Beware of Credit Card Skimmers

Tuesday, September 29, 2009 by Jennifer King - Lawyers.com


I use my credit card for almost all of my purchases, because it helps me track my spending and manage my budget. On days when I'm running a lot of errands, I swipe my credit card so frequently that I could do it with my eyes closed: Swipe. Press "Credit." Press "OK." Sign in the box.

These days, however, it pays to be a bit more attentive when using your credit, debit or ATM card. That's because clever thieves have a new weapon in their arsenal of tools designed to part you from your money: the card skimmer.

Skimming, as it is known, occurs when a thief uses a device, known as a skimmer, to read and record the magnetically stored information on your credit, debit or ATM card. Skimmers can be placed on top of legitimate credit card readers and ATM machines, or can be handheld devices. Because the magnetic strips of credit, debit and ATM cards are electronically encoded with data such as your name, account number and card expiration date, thieves can then copy this information onto counterfeit credit cards that are used for fraudulent purchases.

Unfortunately, there are no regulations prohibiting or limiting the sale of credit card skimmers, so you or I could buy one today for just a few hundred dollars. This makes it very easy for dishonest business employees and other thieves to start skimming information from your credit, debit and ATM cards.

There are a few ways that you can protect yourself against skimming.

  • If you give your card to a store clerk or waiter, try to keep an eye on it. Some thieves will pay store employees to swipe a credit card through a skimmer--which may be smaller than a pager--before they swipe your card through the business's regular card reader. The information on the skimmer is then sold to counterfeiters who download the information and use it for fraudulent transactions.
  • When using machines where you personally swipe your card, notice whether the credit card swiper looks different than normal, or if it seems to be clunky, or shoddily attached to the machine. (But know that skimmers may be installed inside the machine, or may be otherwise unrecognizable.) Gas pumps, ATMs and DVD rental kiosks are more likely to be outfitted with skimmers because employees do not constantly monitor the machines. This makes it easy for a thief to quickly attach a skimmer at night or on the weekend. ATM machines may also be outfitted with pinhole cameras designed to record your PIN number, so make every effort to cover the keypad when entering your PIN.
  • Carefully review your monthly bank and credit-card statements for any signs of fraudulent activity. If you don't recognize a charge or withdrawal, contact your bank or credit card company immediately and dispute the charge. In the United States, you can only be held responsible for up to $50 of fraudulent activity on your credit card. However, your liability can be much higher on ATM and debit cards. If you notify your bank within two business days of learning of that your card has been stolen or used fraudulently, your loss is limited to $50. If you wait more than two business days, you could be liable for up to $500 of losses, and if you wait more than 60 days to report fraudulent activity, your losses could be unlimited.

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Posted in Creditor/Debtor |

The Hidden Benefits of Credit Cards

Thursday, September 24, 2009 by Jennifer King - Lawyers.com


Credit card companies have been getting a lot of bad publicity in recent months. If you have a credit card, you've probably gotten a letter from the card issuer telling you that your credit limit has been cut, or your interest rate is rising, or even that they're closing your account.

That said, credit cards still offer some great benefits, but many cardholders never take advantage of these extra features, or even realize they exist. Did you know, for example, that many credit card companies will double the length of the warranty on a purchase you charge to your card? Several months ago the mouse on my laptop computer stopped working. The computer came with a one-year manufacturer's warranty, and the mouse quit after 18 months. I called up my credit card company and provided them with some basic information. Within a day they told me to take the computer for repairs and then send them the bill so I could be reimbursed for the cost of repairs. Ultimately, it saved me about $400.

These extra credit card benefits can save you money, time and headaches if you take advantage of them. Among the more popular:

Extended Warranty: Many credit card companies will double the warranty on your purchases for up to a year. If the item breaks after the manufacturer's warranty expires, but during the credit card company's extended warranty period, the credit card company will coordinate repair work or reimburse you for repair costs.

Theft, Loss and Damage Coverage: Did you wash your new iPod? Was your new camera stolen? Many card companies will replace or repair an item if it is lost, stolen or accidentally damaged within the first 90 days that you own it.

Return Protection: If a merchant refuses to let you return an item, your credit card company may refund you the item's purchase price, provided it's still in like-new condition and you bought the item recently.

Loss and Damage Insurance on Car Rentals: If you charge a car rental to your credit card, you may be able to decline the collision damage waiver (CDW) because your credit card company automatically provides the same insurance for free. Before you rely on this, read the fine print. You may be ineligible for the coverage in some foreign countries or if your rental is for an extended period of time.

Travel Insurance: Traveling by plane, train, bus or boat? Your credit card company may automatically provide travel insurance that covers you in case of accidental death or dismemberment.

Protection in the Event of Merchant Disputes: Did a merchant overcharge you, make promises that they haven't honored or sell you one thing then deliver another? You can dispute a charge with your credit card company. They'll investigate your claim and refund your money if they find in your favor.

You're only eligible for these benefits if you charge the purchase to your credit card. Plus, not every credit card company offers the same benefits, so you'll want to learn which benefits come with your cards. Look on your credit card company's website for a "Card Benefits" section, or call the company and ask them to send you a list of the card's benefits. Be sure to read the fine print, because some exclusions may apply.

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Posted in Creditor/Debtor |

Avoiding Credit Repair Scams

Thursday, April 23, 2009 by Jennifer King - Lawyers.com


A piece of spam landed in my mailbox this morning. "Want a better credit rating?" the subject line asked. "Don't let a poor credit score ruin your future," it urged me. "Let our credit repair specialists take care of your credit rating so you can enjoy your financial future."

If you're up to your eyeballs in debt and getting a lot of calls from collection agencies, such an offer may have some appeal. What's not to like about the idea that a company can erase your bad credit and give you a new credit identity? But if it sounds too good to be true, that because it is.

Every day, companies pitch their services to people with poor credit scores. But here's the catch: Some credit-repair companies are promising you the impossible. Or they may be taking your hard-earned money to perform simple services that you could do yourself. Worst case, they may encourage you to commit fraud. In any event, credit-repair assistance may only worsen your financial situation by wasting your time and putting you further behind on your debts.

If you decide to look into a credit-repair offer, look for the following warning signs offered by the Federal Trade Commission (FTC):

  • The company wants you to pay before any services are provided
  • They don't tell you your legal rights and what you can do by yourself for free
  • They recommend that you not contact a credit bureau directly
  • They suggest you invent a new credit identity by applying for an Employer Identification Number to use instead of your Social Security number
  • They advise you to dispute all information in your credit report or do something else that seems illegal

Legally, credit-repair companies can help you review your credit reports and remove erroneous information that may be dragging down your credit score. For example, perhaps your report shows information that is wrong or misleading. Maybe it even shows someone else's bad credit information. By law, after credit bureaus are notified of mistakes, they have to work with the companies that provided the incorrect data to either confirm its accuracy or remove it from your report. Removing the bad information may raise your credit score.

But there's no reason to hire a company to dispute the information for you. You can call the credit bureaus and dispute the errors yourself. I've done it. It took me less than an hour to dispute the information with all three credit bureaus, then review the corrected reports about a month later.

Less ethical credit-repair companies may offer illegal advice that could land you in hot water with law-enforcement agencies. For example, it's a federal crime to lie on a loan or credit application, to misrepresent your Social Security number or to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Credit Repair Organizations Act

Under the Credit Repair Organizations Act, credit-repair companies cannot make false claims about their services, require you to pay until they have completed the services they have promised or perform any services until they have your signature on a written contract and have completed a three-day waiting period. During that time, you can cancel the contract without paying their fees.

Any contract you sign with a credit repair company must include:

  • The payment terms for services (including the total cost)
  • A detailed description of all services to be performed
  • How long it should take to get results
  • Any guarantees
  • The company's name and business address

What You Can Do

Everything a credit-repair company can do for you legally, you can do for yourself at little or no cost. You may do the following:

  • Dispute mistakes or outdated items for free.
  • Receive a free report if a company takes adverse action against you, like denying your application for credit, insurance or employment, and you ask for your report within 60 days of receiving notice of the action.
  • Receive one free report a year if you're unemployed and plan to look for a job within 60 days; if you're on welfare; or if your report is inaccurate because of fraud, including identity theft.
  • Request and receive a free copy of your credit report once every 12 months from each of the nationwide consumer reporting companies - Equifax, Experian, and TransUnion. The three companies have set up a central website (annualcreditreport.com), a toll-free telephone number (1-877-322-8228), and a mailing address (Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281) through which you can order your free annual report. If you opt to request a free copy of your credit report via mail then you will need to complete the Annual Credit Report Request Form, which can be printed from the FTC Web site.

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Posted in Creditor/Debtor |

Factors to Consider When Considering Bankruptcy

Tuesday, April 14, 2009 by Jennifer King - Lawyers.com


No matter how you look at, our economy is in the dumps and people are suffering. "Will I lose my job?" "Can I pay my bills?" "How can I ever afford to retire?" It wasn't that long ago that people were flush with money. The stock market was rising, the real estate market was booming and jobs were plentiful. People were doing what people always do when they're optimistic: Spending. Today almost everyone probably wishes they'd spent a little less money in recent years. I certainly wish I had more cash in the bank!

I read a news report recently that said the number of people filing for bankruptcy in the first three months of 2009 increased 35% compared to a year ago and 6% compared to the last three months of 2008. More than 300,000 people filed for bankruptcy in January, February and March. At that rate, it's safe to assume that more than 1.2 million people will file for bankruptcy this year.

You may not be thinking about filing for bankruptcy, but someone you know may be considering it. With that in mind, here are a few things to know about bankruptcy.

Chapter 7 bankruptcy enables people to give their assets to trustee, who sells those assets and uses the money to pay off creditors. It's a quick process, but it doesn't leave you with much in the end. You may be able to keep your car and your house, depending on how much they're worth, plus your furniture and retirement accounts. However, there are income limits, which vary from state-to-state, for Chapter 7 bankruptcy.

Chapter 13 allows a person to keep and use their property while paying off some or all debts according to a plan approved by the court. Payoff plans usually last 3 to 5 years, and you're still liable for your debts until you successfully complete the payoff plan.

Advantages to filing for bankruptcy:

  • Some or all unsecured debt (for example, credit-card debt) may be dismissed in bankruptcy.
  • If you have secured debt (for example, a mortgage or car loan) you may be able modify the terms of the loan so you can afford the payments.
  • Subject to certain limits (which vary, depending on where you live), you should be able to keep your home, your car and some valuables.
  • When you file for bankruptcy, your creditors legally have to stop collection efforts.

Disadvantages to filing for bankruptcy:

  • Bankruptcy remains on your credit report for up to 10 years. During this time, you may not be able to get new credit, or may only able to get credit at high interest rates. So have to rely heavily, if not exclusively, on cash.
  • You may have trouble getting a new job if the company checks your credit report as part of the hiring process.
  • If you owe money to people or businesses in your community, it may be tough to keep your bankruptcy a secret from people.
  • If you own more than one car or several homes, you may have to sell some of that property to help pay down debts.
  • It's ironic, but bankruptcy costs money. You'll have to hire a lawyer, and you may have to pay a trustee's fee and for mandatory personal finance classes.

Ultimately, you have to weigh the pros and cons filing for bankruptcy. If you're facing serious financial problems, bankruptcy may make sense. But if you only have a few debts, filing for bankruptcy may be premature. Instead, you might be better off trying to negotiate a payment plan with your creditors. An experienced bankruptcy lawyer can also help you understand the options and the long-term ramifications.

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Posted in Creditor/Debtor |

What You Need to Know About the New Credit Card Rules

Thursday, January 15, 2009 by Debbie Viguié - Lawyers.com


Credit cards are something most people have or have used.  Many people who have used credit cards have been blindsided by some of the business practices of these companies which can hurt them financially.  A couple weeks ago the Fed voted to approve proposed changes to credit card rules.  The action was motivated by a desire to protect consumers from unfair or predatory practices and to make sure that credit card companies give full and timely disclosure of their policies to cardholders.  The new rules take effect July 1, 2010.  I heard that this was happening but I had no idea what that meant for the average credit card holder, so I did a little digging and here's what I found out.

Due Dates and Late Payments – Have you ever received a credit card bill and by the time you could open it, write a check, and mail it back your payment was already considered late and you were hit with hefty fees?  Well, the Fed has declared that the company cannot consider your payment late unless they sent out your statement at least 21 days prior to the due date.  That means if the company sends out a statement on the first of the month they can't make the due date the tenth of the month (or even the twentieth of the month) and charge you a late fee if you fail to get it in.

Differing Interest Rates and Allocation of Payments – Credit card companies charge different interest rates for different things that you do with your card.  New purchases, transferred balances from other credit cards, and cash advances all can have different interest rates.  If you pay more than the minimum payment credit card companies previously had the option of choosing which of these types of balances they would put the money toward and it was in their best interest to help you pay off the balance with the lowest interest rate.  With the new rules they will be forced to either a) apply the extra payment to the balance with the highest interest rate or b) split the payment pro rata among the different types of balances.

Increasing Interest Rates – The new rules will make it more difficult for banks to increase their interest rates.  This is good news especially given how they have been lately making a habit of upping the interest rates even on good customers who never make a late payment.  Now they can only up your interest rate if a) you make a minimum payment more than 30 days after the due date, b) if the rate was already disclosed as being a variable rate, c) if an opening account interest rate had an expiration date then at that expiration they may raise the rate if the new rate was disclosed when the account was opened, or d) they may increase the rate a year after the account was opened for new transactions only and only after a 45 day notice.

Two-Cycle Billing – Okay, this I had no clue about and it horrifies me.  Let's say you pay off your entire balance in the month of July but only pay a portion of your balance for the month of August.  When calculating the interest they will charge you, credit card companies will use not just the balance for August, but also a portion of the balance for July even though it was completely paid off.  This is a terrible, sneaky way of bilking the credit card user and the new rules will put an end to it.

Security Deposits and Fees – Credit card companies that give credit cards to people with poor or damaged credit often charge huge fees for opening the account and give them tiny credit lines.  By the time the account is opened most of the available credit has already been used and the credit card holder ends up having to pay off all the account opening fees and security deposit fees and whatever they've been charged.  Under the new rule, a company can not take up more than 50% of the credit line with these opening fees.  On account opening they can only charge 25% with an additional 25% allowable if spread out over the first five months.  This is still highway robbery but at least it puts a limit on this predatory lending.

New rules will also require credit card companies to be much more forthcoming about important information like fees and interest rates at every stage of the game, including the credit application.  The rules require more advance notice to changes in the procedures used.  Overall the goal is to demystify the entire process for the consumer.  Hopefully that is what will happen and consumers won't instead find themselves buried under even more paperwork that they don't read or may not understand.

Related Links:

  • Read more about the new rules.
  • Find out everything you ever wanted or needed to know about handling credit cards.
Posted in Creditor/Debtor |

Credit Cards: Safety Net or Death Trap?

Friday, December 5, 2008 by Debbie Viguié - Lawyers.com


Recession, everyone's heard that word tossed around lately.  At the end of the day whether or not we can say we are officially in a recession is practically a moot point.  What matters is how the economic slowdown is hurting people.  Tens of thousands have lost or are about to lose their jobs.  Others have been wiped out financially.  Add to that stress the fact that it is now the holiday season.  That means everyone has the compulsion to go out and buy presents for friends and families.  Regardless of whether you have existing credit card debt or use your card just for emergencies, charging during times of financial difficulty can be disastrous.  Whether you need to supplement your income, want to buy gifts, or need cash to buy groceries - think long and hard before pulling out the plastic.

Credit card companies survive and flourish by making users pay and pay and pay.  Every swipe of the card could ultimately cost you twice as much as the item you're actually paying for.  This is because credit card companies can charge incredibly high interest rates on balances you carry on your account.  The interest rate can go as high as 35%.  While this is outrageous it doesn't stop the company from finding other creative ways to make even more money off of you.  If your payment is late, even by a day, they charge you a fee.  If you go over your credit limit, they charge you a fee.  This is true even if your spending is under the limit but the monthly interest they add to your account pushes you over. 

Eventually you'll be stuck in the trap of paying only the minimum monthly balances which may not even completely cover the amount of interest you were charged that month!  Suddenly money you would be spending on food and other necessities is going to pay those credit card bills.  So to make sure you eat you go to the grocery store and charge your purchase which just adds to your debt and raises the minimum payments each subsequent month until eventually you can't afford to pay one or more credit cards.  When that happens and you miss a payment then you are in serious trouble and are on the path to financial ruin.  Late fees, over the limit fees, higher interest rates, and higher minimum payments kick in and suddenly your safety net is strangling you to death.

Some friends of mine have gotten into serious financial difficulty because of their credit card debt.  The sad truth is that they have really good jobs that pay well, they never are late on their credit card payments and they work really hard to keep costs at a minimum.  Still their debt is choking them.  One reason is that their credit card companies raised their interest rates to the maximum allowable despite the fact that they were good customers.  Given that they haven't been late on a single payment this seems outrageous, but it happens.  Their interest rates are double what they were paying a few years ago.  At this point debt that they thought was under control is raging out of control and they have to struggle each month to pay their bills and still have food on the table.

When you need money fast reaching for a credit card is easy and a natural reflex for many.  However, sit down and figure out what it will cost you in the long run and whether or not two or three months of emergency spending will harm you in the future and become an insurmountable debt.

For those already in debt or those with absolutely no other choice than to use those cards until their situation improves, there are some things you can try.  Try negotiating a lower rate on your cards.  This only works some of the time, though.  You can transfer balances from a high interest card to a lower interest card and cut up the old card.  Ultimately bankruptcy might be an option if you can't dig yourself out of the credit card hole and things are going from bad to worse.

It's hard to have very little money during the holidays.  People who really care about you, though, wouldn't want you to increase your debt buying them the perfect present.  I know it's cliche, but it really is the thought that counts.  So, try putting a little more thought and a little less cash into your gifts this year.  Six months from now you'll be glad you did.

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Posted in Creditor/Debtor |

Show Me the Numbers

Thursday, June 26, 2008 by Debbie Viguié - Lawyers.com


The world is obsessed with my credit.  Okay, not mine personally, but credit in general.  You can't rent an apartment, buy a car or buy a house without it.  Some companies won't even let you get a cell phone plan without checking it.  Every time I turn on the television or radio there's yet another company offering to give me a free credit report or fix my credit or monitor my credit.  I can't surf the web without having credit ads pop up all over the place and flash at me from huge banners.  It's overwhelming and annoying.  Of course, all that paled in comparison to my annoyance when I actually had to pay for a credit report, only to find out I'd have to pay an even steeper fee to find out my credit score.  I'd already coughed up the price of a dinner out to read pages of information, but to get the actual numbers would cost me yet another dinner out!

It seems to me that the people that truly benefit from credit reports and scores are the companies reporting them, specifically Equifax, Experian, and TransUnion.  It's in their best interests to make the consumer paranoid about their credit and businesses obsessed with it.  Every time that report gets pulled someone pays, and half the time that cost gets passed on to me.  I think it should be the other way around.  I think TransUnion and associates should have to pay me each time they make money when someone looks me up. 

Apparently I'm not the only one who's angry about this.  A class action suit that's been going on for years against TransUnion was just settled.  The complaints were much worse and more specific than mine.  TransUnion had been accused of illegally selling too much information about consumers to credit issuing companies.  The settlement has two aspects: cash and services.  The money will have to be distributed amongst all the class members and will be a few dollars at most.  The services aspect is something more people can really sink their teeth into.

You can register at the website https://www.listclassaction.com/ to claim one of two free service packages, each of which includes a few months of free access to your credit report AND score and free credit monitoring.  Best yet, when your months are up, it automatically cancels it for you!  Like me, you've probably had at least one experience where a "free trial" of something suddenly ended and the company started charging your credit card before you could cancel the subscription.  Not the case here.  You do, however, have to register by September 24th.  You will be notified when the court grants final approval of the settlement and your free access begins.

Sign me up!  My hat's off to the men and women who stood up several years ago and went after TransUnion for their activities.  Now I'm just thinking, is Equifax next?

Related Links:

  • Read all about the lawsuit and register to receive benefits.
Posted in Creditor/Debtor |
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