Consumer Protection & Fraud

UNIT VII Personal Financial LiteracyConsumer Protection & FraudCredit Counseling Help is out there!It can be very easy to get overwhelmed by debtThe average college student graduates with $20,000 of debt not to mention another $2200 in credit card debtHelp is available for individuals to get their finances in orderFree help is sometimes offered by employers, unions, banks, and credit unionsAgencies (that will need to be paid) are also available to offer financial servicesThis help can be face to face, over the phone, or online but you need to make sure that the agency is certifiedThis counseling will help you to consolidate all of your loans into one lump sum to pay offConsumer Protection LawsUnfortunately, credit businesses sometimes make mistakes and are not always honestThe following laws have been created to help protected credit consumers...

LawDescriptionTruth in Lending ActFair Credit Reporting ActFair & Accurate Credit Transactions ActRequires lenders to give info about credit in simple terms, must disclose APR and all finance charges, protects against unauthorized use of cardGoverns credit bureaus, requires creditors to give accurate and complete information about your credit history, must allow for one free credit report per yearProvides protection against identity theft by placing alerts on suspicious activity, limits the info that a business can print on receiptsLawDescriptionEqual Credit Opportunity ActFair Credit Billing ActElectronic Funds Transfer ActRequires that all consumers will be given an equal chance to receive credit cannot discriminate based on sex, marital status, race, religion, age, etc.Requires creditors to mail your bill at least 14 days before payment is due, establishes procedures for correcting billing errorsProvides protection for people that use ATMs and debit cards, limits your liability if card is lost/stolen depending on when you claimed the lossFinancial Scams and SchemesNot all financial schemes deal with credit, some deal with investmentsThey appeal to your desire to make a lot, quicklyBe cautious if it sounds too good to be true, it probably is!Identity TheftAll someone needs is your name, SS#, credit card #, or some other piece of information about youThieves will then create credit accounts in your name without you knowingHow do they get the info?Skimming when info is stolen while using your cardPhishing pretend to represent banks or other companies to get your infoPretexting request info about you from banks/businesses under false pretensesHacking use WiFi to access your info publicallyWhat do you do if your identity is stolen?Review credit reports and place a fraud alert on itClose any fraudulent accounts immediatelyFile a complaint with the Federal Trade Commission to investigate File a complaint with the local police to investigateLoan ScamCommercial for loan consolidation with little business info and a 800 or 900 numberWhen a person calls they give very little info about the loans and your financial historyThe explain they will call back to tell you if the loan is approvedAll loans are approved and you are told to send in a fee before you receive the loanThe loan never comesCredit-Repair SchemeCompany advertises that they can erase your bad creditCompany requests a fee paid up-frontHowever, there isnt really anything a company can do to repair your creditThere is no quick and easy way to repair a poor credit historyCollege Financial-Aid ScamCompany advertises that millions in scholarships go unclaimed every yearCompany promises to do research to find you scholarshipsRequests a fee (about $300) to be paid up-front and promises to pay you back if they cannot find you scholarshipsIn the end they will keep your money and give you info that you could find on your own for freePyramid SchemeDisguised as a system for selling goodsPeople are recruited by ads offering big profits to those who pay a fee to the right to sell a companys goodsEach recruit then recruits more to do the same, who also pay fees to the person in chargeRecruits are promised a portion of money made but it becomes impossible to fund and the business collapses

Pyramid SchemePayday LoanAllows a person to get cash for use until his/her next payday with no credit checkApplicant provides paycheck stub and savings/checking account numbers to the lenderApplicant writes a post-dated check for more than the loan that the company cashes after a couple of weeks, this gives the company the loan back plus interestInterest rates are INCREDIBLY high, around 300%!!!!Even though this is a legal business, it gets many into a lot of trouble, especially because it targets low-income families

Rent-to-Own CompanyRent and sell appliances, furniture, and electronic productsConsumer agrees to rent something for a short period, if they continue to rent the item they can eventually pay enough to own the productThe criticism is that the cost of the items is usually two to five times as much as purchasing the same goods from a store