suite updates routinely to keep pace.
  3. Look for the “S.” When shopping or banking online, always ensure that the site uses encryption to protect your information.  Look for “https” at the beginning of the web address.
  4. Use Strong Passwords. Use passwords of eight or more characters, mixing letters, numbers and special characters.  Don’t use your name, birthdate or common words.
  5. Secure Wireless Networks. A wireless network sends a signal through the air that allows it to connect to the Internet.  If your home or business Wi-Fi is unsecure, it also allows any computer within range to access your wireless and potentially steal information from your computer.
  6. Be Cautious When Using Public Wireless Networks. Public Wi-Fi hotspots are convenient but often not secured.
  7. Avoid E-mail Phishing Attempts. Never reply to an emails, text or pop-up messages asking for personal, tax or financial information.  Never click on links even if they seem to be from organizations you trust.  Instead, go directly to the organization’s website.

Teaching Suggestions

  • Ask students which best practices they follow to protect their tax and financial information. Make a list and share it with other students.
  • Ask students to make a list of essential software tools available to them for keeping their financial/tax information secure.

Discussion Questions

  1. Why it might be prudent to purchase security software programs from well-known companies or Internet providers?
  2. Where should you keep your passwords list and why?
Categories: Chapter 5, Identity Theft | Tags: | Leave a comment

When Small Charges Can Signal a Big Crime

Counting every penny on your credit and debit card statements can help detect fraud

Most people looking at their bank statements would probably notice if their credit or debit card were used without their approval to purchase a big ticket item, and they would quickly call their bank or card issuer to report the error or fraudulent transaction.  But consumers are less likely to be suspicious of very small charges, including those less than a dollar…which is why criminals like to make them.

“These transactions might be signs that someone has learned your account information and is using it to commit a crime,” said Michael Benardo, manager of the (Federal Deposit Insurance Corporation) FDIC’s Cyber Fraud and Financial Crimes Section.  “That’s why it’s important to be on the lookout for fraudulent transactions, no matter how small.”

He added, “When thieves fraudulently obtain someone else’s credit or debit card information and create counterfeit card, they might test it out with a small transaction—like buying a pack of gum or a soda—to make sure the counterfeit card works before using it to make a big purchase.  If this test goes unnoticed, by the true account holder, thieves will use the card to buy something expensive that they want or that they can easily sell for cash.”

For more information, click here.

Teaching Suggestions

  • Ask students if they know someone who had his/her credit or debit card compromised. If so, how they detected the illegal charge and how the problem was solved.
  • Under what circumstances should you close the compromised account?

Discussion Questions

  1. Why is it important to regularly scrutinize your monthly credit and debit card statements?
  2. What can be consumers do to protect themselves from such frauds? What is the best way to catch this type of fraud?
Categories: Chapter 5, Credit Cards, Debit Cards, Identity Theft | Tags: , , | Leave a comment

Overhauling Debt Collection Market

New Protections Would Limit Collector Contact and Help Ensure the Correct Debt is collected

The Consumer Financial Protection Bureau (CFPB) is considering to overhaul the debt collection market by capping collector contact attempts and by helping to ensure that companies collect the correct debt.  Under the proposals being considered, debt collectors would be required to have more and better information about the debt before they collect.  As they are collecting, companies would be required to limit communications, clearly disclose debt details, and make it easier to dispute the debt.  When responding to disputes, collectors would be prohibited from continuing to pursue debt without sufficient evidence.  These requirements and restrictions would follow the debt if it were sold or transferred.

For more information about the proposals under consideration, click here.

Teaching Suggestions

  • Ask students what federal laws already prohibit debt collectors from harassing, oppressing, or abusing consumers.
  • Ask students if they, their friends or relatives, have ever been harassed by creditors. If so, what were their experiences?

Discussion Questions

  1. Debt collection market generates more complaints to the Consumer Financial Protection Bureau than any other financial product or service. Why?
  2. What might be some common complaints against debt collectors seeking to collect debt from consumers?
Categories: Chapter 5, Debt, Financial Planning | Tags: , | Leave a comment

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