Frauds and Scams

Free Credit Scores

Posted on January 28, 2015 by Melissa Hart

“Free credit scores” sounds good, right?  But what if you signed up for “free credit scores,” then found out you were enrolled in a credit monitoring program that costs $29.95 per month?  Not so good.  That’s what the FTC says happened with a company called One Technologies, Inc.  Now the company has agreed to settle the FTC’s charges that it misled consumers by advertising “free credit scores” but failing to tell them that they would be enrolled in a credit monitoring program for a monthly fee.

One Technologies, Inc. offered people “free” online access to their credit scores through at least fifty websites, including freescore360.com, freescoreonline.com , and scorescense.com.  But according to the FTC, the company didn’t clearly inform people that once they got their score, they would pay $29.95 per month for a credit monitoring program.  You could only get out of that monthly fee by calling to cancel.  Some people had to call multiple times.  Others were denied refunds.  One Technologies, Inc. will pay $22 million to compensate its customers and must get their consent before billing them.  Also, it must provide the customers with an easy way to cancel.

For additional information, click here.

Discussion Questions

  1. What can you do if you become victim of a deceptive marketing practice?
  2. Where can you get your free credit report at least once every year?

Teaching Suggestions

  1. Ask students to obtain their credit reports from Experian, TransUnion, and Equifax.
  2. Ask students to search the Internet for “free credit scores” and summarize their findings.
Categories: Chapter 5, Credit Scores, Frauds and Scams | Tags: | Leave a comment

The Perils of Penny Stocks

Posted on October 18, 2014 by Melissa Hart

“The best way to avoid penny stock scams is to do independent research.” 

This article underscores the importance of researching penny stocks before investing.  Too often, the lure of “big” profits encourages people to invest without researching penny stocks.  Simply put, they don’t do their homework.

According to this article, a good place to obtain research information about penny stocks is the Security and Exchange Commission website (www.sec.gov).  By examining a company’s 10-K annual report, 10-Q quarterly report, and Form 8-K filings, in which companies report material events.

The article also warns investors about email promotions about penny stocks that are more hype than reality.  For example, Paul Allen, a 65-year old retiree from Boston,  received a flood of emails about a company called Vapor Hub International suggesting that shares of the e-cigarette company were about to take off.  He invested and quickly lost 80 percent of his investment.  And there are many more examples where investors–especially investors with limited funds and little experience buying and selling stock–often lose all or a large portion of their investment.

For more information go to http://www.kiplinger.com/article/investing/T052-C008-S002-the-perils-of-penny-stocks.html

Teaching Suggestions

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

  • Remind students that there is no substitute for research when picking any stock–especially penny stocks issued by small companies without a proven track record.
  • Tell students to remember the old adage “if it sounds too good to be true, it probably isn’t true.”

Discussion Questions

  1. Most investors know the risks involved when they invest in penny stocks. Still, they invest their money.  Why do you think they choose penny stocks?
  2. Assume that you are considering an investment in Vapor Hub International. What information could be used to evaluate this penny stock?  Where would you get this information?
Categories: Chapter_12, Frauds and Scams, Investments, Stocks | Tags: , , , | Leave a comment

Home Depot Data Breach May Top $50 Million

Posted on September 10, 2014 by Melissa Hart

“Home Depot spokeswoman Paula Drake said ‘protecting our customers’ information is something we take extremely seriously.’” 

At the time of this blog, it is not clear how many Home Depot stores or shoppers were involved, but this breach could be one of the largest data breaches to ever hit a retailer.  It is also estimated that the cyber thieves made an estimated $50 million from this breach by selling credit card numbers and personal information.

Home Depot and many other retailers including Target, P. F. Chang’s, Neiman Marcus, and other companies, have all experienced similar data breaches in recent months.  To combat this problem, many companies are beginning to use a new “chip and pin” technology.  Already in use in Europe, the new technology contains a chip in your credit or debit card with account information, requires the user to use pin identification, and is nearly impossible to counterfeit.  Because the new technology has dual verification, card transactions are much, much safer for both retailer and customer.

For more information go to http://www.cbsnews.com/news/home-depot-data-breach-may-top-50-million/

Teaching Suggestions

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

  • Stress the importance of students monitoring credit and debit card activity on a regular basis.
  • Obtain a credit or debit card with the new chip and pin technology.
  • Encourage students to determine their liability if their credit or debit card information is stolen.

Discussion Questions

  1. Assume you are trying to decide between two different credit cards. One card does not have chip and pin technology and does not charge an annual fee.  The other card does have chip and pin technology, but charges an $85 annual fee?  Which card would you choose?  Explain your answer.
  2. Besides choosing a credit or debit card with chip and pin technology, what other steps can you take to make sure you are not a victim of identity theft?
Categories: Chapter 5, Frauds and Scams, Identity Theft | Tags: , | Leave a comment

Health Scams: Don’t Take Risks With Your Health and Your Money

Posted on August 6, 2014 by Melissa Hart

Lots of people are fooled with buying health products that sound great, but are really fakes.  These products may cause serious health problems, such as pain, suffering, or even death.

Watch out for the following fraudulent claims:

  • It’s Natural. Just because a product is “natural” does not mean it is safe.
  • It’s So Easy. Don’t believe the promises of “lose weight while you sleep.”  If it sounds too easy, it might be a scam.
  • Miracle Cure. Generally, one pill will not treat or cure many different illnesses such as cancer, diabetes, AIDS, or arthritis.
  • It Worked for Me. Personal success stories by “real people” or doctors are easy to make up.
  • They Don’t Want You to Know. Always ask your health care providers what is best for your health.

 

For additional information on health fraud and scams go to http://www.fda.gov/healthfraud, http://www.fda.gov/medwatch, and http://www.ftc.gov

Teaching Suggestions

  • Ask students if they have fallen prey to health care scammers.
  • Have students make a short presentation with a summary of actions that might be taken to avoid health scams.

Discussion Questions

  1. Why do health scammers continue to prey on unsuspecting consumers?
  2. What can consumers do to avoid being victimized by health scammers?
Categories: Chapter 9, Frauds and Scams | Tags: , , , | Leave a comment

Managing someone else’s money

Posted on July 5, 2014 by Melissa Hart

Millions of people serve as fiduciaries, someone who manages money or property for another person who is unable to do so. This responsibility provides caring assistance while also protecting the person from potential scams and fraud.  Many older Americans experience declining capacity to handle finances, which can make them vulnerable.  The main responsibilities of a fiduciary are to: (1) act in the person’s best interest, (2) manage money and property carefully, (3) keep money and property separate from own, and (4) maintain good records.

The Consumer Financial Protection Bureau (CFPB) recently published four guides to help financial caregivers, particularly those who handle the finances of older Americans.  These guides are designed for those who serve as agents with power of attorney, a court-appointed guardian, a trustee or as a government fiduciary, such as a Social Security payee.

The guides will assist financial caregivers as they: (1) plan and implement their duties, (2) attempt to avoid scams and financial exploitation, and what to do if the person is a victim, and (3) require additional information; the guides tell where to go for help.

For additional information on a managing someone else’s money, go to:

http://www.consumerfinance.gov/managing-someone-elses-money

Click to access 201306_cfpb_msoa-participant-guide.pdf

Teaching Suggestions

  • Have students talk to someone who manages money on behalf of someone else.  Obtain information about the activities and concerns they have encountered.
  • Prepare a list of actions that might be taken to avoid scams targeted at older consumers and other vulnerable audiences.

Discussion Questions   

  1. What are situations that might require a person to manage the money of another person?
  2. What are examples of frauds and scams aimed at older consumers?
  3. How might a person avoid frauds and scams?
Categories: Chapter 2, Chapter 6, Chapter_14, Financial Planning, Frauds and Scams, Trusts | Tags: , , , , | Leave a comment

Blog at WordPress.com.