Month: March 2013

Protecting Your Children From Identity Theft

Millions of adults fall victim to identity theft each year, and while individuals are becoming more knowledgeable about how to protect themselves, few rarely think about protecting their children from identity theft.  Identity thieves are increasingly targeting children, using their personal information for credit, employment, and medical and criminal purposes.  In the mind of an identity thief, the earlier in a child’s life that they can obtain this information the better, because it gives them a longer time to use the information for their own personal needs before being noticed.

 

Credit card companies do not usually have a birthdate verification system, and therefore it is easy for identity thieves to use a child’s social security number to get credit.  Because first time applicants are considered to have “good credit” children who have no credit in their names are prime targets.

 

Identity thieves can also commit “synthetic identity theft” where they use part of a child’s information with other fictitious information such as birthdates and names.

 

In order to protect your child you want to do many of the same things you would do to protect yourself.  First, you want to order credit reports for everyone in your family, regardless of age.  To do this visit annualcreditreport.com and contact one of the three major reporting agencies.  It is also recommended that you do a “manual search” of your child’s social security number by the agency that you submit to.

 

Additionally, as I noted in a previous post “Tips to Help Protect Yourself from Becoming a Victim of Identity Theft,” make sure that you shred documents that contain sensitive personal information about your child, be careful not to carry your child’s social security card on you (keep it in a safe and secure place in your home) and, if someone asks for your child’s personal information make sure to ask Why they need the information What they are going to use the information for, and How they are going to protect the information.

 

Most import is just being aware that children are just as susceptible to becoming victim’s of identity theft as adults.  Parents and guardians need to make sure that they are taking the same precautions to protect their children’s identities that they take to protect their own identities.  If your child’s identity is stolen you should go through the same process as you would if your own identity was stolen—for more information on what to do if your or your child’s identity is stolen please see my previous post “What to do if Your Identity is Stolen” or visit: http://www.consumer.ftc.gov/features/feature-0014-identity-theft

What to do if Your Identity is Stolen:

Recently, a news story was released revealing that sensitive information about numerous celebrities, including Michelle Obama, Beyonce, and Hillary Clinton, was posted on a public website.  The website posted addresses, financial data, social security numbers, and even credit card numbers of the celebrities.  While the accuracy of the information is still under investigation, this story is a good example of how anyone can become a victim of identity theft.

 

In my previous post “Tips to Help Protect Yourself from Becoming a Victim of Identity Theft,” I discussed steps that individuals can take to reduce their risks of having their identities stolen.  However, even with these precautions in place, it is still possible to become a victim of identity theft.  Realizing that your identity has been stolen can be a scary time, it can be hard to think straight, let alone know what you need to do to prevent further damage.  The Federal Trade Commission (FTC) recommends that if you think your identity has been stolen you should take three main steps:

 

1)   Place an Initial Fraud Alert

2)   Order Your Credit Reports

3)   Create an Identity Theft Report

 

1. Place an Initial Fraud Alert:

What: An initial fraud alert is a warning that you can place on your credit report that lets potential creditors know that you may be a victim of identity theft and requires that the creditors take extra steps in verifying your identity before issuing credit.  It is FREE and lasts for 90 days.

 

Why: Placing an initial fraud alert makes it harder for an identity thief to open more accounts in your name, increase the credit limit on an existing account, or obtain a new card on an existing account.

 

How: Contact one of the credit reporting companies (see contact information below), tell them that you are a victim of identity theft, and ask for a fraud alert on your credit file. Make sure to confirm that they are going to contact the other two credit reporting companies!

 

  • Equifax: 1-800-525-6285
  • Experian:1-888-397-3742
  • TransUnion: 1-800-680-7289

 

Additional Note: There are two other types of “special” fraud alerts:

 

  • Extended Fraud Alert: If you are a victim of identity theft and have a valid police report/identity theft report (discussed later in this post) you can get an extended fraud alert that lasts for 7 years (as opposed to the traditional 90 day period)
  • Active Duty Alert: This is available to persons on active military duty and is similar to the initial 90 day alert, except that it lasts 12 months and your name is removed from prescreened offers of credit or insurance for 2 years.

 

2. Order Your Credit Reports

  • Go to annualcreditreport.com (ONLY this websiteà not others such as freecreditreport.com which is not actually free)
  • Get your free credit report from each of the 3 credit reporting agencies.

 

3. Create an Identity Theft Report

 

What: Identity Theft Affidavit+ Police Report= Identity Theft Report

An identity theft report is an official, valid law enforcement report that alleges the consumer’s identity theft.  This report helps you invoke your rights under the Fair Credit Reporting Act.  Without it you may be able to assert some, but not all, of your rights.

 

Why:

  • Get fraudulent information removed from your credit report.
  • Stop companies from collecting debts that were caused by identity theft.
  • Help you get more information about accounts opened or misused by identity theft.

 

How:

 

Identity theft is currently one of the fastest growing crimes, and while there are many things we can do to reduce our risks of becoming victims of identity theft, sometimes it still happens (even to the President’s wife!).  While having your identity stolen can be overwhelming and stressful, it is important that you take these 3 initial steps as soon as possible to minimize further damage and start getting your life back together!

 

** Note: my colleague Brittany McNamara wrote a post on what to do if you wallet is stolen (Have You Ever Lost Your Wallet? What To Do When It Happens To You).  While there may be some overlap with identity theft, there are different steps you want to take for each.  If your wallet has been stolen AND you believe you may be a victim of identity theft, you would want to go through both processes.

Tips to Help Protect Yourself from Becoming A Victim Of Identity Theft:

Imagine you are drinking your morning coffee, you open the newspaper to catch up on the current events and much to your surprise you see your name in an article describing a man who was arrested the night before on drug charges.  You brush it off as a coincidence that someone shares your same name, have a quick laugh about it, and go about your day; however, the next week you are fired from your job for not informing them of your criminal record.  This is when you realize your identity has been stolen.

 

This is just one example of how an identity thief can steal and  use your personal information.  An identity thief can use your personal information to drain your bank account, run up charges on your credit cards, open new utility accounts in your name, get medical treatment on your health insurance, file a tax return in your name and get your refund, or, as in our example above, give your name to the police during an arrest.  Regardless of how your identity is stolen, it can be a very scary time and it can take years to repair the damage that was done.  While no one can completely protect himself or herself from becoming a victim of identity theft, there are a few simple things you can be doing now that help reduce your risk.

  • Review your monthly statements: Check your bank accounts and statements and look for any inconsistencies.  Make sure that your records match up with what your statements are saying.  Look for any charges you do not remember making.
  • Order and review credit reports: Go to annualcreditreport.com and order your free credit report from each credit reporting agency.  Review your credit reports to make sure that they match up with your records.
  • Keep personal information secure: Keep your personal information in a safe and secure place both at home and at work.  Keep the location of this information to yourself.  Many times our identities are stolen by people we know and often trust.
  • Minimize information you carry: Clean out your wallet/purse.  Only carry what you need (identification, credit or debit card).  Most of the time you do not need to have your social security card with you, leave it at home in a safe and secure place.  Minimize the information an identity thief would have about you if they stole your wallet or purse.
  • Pick up mail promptly: Identity thieves can obtain sensitive personal information about you by stealing your mail.  If you do not have a locked mailbox, make sure to pick up your mail promptly.  Along with this, if you have to mail an item that contains personal information drop it off directly at the post office instead of leaving it in your mailbox. 
  • Shred documents containing personal information:  Another way that identity thieves get sensitive information is by going through the trash outside of personal residences and businesses (“dumpster diving”).  Shred documents that contain personal information before throwing them in the trash. 
  • Before sharing personal information ask: WHY, WHAT, HOW:  If someone asks for your personal information, particularly your social security number, ask why they need the information, what they are going to use it for, and howthey are going to protect it. If you do not feel comfortable with their answers, do not give them your personal information. 
  • Keep passwords private:  Try and avoid making passwords that are easy to guess based on general information about yourself (pet names, children names, street addresses etc).  Add numbers, symbols, and capitalized letters when possible. If you must write down your passwords keep them in a safe and secure place (ie: not taped under mousepad).
  • Be careful about information you put on social media sites: An identity thief can find out a lot about a person based on the information they put on social media sites such as Facebook and Linkedin.  Be careful about what information you put on these sites, and make sure to check your privacy settings to see who can see information about you.

 

While no one is completely safe from becoming a victim of identity theft, taking a few simple steps can greatly reduce your risk.  For more information on how to protect yourself from becoming a victim of identity theft check out this video by the Federal Trade Commission: http://www.consumer.ftc.gov/media/video-0023-what-identity-theft

 

For more information on identity theft in general visit: http://www.consumer.ftc.gov/features/feature-0014-identity-theft

Gift Cards: A Perfect Gift or A Perfect Nuisance

How many of you remember receiving gift cards for birthdays, holidays, and special events? You were always so excited to get one because it meant that you had the chance to pick out not only what you wanted, but also pick it out when you wanted it. There wasn’t any hassle with having to deal with getting a gift receipt, returning the product to the store within the designated time frame, and then having to buy something that day (usually before you lost that small slip of paper that indicated you had store credit).

However, gifts cards were both the best and worst gift ever. Many of them had expiration dates within the year, inactivity fees that would gradually deplete the entire balance on the card, and transaction fees just for using the gift cards!

The CARD Act attempted to address many of these problems, but consumers need to be aware of several problems that still exist.

The CARD Act only applies to gift cards issued by retailers and those gift cards with a Visa, American Express, MasterCard, or Discover logo that don’t fall under the label of prepaid cards. Some of the enacted under the CARD Act can be found on the Federal Reserve’s website and include:

  • Limits on Expiration Dates: The money that you put on a gift card is good for at least five years from the date that the card is purchased
  • Replacement Cards: If your card expires, you can often call the company that issued it and ask for a replacement card
  • Fees Disclosed: Gift card issuers must clearly disclose all fees
  • Fee Limits:
    • The CARD Act limits the amount of fees, such as maintenance, dormancy or inactivity, usage, and fees for adding money to your card UNLESS
      • You haven’t used your card for at least a year, and you are only charged one fee per month

 

The rules mainly address the concern that consumers were being taken advantage of by companies who would hide expiration dates in obscure places or put high fees in place that essentially deprive uninformed consumers of the full value of their gift cards by charging them for simply using their gift cards.

There are still several gaps left in the rules that gift card issuers can use to take advantage of consumers. For instance, gift card issuers can still charge fees if they include them in the purchase price of the gift card. There is also a debate over what should happen in states (like Maine and Tennessee) where gift cards are considered abandoned property after they are not used for two years.

There are also several scams to be aware of when buying gift cards. The Internet has provided many benefits, but it has also provided an easy avenue for scammers to defraud the unsuspecting consumer. According to the Federal Trade Commission (FTC), online auction sites may allow fraudsters to sell gift cards that are counterfeits or stolen.

This past winter, text message gift card scams ran rampant. The Better Business Bureau (BBB) recently drew attention to text message gift card scams and explained how the scam works. According to the BBB, the texts are a way of gaining personal information from consumers for various advertisers. The FTC is aware of this issue. In a press release from March 7, 2013, the FTC stated that it is targeting the senders of the unwanted text messages and the operators of the associated websites through several lawsuits.

 

If you have a general problem with a gift card, the FTC suggests that you contact the company who issued the gift card first to see if they can resolve the problem. If that doesn’t work…

  • For Cards Issued by Retailers: Issue a complaint with the State Attorney General or contact the FTC here.
  • For Cards Issued by National Banks: Send an email to the Comptroller of the Currency’s (OCC) Customer Assistance Group at customer.assistance@occ.treas.gov

Have You Ever Lost Your Wallet? What To Do When It Happens To You

Have you ever lost your wallet? I most certainly have. I recently lost my wallet while traveling, and I had to go through the whole process of calling credit card companies, calling my bank, filing a police report, and dealing with different law enforcement agencies.

The process is actually fairly complex. When relating my story to the police and various TSA agents, I had to go through a list of everything important in my wallet: credit cards, cash, driver’s license, and etc. It made me realize how much very personal information we keep on our persons on an everyday basis. So what do you do when you lose your credit card?

I found a very helpful checklist on the website for the Washington State Department of Financial Institutions:

1. File a Police Report

2. Notify your bank

3. Cancel all of your credit cards immediately

4. Notify major credit reporting agencies

5. A few weeks after the loss or theft, get a copy of your credit report to determine if

fraudulent transactions have been made in your name

 

These are all important steps. I’d like to give a little bit of advice on each one and include some personal tips that I have had the misfortune of needing to learn.

 

1. File a Police Report.

Contact the police department in the city where you lost your wallet. Some cities, such as Denver, have an online police form that you can fill out.

Make sure to keep a copy of your case number so that you can track whether the report was actually received. Keeping a copy of your report is also important for several reasons. Some states (like Illinois) will allow you to obtain a new driver’s license for less if you bring in a copy of the police report and meet certain other conditions. Definitely make sure that you know what your individual state’s policy is on replacement licenses so that you have the necessary documentation on hand.

2. Notify your bank.

If you happened to have a debit card or checks in your wallet, it is a good idea to notify your bank so that they can flag your account and issue a new debit card. You should try to report the loss as soon as possible to limit your liability.

It is a good idea to have an account statement on hand with your account number ready. If not, it isn’t a huge problem. Most local banks are willing to work with you, but I have found that it makes it easier to get through the various automated prompts. The Federal Deposit Insurance Corporation (FDIC) is a useful resource for figuring out some of the laws that govern how much you can be held liable for if you lose your debit card. Under federal law, you are only liable for up to $50 if you notify your bank of your lost debit card within two days of the loss.

3. Cancel all of your credit cards immediately.

By cancelling your credit cards as soon as possible, you help prevent fraudulent charges if someone else tries to use your credit card after it has been lost. Under the Fair Credit Billing Act (FCBA) you are only liable for unauthorized credit card use up to the amount of $50. However, if you cancel as soon as possible, you can avoid liability entirely by canceling before anyone can make fraudulent charges. The Federal Trade Commission (FTC) outlines some helpful tips for dealing with lost credit cards and for protecting your personal account information.

If you need to cancel your credit card, try to have the account number on hand (although this isn’t absolutely necessary). If you call the customer service number for your credit card company, a representative can usually help direct you to their fraud departments to report the loss. Different companies have different policies for how long it will take to mail you a replacement card, so it is a good idea to have a spare card at home if you are used to relying on credit cards. If you have a replacement card at home, you won’t be left high and dry when you lose your wallet.

4. Notify Major Credit Reporting Agencies

If you notify major credit reporting agencies in advance, it can help protect you from the negative consequences of fraudulent credit card transactions.

Your credit report is important because many lenders use it in determining whether you are qualified for certain loans.

Three of the major credit reporting agencies are:

  • Equifax
  • Experian
  • TransUnion

5. A few weeks after the loss or theft, get a copy of your credit report to determine if fraudulent transactions have been made in your name

***Make sure that you only contact the major credit reporting agencies through annualcreditreport.com for a Free Credit Report. You can also only get a free credit report once every twelve months.***

For more information on credit reports visit the FTC’s website here.

You can also find more information on the Consumer Finance Protection Bureau’s website here.

 

I know that it is a hassle to go through the process of cancelling cards and filing police reports, but it is important for your financial safety. The best tip that I can offer is to try to take care of everything as soon as possible (It will help minimize your liability risk).

Credit Cards: Which One is Right for You?

Credit cards have become a part of everyday life for most people. Most of my friends have at least one credit card, and I know many people who have more than one. A recent survey commissioned by the Consumer Financial Protection Bureau (CFPB) found that 35% of people between the ages of 18 and 34, 65% of people between the ages of 35 and 54, and 63% of people ages 55 or older have a general purpose credit card.

With all the advantages offered by credit cards though, there also comes a great deal of risk.  Credit cards are not all created equal. Different cards offer different interest rates, fees, benefits, etc. These are things that we as consumers need to watch out for when choosing a credit card.

Given how many people have credit cards, I would think that choosing one would be fairly easy. Before I make any significant purchase, I usually do my homework. For example, when I am buying a used book on Amazon.com I usually look at the seller’s ratings and read a few reviews. I look to see whether the seller usually delivers books on time, whether reviews are overwhelmingly positive or negative, whether the product arrives as expected, and so on.

BUT…

Choosing a credit card is hard. There is a lot of information out there, and it often seems like those credit card agreements contain their own unique language that looks a lot like the English you learned in school, but for some reason, it just does not make sense. This is supposing that most consumers take the time to read those size ten font agreements that make you cringe when you glance at them. I can usually feel a headache coming on from just looking at them.

The Denver Post recently published an article devoted to the topic of choosing a credit card: “Credit Card Tips: Guides to Choosing the Right Card.” The author refers readers to four websites devoted to the topic and stresses the importance of doing research before committing to a particular card as different cards have different interest rates and fee structures.

In response to concerns about transparency and fairness in the credit card industry, President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) into law in 2009. Additionally, the CFPB has published a glossary of many of the confusing terms included in credit card agreements.

The number one take-away from the various articles that I have read seems to be to do your own research and figure out what is best for you. The research I am talking about is research into your own spending habits. If you know how you have used credit cards in the past (For example: Do you always or never carry a balance on your card?), you can better choose a card that is tailored to your own needs. Because everyone’s spending habits are different, there is no one BEST card out there that suits everyone. So, think about how YOU use your credit card. There are many valuable resources that offer tips to understanding your current credit card statements, as well as any costs associated with switching credit cards. In my opinion, two of the best websites that are available to the public are the CFPB’s and the Federal Reserve’s sites. Both explain the current laws that govern credit card agreements. They also contain several useful links and interactive tools for helping consumers understand what works best for each person.

Although no one ever likes to hear that there is no one BEST credit card, the agency in charge of administering the new credit card rules is aware of the problem and working to effect change. You can watch a clip from one of the leading proponents of changing the credit card industry here.

Economy not always the reason small banks are closing

I do most of my banking with a very large national bank but I do have a couple of accounts with local banks as well. In the last couple of years I noticed that I have to travel farther and farther to bank with the smaller banks due to so many local branches closing. I assumed that the economic crisis played a big role. Some recent studies and reports reveal that regulation under Dodd Frank is putting immense strain on community banks.

Overall, Dodd-Frank is a tremendous piece of legislation. The Committee on Financial Services reports the act spans about 2,300 pages with more than 400 rules and mandates, about 250 of which still to be determined.

The uncertainty inherent in such a massive regulation has required banks to hire compliance officers, a budget expense that some smaller banks simply cannot afford. But many of the challenges for smaller banks are in the regulation itself. American Banker reported that Comptroller Thomas Curry is concerned with “a number of provisions that … many in the industry thought would not apply to community institutions.” Specifically, the act encourages a move away from institutional reliance on credit ratings agencies. This will have “a profound impact on community banks, which lack the institutional structures and analytical resources to undertake independent due diligence,” reports Louise C. Bennetts of American Banker. These banks have to find new ways to make money as well. The low interest rate environment means that the traditional business of lending is not especially lucrative so banks have to figure out other ways to bring in revenue. Such measures will most likely hurt consumers as they will need to pay more for loans and basic banking services, predicts Bennetts.

But community banks are fighting back and informing regulators of the need for changes. The Hill reported the Independent Community Bankers of America (ICBA) smaller banks were not responsible for the financial crisis and they should be carved out of the many new restrictions stemming from Dodd-Frank. So far, regulators are receptive to the message. Federal Reserve Chairman Ben Bernanke told ICBA members that regulators were looking to achieve a “clear distinction” between large and small banks in drafting their rules.

This is just one more indicator that there is still lots to do and lots to learn from Dodd Frank.