Beware of Credit-Repair Scams

According to the Federal Trade Commission (FTC), Financial Education Services (FES) has bilked people out of more than $213 million with a scheme that combines charging people for worthless credit repair services and recruiting them to sell the same bogus services to others.  FES also does business as United Wealth Services.

FES claims it can boost people’s credit scores by hundreds of points quickly by permanently removing negative information from their credit reports and adding positive information. But the FTC says FES’s services accomplish little or nothing. For example, FES sends clients form letters to send to credit bureaus to dispute negative items, but the letters don’t include supporting documents so they rarely result in removal of the items.

The complaint says FES charges people $99 up front for its services, plus up to $89 each month. It’s illegal for a credit repair company to charge people before fully performing the services it promises. Also, the complaint alleges, FES doesn’t give people important information they’re entitled to by law, including written information about the total cost of its services and its refund and cancellation policies.

According to the complaint, FES also pressures people to become FES “agents,” telling them they can make tens of thousands of dollars a month selling FES services to other consumers and recruiting them to become FES agents themselves. But, the FTC says, FES’s purported business opportunity requires its agents to pay hundreds of dollars to join and advance in the business. And, the FTC alleges, in classic pyramid scheme style, FES incentivizes recruiting new agents over selling credit repair services. The complaint charges that few people, if any, make the income promised, and many lose money as FES agents.

If you want to repair your credit, Fixing Your Credit FAQs has information about building your credit and spotting scams. And, if you’re thinking about investing in a business that requires you to recruit other investors, read this information about spotting a pyramid scheme.

For more information, click here.

Teaching Suggestions

  • Ask students to make a list of the legal steps to take to improve their credit scores.
  • What are the legitimate resources for low-cost or no cost help to repair your credit?

Discussion Questions

  1. Is it possible for you to boost your credit score by hundreds of points quickly by permanently removing negative information from your credit reports and adding positive information?  Explain your answer.
  2. Discuss the statement: “Sometimes doing it yourself is the best way to repair your credit.”
  3. What is one of the most important step you can take to improve your credit score?

Is a credit freeze or fraud alert right for you?

Credit freezes and fraud alerts can help reduce your risk of identity theft. Both are free and make it harder for identity thieves to open new accounts in your name. One may be right for you.

Credit freezes

A credit freeze is the best way you can protect against an identity thief opening new accounts in your name. When in place, it prevents potential creditors from accessing your credit report. Because creditors usually won’t give you credit if they can’t check your credit report, placing a freeze helps you block identity thieves who might be trying to open accounts in your name.

A freeze also can be helpful if you’ve experienced identity theft or had your information exposed in a data breach. And don’t let the “freeze” part worry you. A credit freeze won’t affect your credit score or your ability to use your existing credit cards, apply for a job, rent an apartment, or buy insurance. If you need to apply for new credit, you can lift the freeze temporarily to let the creditor check your credit. Placing and lifting the freeze is free, but you must contact the national credit bureaus to lift it and put it back in place.

Place a credit freeze by contacting each of the three national credit bureaus, Equifax, Experian, and TransUnion. A freeze lasts until you remove it.

Fraud alerts

A fraud alert doesn’t limit access to your credit report, but tells businesses to check with you before opening a new account in your name. Usually, that means calling you first to make sure the person trying to open a new account is really you.

Place a fraud alert by contacting any one of the three national credit bureaus. That one must notify the other two. A fraud alert lasts one year and you can renew it for free. If you’ve experienced identity theft, you can get an extended fraud alert that lasts for seven years.

Learn more about credit freezes, fraud alerts, and active duty alerts for service members. And, if identity theft happens to you, visit IdentityTheft.gov to report it and get a personal recovery plan.

For More Information, click here.

Teaching Suggestions

  • Ask students if they, their friends or relatives have placed a credit freeze or a fraud alert.  If so, what has been their experience?
  • Ask students to make a list of downsides to a credit freeze and to fraud alerts.

Discussion Questions

  1. What is the difference between a credit freeze and a fraud alert?
  2. Under what circumstance a credit freeze can be helpful?

THE NEW “BUY NOW, PAY LATER”

For a long time, “buy now, pay later” (BNPL) has referred to the use of credit. However, recently a new BNPL approach has surfaced, and is growing. Today, financial technology (FinTech) companies are using a different method to finance consumer purchases.

BNPL providers include Affirm, Afterpay, Klarna, Zip, and PayPal. The BNPL plan allows consumers to obtain a purchase immediately and then make a series of equal payments, often four payments each due two weeks apart. The first payment is due at the time of purchase.

Most BNPL plans charge interest and late fees. These plans often offer financing to customers with bad credit or no credit. BNPL is used mainly for online shopping although the plan is also available in some stores. Purchases of technology, furniture, clothing, beauty care products, groceries, health care services, and to eat at restaurants are the most common uses of BNPL.

The main benefits of BNPL mentioned by consumers, include to:

  • spread cost of expensive items over time.
  • buy items that they might not otherwise be able to afford.
  • avoid credit card debt.
  • try out the BNPL method.
  • not have to wait until payday to buy an item.

When selecting a BNPL plan, search for those with low or no interest and low or no late fees. Remember when using BNPL, you are still taking on debt. This easy access to credit often results in overspending. Some people will make purchases through multiple plans resulting in greater financial difficulties.

Be sure you can pay on time to avoid late fees and interest charges. Unlike traditional loans, BNPL providers may not report to credit bureaus, so you are not building a credit record.

For additional information on BNPL, click on these articles:

Article #1

Article #2

Teaching Suggestions

  • Have students ask if any friends or relatives have used a BNPL plan. Obtain information about their experiences.
  • Have students create a visual poster, slide presentation, or video with the benefits and drawbacks of BNPL plans.

Discussion Questions 

  1. What aspects of BNPL might create financial difficulties?
  2. Describe actions a person might take to evaluate a BNPL plan.

Money Habits of Women and Men

Based on recent research, findings comparing the financial habits of women and men include:

  • Overall, single men outspend women, which may be due to higher average earnings. Men spend more on food and transportation, while women have higher spending for clothing. Both groups have similar spending for entertainment.
  • Women are wiser shoppers, buying items on sale and using coupons more often than men.
  • For debt, including credit cards, student loans, auto loans, personal loans, home equity lines of credit, and mortgages, men have more debt than women.
  • For both groups, the main financial goals were saving for a vacation, paying off credit card debt, and improving their credit score.
  • As they near retirement, men had higher amounts in their retirement funds. However, women are more likely to participate in an employer retirement plan than men, and save a greater percentage from their paychecks.

For additional information on the money habits of women and men, go to:

Source #1

Source #2

Teaching Suggestions

  • Have students create a short survey to compare the spending, saving, and investing activities of women and men.
  • Have students create a visual proposal (poster or slide presentation) to suggest improved money management activities.

Discussion Questions 

  1. What factors might affect differences between the money management activities of women and men?
  2. Describe actions a person might take to improve money management activities. 

Managing your credit report

The three nationwide consumer reporting agencies–Equifax, TransUnion, and Experian–will provide one free credit report every 12 months if you request it. As a result of a 2019 settlement, all U.S. consumers may also request up to six free copies of their Equifax credit report during any twelve-month period through December 31, 2026. These free copies will be provided to you in addition to any free reports to which you are entitled under federal law.

If you run into difficulty getting your free Equifax, TransUnion, or Experian annual credit report(s) from AnnualCreditReport.com or its toll-free phone number, try contacting the respective institution(s) directly for help:

  • Equifax, (866) 349-5191 (Option 3)
  • TransUnion, (800) 680-7289 (Option 1)
  • Experian, (888) 397-3742 (Option 2 followed by Option1)

Freeze your report

Each of these companies offers you the option to freeze your report with them if you request it. By law each must freeze and unfreeze your credit file for free if you request it. You also can get a free freeze for your children who are under 16. If you are someone’s guardian, conservator or have a valid power of attorney, you can get a free freeze for that person, too.

Free Credit Monitoring for Military

Equifax, TransUnion, and Experian provide free credit monitoring services to active duty service members and to National Guard members, by visiting the active military web pages of each company.

For more information, click here.

Teaching Suggestions

  • Ask students if they or their families have requested their credit report(s) recently.  If so, what was their experience?
  • Ask the students to make a list of circumstances that will lead them to freeze their credit reports.  When should they consider unfreezing reports?

Discussion Questions

  1. When might it be necessary to freeze or unfreeze credit reports for children who are under 16 years of age?
  2. Should federal government require nation’s credit reporting agencies to provide free credit reports to consumers?   Explain your answer.

What is a Robocall?

If you answer the phone and hear a recorded message instead of a live person, it’s a robocall.  Americans have seen a significant increase in the number of illegal robocalls because internet-powered phone systems have made it cheap and easy for scammers to make illegal calls from anywhere in the world, and to hide from law enforcement by displaying fake caller ID information.

To date, the Federal Trade Commission (FTC ) has brought more than a hundred lawsuits against more than 600 companies and individuals responsible for billions of illegal robocalls and other Do Not Call violations.

The FTC also is leading several initiatives to develop technology-based solutions. Those initiatives include a series of robocall contests that challenge tech gurus to design tools that block robocalls and help investigators track down and stop robocallers. The FTC also is encouraging industry efforts to combat caller ID spoofing. Here’s the FTC’s game plan to combat robocalls:

  • continue aggressive law enforcement
  • build better tools for investigating robocalls 
  • coordinate with law enforcement, industry, and other stakeholders
  • stimulate and pursue technological solutions.

For More Information, click here.

Teaching Suggestions

  • Ask students how they or their families respond to robocalls.  Has the number of robocalls increased in recent months?  If so, what might be the reasons?
  • Ask students to make a list of actions to take in combating robocalls.  Share the list with other students.

Discussion Questions

  1. Should you consider reducing unwanted sales calls by submitting your phone numbers to the National Do Not Call Registry?
  2. Why doesn’t the National Do Not Call Registry stop robocalls?
  3. Are robocalls legal?  What kinds of robocalls are allowed without your permission?
  4. How can you manage to get fewer robocalls?

Gift Cards Scams

new data analysis by the Federal Trade Commission (FTC) shows that gift cards continue to be the most common form of payment when Americans report losing money to most scammers.

Since 2018, the data analysis shows American consumers have reported spending nearly $245 million on gift cards that they used to pay scammers for a wide variety of scams.   Scammers most likely to rely on gift cards as a payment method  were government imposters, family imposters, business imposters, and tech support scams.

In these scams, the scammers convince consumers that they must pay using gift cards. The reasons scammers present vary, but they always tell you that you must go to a retail outlet, purchase physical gift cards, and then provide the PIN numbers on the cards to the scammer. Reports suggest scammers favor certain brands of gift cards, such as, eBay or Amazon, however, their brand preferences change over time.

Because of the rapid increase in scams, the FTC has started a new campaign to partner with retailers around the country to help prevent consumers avoid a gift card payment scam.

The FTC has created warning signs that retailers can place directly at the point of sale for gift cards—both on the racks where they are displayed and at cash registers. The signs are designed to stop consumers who may be ready to buy gift cards to pay a scammer, raising key questions and reminding them that “gift cards are for gifts, not payments.

For more information, click here.

Teaching Suggestions

  • How many students have purchased gift cards and how did they use these cards? For personal use?  For gifts? For scammers?
  • What can you do to protect yourself and your family against gift card scams?
  • What will you do if someone calls you from tech support and asks you to pay them with a gift card to fix your computer?

Discussion Questions

  1. Why gift cards continue to be the most common form of payment for most scammers?
  2. Why do so many Americans get scammed by imposters?
  3. What can consumers do to avoid such scams?
  4. Discuss the statement, “Gift cards are for gifts, not payments”.

What to Do When Information Is Lost or Exposed

What to Do When Information Is Lost or Exposed

Did you recently get a notice informing you that your personal information was exposed in a data breach? Did you lose your wallet? Or learn that an online account was hacked? Depending on what information was lost, there are steps you can take to help protect yourself from identity theft

What information was lost or exposed?

  1. Social Security number
  • If a company responsible for exposing your information offers you free credit monitoring, take advantage of it.
  • Get your free credit reports from annualcreditreport.com. Check for any accounts or charges you don’t recognize.
  • Consider placing a free credit freeze. A credit freeze makes it harder for someone to open a new account in your name.
  • Try to file your taxes early — before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job.
  • Respond right away to letters from the IRS.  Don’t believe anyone who calls and says you’ll be arrested unless you pay for taxes or debt.
  • Continue to check your credit reports at annualcreditreport.com.  You can order a free report from each of the three credit reporting companies once a year.
  1. Online login or password
  • Log in to that account and change your password. If possible, also change your user name. If you can’t log in, contact the company. Ask them how you can recover or shut down the account.

3. Debit or credit card number

  • Contact your bank or credit card company to cancel your card and request a new one.
  • Review your transactions regularly. Make sure no one misused your card. If you find fraudulent charges, call the fraud department and get them removed.
  • If you have automatic payments set up, update them with your new card number.
  • Check your credit report at annualcreditreport.com.

4. Bank account information

  • Contact your bank to close the account and open a new one.
  • Review your transactions regularly to make sure no one misused your account. If you find fraudulent charges or withdrawals, call the fraud department and get them removed.
  • If you have automatic payments set up, update them with your new bank account information.
  1. Driver’s license information
  • Contact your nearest motor vehicles branch to report a lost or stolen driver’s license. The state might flag your license number in case someone else tries to use it, or they might suggest that you apply for a duplicate.
  • Check your credit report at annualcreditreport.com.

 

For More Information, click here.

Teaching Suggestions:

  • Ask how many students check their credit report at least once a year. What is the importance of checking your credit report regularly?
  • Ask if any student has placed a credit freeze. If so, what was their experience?

Discussion Questions:

  1. What is the difference between a credit freeze and a fraud alert?
  2. What must you do if someone uses your Social Security number to get a tax refund?

Warning Signs of Identity Theft

What Do Thieves Do With Your Information?

 Once identity thieves have your personal information, they can drain your bank account, run up charges on your credit cards, open new utility accounts, or get medical treatment on your health insurance. An identity thief can file a tax refund in your name and get your refund. In some extreme cases, a thief might even give your name to the police during an arrest.

Here are clues that someone has stolen your information:

  • You see withdrawals from your bank account that you can’t explain.
  • You don’t get your bills or other mail.
  • Merchants refuse your checks.
  • Debt collectors call you about debts that aren’t yours.
  • You find unfamiliar accounts or charges on your credit report.
  • Medical providers bill you for services you didn’t use.
  • Your health plan rejects your legitimate medical claim because the records show you’ve reached your benefits limit.
  • A health plan won’t cover you because your medical records show a condition you don’t have.
  • The IRS notifies you that more than one tax return was filed in your name, or that you have income from an employer you don’t work for.
  • You get notice that your information was compromised by a data breach at a company where you do business or have an account.

For more information, click here.

Teaching Suggestions

  • Ask students if they, their family members or friends have been victims of an identity theft. What was their experience and how did they resolve the problem?
  • Ask students if they mail bills from their home mail box, especially if it is out by the street. What might be some dangers of this method of mailing bills?

Discussion Questions

  1. Should you put your Social Security and driver’s license numbers on your checks?   Why or why not?
  2. Why is it important to check your credit report each year? Should you consider credit monitoring, identity monitoring service, or identity theft insurance?  Why or why not?

Beware of scams related to the coronavirus

Scammers are taking advantage of the corona virus (COVID-19) pandemic to con people into giving up their money. Though the reason behind their fraud is new, their tactics are familiar. It can be even harder to prevent scams right now because people aren’t interacting with as many friends, neighbors, and senior service providers due to efforts to slow the spread of disease.

Those who are ill or don’t feel comfortable potentially exposing themselves may need someone to help with errands. Be cautious when accepting offers of help and use trusted delivery services for supplies and food. During this time of uncertainty, knowing about possible scams is a good first step toward preventing them.

  1. Scams offering COVID-19 vaccine, cure, air filters, testing

There is an increasing number of scams related to vaccines, test kits, cures or treatments, and air filter systems designed to remove COVID-19 from the air in your home. At the time of this writing, there is neither a vaccine nor a cure for this virus. If you receive a phone call, email, text message, or letter with claims to sell you any of these items–it’s a scam.

  1. Fake corona virus-related charity scams

A thief poses as a real charity or makes up the name of a charity that sounds real to get money from you. Be careful about any charity calling you asking for donations. If you are able to help financially, visit the website of the organization of your choice to make sure your money is going to the right place. And be wary if you get a call following up on a donation pledge that you don’t remember making–it could be a scam.

  1. “Person in need” scams

Scammers use the circumstances of the corona virus to pose as a grandchild, relative or friend who claims to be ill, stranded in another state or foreign country, or otherwise in trouble, and asks you to send money. The scammer may ask you to send cash by mail or buy gift cards. These scammers often beg you to keep it a secret and act fast before you ask questions. Don’t panic!  Don’t send money unless you’re sure it’s the real person who contacted you. Hang up and call your grandchild or friend’s phone number to see if the story checks out. You could also call a different friend or relative to check the caller’s story.

  1. Scams targeting your Social Security benefits

Local Social Security Administration (SSA) offices are closed to the public due to COVID-19 concerns, SSA will not suspend or decrease  Social Security benefit payments or Supplemental Security Income payments due to the current COVID-19 pandemic. Scammers may mislead people into believing they need to provide personal information or pay by gift card, wire transfer, internet currency, or by mailing cash to maintain regular benefit payments during this period. Any communication that says SSA will suspend or decrease your benefits due to COVID-19 is a scam, whether you receive it by letter, text, email, or phone call. Report Social Security scams to the SSA Inspector General online at oig.ssa.gov .

For more information, click here.

Teaching Suggestions

  • Ask students if they, their friends, or relatives have been victims of coronavirus- related scams? If so, what was their experience?
  • Someone you don’t know contacts you asking for any personally identifiable information by phone, in person, by text message, or email. What will be your response?

Discussion Questions

  1. Someone you don’t know sends you a check, maybe prize-winnings or the sale of goods and asks you to send a portion of the money back. What will you do and why?
  2. Discuss the statement: “The federal. State, and local consumer protection agencies are doing everything possible to protect consumers from fraudsters”.