Consumer Tips

Buying a Prepaid Debit Card? Read that arbitration clause!

By: Laurence Gendelman 

Prepaid debit card use has increased drastically over the last decade. In 2016, Forbes projects that 29.2 million cards will be active, indicating an average growth rate of 19.7%. While some prepaid debit cards have no activation fees, monthly fees, or card replacement fee, other cards are less advantageous for consumers. Fees can often be up to $20 for activation, $4 for monthly maintenance, $5 to reload funds, $1 just to make a purchase, and the list goes on.

Often these cards contain mandatory arbitration provisions that take away a cardholder’s right to join a class action suit against this issuer or engage in a class-arbitration. As a result, it can be very expensive, costly, and time-consuming to assert your rights if you have a dispute with a prepaid debit card issuer. Most consumers do not read their cardholder agreements before buying a prepaid debit card, but savvy consumers do. Open the package and read the agreement or go online and look up the cardholder agreement for the card that you are thinking about buying.

While arbitration agreements may not seem like an important part of your purchase, they are. If you do have a dispute, your rights can drastically be affected by the “fine print”. Many consumers only care about arbitration provisions before it is too late.

Credit Repair Series (3 of 3): Credit Repair Agencies

By: CameronPassmore 

In Part 2 of our series, we covered how to identify and correct inaccurate information on credit reports. In Part 3, we will discuss the businesses that offer these services professionally: credit repair agencies.

Overview and Concerns
A “credit services organization” (or agency) is defined under Colorado law as, “any person, including a nonprofit organization exempt from taxation under section 501 (c) (3) of the federal “Internal Revenue Code of 1986″, who, with respect to the extension of credit by others, represents that such person can or will, in return for the payment of money or other valuable consideration by the buyer, improve or attempt to improve a buyer’s credit record, history, or rating.” CRS § 12-14.5-103(2). It should be noted that attorneys acting in their normal capacity are excepted from this definition.

Not only has the State of Colorado taken the time to define this occupation legally, but an entire series of laws (known as the Colorado Credit Services Organization Act, CRS § 12-14.5-101, et seq.) has been written with an eye to protect consumers. The state legislature has summarized their concerns, “[c]ertain advertising and business practices of some credit services organizations have worked a financial hardship upon the people of this state, often those who are of limited economic means and inexperienced in credit matters. Credit services organizations have significant impact upon the economy and well-being of this state and its people.” CRS § 12-14.5-102(1)(b).

The savvy consumer should be aware that bad actors are present within the field of credit repair. At a minimum, remember that nobody can promise results. Other things to look out for include: payment up-front, offers such as “guarantee plans,” agencies that sell advice, etc. Most of the time when a credit report contains an inaccuracy, a savvy consumer will be able to address the issue themselves, provided they are willing to see the process through to its end.

Complex Matters
This series has been aimed at educating consumers on how to obtain their credit report and how to challenge inaccurate credit report information. A great deal of the time, a credit repair agency will not be able to offer you anything you cannot get for yourself. That said, every credit situation is different, and complex issues can arise regarding liens, taxes, and collection actions. If the credit repair task ahead of you is complex, credit repair agencies do have the benefit of repetition, and a reputable agency is one possible way to resolve complex issues.

Selecting a credit repair agency, should you decide you need one, is beyond the scope of this series. However, at minimum, savvy consumers should use the usual due diligence before selecting anyone to help them with any financial issue. A partial list of research tools appears below:

Google

(you can search business reviews in the Google Local section of your Google+ account)

Better Business Bureau

Do your homework before contacting an agency: the last thing your credit horror story needs is a sequel. In the end, remember that when it comes to credit repair you will always be your primary advocate. Stay credit vigilant, and good luck.

Know Your Coverage

By: CarmenFeldman 

The Affordable Care Act, which has  sometimes been referred to as Obamacare, added some rights and protections which allow consumers of health care to more easily understand their health plan’s coverage. Every health plan must now provide a summary of benefits and coverage (SBC). This document must be written in plain language and must be easy-to-understand. Here is an example of what an SBC looks like. As you can see, the document not only breaks down the amount of co-pays you will have to pay for various treatments, but also gives you coverage examples.

The idea behind the SBC is to create a standard document which allows you to compare health plans as you are shopping for coverage on the exchange. However, it is also a great tool to have when you are trying to prepare yourself for your next doctor’s visit. No matter if you bought insurance on the exchange, or already have insurance through your employer, every health plan has to provide a SBC. You can ask your insurance company for a copy at any time. Along with the SBC, your insurance company will also be able to provide you with a uniform glossary of all the terms you will come across in the SBC- to make understanding it a little easier.

If you are nevertheless struggling with understanding your coverage, call your insurance company customer helpline!

Credit Repair Series (2 of 3): Reviewing and Challenging Credit Items

By: CameronPassmore 

After obtaining your credit report from www.annualcreditreport.com, you should have a fair amount of information to go over. Many people are only interested in their credit score: do not make this mistake. A credit score is just a number, after all, and what you should really be interested in is what is driving that number. The only way to understand why your number is what it is (low or high) is to understand what is in your report.

Looking at Your Report

Many people are only interested in their credit score: do not make this mistake. A credit score is just a number, after all, and what you should really be interested in is what is driving that number.

Your credit report is made up of a bunch of individual entries, such as the one shown above. The red circles highlight the portions of each item that you will want to review. At its simplest, this is an exercise in checking for accuracy. Nobody is in a better position than you to know if this data is correct. So ask yourself this question: does all of this look accurate? If something does not, then you may have found an actionable item that could improve your credit score.

Please remember that there is no such thing as harmless inaccurate data. For instance, a common error is a credit card that has been closed, but shows as still open on your credit report. It may have a spotless payment record and it may show a zero balance. But, it still tells creditors that you already have thousands of dollars of credit at your disposal that you do not actually have. Thus, there is a real difference between your actual capacity to manage another line of credit, and your capacity to do so as documented in your credit report. The difference between these two can increase interest rates on loans you apply for or in some cases even get you denied for a loan. More is not more, accurate is more.

Challenging Items

Now that you have identified an inaccuracy, it it time to act on it. The contact information for the three reporting agencies was provided in Part 1 of this series. The other contact information you will need to know is from the company that provided the information. As you can see, above, the entry on your credit report already contains this information!

The first thing you need to do is gather your evidence. Do you have receipts showing your payments? Confirmation emails? Printable online balances? A transaction history? Use it. You want everything that tells your side of the story. Remember that both the credit reporting agency and the information provider are required to keep your nonpublic data… nonpublic. They will need this information to make corrections to your report. Want to get really specific? Make copies of your credit report and circle the items in question.

Once you have compiled your evidence, write a letter explaining exactly what is wrong, exactly what it should be, and where in your evidence that can be verified. The final step is to sign the letter and make two copies of everything: one for the credit reporting agency, and the other for the information provider. The originals are for your own records.

In reality, this approach is somewhat redundant as both the agency and the information provider are obligated to work together to find a solution. But the extra copy is worth your time: both entities will have everything they need to act on your inquiry from day one, and even under the best of circumstances you are looking at about 30 days before you see any changes. A month might not seem that long, but imagine how long it could feel if it is standing in the way between your family and your next home: 30 days can be an eternity.

Investigation Complete

Once the reporting agency finishes with your inquiry, they are obligated to notify you of the results and to provide you a new copy of your report should your inquiry lead to a change in your credit report. They are also obligated to provide new information to anyone who requested your credit report in the last six months.

There is always the possibility that your credit report will not change. Remember that only inaccurate information will result in a change. Disputed charges may still appear: disagreeing with an item on your credit report is not enough to get it removed. You may, however, request that a statement be attached to your credit report regarding the disputed item. This statement will accompany your report, allowing you to provide context regarding the unchanged item.

Is a Payroll Card Right for You?

By: Laurence Gendelman 

According to Forbes, In 2012, $34 billion dollars were loaded on 4.6 million payroll cards. By 2017, Forbes projects that  this number will increase to $68.9 billion dollars. Payroll cards are a recent phenomenon increasingly utilized by companies both big and small alike.

Payroll cards are an alternative to an employee receiving their salary or wages in the traditional form of check or direct deposit. Before deciding to transition away from traditional mediums of compensation and use a payroll card, it is important to make sure that a payroll card is right for you.

A payroll card is essentially a debit card with a stored value that is reloaded by your employer every pay period. The card does not extend any credit to the cardholder; rather the cardholder is limited to spend only those funds preloaded on the card. Payroll cards do not require any credit check or prerequisites like a credit card.

The major benefits of these cards is that they present many of the same features of a debit card, but do not require a bank account or an extension of credit. Additionally, the cards eliminate obsolete check cashing fees, allow the user to make purchases over the internet or at retailers, and provide similar FDIC protection as a debit card supported by a bank account.

While these features of a payroll card may be enticing, users should fully understand the terms and conditions associated with the specific payroll card they are using. First, in some states a user cannot be charged any fees to access their money. Know the laws of your particular state. The fees associated with these cards can often be outrageous including:

– ATM Withdrawal: $1.75

– ATM Balance Inquiry: $1.00

– Monthly Fees: $9.95 (Vision Premier Card, Univision Card)

– Replacement Card: $6.00

– Paper Statements: $2.95

– Inactivity Fees: $7.00

For more information about recent payroll card fee investigations by the Attorney General of New York, click here.

While some of the above fees may be typical of debit cards, these fees are different for two reasons. First, the fees tend to be higher on average than those for debit cardholders. Second, several fees exist for payroll cards that are not common for debit cards such as fees for inactivity, replacement cards, most of all monthly service fees.

The final problem associated with recent payroll card scams is that employees are sometimes forced by their employers to use payroll cards to receive their pay, rather than a payroll card being one option among many.According to the CFPB, an employee may have the option to use a payroll card, but cannot be forced or compelled to do so.

Employers cannot force their employees to use a payroll card; to do so is illegal. The Consumer Financial Protection Bureau has stated that they intend to use their enforcement powers to stop employers from forcing employees to use payroll cards. According to the American Payroll Association, employers save approximately $2.75 per payment using payroll cards rather than direct deposits or checks. This likely explains why employees may coerce employees to receive their income in for form of a payroll card. Additionally the fee structures of the cards are agreed upon between the card issuer and the employer, so employers may be benefiting as well by charging fees to their employees to access their own money.

While payroll cards are not inherently evil and may present many benefits for your and your financial wellbeing, there are risks to be aware of. If you choose to accept a payroll card from your employer, make sure that:

– It is YOUR choice to accept your income in the form of a payroll card deposit,

– You are aware of the fee structure, if any, associated with the card and its features,

– The benefits associated with your choice to use a payroll card outweigh the costs, and

– That a debit card supported by a bank account would not serve your interests better.

You work hard for your money. Make sure that the way you access that money is serving your financial interests, goals, and needs. If you believe that you have been coerced by your employer to receive your compensation on a payroll card, or that the administrator of your payroll card is engaging in other illegal behavior, you can submit your complaint here.

Watch Out for These Common Internet Scams!

By: StephMinnock 

As you may remember from last year’s post on online shopping, the Internet is a fantastic resource but one that must be used carefully. This is particularly true when one is using email and social media sites such as Facebook. Although Facebook and email have transformed the way that we communicate with each other, they also leave us vulnerable to phishing and other acts designed to steal private information from unwitting consumers. Below is a list of common Internet scams that you should watch out for when using email or social media.

Phishing: Emails appear to come from trusted sources and request account information for personal bank accounts or other forms of personally identifying information. Examples include emails with messages like:

“We suspect an unauthorized transaction on your account. To ensure that your account is not compromised, please click the link below and confirm your identity.”

“During our regular verification of accounts, we couldn’t verify your information. Please click here to update and verify your information.”

“Our records indicate that your account was overcharged. You must call us within 7 days to receive your refund.”

Funeral Notification Scam: Scammers are sending bogus emails with the subject line “funeral notification.” The message from the “funeral home” offers condolences and offers a link for more information about the upcoming funeral. The link downloads malware onto the your computer.

The Fake Friend Scam: When a Facebook friend request is sent from someone you already think was your friend, and you accept without realizing, your Facebook information becomes available to a scammer who may either (1) recommend sketchy websites that download malware to your computer; (2) use your account to gather information about your other friends; or (3) suck you into a romance scam, which occurs when you develop an online relationship with someone who is not who they portray themselves to be. This is also called catfishing. These scammers may try to obtain credit card or other financial information that may lead to identity theft or otherwise attempt to expose you to viruses.

There are steps you can take to prevent your information from being stolen! 

(1) Delete emails and text messages that ask you to provide personal information that are not from trusted sources.

(2) Do NOT click on links from emails unless you trust the sender AND have verified with the sender that they actually sent the message.

(3) Call the bank or business that appears to have sent you the message by using the phone number on the back of your credit card or the financial statements that you’ve received from that organization.

(4) Keep your security software updated.

(5) Use a pop-up blocker and don’t click on any links that pop-up.

Think before you click to protect your personal information, your financial information, and your friends and email contacts from potential scammers!

Credit Repair Series (1 of 3): How to Obtain a Credit Report for Free

By: CameronPassmore

Learning that your credit rating has slipped can send you into a panic. Our credit ratings are our reputations, financially, after all. It is a thing we own, like our cars or our homes. Thus, waking up one morning to learn our credit ratings have been damaged can be unnerving to say the least.

What’s more, while a leaky roof or a dented door is easy enough to understand, who really knows where all these credit numbers come from, anyways? They just seem to manifest themselves. And, if you are among the many who do not understand the intricate workings of credit scores, know that you are in good company (the author of this blog post has limited knowledge at best).

The problem is that this great unknown “credit thing,” combined with the feeling of loss associated with a credit downgrade, can lead to rash behavior. Or at the very least a sort of dependance on institutions who claim to know the game, and promise to make it all better…. for a price. But there is hope: you do not need to know how credit scores are formed to know what you might do about your own.

Credit Service Organizations have No Special Powers

These organizations check, and attempt  (more on this in Part 2) to repair your credit for you. But they ultimately can do nothing you couldn’t do yourself… for close to free.

Step One: Get Your Report

You obviously need the whole story before you will know how to proceed. Colorado law requires that credit bureaus provide you with one free credit report a year, upon request. There are services on the internet that will pull such reports for you, but they are always looking to offer something more. To save time and possibly money, send the request directly. The three major bureaus are:

Equifax: PO Box 740241; Atlanta GA 30374; (800) 685-1111; www.equifax.com

Experian: PO Box 949; Allen TX; 75013; (888) 397-3742; www.experian.com

Trans Union: PO Box 6790; Fullerton, CA 92834; (877) 322-8228; www.transunion.com

It should be noted that these bureaus will request personal data before they will send a report. This includes your social security number. But rest easy: most, if not all, of the information they will want they already have. The purpose of requesting it is to make certain you are who you say you are. Identify theft can only further damage your credit: don’t be afraid to provide the necessary info, this keeps us safe.

Not only may you obtain a report once a year for free, but if you are denied credit the creditor must give you the name and address of the bureau that supplied the report upon which the decision was made (it will most probably be one of the three above). If you contact them within 60 days, you may receive a copy of that report for free.

Once you receive your credit report you can begin to repair to to the extent possible. This will be covered in part two of our series on credit repair.