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.

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?

Personal Finance Hacks

Hacks – skills and shortcuts – are used in many life settings.  For personal finance, here are some tips that can help stop money leakages:

  • Only use credit cards with financial advantages, such as cashback; always pay off credit card balances on time.
  • Making weekly payments, instead of monthly, helps to save interest and reduces the amount owed faster.
  • Pay off loans/debts with the highest interest rates first.
  • You might consider paying off a debt with another loan if the new loan has a much lower interest rate.
  • When shopping online, leave the item in the cart for several days or weeks; the price may be lower or you may decide you don’t really need the item.
  • Consider bulk purchases with friends to qualify for free shipping.
  • Take advantage of seasonal sales.
  • Unsubscribe from email offers.
  • Avoid household clutter to save time and money.
  • Cook your own meals; online videos and recipes offer fast, easy meals.
  • Talk to others for investment advice.

For additional information on personal finance hacks, click here.

Teaching Suggestions

  • Have students tell their personal experience with tech, travel, or personal finance hacks.
  • Have students create a video to dramatize various personal finance hacks.

Discussion Questions 

  1. How would you decide if a personal hack will be of value to you?
  2. Describe actions that might be used to communicate personal finance hacks to others.

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?

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?

Car Subscription Services

The opportunity to change cars like you change clothes is now possible.  For a monthly fee, car subscription services are an alternative to motor vehicle buying and leasing.

With an upfront fee is usually involved, the monthly fee covers the car payment, insurance, maintenance, and roadside assistance.  Subscribers can manage their plan online with the vehicle delivered to your home.

Car manufacturers that offer this service are Cadillac, Ford, Volvo and Porsche. Other companies specializing in offering a variety of makes and models are Fair, Flexdrive, Clutch and Carma.

Unlike leasing for 24 or 36 months, car subscription can be for as short as a month. However, some programs require a two-year contract, and only allow a trade-in (exchange) after 12 months.

The greatest benefit is the “negotiation-free” way of obtaining a car. And, if you don’t like the car, you can get a different vehicle. Car subscribers are reminded it’s not your car.  Smoking is usually prohibited and pets should be kept in carriers.  Not all cars are brand new but most are low mileage and less than six years old.

For additional information on car subscriptions, click here.

Teaching Suggestions

  • Have students talk to two or three others to obtain their opinions on the benefits and concerns of car subscription services.
  • Have students compare cost of various car subscription services with buying or leasing a vehicle.

Discussion Questions 

  1. What do you believe are the benefits and drawbacks of using a car subscription service?
  2. Describe life situations that might be most attracted to using a car subscription service.

Is Your Debit or Credit Card Compromised?

What should you do if you believe your debit or credit card has been compromised?  Yes, there are consumer protection regulations that can help.  For example, the Electronic Funds Transfer Act (EFTA) and the Consumer Financial Protection Bureau’s (CFPB’s) “Regulation E” limit your liability for losses from unauthorized transactions.

If your debit or credit card number is used to make an unauthorized withdrawal from a checking or savings account, minimize your losses by contacting your bank as soon as possible.  Your maximum liability under EFTA is $50 if you notify your bank within two business days after learning of the loss.  If you wait longer, you could lose more, according to the law.

If your credit card number is used without your authorization, your liability is normally capped by the Truth in Lending Act (TILA) and the CFPB’s “Regulation Z” at $50 for all unauthorized transactions, and remaining credit card losses are typically absorbed by the card issuer.  Some other worthwhile precautions you can take include:

  • Do not use ATMs in remote places, especially if the area is not well lit.
  • Go elsewhere if you see a sign directing you to only one of multiple ATMs in a location.
  • Shield the keypad with your hand when typing your PIN at the ATM or a retailer’s checkout area.
  • Regularly check your bank and credit card accounts for unauthorized transactions, even small transactions that you might think might not be worth reporting to your bank.

For more information, click here.

Teaching Suggestions

  • Ask students to summarize the major provisions of the Electronic Funds Transfer Act (EFTA).
  • Why is it important to notify your bank as soon as possible when your account has been compromised?
  • Let students debate the issue, “Use cash, why use a debit card?

Discussion Questions

  1. What is the Truth and Lending Act and how does it protect you if your debit/credit card is compromised?
  2. How can you determine if an ATM has a false cover or it has been tampered?

Common Credit Report Errors

What are common credit report errors that you should look for on your credit report?  When reviewing your credit report, check that it contains items about you.  Be sure to look for information that is inaccurate or incomplete.

Some common errors in credit reports are:

Identity errors

  • Errors made to your identity information (wrong name, phone number, address)
  • Accounts belonging to another person with the same name or similar name as yours (this mixing of two consumer’s information in a single file is called mixed file)
  • Incorrect accounts resulting from Identity theft

Incorrect reporting of account status

  • Closed accounts reported as open
  • You are reported as the owner of the account, when you are actually just an authorized user
  • Accounts that are incorrectly reported as late or delinquent
  • Incorrect date of last payment, date opened, or date of first delinquency
  • Same debt listed more than once (possibly with different names)

Data management errors

  • Reinsertion of incorrect information after it was corrected
  • Accounts that appear multiple times with different creditors listed (especially in the case of delinquent accounts or accounts in collection)

Balance Errors

  • Accounts with an incorrect current balance
  • Accounts with an incorrect credit limit

For more information, click here.

Teaching Suggestions

  • Why is important to check your credit reports every year?
  • Credit bureaus are required to follow reasonable procedures to ensure that your credit report is accurate, then why mistakes may occur?
  • Ask students if they have ever been contacted a credit bureau to dispute the accuracy of its information. What was the outcome?

Discussion Questions

  1. When you notify the credit bureau that you dispute the accuracy of its information, what must the credit bureau do to rectify mistakes?
  2. What are your legal remedies if a consumer reporting agency fails to comply with the provisions of the Fair Credit Reporting Act?

Tax Identity Theft Awareness Week

Are you looking forward to getting your tax refund in the New Year? Tax identity thieves may be looking forward to getting your refund too. That’s why the Federal Trade Commission has designated January 29-February 2, 2018 as Tax Identity Theft Awareness Week.

Tax identity theft happens when someone uses your Social Security number (SSN) to get a tax refund or a job. You might find out it’s happened when you e-file your tax return and discover that a return already has been filed using your SSN. Or, the IRS may send you a letter saying more than one return was filed in your name, or that IRS records show you have wages from an employer you don’t know.

Learn to protect yourself from tax identity theft and IRS imposter scams, and what to do if someone you know becomes a victim. The FTC and partners including the IRS, the Department of Veterans Affairs, and the Treasury Inspector General for Tax Administration will be co-hosting free webinars and Twitter chats during Tax Identity Theft Awareness Week. Visit ftc.gov/taxidtheft for details about the events and how to participate.

For more information, click here.

Teacher Suggestions

  • Ask students if filing early may avoid e-file tax identity theft fraud if someone files before they do.
  • Ask students what steps should they take if their identity is stolen?

Discussion Questions

  1. How can one protect from tax identity theft and IRS imposter scams?
  2. What can you do if you or someone else you know becomes a victim of identity theft?

Protect Your Social Media Accounts

The Internet has made our lives easier in so many ways. However, you need to know how you can protect your privacy and avoid fraud. Remember, not only can people be defrauded when using the Internet for investing; the fraudsters use information online to send bogus materials, solicit or phish.

Here’s what you can do to protect yourself when using social media:

Privacy Settings: Always check the default privacy settings when opening an account on a social media website.

Biographical Information: Consider customizing your privacy settings to minimize the amount of biographical information others can view on the website.

Account Information: Never give account information, Social Security numbers, bank information or other sensitive financial information on a social media website.

Friends/Contacts:  Decide whether it is appropriate to accept a “friend” or other membership request from a financial service provider, such as a financial adviser or broker-dealer.

Site Features: Familiarize yourself with the functionality of the social media website before broadcasting messages on the site. Who will be able to see your messages — only specified recipients, or all users?

For More Information, click here.

Teaching Suggestions

  • Ask students to make a list of their social media accounts. How do they protect their accounts from fraudsters?
  • Why do many social media websites require biographical information to open an account?

Discussion Questions

  1. Why is it important to limit the information made available to other social media users?
  2. Is there an obligation to accept a “friend” request of a service provider or anyone you don’t know or do not know well?
  3. Why be extra careful before clicking on a link sent to you even if by a friend?