Chapter 5

Better Credit by “Piggybacking”?

Is it possible for a person with bad credit to inflate his/her own credit score and get the money-saving benefits of better credit by “piggybacking” on the credit of a stranger? That’s how a Denver-based business pitched its services to cash-strapped consumers. But the Federal Trade Commission says the defendants couldn’t back up their score improvement claims and engaged in several illegal practices that violated the FTC Act, the Credit Repair Organizations Act (CROA), and the Telemarketing Sales Rule.

BoostMyScore and CEO William O. Airy claimed to offer consumers “the amazing benefit” of having another person’s credit “‘copied and pasted’ on to your credit report,” giving the buyer “the biggest possible FICO® score boost in less than 60 days; and it’s guaranteed!” Here’s how the defendants described their services, for which they charged consumers between $325 to $4,000 – or even more:

Online and in radio ads, the defendants promised consumers concrete benefits – for example, qualifying for a mortgage. According to one promotional piece, “ . . . many of our customers realize a jump of about 120 points in as little as two weeks. What would a credit score increase of that size mean for you? If you are like most people, that could be the difference between having your mortgage application approved or not.”

The settlement prohibits the defendants from marketing credit repair services that attempt to add an authorized user to anyone’s credit unless that person has actual access. In addition to other provisions to protect consumers in the future, the proposed order prohibits misrepresentations about the legality of credit piggybacking. Most of the proposed $6.6 million judgment would be suspended due to the defendants’ financial condition.

For More Information click here.

Teaching Suggestions

  • Ask students if it is possible to boost their own credit scores by someone else’s good credit.
  • Ask students if they know what information creditors use in determining whether a loan will be approved or denied.

Discussion Questions

  1. What can be done to prevent companies such as Boost My Score, to stop deceiving already financially-strapped consumers?
  2. How effective are the cease-and-desist orders and fines by the Federal Trade Commission, if the defendants don’t have to pay due to their financial condition?
  3. What are the true and tried methods of improving your credit scores?
Categories: Chapter 5, Credit Scores | Tags: , | Leave a comment

Disputing Errors on Credit Reports

Your credit report contains information about where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. The federal Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information in the files of the nation’s credit reporting companies.

Some financial advisors and consumer advocates suggest that you review your credit report periodically. Why?

  • Because the information it contains affects whether you can get a loan — and how much you will have to pay to borrow money.
  • To make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
  • To help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

For more information, click here.

Teaching Suggestions

  • Ask students to summarize major provisions of the Fair Credit Reporting Act. How does the law protect consumers?
  • What is the importance of reviewing your credit report periodically?

Discussion Questions

  1. Why only authorized persons are allowed to obtain credit reports?
  2. What must a credit bureau do when you notify the credit bureau that you dispute the accuracy of its information?
  3. What should you do if you are denied credit, insurance, employment, or rental housing based on the information in the report?
Categories: Chapter 5, Credit Scores, Identity Theft | Tags: , | Leave a comment

COVID-19 Robocall Scams

Scammers are using illegal robocalls to profit from Coronavirus-related fears.  Illegal robocalls are universally hated, so why do scammers still use them? Because scammers need only a few people to take the bait for them to make money. Scammers might do that by getting your bank account number, tricking you into handing over gift card PIN codes, or stealing valuable personal information such as your Social Security number.

Crises such as COVID-19, bring out the best in people, and the worst in scammers who pretend to be from the Social Security Administration, offering fake Coronavirus tests to Medicare recipients, and scaring small businesses into buying bogus online listing services.

To hear examples of illegal robocalls exploiting concerns about the Coronavirus, and to stay up to date on the latest Federal Trade Commission (FTC) information, visit ftc.gov/coronavirus.

Now that you know what Coronavirus robocall scams are like, make sure you share this information with your friends and family members. And, if you get such scam calls,don’t believe them. Instead:

  • Hang up. Don’t press any numbers. The recording might say that pressing a number will let you speak to a live operator or remove you from their call list, but it might lead to more robocalls, instead.
  • Consider using a call blocking app or device. You also can ask your phone provider if it has call-blocking tools. To learn more, go to ftc.gov/calls.
  • Report the call. Report robocalls at ftc.gov/complaint. The more the FTC  hear from you, the more they can help fight scams.

For more information, click here.

Teaching Suggestions

  • Ask students if they or their family members have received such calls. If so, how did they respond?
  • How many students or family members have considered using a call blocking app or have contacted their phone provider to block such calls? Summarize their findings.

Discussion Questions

  1. Why is it not advisable to ask the caller to remove your name from their call list?
  2. How does reporting your robocalls help the FTC combat scammers?
Categories: Chapter 5, Identity Theft, Uncategorized | Tags: , , | Leave a comment

Tips for gift card shopping

Gift cards are one quick way to get through your last-minute holiday shopping list. But before you give (and get) gift cards, here are a few things you need to know.

  • Inspect gift cards before you buy. A gift card should have all its protective stickers in place. Report the card to the store if anything looks scratched off or damaged.
  • When you buy, save the receipt. Keeping the gift card receipt can be helpful if you run into problems with the card. 
  • Treat gift cards like cash. Report a lost or stolen gift card to the card’s issuer immediately. Most card issuers have toll-free numbers you can find online to report a lost or stolen card. Depending on the card issuer, you may even be able to get some money back.
  • Buy gift cards from sources you know and trust. Think twice about buying gift cards from online auction sites, to avoid buying fake or stolen cards.
  • Read the gift card’s terms and conditions. Know the deal you’re getting with gift cards. For example, are there fees every time it gets used – or if it sits unused?

And here’s the most important gift card tip of all:

  • Remember that gift cards are for gifts, not payments. Gift cards are a scammer’s favorite way to steal your money. Anyone who demands that you pay them with a gift card, for any reason, is always a scammer. This includes calls from imposters claiming to be a family member with an emergency, calls from the IRS and Social Security, law enforcement, and utility companies. Simply, never pay with a gift card.

Report gift card scams directly with the card issuer, then report it to the Federal Trade Commission at ftc.gov/complaint.

For more information, click here.

Teaching Suggestions

  • Ask students if they have ever given or received a gift card. If so, let them describe their experience.
  • Make a list of differences between a traditional debit-card and gift cards.

Discussion Questions

  1. Why is it important to inspect gift cards before you buy them?
  2. What are some of the disadvantages of gift cards?
  3. What happens to a gift card holder when the retailer/issuer goes bankrupt?
Categories: Chapter 5, Debit Cards | Tags: | Leave a comment

Apartment Loans

Many recent college graduates choose to rent expensive, upscale apartments rather than putting money into savings. Their “fear of missing out” (FOMO) on being “close to the action” or luxury-living amenities comes at a cost, with high demand for these units resulting in spiraling monthly rents.  To cover these higher costs, “apartment loans” are now available in several urban areas.

Similar to the high-risk mortgages that triggered the financial crisis in 2008, apartment loans may be viewed as predatory lending.  Renters may borrow up to $15,000 with no interest for the first six months, but then encounter an annual interest rate of 15-17 percent.  Some justify these loans in that the costs are lower than payday lending.

If you have to take out a loan to pay the rent for an apartment…you CAN’T afford to live there.  Your ability to build wealth and long-term financial security will depend on living within your income.

For additional information on apartment loans, click here.

Teaching Suggestions

  • Have students conduct a survey of renters to determine actions they took to determine the location and cost of obtaining an apartment.
  • Have students create a visual presentation with the dangers of apartment loans.

Discussion Questions 

  1. What actions might be considered to avoid apartment loans?
  2. Describe financial and personal concerns associated with apartment loans.
Categories: Chapter 5, Chapter 7, Credit Scores, Financing a Home | Tags: , | Leave a comment

Top Frauds

Are you at risk for fraud?  What are some of the more common frauds and how much could it cost you?

  • In 2018, the Federal Trade Commission (FTC) collected more than 1.4 million fraud reports, and Americans said they lost money to the fraud in 25 percent of those reports. Americans reported losing $1.48 billion to fraud – an increase of 38 percent over 2017.
  • The top reports in 2018 were: imposter scams, debt collection, and identity theft.
  • Younger people reported losing money to fraud more often than older people. Of those people who reported fraud and their age, 43 percent of people in their 20s reported a loss to that fraud, while only 15 percent of people in their 70s did.
  • When people in their 70s lost money, the amount tended to be higher: their median loss was $751, compared to $400 for people in their 20s.
  • Scammers like to get money by wire transfer – for a total of $423 million in 2018. That was the most of any payment method reported, but there was a surge of payments with gift and reload cards – a 95 percent increase in dollars paid to scammers last year.
  • Tax-related identity theft was down last year (by 38 percent), but credit card fraud on new accounts was up 24 percent. In fact, misusing someone’s information to open a new credit card account was reported more often than other forms of identity theft in 2018.
  • The top 3 states for fraud and other reports (per 100,000 population) are Florida, Georgia and Nevada. The top 3 states for identity theft reports (also per 100,000) are Georgia, Nevada and California.

For more information, click here.

Teaching Suggestions

  • Ask students if they, their relatives or friends have ever been victims of fraud. If so, what was the outcome?
  • Ask students to prepare a list of local, state, and federal agencies where fraud can be reported.

Discussion Questions

  1. Is it possible that the reason more young people reported fraud is because older persons are less likely to report?
  2. Are older people not reporting fraud because they are not tech savvy, or embarrassed by their inability to know they were scammed?
Categories: Chapter 5, Frauds and Scams, Identity Theft | Tags: , , | Leave a comment

Fake Credit Repair: Good Teton Professionals, LLC

In June 2019, the Federal Trade Commission (FTC) charged that two defendants, Douglas Filter and Marcio G. Andrade, using such trade names as Deletion Experts, Inquiry Busters, and Top Tradelines, used deceptive websites, unsolicited emails, and text messages to target consumers with false promises of substantially improving consumers’ credit scores by claiming to remove all negative items and hard inquiries from consumers’ credit reports.

The defendants also falsely claimed to substantially improve consumers’ credit scores by promising to add consumers as “authorized users” to other individuals’ credit accounts.  In most instances, however, the defendants were not able to substantially improve consumers’ credit scores.  The complaint also alleges that the defendants charged illegal upfront fees and failed to provide consumers with required disclosures about their credit repair services.

The defendants often used illegal remotely created checks to pay for the credit repair services they offered through telemarketing, according the FTC’s complaint.

For more information, click here.

Teaching Suggestions

  • Ask students to prepare a list of federal laws that protect consumers from operators of fake credit repair schemes.
  • What is the best advice before you sign with such companies as, Grand Teton Professionals, LLC; to repair your poor credit?

Discussion Questions

  1. What is a household to do if it is experiencing problems in paying bills, thus resulting in poor credit scores?
  2. What are your options, if you are having problems paying your bills and need help?
  3. Discuss the statement, “Only time and a conscientious effort to pay your debt in a timely manner will lead to the success of improving your credit report.”
Categories: Chapter 5, Consumer Complaints, Credit Scores, Frauds and Scams | Tags: , | Leave a comment

Weighed down by debt? How to ease the load

If you’re overwhelmed by debt, it’s crucial to find a solution.

FDIC Consumer News offers a few tips.

  • Contact your lender immediately if you think you won’t be able to make a loan payment.
  • Reputable credit counseling organizations can help you develop a personalized plan to solve a variety of money problems. 
  • Be very careful of “debt settlement” companies that claim they can reduce what you owe for a fee.
  • Avoid scams.
  • Remember that you have rights when it comes to debt collection.

For more information, click here.

Teaching Suggestions

  • Ask students if they know anyone who has had financial difficulties and how they resolved their problem.
  • Ask students to review the main provisions of the federal Fair Debt Collection Practices Act and how the law protects consumers from unfair debt collectors.

 Discussion Questions

  1. Why is it critical to contact your mortgage lender immediately if you think you can’t make a loan payment on time?
  2. In what ways reputable credit counseling organizations can help you develop a personalized plan to solve financial problems?
  3. What are the warning signs of possible fraud by a debt settlement company or credit counselor?
Categories: Chapter 5, Consumer Complaints, Credit Mistakes, Debt, Frauds and Scams | Tags: , | Leave a comment

Free Credit Freezes

Security freezes, also known as credit freezes, restrict access to your credit file, making it harder for identity thieves to open new accounts in your name. Starting September 21, 2018, you can freeze and unfreeze your credit file for free. You also can get a free freeze for your children who are under 16. And if you are someone’s guardian, conservator or have a valid power of attorney, you can get a free freeze for that person, too.

How will these freezes work? Contact all three of the nationwide credit reporting agencies – Equifax, Experian, and TransUnion. If you request a freeze online or by phone, the agency must place the freeze within one business day. If you request a lift of the freeze, the agency must lift it within one hour. If you make your request by mail, the agency must place or lift the freeze within three business days after it gets your request. You also can lift the freeze temporarily without a fee.

Don’t confuse freezes with locks. They work in a similar way, but locks may have monthly fees. If you want a free freeze guaranteed by federal law, then opt for a freeze, not a lock.

For more information, click here.

Teaching Suggestions

  • Ask students if anyone has already placed a credit freeze or a fraud alert. If so, what has been their experience?
  • Encourage students to place a credit freeze since it is now free to freeze or unfreeze their credit file.

Discussion Questions

  1. What might be the advantages or disadvantages of placing a credit freeze?
  2. What can you do if a credit reporting agency is not placing a credit freeze or fraud alert properly?
Categories: Chapter 5, Credit Scores | Tags: , | Leave a comment

Protect Your Identity

According to its last Consumer Sentinel report, the Federal Trade Commission received 371,061 identity theft complaints in 2017, down from 399,222 the previous year.  That’s good news, but the 2018 Identity Fraud Study issued by Javelin Strategy & Research tells a darker tale.  Based on random survey of Americans, it revealed that there was an 8 percent increase in identity fraud (the fraudulent use of someone’s personal information) from 2016 to 2017, and losses rose from $16.2 to $16.8 billion.  Javelin also notes that while the chip cards have cut down on fraud terminals or by cloning devices, the drop has been more than offset in online theft and fraud.

For More Information, click here.

Teaching Suggestions

  • Ask students if anyone has his/her identity stolen. If so, what has been their experience?
  • Ask students to prepare and then share a list of steps that they can take to reduce chances of becoming identity theft victims?

Discussion Questions

  1. How can you detect if you are a possible victim of an identity theft?
  2. If you become a victim of identity theft, what steps must you take immediately?
Categories: Chapter 4, Chapter 5, Frauds and Scams, Identity Theft | Tags: , | Leave a comment

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