| CREDIT REPAIRE |
Use Your Credit Clout: Credit Laws That are on Your
Side ------------------KNOWLEDGEFINANCIAL.COM
With all the talk in Congress over possible new credit card rules and regulations, you may
not be aware that some credit laws have been around since the 1970’s and give you some
serious credit clout -- if you know how to use them. Here are the top ways you can exercise
your credit rights:
I Didn’t Charge That: Your statement arrives in the mail (or by email) and you discover
a charge that you didn’t make. Under the federal Truth in Lending Act, you are not
responsible for more than $50 in unauthorized purchases if you report the error within 60-
days of receiving the account statement. You will have a difficult time getting the credit
card company to investigate if you wait. Your best bet is to call the card issuer to let them
know that a thief is using your card. Always follow up that phone call with a letter sent
certified mail so you have a record that it was received. By the way, most credit card
issuers waive the $50 “co-pay” if you notify them promptly after your card was
compromised. And if your card number was stolen and used without presenting the card
(over the Internet, for example), you cannot be held responsible for that $50 under the
same law.
The Bill is Not in the Mail: If your credit card bill doesn’t arrive by mail (or email) as
scheduled, don’t just assume you are off the hook for that month. If you notify the issuer in
writing within sixty days of the date it should have been sent to you, you’ll be protected by
the Fair Credit Billing Act (FCBA) and the issuer won’t be able to charge you interest solely
as a result of the error. If you call the issuer, remember to follow up in writing or you aren’t
protecting your rights. Your letter should be sent to the address for billing errors and
inquiries on your statement and should never be sent with a payment.
The Goods Aren’t in the Mail: Also worth mentioning is your right under the FCBA to
dispute a charge if the goods or merchandise you ordered are not delivered as promised.
Let’s say you order a laptop online and it never arrives. Or perhaps it is different than what
was promised. Either way, you can “assert a billing error,” which means you can write to
the card issuer at the address for billing errors and inquiries (usually this address is printed
on your bill) and get them involved in the dispute. They will contact the merchant for an
explanation and either tell you that they have credited your account or get back to you
with the merchant’s reply to your dispute. You don’t have to pay the disputed amount
while this investigation is underway, but you do have to pay the rest of your bill (either
partially or in full). Remember: you must put your dispute in writing. A phone call doesn’t
protect your rights.
When the Debt Collector Comes Calling: Maybe you pay your bills on time, or
maybe you’ve been through a rough patch and bills fell through the cracks. Either way, if
you get a collection notice in the mail, the panic sets in fast. Relax…at least for a few
minutes. Under the federal Fair Debt Collection Practices Act, you have the right to ask
the debt collection agency to verify your debt. The collectors have to stop their work if you
dispute the bill. Disputing also gives consumers protection if the collector reports the
inaccurate account to the credit bureaus. To exercise this right, send a letter to the
collection agency via certified mail asking it to verify the debt. The “verification” may be
sketchy (especially if you didn’t pay because you were fighting over a bill), so be sure to
gather your evidence in the meantime, if you have any.
Tip: If you believe you owe the debt, you may want to skip this step and just make
payment arrangements before the debt appears on your credit report. Many collectors will
give you a short window of time to pay before they report. Just make sure they first agree in
writing that they won’t report it.
Old Debts Don’t Last Forever: Every state has a statute of limitations for different
types of debts. If a debt is too old and lenders or collectors try to sue, you can raise the
statute of limitations as your defense and they probably won’t succeed. If you are
contacted about a debt that’s more than a couple of years old, request verification (as we
just discussed), then find out your state’s statute of limitations for that debt. If it is too old,
send a certified letter explaining that you know it’s outside the statute of limitations and
ask the collector to leave you alone. Keep a copy for your records, in case it pops up later
with another agency. Watch out: don’t send a token payment just to make a debt collector
leave you alone. Paying or agreeing to pay on a debt may start the statute of limitations
over again.
Yes, it’s Truly Free: Under the Fair and Accurate Credit Transactions Act (FACTA), you
can A FREE ANNUAL COPY of your credit report from each of the three major credit
reporting agencies once a year. It’s fairly easy, and they are truly free. Whether you
stagger them out and check one every few months, or order one from all three agencies at
the same time, the price is right. So why not take advantage of it?
Debit Card Protection: If your debit card is used by a thief, you’ll want to act quickly. If you
do, the Electronic Funds Transfer Act is on your side. If you report the loss or theft within
two business days after you discover it, by law you’ll be out no more than $50 (and most
issuers won’t hold you responsible for the first $50 if you report the theft right away). Wait
longer and you could be held responsible for up to $500 in fraudulent withdrawals. If you
don’t notify your financial institution of the loss within 60 days after your statement is
mailed to you, you could be out your entire account – plus any overdraft line of credit!
Make sure you keep the phone number for contacting your issuer handy in case someone
uses your debit card without your permission.
Understanding Your Debt Collection Rights
You just gave a telemarketer your credit card number. Or you owe a bank money for your
new car or family home. Maybe you are falling a bit behind on your payments, or maybe
someone else claims you are falling behind - but you're not. You may be receiving phone
calls from the bank, credit card company or collection agency. Sound familiar? No fun, is
it?
There are things you can do to make sure you are a bit more in control of those pesky debt
collectors. Read our summary of the Fair Debt Collection Practices Act, passed by
Congress to protect consumers like you from illegal debt collection activities today.
15 U.S.C. §§ 1692 – 1692o
This information was updated as of June 2, 2005 and is believed to be accurate as of this
date. We assume no responsibility to update this information.
The Fair Debt Collection Practices Act (the Act) was passed by Congress to protect
consumers by making some debt collection activities illegal. Some of those practices and
activities which are illegal are described below. (15 U.S.C. § 1692e.)
Definitions used on this page:
If you owe money or use a credit card, you are a Consumer. (15 U.S.C. § 1692a(3).)
Consumer also means your spouse, parent, if you are a minor, guardian, executor or
administrator. (15 U.S.C. § 1692c(d).)
If you owe a Debt, you owe money to a Creditor for anything that you owe for personal,
NOT business or commercial purposes. (15 U.S.C. § 1692a(5); § 1692c(d).)
If you ever fall behind in paying your Creditor you may be contacted by a Collector. A
Collector might be an individual, an attorney, or a company, who ordinarily receives a
payment from your Creditor for collecting on your overdue payments. A third party
Collector collects Debts owed to someone else – your Creditor. (15 U.S.C. §1692a(6).)
How it works:
Can Collectors contact you? If, so, when can they contact you? -------------------------------
KNOWLEDGEFINANCIAL.COM
Can Collectors contact your family, friends or work-place?
Can you stop the Collector from contacting you?
What if you have an attorney?
What should a Collector tell you about the Debt?
What if don’t you think you owe money to the Creditor?
What if the amount is incorrect?
What if you owe multiple debts?
What happens during the 30-day dispute period?
What can a Collector say? What they may not say.
What to do if you think a Collector broke the law?
Can Collectors contact you? If, so, when can they contact you?
Yes. Collectors may contact you in person, by telephone, fax, mail, or telegram.
Collectors may not contact you at unusual times or places such as before 8:00 a.m. or
after 9:00 p.m. unless you tell the Collector that they may contact you at any time. (15 U.
S.C. § 1692c(a)(1).)
In general they may not contact you if you tell them you have an attorney and your
attorney is handling your debt(s) for you. (See What if you have an attorney?) (15 U.S.C. §
1692c(a)(2).)
TIP: It would smart to keep track of all of the communication between you and the
Collector including his or her name, the date of the communication, and what you
discussed. (See What should a Collector tell you about the Debt?)
Return to top
Can Collectors contact my family, friends or work-place?
A Collector may not contact anyone else to discuss the Debt with them. Collectors may
contact other people, one time only, to find out where you live, work and what your phone
number is. (15 U.S.C. §1692c(b).)
A Collector may not:
Contact another person more than once --unless that person tells the Collector it is okay to
call again; or
Tell the person he contacts that it is in the debt collection business; or
Send them a postcard or any type document with any information or marks on the
envelope that may communicate that the Collector’s purpose is to collect a debt. (See
What can a Collector say? What they may not say.)
A Collector may only make contact once with your employer. A Collector who has not
contacted your employer can send a letter asking for verification of your employment. .
Collectors are not allowed to ask your employer or co-workers personal information about
you. If the Collector contacts your work-place more than one time, for the same purpose,
you may tell the Collector not to phone you at work because your employer does not want
you to receive those kinds of calls at work. (15 U.S.C. §§ 1692b-c)
Your friends and family may tell the Collector not to phone them any more after the
Collector has phoned there the one time allowed under the Act. The Collector is not
allowed to continue contacting them unless they tell the Collector to continue the
contact. (15 U.S.C. §§ 1692b-c)
NOTE: Telling a Collector “don’t call,” will NOT make the Debt go away – it only prevents
the Collector from hassling you.
A Collector may contact your attorney, if you have one, and discuss the Debt with your
attorney. (15 U.S.C. §§ 1692b(6).)
Can you stop a Debt Collector from contacting you?
Yes, but only if you write them a letter telling them to stop contacting you. Be sure to keep
a copy of the letter. Once the Collector receives your letter, they may not contact you
about the Debt again, except to tell you that the Collector or the Creditor will take a
specific action to resolve the Debt. (For example the Creditor may decide to sue you to
recover the Debt.) . (15 U.S.C. § 1692c; and § 1692i)
NOTE: Sending a letter to the Collector will NOT make the Debt go away.
Return to top
What if you have an attorney?
If you have an attorney helping you settle your Debt, tell the Collector the name of your
attorney. If you prefer that your attorney handle the situation, you can tell the Collector
not to contact you again. The Collector will not contact you again unless your attorney
gives the Collector permission to contact you, or unless your attorney fails to respond to
the Collector in a reasonable amount of time. (15 U.S.C. § 1692b(6).)
Return to top
What should a Debt Collector tell you about the Debt?
The Collector has 5 days after the first contact with you to: -----------------------------------
KNOWLEDGEFINANCIAL.COM
Notify you in writing that you owe the Creditor money;
Notify you of your right to dispute the Debt.
The written notice must include:
Amount of the Debt;
Name of the Creditor;
Your right to dispute, all or part of, the Debt, in writing, within 30 days of you receiving the
notice.
NOTE: The 30 day time frame starts running on the day you receive the notice NOT the
date of the letter or the postmark)
(See also What if you don’t think you owe money to the Creditor?)
(15 U.S.C. §1692g.)
NOTE: The purpose of this part of the Act is to help Consumers who might have been
mistaken or misidentified. For this reason you must receive written verification of the name
of the Consumer, and amount of the Debt as it was obtained from the Creditor.
Side ------------------KNOWLEDGEFINANCIAL.COM
With all the talk in Congress over possible new credit card rules and regulations, you may
not be aware that some credit laws have been around since the 1970’s and give you some
serious credit clout -- if you know how to use them. Here are the top ways you can exercise
your credit rights:
I Didn’t Charge That: Your statement arrives in the mail (or by email) and you discover
a charge that you didn’t make. Under the federal Truth in Lending Act, you are not
responsible for more than $50 in unauthorized purchases if you report the error within 60-
days of receiving the account statement. You will have a difficult time getting the credit
card company to investigate if you wait. Your best bet is to call the card issuer to let them
know that a thief is using your card. Always follow up that phone call with a letter sent
certified mail so you have a record that it was received. By the way, most credit card
issuers waive the $50 “co-pay” if you notify them promptly after your card was
compromised. And if your card number was stolen and used without presenting the card
(over the Internet, for example), you cannot be held responsible for that $50 under the
same law.
The Bill is Not in the Mail: If your credit card bill doesn’t arrive by mail (or email) as
scheduled, don’t just assume you are off the hook for that month. If you notify the issuer in
writing within sixty days of the date it should have been sent to you, you’ll be protected by
the Fair Credit Billing Act (FCBA) and the issuer won’t be able to charge you interest solely
as a result of the error. If you call the issuer, remember to follow up in writing or you aren’t
protecting your rights. Your letter should be sent to the address for billing errors and
inquiries on your statement and should never be sent with a payment.
The Goods Aren’t in the Mail: Also worth mentioning is your right under the FCBA to
dispute a charge if the goods or merchandise you ordered are not delivered as promised.
Let’s say you order a laptop online and it never arrives. Or perhaps it is different than what
was promised. Either way, you can “assert a billing error,” which means you can write to
the card issuer at the address for billing errors and inquiries (usually this address is printed
on your bill) and get them involved in the dispute. They will contact the merchant for an
explanation and either tell you that they have credited your account or get back to you
with the merchant’s reply to your dispute. You don’t have to pay the disputed amount
while this investigation is underway, but you do have to pay the rest of your bill (either
partially or in full). Remember: you must put your dispute in writing. A phone call doesn’t
protect your rights.
When the Debt Collector Comes Calling: Maybe you pay your bills on time, or
maybe you’ve been through a rough patch and bills fell through the cracks. Either way, if
you get a collection notice in the mail, the panic sets in fast. Relax…at least for a few
minutes. Under the federal Fair Debt Collection Practices Act, you have the right to ask
the debt collection agency to verify your debt. The collectors have to stop their work if you
dispute the bill. Disputing also gives consumers protection if the collector reports the
inaccurate account to the credit bureaus. To exercise this right, send a letter to the
collection agency via certified mail asking it to verify the debt. The “verification” may be
sketchy (especially if you didn’t pay because you were fighting over a bill), so be sure to
gather your evidence in the meantime, if you have any.
Tip: If you believe you owe the debt, you may want to skip this step and just make
payment arrangements before the debt appears on your credit report. Many collectors will
give you a short window of time to pay before they report. Just make sure they first agree in
writing that they won’t report it.
Old Debts Don’t Last Forever: Every state has a statute of limitations for different
types of debts. If a debt is too old and lenders or collectors try to sue, you can raise the
statute of limitations as your defense and they probably won’t succeed. If you are
contacted about a debt that’s more than a couple of years old, request verification (as we
just discussed), then find out your state’s statute of limitations for that debt. If it is too old,
send a certified letter explaining that you know it’s outside the statute of limitations and
ask the collector to leave you alone. Keep a copy for your records, in case it pops up later
with another agency. Watch out: don’t send a token payment just to make a debt collector
leave you alone. Paying or agreeing to pay on a debt may start the statute of limitations
over again.
Yes, it’s Truly Free: Under the Fair and Accurate Credit Transactions Act (FACTA), you
can A FREE ANNUAL COPY of your credit report from each of the three major credit
reporting agencies once a year. It’s fairly easy, and they are truly free. Whether you
stagger them out and check one every few months, or order one from all three agencies at
the same time, the price is right. So why not take advantage of it?
Debit Card Protection: If your debit card is used by a thief, you’ll want to act quickly. If you
do, the Electronic Funds Transfer Act is on your side. If you report the loss or theft within
two business days after you discover it, by law you’ll be out no more than $50 (and most
issuers won’t hold you responsible for the first $50 if you report the theft right away). Wait
longer and you could be held responsible for up to $500 in fraudulent withdrawals. If you
don’t notify your financial institution of the loss within 60 days after your statement is
mailed to you, you could be out your entire account – plus any overdraft line of credit!
Make sure you keep the phone number for contacting your issuer handy in case someone
uses your debit card without your permission.
Understanding Your Debt Collection Rights
You just gave a telemarketer your credit card number. Or you owe a bank money for your
new car or family home. Maybe you are falling a bit behind on your payments, or maybe
someone else claims you are falling behind - but you're not. You may be receiving phone
calls from the bank, credit card company or collection agency. Sound familiar? No fun, is
it?
There are things you can do to make sure you are a bit more in control of those pesky debt
collectors. Read our summary of the Fair Debt Collection Practices Act, passed by
Congress to protect consumers like you from illegal debt collection activities today.
15 U.S.C. §§ 1692 – 1692o
This information was updated as of June 2, 2005 and is believed to be accurate as of this
date. We assume no responsibility to update this information.
The Fair Debt Collection Practices Act (the Act) was passed by Congress to protect
consumers by making some debt collection activities illegal. Some of those practices and
activities which are illegal are described below. (15 U.S.C. § 1692e.)
Definitions used on this page:
If you owe money or use a credit card, you are a Consumer. (15 U.S.C. § 1692a(3).)
Consumer also means your spouse, parent, if you are a minor, guardian, executor or
administrator. (15 U.S.C. § 1692c(d).)
If you owe a Debt, you owe money to a Creditor for anything that you owe for personal,
NOT business or commercial purposes. (15 U.S.C. § 1692a(5); § 1692c(d).)
If you ever fall behind in paying your Creditor you may be contacted by a Collector. A
Collector might be an individual, an attorney, or a company, who ordinarily receives a
payment from your Creditor for collecting on your overdue payments. A third party
Collector collects Debts owed to someone else – your Creditor. (15 U.S.C. §1692a(6).)
How it works:
Can Collectors contact you? If, so, when can they contact you? -------------------------------
KNOWLEDGEFINANCIAL.COM
Can Collectors contact your family, friends or work-place?
Can you stop the Collector from contacting you?
What if you have an attorney?
What should a Collector tell you about the Debt?
What if don’t you think you owe money to the Creditor?
What if the amount is incorrect?
What if you owe multiple debts?
What happens during the 30-day dispute period?
What can a Collector say? What they may not say.
What to do if you think a Collector broke the law?
Can Collectors contact you? If, so, when can they contact you?
Yes. Collectors may contact you in person, by telephone, fax, mail, or telegram.
Collectors may not contact you at unusual times or places such as before 8:00 a.m. or
after 9:00 p.m. unless you tell the Collector that they may contact you at any time. (15 U.
S.C. § 1692c(a)(1).)
In general they may not contact you if you tell them you have an attorney and your
attorney is handling your debt(s) for you. (See What if you have an attorney?) (15 U.S.C. §
1692c(a)(2).)
TIP: It would smart to keep track of all of the communication between you and the
Collector including his or her name, the date of the communication, and what you
discussed. (See What should a Collector tell you about the Debt?)
Return to top
Can Collectors contact my family, friends or work-place?
A Collector may not contact anyone else to discuss the Debt with them. Collectors may
contact other people, one time only, to find out where you live, work and what your phone
number is. (15 U.S.C. §1692c(b).)
A Collector may not:
Contact another person more than once --unless that person tells the Collector it is okay to
call again; or
Tell the person he contacts that it is in the debt collection business; or
Send them a postcard or any type document with any information or marks on the
envelope that may communicate that the Collector’s purpose is to collect a debt. (See
What can a Collector say? What they may not say.)
A Collector may only make contact once with your employer. A Collector who has not
contacted your employer can send a letter asking for verification of your employment. .
Collectors are not allowed to ask your employer or co-workers personal information about
you. If the Collector contacts your work-place more than one time, for the same purpose,
you may tell the Collector not to phone you at work because your employer does not want
you to receive those kinds of calls at work. (15 U.S.C. §§ 1692b-c)
Your friends and family may tell the Collector not to phone them any more after the
Collector has phoned there the one time allowed under the Act. The Collector is not
allowed to continue contacting them unless they tell the Collector to continue the
contact. (15 U.S.C. §§ 1692b-c)
NOTE: Telling a Collector “don’t call,” will NOT make the Debt go away – it only prevents
the Collector from hassling you.
A Collector may contact your attorney, if you have one, and discuss the Debt with your
attorney. (15 U.S.C. §§ 1692b(6).)
Can you stop a Debt Collector from contacting you?
Yes, but only if you write them a letter telling them to stop contacting you. Be sure to keep
a copy of the letter. Once the Collector receives your letter, they may not contact you
about the Debt again, except to tell you that the Collector or the Creditor will take a
specific action to resolve the Debt. (For example the Creditor may decide to sue you to
recover the Debt.) . (15 U.S.C. § 1692c; and § 1692i)
NOTE: Sending a letter to the Collector will NOT make the Debt go away.
Return to top
What if you have an attorney?
If you have an attorney helping you settle your Debt, tell the Collector the name of your
attorney. If you prefer that your attorney handle the situation, you can tell the Collector
not to contact you again. The Collector will not contact you again unless your attorney
gives the Collector permission to contact you, or unless your attorney fails to respond to
the Collector in a reasonable amount of time. (15 U.S.C. § 1692b(6).)
Return to top
What should a Debt Collector tell you about the Debt?
The Collector has 5 days after the first contact with you to: -----------------------------------
KNOWLEDGEFINANCIAL.COM
Notify you in writing that you owe the Creditor money;
Notify you of your right to dispute the Debt.
The written notice must include:
Amount of the Debt;
Name of the Creditor;
Your right to dispute, all or part of, the Debt, in writing, within 30 days of you receiving the
notice.
NOTE: The 30 day time frame starts running on the day you receive the notice NOT the
date of the letter or the postmark)
(See also What if you don’t think you owe money to the Creditor?)
(15 U.S.C. §1692g.)
NOTE: The purpose of this part of the Act is to help Consumers who might have been
mistaken or misidentified. For this reason you must receive written verification of the name
of the Consumer, and amount of the Debt as it was obtained from the Creditor.
| What if you think you don’t owe money to the Creditor? If you think you don’t owe the Creditor money, you must send the Collector a letter stating that you do not owe the money to the Creditor. You must send this letter to the Collector within 30 days of the date you receive the written notification of the Debt. (See What should a Debt Collector tell you about the Debt?) (15 U.S.C. § 1692g (b).) You may tell the Collector not to contact you until you receive proof of the Debt. If you decide to do this, you must do it in writing Once you dispute the Debt in writing, the Collector must stop trying to collect money from you until you receive written proof that you really owe the Debt from the Collector. Proof should include a written document with your name, and the name of the Creditor and the amount you owe. NOTE: This will NOT make the Debt go away. The thirty day period is NOT a grace period – it is just a period of time during which the Creditor must prove that you owe the Debt to the Creditor. (15 U.S.C. § 1692g(b).) TIP: It may take the Collector a long time to get back to you with the proof you request. There is no time limit for the Collector to provide proof. If the Collector cannot provide the proof you request, it may sell the Debt to another company to try to collect from you. If this happens, repeat the above steps again until you get actual proof of the Debt. What if the amount is incorrect? --------------------------- KNOWLEDGEFINANCIAL.COM If you don’t think the amount of money the Collector is trying to collect from you is the correct amount, you must send the Collector a letter stating that you do not owe the amount of money the Collector is asking you to pay. You must send this letter to the Collector within 30 days of the date you receive the written notification of the Debt. (15 U.S.C. § 1692g(b).) (See also What should a Collector tell you about the Debt? and What if you don’t think you owe money to the Creditor? for instructions on what to do next.) If you negotiated with the Creditor on partial payments, you may be frustrated if the Collector refuses to accept partial payments. The Collector is allowed to demand larger installments in an accelerated time frame. Although this may be frustrating to you, it is not a violation of the law. The Collector is allowed to negotiate its own terms, but the Collector may not make any false statements or use misleading ways to collect a Debt from you. So, if you suggest a partial payment knowing the Creditor will accept a partial payment, the Collector is not allowed to tell you “only full payment is acceptable.” (15 U.S.C. § 1692e) In general Collectors may NOT add interest, fees, expenses or charges of any kind to the original debt. However a Collector may charge an additional amount if: The Creditor included a condition for the fees or expenses in its agreement with you when you incurred the Debt; or If it is allowed in the State where the contract was created; If it is allowed in the State where a judgment was entered. (15 U.S.C. § 1692f) (See also What to do if you think a Collector broke the law?) Return to top What if you owe multiple debts? If you owe more than one debt and you make a payment to a Collector, the Collector must follow your instructions apply the money to the debt you tell them to apply it to – it cannot apply it to any other debt. (15 U.S.C. § 1692h) What happens during the 30-day dispute period? The 30 dispute period is NOT a grace period. Until you dispute any or all of the Debt in writing, within 30 days of receiving the notice of Debt, (NOT the postmark or the date of the letter) the Collector can continue to try to collect the Debt from you. TIP: Dispute the Debt immediately. A Collector may report the Debt to a Consumer Reporting Agency, or send you notice of the Debt the same time it sends you a summons to appear in court. If you receive a summons to appear in court after you disputed the Debt in writing -- go to court! Bring a copy of the letter you sent the Collector disputing the Debt, and tell the Judge that the Collector did not send you proof of the Debt. (See also What should a Collector tell you about the Debt?) What can a Collector say? What it may not say. Collectors are required to tell you who they are, who they are collecting for (the name of the Creditor) and the amount of the Debt. (15 U.S.C. §§ 1692d-f.) They may NOT: Contact you by postcard; Use a false name; Give you false contact information; Tell you owe more than you really do (unless they were given the wrong information from the Creditor); Tell you they work for a credit reporting agency; Tell you are guilty of a crime; Tell you they will sue you if they don’t intend to sue you, or don’t expect the Creditor to sue you; Tell you they are an attorney if they aren’t; Tell you they represent an attorney if they don’t; Send you something that looks like an official court document if it is not; Send you papers and tell you the papers are not legal forms if they really are legal forms; Give false information to anyone about you; Tell or threaten to tell anyone about your Debt; Tell you, you will be arrested if you refuse to pay; Harass you by threatening you with violence or harm; (NOTE: Infrequent contacts such as once a week or twice a month may be stressful, but is not harassment under the FDCPA.) (15 U.S.C. § 1692d.) Threaten you, any members of your family, workers, or friends (15 U.S. C. § 1692d); They may not threaten to or publish your name as someone who refuses to pay his or her Debt, except to a Credit Reporting Agency (15 U.S.C. § 1692d.); They may not use obscene language (15 U.S.C. § 1692d.); If you tell them not to contact you in writing, or tell them that you have an attorney, they may not continue to contact you; In most States they may not collect an amount greater than the amount of your Debt. (NOTE: Some states allow an additional charge for Collectors); They may not deposit a post-dated check prematurely; or Threaten to take your property unless the Creditor or Collector can do so legally. What to do if you think a Debt Collector broke the law? ----------------- KNOWLEDGEFINANCIAL. COM Credit.Com encourages you to report any problems you have to: The Federal Trade Commission: The Federal Trade Commission works for consumers to prevent fraudulent, deceptive and abusive business practices. To file a complaint visit http://ftc.gov, or call 1- 877-FTC-HELP. (15 U.S.C. §1692l) File a complaint with your state’s office of Attorney General. Click here for the Attorney General’s office in your state where you can find on-line complaint forms, for filing complaints against Collectors and Creditors who violate the Federal Fair Debt Collection Practices Act and your State's Debt collection and Creditor collection laws: http: //www.fair-debt-collection.com/ag-complaint-forms.html You have the right to sue a Collector in either a Federal or State Court within one year of the date the law was violated. If you win your case against the Collector you may recover damages. (15 U.S.C. § 1692i.) You may wish to contact an attorney to help you with this process. If you do not have an attorney or cannot afford one, contact the Local Legal Services provider, or Lawyer Referral Service of the state, county or local bar association near your home. Consumer Protection is different in every State. The Federal Act does not change the laws of any State Debt Collection Practice unless that law conflicts with any part of the Act. If State law conflicts with the Act, but provides better protection for you, then the State Law applies. (15 U.S.C. §§ 1692a, n.) An attorney can advise you of your rights. Disclaimer: This legal information site is a self-help site that is provided for educational and information purposes only to help consumers become educated about their rights. Please note, that legal information is not the same thing as ‘legal advice.’ Any of the opinions, suggestions, instruction, advice, links and content is at the user’s own risk. Credit.Com Inc. encourages you to consult with legal and financial professionals prior to making any decisions that have legal or financial consequences to you. Credit.Com Inc is not engaged in rendering legal or financial advice. The information provided here should not be used as a substitute for legal or financial professionals. While we have made every attempt to ensure the information contained on this site is accurate and from reliable sources, we are not responsible for any errors or omissions, or for the results obtained from the use of this information on this site or any site that we have provided links to as a courtesy to you. WWW.KNOWLEDGEFINANCIAL.COM |
| Do-it-Yourself Debt Reduction BY KNOWLEDGEFINANCIAL.COM With a little dedication and prior planning, it is possible to reduce your debts on your own. Why pay debt counselors and consolidation agencies fees for things you can do yourself? Credit.com shows you the tricks of the trade and the fastest way to reduce your debts on your own. Step 1: Evaluate your debts Collect all your financial documents and print out your credit reports to see exactly where you stand. This is an important step toward debt recovery and one that people are often scared to take. On a piece of paper, write down the balances, interest rates, and monthly amount due for each of your debts. Include your auto loans, personal loans, payday loans, credit cards, and other debts. You should also make note of any annual fees on your credit cards. You don't need to include your mortgage loan or student loans at this time. These loans have relatively long terms and low APRs so it is better to focus on paying off your other debts first. If you have an overwhelming amount of debt, you may want to request a free professional debt help consultation. Step 2: Look at your budget After you have collected the information about your debts, you should take a look at your monthly budget. Write down your monthly income after taxes and subtract your rent/mortgage payment from this amount and other monthly expenses such as childcare, student loan payments, insurance, utilities, and groceries. Once you have subtracted all of your expenses, calculate how much you have left to pay off your debts. If this amount is too small, look for ways to reduce your spending. Consider turning off your cable subscription or carpooling as ways to cut back temporarily. The more you can pay towards your debts each month, the sooner you will be debt free. Step 3: Make a plan Now that you know all about your financial situation, it's time to create a plan for reducing your debts. Use your information from Step 1 and 2 to fill in the following chart. Subtract your minimum debt payments (Step 1) and monthly expenses (Step 2) from your monthly income after taxes. The remaining amount should be used to pay off the debt with the highest interest rate and the highest balance. Example Your Plan Monthly income after taxes $2,800 $ Minimum debt payments (1) - $1,800 - $ Monthly expenses (2) - $400 - $ Remaining amount goes to the debt with the highest rate and balance = $600 = $ Continue this cycle each month until the debt is paid off and then move on to the next highest rate/balance account. This may seem like an odd process, but it is the fastest way to reduce your debts. During this time, you should not add any new charges to your credit cards. Also, try to increase the amount you pay toward the most expensive debt each month. Track your progress with a chart like this: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Payment Goal $600 $600 $625 $625 $650 $650 Actual Payment $625 Step 4: Start negotiations While you are starting to follow your repayment plan from Step 3, you should contact your creditors and lenders to see if you can improve the terms on your debts. You may be able to lower your interest rates or negotiate a reduced settlement on some debts by speaking with the customer service department. It is especially easy to negotiate the terms of debts that are charged off (dismissed) by the creditor or in collections already. Also think about moving some of your credit card debts to new accounts with lower interest rates. Moving a balance to a credit card with a 0% introductory rate for 6-12 months can help you save a lot on interest. Just be sure to keep each of your credit card balances below 35% of the credit limits to avoid damaging your credit score. During this time, investigate if consolidating your debts into a personal loan or home equity loan could help too. Step 5: Follow-through Do your best to meet your payment goals each month. It's okay if the amount you put toward your most expensive debt each month varies. Just try to consistently put as much as possible toward your debts. Signing up for an automated payment system and keeping a chart of your progress on the refrigerator can help you stay on track. When you reach major milestones, be sure to celebrate your success. Before you know it, you'll be debt free! Debt Consolidation: The Pros and Cons of Your Major Options ----------------------- KNOWLEDGEFINANCIAL.COM Do you want to have fewer bills to pay each month and save money at the same time? Who doesn’t?! But simply consolidating a bunch of debts at a lower interest rate won’t necessarily get you there. Consider the pros and cons of all your options – and then manage your debts and cut back on spending over time. Once you choose a consolidation method, make sure you keep the total cost as low as possible. Here are three tips to up the odds that your debt consolidation plan will work: Don’t take the maximum amount of time possible to pay off your new loan. Instead, come up with a plan to get out of debt in three to five years. Read the fine print so there are no surprises, such as a balance transfers or application fees. Ignore all offers that sound too good to be true. Tip for folks in really bad financial shape: If you are in serious money trouble and are feeling overwhelmed by all the bills, before you do anything else, take advantage of Knowledgefinancial.com . Homeowners Have Great Options If you’ve built up some equity and the interest rates remain favorable, it may make sense to refinance your home and use the additional cash you can borrow, over and above what you owe on your current mortgage, to pay off more expensive debts. Or you might be better off taking out a home equity line of credit (HELOC) or a fixed rate home equity loan. Pros: You can save a fortune by switching debts from the double-digits of typical credit card bills to the much lower rates on home equity loans and refinances. There’s the possibility of being able to deduct the interest on home loans, whereas that’s not possible with credit card debts. If you shop carefully, you’ll be able to get a good deal on closing costs, saving you more money. Cons: You’re putting your home on the line, which is extremely risky unless you are certain you can trust yourself to stop over-spending and to faithfully pay off the home loan(s). If you go for a variable rate loan, remember that what goes down may well go up, increasing your cost of borrowing. Don’t unwittingly extend the length of time you’ll be in debt or it might cost you more over the long run than if you’d simply paid off those higher rate bills. Tips: Don’t pocket the money your refinancing frees up every month. Instead, use it to create an emergency fund (if you don’t already have one). Once that’s set up, use the money as a pre-payment against your home loan or to boost your retirement savings. Ditto with any tax refunds that come your way. Cardholders Have Great Options One of the easiest ways to consolidate your credit card debts is to call your current card issuers and ask them to give you a better deal. If the customer service representative seems unwilling, don’t be shy! Ask to speak with a supervisor. Lenders know the competition is tough, and it’s cheaper for them to keep you than it is to get a new customer to replace you – especially if you’re a “low maintenance” borrower who pays bills on time. While you have them on the phone, ask about these three issues: Getting a special rate on any new balances that you transfer to their card. Getting the interest rate lowered on new purchases. Getting any annual fee waived. Pros: A phone call or two to a toll-free number is all it takes. It doesn’t get much easier than that! You have nothing to lose and you may save yourself a lot of money – now and over the long haul. Cons: Especially if you have a spotty payment record, it may not work! Instead, try getting a new, low rate card at Credit.com. This is admittedly more of a hassle than making one toll-free call, but if you’re honest about your credit situation as you look over the offers, you may find a lower rate card without too much trouble. Tips: Ask that any balance transfer fees be waived. Don’t apply for too many new cards at one time. It can hurt your credit score. So choose carefully! Watch out for teaser rates. While you can save the most by strategically transferring your debt to another low introductory rate card whenever the last "teaser" rate is about to expire, the constant balance swapping can burn you out, and if you flub it, you could pay for it. Instead, try to find a card with a steady, low interest rate. Be sure to plow your savings back into your debts. Can You Borrow from Your Nest Egg? ---------------------- KNOWLEDGEFINANCIAL.COM The answer is “Yes!” if you have: A 401(k), 403(b) or certain other kinds of pension plans An IRA Investments, such as stocks and bonds (loans against them are called "margin" loans) The key word to remember here is borrow. It’s one thing to take a loanagainstyour future nest egg. That alone raises many issues worthy of your consideration! But if you were to withdraw retirement funds early instead, from your 401 (k), for example, you’d have to pay taxes and a 10% penalty. The interest rates on these loans tend to be low – or even interest-free. For example, you can use money from your IRA interest-free for 60 days. However, you must “roll it over” to another IRA account within 60 days. Don't use your IRA to pay debts unless you are 100% confident the money will be replaced within two months, say, with a tax refund you are guaranteed to receive. Otherwise, you'll be hit with a penalty and taxes on the funds. (Of course, while you’re using your IRA money, it won’t be earning you any interest either.) Pros: If you have no credit history or a poor one, these borrowing options might make sense, since they require no credit check and are easy to get. The interest rates are generally low, and since you’re the lender, the interest gets paid to you (in the case of retirement funds). As far as margin loans and IRAs are concerned, you don't have to make interest payments on them at all. Cons: Should you lose your job, you might have to pay back your retirement fund loan immediately … or pay taxes and penalties and have it treated as an early withdrawal. You could end up robbing your retirement fund if you rely too much on these loans. If you fall behind on your re-payments, even though they are to yourself, the IRS will treat a retirement fund loan as an early withdrawal -- 10% plus taxes. Since there’s always a risk of a “margin call” if the market crashes, most advisors urge caution here – that is, keep margin borrowing at 20-25% of your investment account. (With a margin call, you may be called on to immediately pay back the loan, which may mean selling stock at an unfavorable time.) Don't use your IRA to pay debts unless you are absolutely certain that you can come up with the funds within 60 days. Otherwise, you'll be hit with a penalty and taxes on the funds. Speak with a tax professional before undertaking an IRA rollover to be certain your plan is sound. For example, the funds have to be returned to an IRA account (same one or different). |
| Finding Quality Credit Counseling ---------- BY KNOWLEDGEFINANCIAL.COM If the bills are piling up and you’re wondering how you’ll ever get out from under, it’s likely that you’d benefit from some credit counseling. Most people put off getting help until their financial lives are in ruins. They feel as though they have no place to turn. In a panic, they’re not thinking they have a choice. But they … and you … do! Choose the right counseling agency and you can turn your life around. Make no choice or a bad choice and you may find yourself in worse financial shape. If you’ve been in denial, now is a great time to come clean. Pull out the bills and face the facts. Tally up how much you owe and get yourself some expert help. Perhaps you’ve been putting off credit counseling because you’ve seen the headlines about the IRS cracking down on many agencies that claim to be nonprofit, but turn out to be nothing of the sort. Here’s how to find a gem of an agency amongst all the rest: Note: Don’t bother looking up “credit counseling” on Google. You’d find some 5.6 million entries, plus lots of ads from websites with catchy names promising to reduce your debts dramatically and get you debt-free in no time. Don’t trust these sites. Play It Safe Choose an agency that is a member of the nonprofit National Foundation for Credit Counseling, which provides services in over 1,300 locations to some two million consumers a year. To find the one most convenient for you, call 800-388-2227 or click here. Certified credit counselors are available by phone, over the Internet, via old-fashioned “snail mail,” and in person to help sort out problems with creditors, teach budgeting, create repayment plans, and plan for the future. Important: Most experts recommend you work with someone face-to-face, at least in the beginning, to get the maximum benefit. There are other excellent ways to find nonprofit credit counseling services. For example, you may find financial counseling programs where you work or worship, at your bank or credit union, on your military base, at local colleges and universities – as well as through the local office of the Federal Cooperative Extension Service, which offers programs in family finances, as well as in nutrition, horticulture, child development, and housing. Questions to Ask a Credit Counselor Is your agency non-profit? Is it accredited? By whom? Do you offer budget and credit education? What free information can you give me? What training do your counselors get? Are they certified? By whom? Do they receive commissions? Are there upfront fees? If so, how much are they? What if I can’t pay? Can you assure me that all of my credit records will be kept confidential? How can I track my accounts as they are being paid through your office? Can I get that in writing? Will we have a written agreement? For other questions to ask credit counselors, see this excellent advice from the Federal Trade Commission. You Shop for Shoes … In the same way that you may try on a few pairs of shoes before you find ones that suit you, you may need to visit a few credit counseling agencies to find one you’ll be comfortable working with. Remember: this relationship may be one that lasts several years, so you want to find a good fit. Tip: Don’t let your worries over your immediate financial crisis get in the way of finding a place that feels right to you. It may be unpleasant to realize, but since you didn’t get into financial trouble overnight, you can’t get out of it that quickly either. That doesn’t mean you should have to tolerate someone’ s judgmental attitude or a one-size-fits-all approach to debt relief. There should be plenty of free information available to you without you having to go into detail about your finances first. You want a well-trained professional who will take the time to develop a debt-busting plan customized to your situation – and someone who will teach you about money management. To further guarantee the advice you get is based upon your needs, counselors should receive a steady salary as opposed to commissions based upon the programs they sell to clients, often using high-pressure tactics. Tip-Offs to Rip-Offs Keep away from counseling agencies that: Need details about your situation before they’ll send you any information. Do not have certified counselors. Guarantee to wipe out your unsecured debts. Promise that your debts can be paid off with pennies on the dollar. Charge substantial monthly fees. Expect a percent of the amount they save you as a fee. Encourage you to stop making payments and/or stop communicating with your creditors. Promise to remove negative but accurate information from your credit report. Click here for more of Credit.com’s excellent tips for avoiding scammers. Check Them Out -------------- KNOWLEDGEFINANCIAL.COM It’s easy – but very important – to double check on counseling agencies. Ask for references from former clients willing to discuss their experiences – and follow up with them. Ask for recommendations from friends and family. Positive experiences among people you trust can go a long way toward assuring that you’ve made a good choice. Visit the Better Business Bureau and see if there are complaints about any of the agencies you are considering. See if the agencies are approved by the Department of Justice, which certifies agencies according to the recent (so-called) bankruptcy reforms. Before filing for bankruptcy, consumers are now required to obtain credit counseling from an approved agency. To get this government approval, nonprofit counseling agencies must employ trained counselors, have a good track record, be bonded, and demonstrate the ability to provide an evaluation of consumers’ unique financial situations, a personalized budget, and an explanation of alternatives to bankruptcy. Bankruptcy?! While bankruptcy may be the furthest thing from your mind, choosing an agency approved by Uncle Sam is simply another way to separate the scam artists from the organizations truly focused on helping consumers. While many people who enter credit counseling do file for bankruptcy, it’s not the only option. For example, more than a third of those who see a member of the National Foundation for Credit Counseling are able to manage their debt on their own after receiving financial education and counseling. Many others participate in debt management plans (DMP), where they send one monthly check to the counseling agency, which then distributes payments against their unsecured debts – for example, credit card, medical bills, and student loans – following a payment schedule that the counselor has developed between the consumer and the creditors. If you choose to go the DMP route – after you’ve reviewed a range of options – choose a credit counselor that will negotiate better terms with your lenders. For example, your interest rates may be lowered and some fees may be waived. On the other hand, you may have to forfeit the right to use or apply for additional credit during the term of the DMP. How long will that be? Your credit counselor should be able to let you know how long that will take, based upon a monthly payment you can afford, along with your other monthly expenses. If you’ve racked up substantial debts, it could take four or five years to complete your DMP. But before you start following it, make sure your creditors are on board – and be sure to keep up the payments on your secured debts. Tip: Ask the credit counselor to see if your accounts can be “re-aged” – that is, made current. You will have to make a number of payments before lenders will do so, but it’s an important step in rebuilding your credit, even though negative information (e.g., past late payments) will remain on your credit report. Click here for more tips from the Federal Trade Commission on making a DMP work for you. Whatever You Do ... Don’t ignore your financial problems! “For those consumers who live close to the financial edge, even a small wobble – a cut in pay or change in their recurring expenses – can endanger their economic stability. ... But, too often, our counselors don't get a chance to get in the game until consumers are already in serious financial difficulty. ... I can't count the number of times I have heard a frustrated agency professional say ‘if only we could have talked to them sooner.’" No matter what your financial situation is, you can get help – but you have to seek it out. The sooner you get going the better! WWW.KNOWLEDGEFINANCIAL.COM |
| Six Smart Credit Card Strategies ---------- KNOWLEDGEFINANCIAL. COM BY KNOWLEDGEFINANCIAL. COM While credit cards are sometimes portrayed as a necessary evil, they also provide a lot of benefits. The key is to know how to use them to your advantage and not to get caught up in the traps that lurk behind the benefits. Here are six ways to use credit cards to your advantage: Borrow Cheaply: Interest rates are creeping up on all types of loans, but those introductory low-rate credit offers just keep coming. My mailbox is flooded with offers like these: 0% for six months! 3.99% for the life of the transferred balance! 0% financing for one full year with a major home improvement purchase! Some consumers successfully use these low-rate offers to consolidate debt, pay college tuition, or even to pay off more expensive home equity lines of credit. Of course, you have to watch out for the traps, which include fees of as much as 4% on a balance transfer, and rates that skyrocket if you make a payment even one hour late. Also keep in mind that maxing out a credit card can lower your score, resulting in higher rates on other credit card balances you carry. So tread carefully, but take a lower rate when you can. Play the Float: Banks and insurance companies play the float all the time, investing the money you pay for premiums or park in a savings account at 0% interest. If you can put your money to better use elsewhere (a high yield savings account would be one option), you will come out ahead. You can do that by playing the float yourself, and a credit card is the perfect way to do it. Charge a high-ticket item on your credit card and pay it in full when the bill is due. Time it right and you could get nearly two month’s interest free. Find out when your credit card issuer’s billing cycle closes (call customer service or check your previous statements) and then make your purchase right after that date. The charge won’t appear until next month’s bill, and depending upon the length of the grace period, you might luck out with a good healthy float. This strategy does not typically work if you are carrying a balance on your credit card. Virtually all credit cards use the average daily balance method including new purchases to calculate interest. That means you don’t get a free ride on new purchases if you start the billing period with a balance. The exception is One by American Express, which gives you the choice to pay off a purchase or revolve it. It also features a savings rebate deposited into a high-yield savings account. Another way to play the float is to take advantage of interest-free financing. Let’s say you buy a $3,000 flat screen television with 0% financing. If you park that $3K in your high-yield savings account at 4.5%, you’ll have $135 at the end of the year. Watch those monthly payment and final payment due dates carefully, though. If you slip up, you will get hit with a hefty finance charge – probably all the way back to day one. Rack Up Rewards: If you want travel rewards, free movie passes, or even cold hard cash, just pull out the plastic. There are rewards to suit just about every interest. The challenge becomes picking one! If you carry a balance, understand that the interest rate may be higher than what you can get elsewhere. And watch out for strings attached to the rewards, such as minimum purchase requirements, blackout dates for travel, or caps on the amount you can earn. Once you’ve found a card you like, you may find yourself using it for all your purchases. That can be rewarding – and addictive -- so make sure you don’t overspend just to earn rewards. Shop Safely: Credit card purchases are backed with the protection of federal law. Under the federal Fair Credit Billing Act, you have the right to dispute a charge if you make the purchase using a credit card and the merchandise you order is not delivered, or if it is not delivered as agreed (wrong color, wrong item, for example) or even if it was not delivered as promised (the flowers guaranteed for delivery on Valentine’s Day show up two days later). To dispute a billing error on your credit card, you must follow the rules, though. Picking up the phone to complain is not enough! Here’s what to do: Write to the credit card issuer at the address for "billing inquiries," not the address for sending your payments (the address for billing inquiries is often found on the back of your most recent monthly statement); include your name, address, account number, and a description of the billing error. Send your letter so that it reaches the credit card issuer within 60 days after the first bill containing the error was mailed to you. Send your letter by certified mail, return receipt requested, so you have proof of what the credit card issuer received. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter. When you do, the credit card issuer must acknowledge your complaint in writing within 30 days after receiving it, unless the problem has already been resolved. And the credit card issuer must resolve the dispute within two billing cycles (but not more than 90 days) after receiving your letter. Here’s the best part: While the item is officially under dispute, you can withhold payment on it. But you must pay any amount not under dispute and/or pay your regular minimum payment. The credit card issuer cannot take any legal or other action to collect the disputed amount and the related charges (including finance charges) during the dispute. Debit cards do not carry the same protections, though your debit card issuer may offer assistance in a matter you cannot resolve with a merchant. One more warning: billing error protections don’t offer help in the case of buyer’s remorse. In addition to billing disputes, you also have the protection of federal law if your credit card is lost or stolen and used by a thief. Your maximum liability for unauthorized charges is $50, and most card companies won’t even require you pay that amount. Technically there is no time limit for disputing unauthorized charges, but the sooner you do so, the easier it will be to resolve the matter. Unauthorized use, by the way, doesn’t typically cover an unauthorized purchase by someone you lent the card to. When I was in high school, my mom once lent me her card to buy a dress, and I walked out with a dress, plus shoes, earrings and a purse – and a bill for $350. Unfortunately for Mom, she couldn´t dispute the charge. Caveat emptor. Build Your Empire: Spike Lee is just one of many people who have followed his dreams and started his own businesses using credit cards. Plastic is usually a lot easier to get than a bank loan, especially for a start-up venture. But that easy credit has its downside. With a large line of credit on your Visa or MasterCard, you may be tempted to spend money on things not essential to your business. (Do you really need four-color letterhead and the latest computer?) If finances charges rack up faster than revenues, you’ll soon be in trouble. The better strategy is to start your business on the cheap, and use credit cards only as needed. When you do use plastic, choose a business credit card reported in the name of your business rather than on your personal credit. You’ ll protect your credit rating from the additional debt and you will be setting up your venture as a serious entity rather than a side hobby. Save at the Car Rental Counter: Your $10 a day car rental can easily mushroom into $30 a day if you buy the “protection” coverage the rental car company will try to sell you at the counter. The “Collision Damage Waiver” is technically not insurance, but it works like insurance in that it covers you if the vehicle you rent is damaged. The good news is that between your own car rental coverage and a CDW waiver benefit on your credit card, you may be able to turn down that pricey policy. Check with your own auto insurance company first to see whether your coverage extenm |
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CREDIT HELP: Use Your Credit Clout: Credit Laws That are on Your Side. Profits From Credit! --- READ BELOW..
| THE TRUTH ABOUT CREDIT REPAIR! Mortgage, insurance, or even a job. Generally, they can’t deliver. After you pay them hundreds or even thousands of dollars in fees, these companies do nothing to improve your credit report - most simply vanish with your money The Truth About Credit Repair ----- KNOWLEDGEFINANCIAL. COM “Credit problems? No problem!”Credit repair companies promise, for a fee, to clean up your credit report so you can get a car loan, a home “We can erase your bad credit — 100% guaranteed.” “Create a new credit identity — legally.” “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!” Does all this sound too good to be true? Well, it is. These are the typical claims of shady credit repair organizations (CROs) which often victimize unwary consumers – usually, the most vulnerable consumers who are struggling with bankruptcy or have had problems rebuilding damaged credit reports and credit scores. These companies promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. Generally, they can’t deliver. After you pay them hundreds or even thousands of dollars in fees, these companies do nothing to improve your credit report - most simply vanish with your money. Rather than improving your credit, you may end up deeper in debt and see your credit score actually get worse. As opposed to credit counselors, who provide guidance on improving your credit reports and scores through better financial management, these credit repair organizations offer to remove negative information from your credit report. Generally, there are three steps to the service that these credit repair organizations offer: 1) The companies ask you to forward them copies of your credit reports (usually from the three major credit reporting agencies - Equifax, Experian, and TransUnion), which you must obtain directly from those agencies; 2) The credit repair organizations then recommend which items on your credit report you should dispute; 3) The credit repair organizations then contact the credit reporting agencies to challenge questionable items on your credit reports. However, the simple truth is that no one can legally remove accurate negative information from a credit report. Credit reporting agencies are obligated under the Fair Credit Reporting Act (FCRA) to correct or delete inaccurate, incomplete, or unverifiable information, usually within 30 days. They are not required to remove accurate information unless it is more than seven years old (or bankruptcies that are over ten years old). You have the right to dispute any inaccurate or incomplete information on your credit report – and the credit reporting agency must investigate the dispute without charge to you. Everything a credit repair organization can do for you legally, you can do for yourself at little or no cost. Shady credit repair organizations have long been the target of investigation by the Federal Trade Commission (FTC) due to the high numbers of complaints from consumers. Last year, the FTC launched 'Project Credit Despair' which has snared 20 'Credit Repair' scammers to date. A number of class-action suits have also been filed against credit repair organizations. Equifax and Fair Isaac face a class-action suit in Georgia for selling the ‘Score Power’ program designed to help consumers predict their credit score and see how changes to their credit reports affect that score. While this is may not actually be a credit repair service, the plaintiffs are attempting to use the law that regulates credit repair organizations to sue the companies. Fair Isaac is also facing another class-action suit in California based upon similar complaints. How can you avoid becoming a victim of these scams? The obvious answer is to save yourself the money and the risk by improving your credit on your own. There are also numerous non-profit credit counseling organizations which can help you to devise a plan for managing your finances and improving your credit. The National Foundation for Credit Counseling (NFCC) is a nonprofit credit counseling network which can refer you to a member in your area. However, if you don’t feel you have the time to do this on your own, if you are are overwhelmed by the process, or if you just want to turn the whole thing over to professionals, there are some basic rules for picking a reputable company to assist you in repairing your credit. According to the FTC, the main warning signs of scam credit repair companies are: Companies that want you to pay for credit repair services before they provide any services. Credit repair companies cannot require you to pay until they have completed the services they have promised. Companies that do not tell you your legal rights and what you can do for yourself for free. Companies that recommend that you not contact a credit reporting company directly. Companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number. Companies that advise you to dispute accurate information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution. In 1996, the Credit Repair Organizations Act (CROA) was signed into law to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law ” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot: Make false claims about their services. Charge you until they have completed the promised services. Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees. Your contract must specify: The payment terms for services, including their total cost. A detailed description of the services to be performed. How long it will take to achieve the results. Any guarantees they offer. The company’s name and business address ------- KNOWLEDGEFINANCIAL.COM |
| A Fresh Start? A common, and illegal, tactic employed by scam credit repair organizations is called ‘file segregation.’ These companies have flooded the mail, internet, radio, and TV with ads claiming that using ‘legal forms from the federal government’ you can exercise your ‘one-time right’ to apply for a new Social Security number. Bingo, you’re a new person with a clean credit history, right? Wrong – unlike other scams in which you may be an innocent victim, this scam makes you a perpetrator of fraud against the government. If you try ‘file segregation’, you could face fines or even a prison sentence. File segregation operators advise the consumer to apply to the IRS for an Employer Identification Number ("EIN"). Consumers are told to use the EIN in lieu of their Social Security number when applying for credit, in order to create a completely new credit file in which the old debts will not appear. The scheme essentially involves an attempt to hide one's identity from creditors by getting credit with the EIN and a name and address that differ slightly from accurate identifiers. Both the person selling such a scheme and consumers who follow the scheme are violating the law. The CROA bars any person from making or counseling any consumer to make any untrue or misleading statement with the intent to alter the consumer's identification in order to hide accurate credit information. Consumers following such advice may be committing felonies. Several aspects of a credit repair service's program could lead you to commit fraud. It is a federal crime to: Make false statements on a loan or credit application. Misrepresent your Social Security number. Obtain an EIN under false pretences. In addition, if you were to use the telephone or the postal system to apply for credit and provide false information, then you could be charged with mail or wire fraud, too. Also, file segregation likely would constitute civil fraud in many states. Already Stung? Have you already been victimized by one of these shady credit repair organizations? If so, you have the right to sue the credit repair organization under the CROA. They could be liable to you for the damages you suffered or the amount you paid to them, whichever is greater. The credit repair organization is also liable for attorney’s fees and punitive damages if the violation was particularly egregious. If you’ve been taken advantage of by a credit repair organization, contact the FTC. You can file a complaint at www.ftc.gov or by calling 1-877-FTC-HELP. The FTC can also start administrative proceedings against the credit repair organization and individual states can sue the organizations to stop them from violating the Act and to recover damages suffered by residents. Law Firms Offering Credit Repair There are a number of law firms which have moved into the credit repair market, such as Lexington Law and Ovation Law. What difference does it make to have a law firm working on your credit repair? Not much. They go through the same process and do the same thing as the non-law firm credit repair organizations. These firms are still covered by the Credit Repair Organizations Act, and are bound by state bar association rules. However, the difference is that most states require non-law firm credit repair organizations to place a bond with the state as a guarantee that they will comply with local laws regarding credit repair. Law firms are generally exempt from this requirement, and this has led a number of credit repair organizations to convert to law firms. Most of these law firms don’t really practice law…they’re just firms on paper. *Consumer Credit File Rights Under State and Federal Law You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. However, neither you nor any ''credit repair'' company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for 10 years. You have a right to obtain a copy of your credit report from a credit bureau. You may be charged a reasonable fee. There is no fee, however, if you have been turned down for credit, employment, insurance, or a rental dwelling because of information in your credit report within the preceding 60 days. The credit bureau must provide someone to help you interpret the information in your credit file. You are entitled to receive a free copy of your credit report if you are unemployed and intend to apply for employment in the next 60 days, if you are a recipient of public welfare assistance, or if you have reason to believe that there is inaccurate information in your credit report due to fraud. You have a right to sue a credit repair organization that violates the Credit Repair Organization Act. This law prohibits deceptive practices by credit repair organizations. You have the right to cancel your contract with any credit repair organization for any reason within 3 business days from the date you signed it. Credit bureaus are required to follow reasonable procedures to ensure that the information they report is accurate. However, mistakes may occur. You may, on your own, notify a credit bureau in writing that you dispute the accuracy of information in your credit file. The credit bureau must then reinvestigate and modify or remove inaccurate or incomplete information. The credit bureau may not charge any fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit bureau. If the credit bureau's reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit bureau, to be kept in your file, explaining why you think the record is inaccurate. The credit bureau must include a summary of your statement about disputed information with any report it issues about you. |
 | |  | |  | |  | |  |
COMMERCIAL INVESTMENT. ALL
THAT CAN HELP! COMMERCIAL
REAL ESTATE; A BETTER WAY
TO INVEST AND GET RICHER!
MULTI-WAYS TO WIN BIG IN
REAL ESTATE. WHAT IS
COMMERCIAL REAL ESTATE?
FINANCIAL REPORT: HOW TO
GET A MORTGAGE HOME
LOAN? Securing a home loan is
the most important step in the
home-buying process. Here are
the basics for getting your
financing.
HOW TO GET PRE-QUALIFY FOR
A HOME LOAN? 8 Fundamental
Reasons to Get Pre-Approved for
a Home Loan!
The first and most important step
in buying a home is getting pre-
qualified for a home loan.
BY GETTING PREQUALIFIED,
YOU IMMEDIATELY FIND
YOURSELF IN A STRONGER
NEGOTIATION POSITION.
YOU MADE YOURSELF MORE
ATTRACTIVE TO SELLERS.
IDENTITY THEFT: WATCH OUT,
STOP IT FROM HAPPENING, GET
THE TOOLS YOU NEED TO
PREVENT IT RIGHT HERE! AT
KNOWLEDGE FINANCIAL.COM
CREDIT HELP: Use Your Credit
Clout: Credit Laws That are on
Your Side; Understanding Your
Debt Collection Rights
CREDIT INFO: SAVE YOUR
CREDIT, RESCUE IT, PROTECT IT,
INCREASE YOUR SCORE. WE
HAVE VALUABLE INFORMATION
TO HELP YOU
CREDIT CARDS: The American
Credit Cards are very important
to have; but credit cards
represent a danger for those
who may not have the discipline,
order or those who don't think
what a plastic card can do for
them or to them! The borrowers
are the slaves of the lenders.
Credit cards issuers are
monsters the can eat the
average consumers alive.
CREDIT RATING: THE
IMPORTANCE OF YOUR CREDIT
RATING! Credit Card Fraud: 21
Tips to Protect Yourself. More
about your credit Score.
Companies base your credit
scores on five categories
ID-THEFT: HOW TO PROTECT AND
DEFEND YOURSELF AGAINST
IDENTITY THEFT? -----DETER,
DETECT AND DEFEND?
Credit & Loans: Credit Cards &
Consumer Loans ...
WHAT DO YOU KNOW ABOUT
IDENTITY THEFT?
Consumer Reports' advice on
steps you can take to protect
your identity and what to do if
you believe it's already been
compromised
Government's general
information; Local, State, and
Federal.
TAX SAVING TIPS FOR
INDIVIDUAL INVESTOR, GREAT
INFORMATION FOR ALL. Taxes
The More You Know, the Less
You’ll Pay
Business structures
101
LLP, LLC, S-corp and C-corp:
It's not just alphabet soup! A
breakdown of what you
need to know, in layman's
terms.
INVESTMENT: MAKE
YOURSELF RICHER BY
INVESTING THE RIGHT
WAY IN THE RIGHT
PRODUCTS. REAL
ESTATE INVESTMENTS
CAN HELP
STOCK MARKET: STOCK
MARKET A WAY TO INVEST AND
MULTIPLY YOUR PROFITS.
THESE INDUSTRIES HAS
THOUSANDS OF COMPANIES TO
BUY STOCKS FROM.
MUTUAL FUNDS: MUTUAL
FUNDS A WONDERFUL WAY TO
INVEST YOUR MONEY. Buying
and Selling mutual funds
You can buy some mutual funds
(no-load) by contacting the fund
companies directly. Other funds
are sold through brokers, banks,
financial planners, or insurance
agents.
BOND FUNDS: INVESTING IN
THE BONDS MARKET. WHAT
ARE BONDS?
Have you ever borrowed
money? Of course you have!
Whether we hit our parents up
for a few bucks to buy candy as
children or asked the bank for a
mortgage, most of us have
borrowed money at some point
in our lives.
FOREX MARKET: THE
LARGEST MARKET IN THE
WORLD TO INVEST AND GET
RICHER IF YOU USE THE
RIGHT TOOL.
FOREIGN EXCHANGE-(forex or
FX for short) is one of the most
exciting, fast-paced markets
around. Until recently, trading in
the forex market had been the
domain of large financial
institutions, corporations, central
banks, hedge funds and
extremely wealthy individuals.
The emergence of the internet
has changed all of this, and now
it is possible for average
investors to buy and sell
currencies easily with the click
of a mouse.
TAX CERTIFICATES: TAX
CERTIFICATE / TAX DEED: A
BETTER WAY TO INVEST
MONEY AND GET RICHER.
TAX LIENS: How Can You
Safely Earn 18% to 240% Per
Year On Your Investments?
Yes you can... By investing in
Government Issued
what are you doing
with your money in
the wake of the
financial crisis?
Where is the safe
place to put MONEY?
THAT CAN HELP! COMMERCIAL
REAL ESTATE; A BETTER WAY
TO INVEST AND GET RICHER!
MULTI-WAYS TO WIN BIG IN
REAL ESTATE. WHAT IS
COMMERCIAL REAL ESTATE?
FINANCIAL REPORT: HOW TO
GET A MORTGAGE HOME
LOAN? Securing a home loan is
the most important step in the
home-buying process. Here are
the basics for getting your
financing.
HOW TO GET PRE-QUALIFY FOR
A HOME LOAN? 8 Fundamental
Reasons to Get Pre-Approved for
a Home Loan!
The first and most important step
in buying a home is getting pre-
qualified for a home loan.
BY GETTING PREQUALIFIED,
YOU IMMEDIATELY FIND
YOURSELF IN A STRONGER
NEGOTIATION POSITION.
YOU MADE YOURSELF MORE
ATTRACTIVE TO SELLERS.
IDENTITY THEFT: WATCH OUT,
STOP IT FROM HAPPENING, GET
THE TOOLS YOU NEED TO
PREVENT IT RIGHT HERE! AT
KNOWLEDGE FINANCIAL.COM
CREDIT HELP: Use Your Credit
Clout: Credit Laws That are on
Your Side; Understanding Your
Debt Collection Rights
CREDIT INFO: SAVE YOUR
CREDIT, RESCUE IT, PROTECT IT,
INCREASE YOUR SCORE. WE
HAVE VALUABLE INFORMATION
TO HELP YOU
CREDIT CARDS: The American
Credit Cards are very important
to have; but credit cards
represent a danger for those
who may not have the discipline,
order or those who don't think
what a plastic card can do for
them or to them! The borrowers
are the slaves of the lenders.
Credit cards issuers are
monsters the can eat the
average consumers alive.
CREDIT RATING: THE
IMPORTANCE OF YOUR CREDIT
RATING! Credit Card Fraud: 21
Tips to Protect Yourself. More
about your credit Score.
Companies base your credit
scores on five categories
ID-THEFT: HOW TO PROTECT AND
DEFEND YOURSELF AGAINST
IDENTITY THEFT? -----DETER,
DETECT AND DEFEND?
Credit & Loans: Credit Cards &
Consumer Loans ...
WHAT DO YOU KNOW ABOUT
IDENTITY THEFT?
Consumer Reports' advice on
steps you can take to protect
your identity and what to do if
you believe it's already been
compromised
Government's general
information; Local, State, and
Federal.
TAX SAVING TIPS FOR
INDIVIDUAL INVESTOR, GREAT
INFORMATION FOR ALL. Taxes
The More You Know, the Less
You’ll Pay
Business structures
101
LLP, LLC, S-corp and C-corp:
It's not just alphabet soup! A
breakdown of what you
need to know, in layman's
terms.
INVESTMENT: MAKE
YOURSELF RICHER BY
INVESTING THE RIGHT
WAY IN THE RIGHT
PRODUCTS. REAL
ESTATE INVESTMENTS
CAN HELP
STOCK MARKET: STOCK
MARKET A WAY TO INVEST AND
MULTIPLY YOUR PROFITS.
THESE INDUSTRIES HAS
THOUSANDS OF COMPANIES TO
BUY STOCKS FROM.
MUTUAL FUNDS: MUTUAL
FUNDS A WONDERFUL WAY TO
INVEST YOUR MONEY. Buying
and Selling mutual funds
You can buy some mutual funds
(no-load) by contacting the fund
companies directly. Other funds
are sold through brokers, banks,
financial planners, or insurance
agents.
BOND FUNDS: INVESTING IN
THE BONDS MARKET. WHAT
ARE BONDS?
Have you ever borrowed
money? Of course you have!
Whether we hit our parents up
for a few bucks to buy candy as
children or asked the bank for a
mortgage, most of us have
borrowed money at some point
in our lives.
FOREX MARKET: THE
LARGEST MARKET IN THE
WORLD TO INVEST AND GET
RICHER IF YOU USE THE
RIGHT TOOL.
FOREIGN EXCHANGE-(forex or
FX for short) is one of the most
exciting, fast-paced markets
around. Until recently, trading in
the forex market had been the
domain of large financial
institutions, corporations, central
banks, hedge funds and
extremely wealthy individuals.
The emergence of the internet
has changed all of this, and now
it is possible for average
investors to buy and sell
currencies easily with the click
of a mouse.
TAX CERTIFICATES: TAX
CERTIFICATE / TAX DEED: A
BETTER WAY TO INVEST
MONEY AND GET RICHER.
TAX LIENS: How Can You
Safely Earn 18% to 240% Per
Year On Your Investments?
Yes you can... By investing in
Government Issued
what are you doing
with your money in
the wake of the
financial crisis?
Where is the safe
place to put MONEY?
CREDIT CARDS THEFT PREVENTION
Secrets of a Former Credit Card Thief
Card theft is cheap, easy and you could be next.
We've all heard the standard tips about preventing
identity theft and credit card fraud. But what would a real
identity thief tell you if he had the chance? Dan
DeFelippi, who was convicted of credit card fraud and ID
theft says simply this: You can't be too careful.
Desotel Caldigaz said: mostly made fake credit cards with real credit card
information he bought online. "I would make fake IDs to go with them, and
then I'd buy laptops or other expensive items in the store and sell them on
eBay," he says. DeFelippi was also involved in several other kinds of scams,
including phishing schemes that exploited AOL and PayPal customers.
Committing credit card fraud is still "ridiculously easy to
do," he says. "Anyone with a computer and about $200
could start making money the next day."
After his conviction, Desotel faced ten years in prison, but under a plea deal
he agreed to community service and to pay back more than $200,000 in
restitution. He also worked for the U.S. Secret Service, helping to infiltrate
the online underground and training agents in the latest fraud techniques.
His help led to the arrests of five to 15 people over two years. Today, he's a
Web developer at a graphic design company in Rochester, N.Y. He agreed to
take an hour with CreditCards.com to share his story and his top tips on
how to protect yourself.
Knowledgefinancial.com: How did you get started?
Dan DeFilippi: When I was in middle school and high school, I was into what I
would call innocent hacking. I wasn't trying to be malicious or make money.
I was just interested to see what I could do. In college, I started selling fake
IDs to make a little extra money.
I was pretty active in online chat rooms where people would talk about this
stuff, and I began to realize there was a whole world of credit card fraud
where I could make a lot of money with very little effort. From there, it was
just a huge downward spiral.
Knowledgefinancial.com: You said you bought credit
card data online. Tell me about that.
Desotel: Every credit card has magnetic stripe on the back with data on it.
There are people out there who hack into computers where that data is
being stored.
There are also people like waitresses and waiters with handheld skimmers
who steal the data that way. Then they sell the data online. I'd pay $10 to $50
for the information from one card. Then I'd use an encoder to put that data
on a fake card, go into a store and purchase stuff.
Knowledgefinancial.com: Do identity thieves like some
credit cards better than others?
Desotel: Well, a lot of American Express cards have no set limit, so you'd be
able to buy a lot more. However, the downside is that a lot of merchants
require more security for American Express than for other cards.
They may ask you to enter the four-digit code on the front of the card or your
ZIP code. That information usually isn't in the magnetic stripe information.
So if a card is skimmed, if someone has its magnetic stripe information,
they would still need the number on the front or your ZIP code to commit
fraud.
Knowledgefinancial.com: What about debit cards?
Desotel: I always recommend against them. With debit cards, it's your real
money in your bank account you're playing with. So if someone gets your
debit card information and uses it, your cash is gone until you fill out a lot of
paperwork and persuade the bank to give it back to you. Credit cards are
much better at protecting you against fraud. And if you're worried about
debt, you can always pay them off every month.
Knowledgefinancial.com: What's your No. 1 tip on how
consumers can protect themselves?
Desotel: You've probably heard this before, but the most important thing
really is to watch your accounts. And I don't mean just checking your
statement once a month.
If you're only checking your statement once a month, someone can start
using your card at the beginning of the billing cycle, and they can do a lot of
damage before you catch it. You're talking thousands of dollars, and it will
be a lot harder to catch them and dispute it.
I use Mint.com, which is a free aggregation service that allows you to put all
your accounts on there and monitor everything at once. I check that every
day. It's also a good idea to check your credit report at least twice a year to
make sure no one has stolen your identity.
Knowledgefinancial.com: Is online shopping safe?
Desotel: You've got to be careful. It is really easy to create a fake online
store or to create a store that sells stuff, but its real purpose is to collect
credit card information. I'd try to stick to reputable sites or at least to sites
that have reviews.
A lot of times they'll create these stores that sell things that are widely
searched for at prices that are incredibly low. If a deal is way too good to be
true, it's probably a scam and they just want your information. The more
information a website asks for, the more you need to be certain that this is
information they really need and it's a legitimate site.
Also, don't buy anything from somebody e-mailing you, no matter how good
the offer sounds. If a company is sending you an ad through e-mail and
you've never heard of the company, don't buy anything from them.
Knowledgefinancial.com: How did your phishing scams
work?
Desotel: People are much savvier now. Back when I started, it wasn't that
common. I was getting thousands and thousands of responses from single
mailings.
The first one I did, I targeted AOL users, because I thought they would be
less computer literate and more likely to fall for my scams. We said, "Your
credit card information has expired. Come to this site and update your
information or your account will be closed." I did something similar with
PayPal.
I sent an e-mail that said, "Someone has accessed your account. We've
locked your account. Please click here to access your account." We'd link
them to a fake website and they'd give us their PayPal log-in information.
Then we'd say, "For security purposes we've removed your account
information. Please re-enter it."
Knowledgefinancial.com: Where did you get the e-mail
addresses for your phishing schemes?
Desotel: There's software that allows you to harvest them from anyone who
has posted their e-mail addresses online, so don't ever put your e-mail
address on a website. If I was targeting a specific group, I'd try to find
e-mails for that group. For the PayPal scam, I was trying to find people
around my age or younger, so I targeted college and universities.
I looked for ones in Massachusetts because I could make fake IDs from
Massachusetts. As part of the scam, I'd get their date of birth, address,
Social Security number and driver's license number. Then I could make a
fake ID that had all accurate information on it. The only thing that wouldn't be
real would be my picture. It's kind of scary how much information I could get.
Knowledgefinancial.com: What other mistakes do
consumers make on the Web?
Desotel: When you're using your computer online, it's sending data back
and forth between your computer and website. If someone gains access to
that connection -- it's called sniffing -- they can capture the data between
you and the website you're communicating with.
That's the reason it's so important to access secure websites if you're
putting in any sensitive data, so look for "https" in the Web address. A more
recent issue is the free wireless offered all over the place. If you're using an
open Wi-Fi connection, you should pretty much have the expectation that
there is no security.
Knowledgefinancial.com: What steps do you take to
protect your own data online?
Desotel: All financial services companies have two-factor authentication. So
you typically have to put in a password plus something else. A lot of banks
use questions, but that can actually give you a false sense of security
because you can find out a lot of information about people online. So maybe
this is extreme, but for those questions, I make up stuff.
I don't put in my real information. For example, a common question is: "What
city were you married in?" Well, I'm not married, but I'll answer that
question so there's no way anyone could possibly know the answer. I try to
make sure at least one of the questions has a made-up answer.
Knowledgefinancial.com: What's your advice on using
ATMs?
Desotel: ATM skimming is the big thing right now because it's cash, and
cash is king. Basically, that's where someone puts a card reader on the
ATM machine, captures your PIN, then goes and drains your bank account.
The skimmer device goes over the card slot, and it's designed to look like
part of the ATM.
Some of the equipment now is very good and it's hard to tell the difference
between that and a real machine. So what you need to do is try to use the
same ATM every time, and watch out for anything on the machine that looks
out of the ordinary, especially something stuck on the front where you put
your card in.
Generally, I like to use ATM machines at banks rather than convenience
stores or a bar or club. There have been incidents where thieves installed
their own ATM machines in places with skimmers inside them. That's much
less likely to happen at a bank.
Knowledgefinancial.com: Is there more the banking
industry could do to protect us?
Desotel: The biggest thing they could do is get away from using magnetic
stripes. They aren't that secure and anyone can get a magnetic stripe
reader (a skimmer) for $5 to $10. The smart chips that are widely used in
Europe and internationally are much more secure and harder to hack.
They offer near 100 percent protection against fraud, at least from a
skimming point of view, and they also require a PIN. But the credit card
companies have done the math. They think people will use their credit cards
less often if they had to put in a PIN.
It might eliminate a lot of the fraud, but there would be less card use and
they would end up losing money. So they're actually doing just the opposite,
moving to a system where you can just have your credit card in your pocket
-- you don't even have to swipe it to use it. The problem is, that's very
unsecure. Anyone with equipment can sit out in their car and pick that up.
Knowledgefinancial.com: How did you end up getting
caught?
Desotel: I went to Best Buy with a guy I was working with locally to buy a
laptop, and the manager there was pretty well trained. When he swiped the
card, he asked for my friend's ID. Most stores don't ask for ID. My friend
gave him his fake driver's license, but then when the manager swiped the
credit card, it came up "Call for authorization."
A call for authorization, if you're trying to commit credit card fraud, is really
bad; it means the credit card company has seen suspicious activity. The
manager said he needed to go to the front desk to finish processing the
order. As soon as he left, we walked as quickly as possible to the exit and
left the store.
The problem was, my friend had given the manager his fake ID with his
picture. They ran it on the news and caught him. He told them the whole
story, so they ended up catching me, too. I really was better off getting
caught when I did. I was lucky I didn't go to prison. Under the guidelines now,
I'd probably have to serve at least two years. So anything I can do to help
people now, to help compensate for what I've done, I'm trying to do.
Secrets of a Former Credit Card Thief
Card theft is cheap, easy and you could be next.
We've all heard the standard tips about preventing
identity theft and credit card fraud. But what would a real
identity thief tell you if he had the chance? Dan
DeFelippi, who was convicted of credit card fraud and ID
theft says simply this: You can't be too careful.
Desotel Caldigaz said: mostly made fake credit cards with real credit card
information he bought online. "I would make fake IDs to go with them, and
then I'd buy laptops or other expensive items in the store and sell them on
eBay," he says. DeFelippi was also involved in several other kinds of scams,
including phishing schemes that exploited AOL and PayPal customers.
Committing credit card fraud is still "ridiculously easy to
do," he says. "Anyone with a computer and about $200
could start making money the next day."
After his conviction, Desotel faced ten years in prison, but under a plea deal
he agreed to community service and to pay back more than $200,000 in
restitution. He also worked for the U.S. Secret Service, helping to infiltrate
the online underground and training agents in the latest fraud techniques.
His help led to the arrests of five to 15 people over two years. Today, he's a
Web developer at a graphic design company in Rochester, N.Y. He agreed to
take an hour with CreditCards.com to share his story and his top tips on
how to protect yourself.
Knowledgefinancial.com: How did you get started?
Dan DeFilippi: When I was in middle school and high school, I was into what I
would call innocent hacking. I wasn't trying to be malicious or make money.
I was just interested to see what I could do. In college, I started selling fake
IDs to make a little extra money.
I was pretty active in online chat rooms where people would talk about this
stuff, and I began to realize there was a whole world of credit card fraud
where I could make a lot of money with very little effort. From there, it was
just a huge downward spiral.
Knowledgefinancial.com: You said you bought credit
card data online. Tell me about that.
Desotel: Every credit card has magnetic stripe on the back with data on it.
There are people out there who hack into computers where that data is
being stored.
There are also people like waitresses and waiters with handheld skimmers
who steal the data that way. Then they sell the data online. I'd pay $10 to $50
for the information from one card. Then I'd use an encoder to put that data
on a fake card, go into a store and purchase stuff.
Knowledgefinancial.com: Do identity thieves like some
credit cards better than others?
Desotel: Well, a lot of American Express cards have no set limit, so you'd be
able to buy a lot more. However, the downside is that a lot of merchants
require more security for American Express than for other cards.
They may ask you to enter the four-digit code on the front of the card or your
ZIP code. That information usually isn't in the magnetic stripe information.
So if a card is skimmed, if someone has its magnetic stripe information,
they would still need the number on the front or your ZIP code to commit
fraud.
Knowledgefinancial.com: What about debit cards?
Desotel: I always recommend against them. With debit cards, it's your real
money in your bank account you're playing with. So if someone gets your
debit card information and uses it, your cash is gone until you fill out a lot of
paperwork and persuade the bank to give it back to you. Credit cards are
much better at protecting you against fraud. And if you're worried about
debt, you can always pay them off every month.
Knowledgefinancial.com: What's your No. 1 tip on how
consumers can protect themselves?
Desotel: You've probably heard this before, but the most important thing
really is to watch your accounts. And I don't mean just checking your
statement once a month.
If you're only checking your statement once a month, someone can start
using your card at the beginning of the billing cycle, and they can do a lot of
damage before you catch it. You're talking thousands of dollars, and it will
be a lot harder to catch them and dispute it.
I use Mint.com, which is a free aggregation service that allows you to put all
your accounts on there and monitor everything at once. I check that every
day. It's also a good idea to check your credit report at least twice a year to
make sure no one has stolen your identity.
Knowledgefinancial.com: Is online shopping safe?
Desotel: You've got to be careful. It is really easy to create a fake online
store or to create a store that sells stuff, but its real purpose is to collect
credit card information. I'd try to stick to reputable sites or at least to sites
that have reviews.
A lot of times they'll create these stores that sell things that are widely
searched for at prices that are incredibly low. If a deal is way too good to be
true, it's probably a scam and they just want your information. The more
information a website asks for, the more you need to be certain that this is
information they really need and it's a legitimate site.
Also, don't buy anything from somebody e-mailing you, no matter how good
the offer sounds. If a company is sending you an ad through e-mail and
you've never heard of the company, don't buy anything from them.
Knowledgefinancial.com: How did your phishing scams
work?
Desotel: People are much savvier now. Back when I started, it wasn't that
common. I was getting thousands and thousands of responses from single
mailings.
The first one I did, I targeted AOL users, because I thought they would be
less computer literate and more likely to fall for my scams. We said, "Your
credit card information has expired. Come to this site and update your
information or your account will be closed." I did something similar with
PayPal.
I sent an e-mail that said, "Someone has accessed your account. We've
locked your account. Please click here to access your account." We'd link
them to a fake website and they'd give us their PayPal log-in information.
Then we'd say, "For security purposes we've removed your account
information. Please re-enter it."
Knowledgefinancial.com: Where did you get the e-mail
addresses for your phishing schemes?
Desotel: There's software that allows you to harvest them from anyone who
has posted their e-mail addresses online, so don't ever put your e-mail
address on a website. If I was targeting a specific group, I'd try to find
e-mails for that group. For the PayPal scam, I was trying to find people
around my age or younger, so I targeted college and universities.
I looked for ones in Massachusetts because I could make fake IDs from
Massachusetts. As part of the scam, I'd get their date of birth, address,
Social Security number and driver's license number. Then I could make a
fake ID that had all accurate information on it. The only thing that wouldn't be
real would be my picture. It's kind of scary how much information I could get.
Knowledgefinancial.com: What other mistakes do
consumers make on the Web?
Desotel: When you're using your computer online, it's sending data back
and forth between your computer and website. If someone gains access to
that connection -- it's called sniffing -- they can capture the data between
you and the website you're communicating with.
That's the reason it's so important to access secure websites if you're
putting in any sensitive data, so look for "https" in the Web address. A more
recent issue is the free wireless offered all over the place. If you're using an
open Wi-Fi connection, you should pretty much have the expectation that
there is no security.
Knowledgefinancial.com: What steps do you take to
protect your own data online?
Desotel: All financial services companies have two-factor authentication. So
you typically have to put in a password plus something else. A lot of banks
use questions, but that can actually give you a false sense of security
because you can find out a lot of information about people online. So maybe
this is extreme, but for those questions, I make up stuff.
I don't put in my real information. For example, a common question is: "What
city were you married in?" Well, I'm not married, but I'll answer that
question so there's no way anyone could possibly know the answer. I try to
make sure at least one of the questions has a made-up answer.
Knowledgefinancial.com: What's your advice on using
ATMs?
Desotel: ATM skimming is the big thing right now because it's cash, and
cash is king. Basically, that's where someone puts a card reader on the
ATM machine, captures your PIN, then goes and drains your bank account.
The skimmer device goes over the card slot, and it's designed to look like
part of the ATM.
Some of the equipment now is very good and it's hard to tell the difference
between that and a real machine. So what you need to do is try to use the
same ATM every time, and watch out for anything on the machine that looks
out of the ordinary, especially something stuck on the front where you put
your card in.
Generally, I like to use ATM machines at banks rather than convenience
stores or a bar or club. There have been incidents where thieves installed
their own ATM machines in places with skimmers inside them. That's much
less likely to happen at a bank.
Knowledgefinancial.com: Is there more the banking
industry could do to protect us?
Desotel: The biggest thing they could do is get away from using magnetic
stripes. They aren't that secure and anyone can get a magnetic stripe
reader (a skimmer) for $5 to $10. The smart chips that are widely used in
Europe and internationally are much more secure and harder to hack.
They offer near 100 percent protection against fraud, at least from a
skimming point of view, and they also require a PIN. But the credit card
companies have done the math. They think people will use their credit cards
less often if they had to put in a PIN.
It might eliminate a lot of the fraud, but there would be less card use and
they would end up losing money. So they're actually doing just the opposite,
moving to a system where you can just have your credit card in your pocket
-- you don't even have to swipe it to use it. The problem is, that's very
unsecure. Anyone with equipment can sit out in their car and pick that up.
Knowledgefinancial.com: How did you end up getting
caught?
Desotel: I went to Best Buy with a guy I was working with locally to buy a
laptop, and the manager there was pretty well trained. When he swiped the
card, he asked for my friend's ID. Most stores don't ask for ID. My friend
gave him his fake driver's license, but then when the manager swiped the
credit card, it came up "Call for authorization."
A call for authorization, if you're trying to commit credit card fraud, is really
bad; it means the credit card company has seen suspicious activity. The
manager said he needed to go to the front desk to finish processing the
order. As soon as he left, we walked as quickly as possible to the exit and
left the store.
The problem was, my friend had given the manager his fake ID with his
picture. They ran it on the news and caught him. He told them the whole
story, so they ended up catching me, too. I really was better off getting
caught when I did. I was lucky I didn't go to prison. Under the guidelines now,
I'd probably have to serve at least two years. So anything I can do to help
people now, to help compensate for what I've done, I'm trying to do.
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