Tag: Scams

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Does Western Union Owe You Money? Company Settles FTC Lawsuit for $586M

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By now, many consumers know to automatically delete suspicious emails or social media messages requesting wire transfers from Nigerian princes or scammers posing as long-lost relatives. 

Even so, people have lost millions of dollars to fraudsters via wire transfer scams. If you’ve fallen victim to a wire transfer scam involving Western Union, you might want to pay attention to this news.  

Consumers now can file claims to recoup money lost when scammers told them to pay via Western Union’s money transfer system, as part of a $586 million federal settlement with the company that was announced this week.  

The deadline to file claims with the U.S. Department of Justice is Feb. 12, 2018. The settlement applies to scams executed through Western Union between Jan. 1, 2004, and Jan. 19, 2017. 

“American consumers lost money while Western Union looked the other way,” Federal Trade Commission (FTC) Acting Chairman Maureen K. Ohlhausen said this week in a press release. “We’re pleased to start the process that will get that money back into consumers’ rightful hands.”  

The settlement stemmed from a January 2017 complaint against the company by the FTC, which said that lax security policies have made the popular money transfer service a way for scammers to defraud consumers.   

The case was investigated with the assistance of the Department of Justice, the Postal Inspection Service, the FBI and several local law enforcement agencies.  

“Returning forfeited funds to these victims and other victims of crime is one of the department’s highest priorities,” Acting Assistant Attorney General Kenneth A. Blanco, of the Justice Department’s Criminal Division, said in a Nov. 13 statement. 

Western Union also has agreed to implement an antifraud program and enhance its policies on federal compliance obligations.  

What kinds of scams are covered?

variety of scams may be covered by this settlement, according to the FTC, including but not limited to the following: 

  • Internet purchase scams: You paid for, but never received, things you bought online. 
  • Prize promotion scams: You were told you won a sweepstakes and would receive your winnings in exchange for payment, but you never received any prize. 
  • Family member scams: You sent money to someone who was pretending to be a relative in urgent need of money. 
  • Loan scams: You paid upfront fees for a loan, but did not get the promised funds. 
  • Online dating scams: You sent money to someone who created a fake profile on a dating or social networking site.  

How do I submit a claim?

If you’ve already reported your losses to Western Union, the FTC or a government agency, you may receive a form in the mail from Gilardi & Co., the claims administrator hired by Justice to handle refunds. This form will include a claim ID and a PIN that you’ll need when filing your claim online at www.ftc.gov/wu 

You also can file a claim if you did not receive a form in the mail. Visit www.ftc.gov/wu and click on the link indicating that you did not receive a claim form and follow the instructions to complete your filing. 

If you sent money to a scammer via Western Union, file a claim even if you don’t have any paperwork, according to the Justice Department. You may still be eligible for a refund. 

You can file more than one claim, if you were a scam victim more than once. 

Will I definitely get my money back?

Hard to say. Each claim will be verified by the Justice Department. If your claim is verified, the amount you get will depend on how much you lost and the total number of consumers who submit valid claims.  

If verified, you’re only entitled to a refund of the actual amount you transferred through Western Union, according to the Justice Department. Other expenses, like fees or transfers sent through other companies, will not be included in your refund. 

It could take up to a year to process and verify your claim. The best way to stay in the loop is to bookmark the FTC page for the Western Union settlement or westernunionremission.com and check frequently for updates.  

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Identity Theft Protection, News

No, Equifax Is Not Calling You. Watch Out for Scam Phone Calls After the Data Breach

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Less than a week after the Equifax data breach was made public, it seems scammers are already looking for opportunities to prey on concerned consumers.

The Federal Trade Commission posted a scam alert Thursday warning consumers to not give their personal information to anyone who calls and claims to be an Equifax representative. Over the summer, hackers breached the Atlanta-based credit bureau’s database and accessed the personal information of about 143 million consumers, including sensitive information like Social Security numbers.

But Equifax is not calling those affected by the breach, so if you get a phone call from someone saying they represent Equifax and want to verify your account information, the FTC advises you hang up. It’s ironic, in a way, to target victims by posing as a concerned Equifax representative. The company has been criticized widely for its sluggish response to the breach, which occurred sometime between mid-May and July but wasn’t discovered until July 29 and wasn’t announced until more than a month later.

In response to the security failure, the House Committee on Energy and Commerce has demanded Equifax answer several questions about the breach, including why the company put off announcing the breach for so long. Equifax has until Sept. 22 to respond to the committee’s questions, and the committee plans to hold hearings on the breach in September or October.

In a company statement, Equifax CEO Richard Smith said the breach was a “disappointing event.”

“Confronting cybersecurity risks is a daily fight,” he added. “While we’ve made significant investments in data security, we recognize we must do more. And we will.”

In the breach, people’s Social Security numbers, dates of birth, addresses, and other personally identifiable information (PII) were compromised, so it’s understandable you’d be worried and are looking for help.

Here’s what you can do to take control of protecting your identity.

Assume you’re affected

While you can go to Equifax’s website and go through a multistep process to see if your information has been compromised, you can also just assume someone has their hands on your personal information. (It’s also worth noting the Equifax site reportedly isn’t reliable for telling you if you’re affected, and many consumers have reported the site is slow to load or doesn’t load at all.) Even if you weren’t among the 143 million whose personal information was compromised in this breach (and the odds aren’t in your favor), chances are it has been or will be in a breach at a different company or organization. With that in mind, you’ll want to focus on how to detect signs of identity theft and how to respond to them.

Monitor your credit

Equifax responded to the breach by offering free credit and identity monitoring to everyone — not just those affected — for a year through TrustedID Premier. You must go to equifaxsecurity2017.com to enroll, which requires entering your last name and the last six digits of your Social Security number. You’ll then be given an enrollment date, which may be several days after you start the enrollment process, at which point you can return to the site to continue enrollment. You’ll need to set a reminder to continue the process, as Equifax won’t send you a notification when it’s time.

You have many other ways to find out if someone has misused your personal information. Several companies offer free credit scores — Credit Karma, Discover, Capital One, Mint, LendingTree (our parent company), etc. — either to everyone or to their customers. To help you choose, we put together this guide to getting your free credit score. Credit Karma also offers a free credit monitoring service, and Discover cardmembers can sign up for alerts when their Social Security numbers are detected on suspicious websites. You can also pay for credit monitoring services from a number of providers, including the three major credit bureaus Equifax, Experian and TransUnion , as well as credit scoring giant FICO.

Consider a credit freeze

You can also freeze your credit so no one, not even you, can apply for new credit using your information. If you do this, you have to initiate a freeze with each of three major credit bureaus, as well as “thaw” each report when you want to apply for a new credit account. Every time you freeze and thaw your credit you may be charged a fee, which varies by state. This only protects you from credit fraud and does not prevent things like taxpayer identity theft, criminal identity theft, medical identity theft, and insurance identity theft.

On Sept. 15, Equifax announced it is waiving the fee for removing and placing credit freezes on Equifax credit reports through Nov. 21, 2017. Anyone who paid for an Equifax freeze at or after 5 p.m. EDT on Sept. 7 will receive a refund, the company said.

Have a plan for responding to identity theft

One of the best ways you can prepare for identity theft is to detect it early. After that, you need to know how to resolve it. You can do this yourself by filing a police report, disputing fraudulent accounts on your credit reports, and making the phone calls necessary to correct any problems stemming from the fraud. Or you could pay someone to help you with this time-consuming task. Check with your employer to see if they offer identity theft insurance or identity theft resolution services as an employee benefit, and if not, consider paying for it.

We’ve rounded up the best identity theft resolution services here.

More than anything, remain calm as you sort through the fallout of this breach. Focus on making a plan for protecting yourself from and responding to identity theft and making sure you only deal with trustworthy service providers.

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How to Donate to Hurricane Relief Without Getting Scammed

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When natural disasters strike, Americans pour in money and support to help the victims.

But while relief efforts are uplifting, they come with a caveat for anyone looking to contribute: How can you give money safely and securely to people who need it most?

Fundraising scams and fake charities often show up after hurricanes and other disasters. These practices aren’t new either — less than six months after Hurricane Katrina hit the Gulf Coast in 2005, the FBI had opened 100 investigations into fraudulent fundraising sites.

“After disasters like this, we do often see more organizations popping up, and it does take some time if there are scams out there to identify what they are,” says Katelynn Rusnock, the advisory system manager for Charity Navigator, an independent charity watchdog organization. Based in Glen Rock, N.J., Rusnock specializes in communicating potential wrongdoing found within charities.

So how can you make sure you’re not donating to a fake organization? Here are five ways to avoid fundraising scams.

Make sure the charity is legitimate with charity tracking sites

Learn about the organization before you give away any of your money, Rusnock recommends. Charity Navigator, and similar sites such as CharityWatch and GuideStar, maintain up-to-date listings of registered nonprofits, which you can use to check whether or not an organization is legitimate.

When in doubt, Rusnock suggests giving to larger nonprofits that have contributed to previous major disasters.

“Larger organizations that often respond to disasters are usually fairly equipped to deal with these types of things,” she says. “They have the teams with the expertise, and they’ve got the experience to do this well.”

Look up their employer identification number on the IRS website

You also can look up charities by checking their employer identification number (EIN), which will show if they’re registered with the Internal Revenue Service. Rusnock says you should be able to find this number on an organization’s website, and recommends asking them directly if it isn’t readily available. To help verify these groups, the IRS has created a tool on its website for searching charities by their EIN.

Check scam alerts from the Federal Trade Commission

Additionally, the Federal Trade Commission frequently updates a list of scam alerts so you can stay aware of recently reported groups.

The FTC reports that a flood insurance scam is already proliferating in the wake of Hurricane Harvey. Homeowners and renters get robocalls telling them their flood premiums are past due and that they need to submit a payment in order to get relief from their insurer.

You can sign up to get scam alerts sent directly to your email.

Beware of fake social media fundraising

While social media can be a helpful source of information about ways to give, and seeing friends talking about donating online can make it seem like an enticing option, it’s also unregulated and can be exploited by scam artists and phony nonprofits.

In times of heightened need, scammers using fake Facebook accounts and Twitter bots to post spam or malware links can be some of the biggest offenders.

Phishing is also a common concern, according to the United States Computer Emergency Readiness Team, a division of the Department of Homeland Security. Fraudulent organizations may send out emails or texts asking for direct donations or personal information, which are often attempts to steal a person’s identity. You should avoid giving out personal information or clicking on links from unknown sources.

Look out for red flags, like requests for payment via wire transfers

It’s also smart to be conscious of how a charity wants you to donate. In the FTC’s guide for avoiding fundraising scams, the organization warns that groups asking for payment in cash or through a wire transfer are more likely to be fake. Additionally, charities that offer to send an overnight courier to collect money, or use other tactics to pressure you to act quickly, are usually worth avoiding.

To combat this, Rusnock says it’s best to give directly to the charity through their own website, as opposed to using outside channels, such as social media or emails, that may or may not be associated with the organization.

Crowdfunding could be deceitful, too. According to the Better Business Bureau, campaigns on sites such as Kickstarter and Indiegogo can be unreliable, as it’s hard to determine whether or not a source is trustworthy or not. Still, there are some reliable ways to use these services, and GoFundMe has even set up an official page specifically for Hurricane Harvey relief and for Hurricane Irma relief. GoFundMe also offers to refund customers if they find out their donations weren’t used as promised.

Once you choose a legitimate charity, Rusnock suggests sticking with the organization. While many people tend to only donate immediately after a disaster strikes, she recommends signing up for recurring payments, or checking back in with the organization months after your first donation to learn about their current needs.

“A lot of people want to go out and donate after this happens, but we encourage donors — if they’re able to — to continue to support that organization even once the crisis is no longer in the news,” Rusnock says. “Oftentimes the charity is still responding long after attention has shifted away.”

 

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Consumer Watchdog

The Truth About ‘Obama Student Loan Forgiveness’

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The average 2016 college graduate carries $37,000 worth of student loan debt today according to an analysis of student loan debt by Mark Kantrowitz, publisher of Cappex.com. Kantrowitz tells MagnifyMoney he expects that number to rise for 2017 graduates.

It’s no wonder that those drowning in debt can get desperate. And scammers have come up with a clever way to dupe these borrowers into spending money on services that promise to erase their debt. One of the most popular student loan scams today involves companies that charge borrowers to sign up for the so-called “Obama Student Loan Forgiveness” program.

The only problem is that there is no such loan forgiveness program.

The truth about “Obama Student Loan Forgiveness”

So-called student “debt relief” companies use “Obama Student Loan Forgiveness” as a blanket term for the various flexible federal student loan repayment programs implemented over the last decade by the Bush and Obama administrations.

What they don’t tell unwitting consumers is that these programs, which include income-driven repayment plans and Public Service Loan Forgiveness, among others, are free to borrowers and do not require paying for any special services in order to enroll.

Promising relief to indebted college graduates, these companies lead people to believe that enrolling in these programs requires special assistance — which they may offer for a sizable upfront fee and/or recurring monthly payments. Rather than getting the help they need, borrowers are duped into paying for something they could easily accomplish for free with a simple phone call to their student loan servicer.

While there are multiple ways you can get scammed by debt relief companies claiming to offer you “Obama Student Loan Forgiveness,” there are some red flags that can help you spot a scam.

6 ways to spot a student debt relief scam

It’s important to note that it’s not illegal for a company to charge a borrower to enroll them in a program that’s free to them. These companies are arguably taking some of the work out of getting enrolled, even if that “work” could easily be accomplished with a phone call to your student loan servicer.

Nonetheless, some debt relief firms take things a bit too far, and it’s important to be aware of scams out there. After all, student loan forgiveness scams are really only one part of a broad range of debt relief scams. Debt relief scams share many of the same qualities and employ similar tactics to mislead consumers into paying for their services.

Here are some red flags to watch out for:

  1. They ask for fees upfront. By law, debt relief services are not allowed to ask for payment until they have performed services for their customer. A legitimate debt relief service may ask for a fee upfront, but they will place that payment in an escrow account, and they will not officially receive the payment until they complete the work.
  2. They charge fees for free government services. This one is a bit tricky. So long as a company makes it clear that it is possible to gain access to a government debt relief program for free, it’s not illegal for them to charge consumers for their help in enrolling in those programs. However, the worst actors out there will keep that information to themselves, leading consumers to believe they need to pay a professional for access.
  3. They claim to be affiliated with the U.S. Department of Education. The Department of Education, which manages the federal student loan system, does not partner with any debt relief services. Any company claiming to be associated with the Department of Education is a scam.
  4. They “guarantee” that your debt will be forgiven. Services will try to entice customers by promising total loan forgiveness or a reduction in their student loan payments. But monthly payments for borrowers enrolled in federal student loan repayment programs are established by law and cannot be negotiated. Also, the legitimate loan forgiveness programs out there usually require making payments for several years, and there is no company that can promise loan forgiveness unless you meet those payment requirements first.
  5. They advertise “pre-approval” for debt relief programs. There is no “pre-approval” for federal income-driven repayment or loan forgiveness programs. They are free for borrowers, and so long as your loans are in good standing, it’s a matter of the types of loans you have when you took them out that qualifies you for the different programs. To see if you qualify for a given program, contact your loan servicer directly.
  6. They offer to make your student loan payments for you. You should be the only person submitting payments to your loan servicer. The Department of Education has contracted these loan servicers to manage federal student loans, and loan payments should be made directly through their websites. Never send your payment to a debt relief firm, even if they promise to pay your loans for you. The exception here is if you’re working with a debt relief firm to settle a debt with a lump-sum payment. In that case, they are legally required to hold your cash in an FDIC-insured account until they officially settle the debt. And if their client decides they no longer want their services, they have to return the funds to them in full.

Do your due diligence before working with any debt relief service, by keeping an eye out for these red flags, as well as checking sites like the Consumer Financial Protection Bureau, the Federal Trade Commission, or the Better Business Bureau for complaints against the company.

What to do if you’ve fallen for a student debt relief scam

If you’ve been scammed by a debt relief company, there are certain steps you need to take to prevent further financial damage. However, know that it is possible you may never get your money back.

Submit a complaint to the Consumer Financial Protection Bureau and the Federal Trade Commission. Reporting scams, can not only help others from losing their money, but if an investigation by the CFPB or FTC results in suit and judgment, then the debt relief company may be required to issue refunds, cease business, and ensure borrowers do not miss out on important repayment benefits.

Track your credit reports with all three credit bureaus to ensure your personal information is not used fraudulently. You can get one free credit report each year at annualcreditreport.com or use these free services to monitor your report for suspicious activity. If you fear a debt relief scammer has your Social Security number and other financial information, you might want to consider a credit freeze. That will stop anyone from being able to open a new line of credit without you knowing.

Contact your loan servicing companies and have any power of attorney authorizations removed. Some companies will ask borrowers to give them power of attorney so they can negotiate directly with their loan servicers. You don’t want to leave any company with this privilege because they will be able to make decisions about your loans without you knowing.

Contact your bank or credit cards to stop payment to the debt relief company and see if they can work with you to try and get your money back. It is common for debt relief services to charge monthly recurring fees for their services.

Change your Federal Student Aid password. Every federal student loan borrower has a unique login for the https://studentloans.gov site, where you can track all of your federal loans. If you gave a company your FSA information, consider that information compromised and change your FSA password immediately.

9 Legitimate Student Loan Forgiveness Programs

While there is no such program called “Obama Student Loan Forgiveness,” there are several legitimate student loan repayment programs that offer student loan forgiveness.

These programs have a wide range of requirements and payment terms, some as short as five years, others as long as 25 years, and can be available based on the types of federal student loans you have as well as your chosen career.

In addition to loan forgiveness programs, there are programs that offer loan repayment assistance or loan discharge. How much can be discharged and the amount of repayment assistance varies greatly depending on the program.

9 examples of legitimate loan forgiveness programs, loan repayment assistance programs, and loan discharge programs

What to do if you can’t afford your student loan payments

If you are struggling to afford your student loan payments, there are some actions you can take to ensure your loans remain in good standing and you avoid a default that could negatively impact your credit score.

Enroll in an income-driven repayment plan

If you are unable to afford your current payment, you can apply to change repayment plans. For example, if you are on a Standard Repayment Plan for your federal student loans, you could request to enroll in an income-driven repayment plan. If you are already on an IDR plan and your income has changed significantly, you can request to have your payment amount recalculated.

Ask for a deferment or forbearance

If you are going through a temporary financial hardship, you can ask your loan servicer to apply a deferment or forbearance, which would not require you to make payments during the deferment or forbearance. While both a deferment and forbearance offer you relief from making payments, with a forbearance you will be required to eventually pay back the interest that accrues during that time. Also, it’s important to note that while you are in deferment or forbearance, you aren’t making payments, which means you might be missing out on forgiveness programs like PSLF if you are working in public service or for a nonprofit.

Consider refinancing or consolidating your loans

Refinancing involves taking out a new loan from a private lender and using that loan to pay off your old loan. The pros of refinancing include a reduced interest rate and the ease of having just one payment. If you refinance a federal student loan, you will lose all of the benefits that federal student loans offer.

Alternatively, you could consolidate your federal loans. A Direct Consolidation Loan combines all your loans using the average weighted interest rate into one loan. So instead of dealing with multiple loan servicers and multiple loan payments each month, you only have one student loan payment to make each month. You can apply for a Direct Consolidation Loan at no cost through the government’s Federal Student Aid website.

Work with your loan servicer

If you have private loans, your lender may not offer as many repayment options as federal loans. Reach out and work with your lender anyway. They may offer a financial hardship program that would lower your payments. Your loan servicer would much rather work with you to ensure they get paid.

Consider bankruptcy if you can pass the “hardship test”

While it is highly unlikely you will be able to discharge your student loans in bankruptcy, it isn’t impossible. You must either show that your loans would impose an undue financial hardship that will not go away or that the loan was not a qualified student loan in that it did not fit the definition or was in an amount that exceeds the school’s cost of attendance. An example of where this argument has been successful would be a private bar loan, a loan taken out to cover the expenses of taking the bar exam.

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Liz Stapleton
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How to Avoid 3 Common Tax Scams

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It’s March, which can only mean one thing — it’s time to start stressing about taxes. The deadline is looming, so it’s time to

If you haven’t done yours already, you’re probably smack dab in the middle of gathering all the pertinent pieces of paperwork and trying to track down all those missing receipts you can’t seem to find for write-offs. Into this fun mix let us add one more worry — avoiding tax scams. Unfortunately it’s par for the course these days that would-be thieves are just dying to get their hands on your information and your money … but there are ways to stop them. Being prepared is half the battle, so here’s what to be on the lookout for this tax season to ensure that all your information and money stays right where it should be — with you.

1. File as soon as possible

The longer your tax information is out there and unfiled, the more chances crooks have to swoop in and file your taxes for you, thereby receiving the refund that should be going to you. Once you’ve received all your tax documents and have any other paperwork on hand that you’ll need, the smartest thing to do to avoid theft is to file yourself as quickly as possible.

2. Be aware of fake phone calls

The number one thing you need to be aware of when it comes to calls from the IRS is that the agency has already stated plainly that they will never ask for someone’s credit card numbers over the phone, nor will they ever request payments via pre-paid debit cards or wire transfers. In fact, the IRS rarely makes calls right off the bat anyway — usually their first mode of communication is through mail — so if you receive a call from the “IRS” out of the blue asking for money to be sent via wire transfer or pre-paid cards, it’s a scam. If you do receive one of these calls, inform that caller that you’re aware of these types of scams, and that you’ll need to make sure this call isn’t one by reaching out to the IRS yourself to verify, and then hang up. You can then report the incident to the Treasure Inspector General for Tax Administration at 1.800.366.4484, as well as with the FTC Complaint Assistant program.

3. And fake emails

Pretty much the same rules apply for emails that do for phone calls. The IRS almost always attempts to connect with people through regular mail first, not via email or phone, and you’ll never receive an email from out of the blue about refunds or back due taxes. If you’ve received an email from the IRS about money owed, don’t open it until you’ve verified directly with the IRS yourself that it’s actually valid.

Check out this piece on the IRS Dirty Dozen Tax Scams to avoid other potential tax pitfalls.

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College Students and Recent Grads, Consumer Watchdog

Beware of Student Loan Debt Relief Scams

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Debt collections_lg

Student loans are one of the most frustrating and often confusing payments to handle. 22-year-old recent graduates who might barely know how to balance a checkbook are expected to suddenly know how to find all the federal programs geared towards helping with repayment (like income-Based repayment and forgiveness) and how to keep track of multiple loans across different vendors that could be handed off to another owner at any time. Does your head hurt yet? Filing your own taxes is often much simpler than getting the hang of student loans.

So, it’s no surprise that people are more than happy to pay someone else to handle the stress of student loans, which is why student loan debt relief and repayment scams exist.

These companies offer to handle your student loans, get you low-low payments or forgiveness. All in exchange for a fee of course.

But you don’t have to pay anyone for help getting your student loan situation in order. In fact, you shouldn’t be wasting the money you could be putting towards getting debt free.

You should also be wary of any phone calls offering to help you gain access to a new federal program focused on student loan forgiveness. These are often predatory scam calls.

Get Help for Free

It’s important to note that most of the free help is centered on federal student loans. We’ll discuss private student loans later in this article.

There are several ways you can receive assistance on your federal student loans.

  • Use income-based plans to lower your monthly payments

These repayment plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). Each plan works a little differently and not everyone will be eligible based on when you took out loans and how much you make. The programs all help reduce payments in accordance with your current income. As you earn more, you pay more on your loans. The programs all allow for remaining federal student loans to be discharged after 20 – 25 years of consistent payments.

  • Consolidate your loans

Consolidating your loans into one easy payment could help remove some of the stress from your repayment process. You can consolidate federal loans using the Federal Direct Consolidation loan. There is no fee for this process. Just be aware you could lose out on potential benefits on your existing loans if you consolidate.

  • See if you’re eligible for forgiveness programs

There are a myriad of forgiveness programs for federal student loans. Most are focused on your career. For example, teachers may be eligible for the Teacher Loan Forgiveness program by working at a designated elementary or secondary school for five consecutive years. You could earn between $5,000 and $17,500 depending on your subject. Doctors, lawyers and other specialized professions can be eligible for certain forgiveness programs. There are also volunteer programs and forgiveness for military personnel.

  • Rehabilitate yourself by getting out of default

If your loan ends up in default, you’re far more likely to be on the receiving end of scam calls about fixing your student loans or being eligible for a phony forgiveness program. Your loans need to be in good standing in order to be eligible for any forgiveness programs or refinancing. Work with your student loan servicer to get out of default. You can reach out to student loan counseling services, but look for non-profit organizations offering free consultations.

You can track your federal loans via the National Student Loan Data System .

[Miss a Student Loan Payment? Where to Find Help and What Happens Next]

Need Help with Private Loans?

Unfortunately, private loans are not as flexible as federal loans. You will not have the same options for Income-based repayment programs nor forgiveness programs.

However, you should always communicate with your loan provider if you feel you’ll have difficulty making a payment. There is no discharging student loans in bankruptcy, so burying your head in the sand and letting the situation build up will just create more pain. You should also see if you’re eligible for student loan modification.

You could consider refinancing your private student loans to another lender that may offer better interest rates and perks like forbearance in case you lose your job and can’t afford to make payments for a few months.

SoFi* offers unemployment protection for up to 12 months with fixed refinance rates as low as 3.25% and variable rates as low as 2.75% (with autopay).

Earnest* offers the ability to skip one payment a year without penalty (you make up for it over time), which certainly isn’t a long-term fix but could give you a little breathing room to figure out your financial situation.

[Sample Goodwill Letter to Remove a Late Student Loan Payment from Your Credit Report]

Already the Victim of a Scam?

You may have already become a victim of a student loan scam. If this is the case, you should report your situation to the Consumer Financial Protection Bureau.

Issues with Federal student loan servicers can be reported to the Federal Student Aid Ombudsman Group.

* We’ll receive a referral fee if you click on a link with this symbol *. This does not impact our rankings or recommendations You can learn more about how our site is financed here.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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Identity Thieves Filing Illegitimate Tax Returns

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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You sit down at your computer to start working your way through your tax return and as you go to submit, up pops a message that you already filed a return. But you didn’t. Your identity has been stolen and someone already submitted and received your tax return.

Illegitimate tax returns are more common than you probably realize. 1.6 million Americans were victims of tax identity theft in just the first part of 2013 with thieves getting away with $5.2 billion during the year, according to the Government Accountability Office.

You may also be a victim of identity theft and not know it until the IRS sends you a letter. If someone else is using your Social Security Number on a job, that income will be reported to the IRS under your name. The IRS will notice you didn’t account for that income when you filed your return and send you a letter stating you failed to declare all your income.

There is no foolproof way to protect your identity from being compromised at tax time, but there is one main strategy to prevent yourself from becoming a victim.

File Early

A desire to procrastinate filing taxes could land you in months of work trying to clear your name of fraud. One of the easiest ways to avoid being a target of the illegitimate tax returns scam is to simply file as early as possible. 

If You’re a Victim of ID Theft 

Report it immediately to:

  • Your local police
    • You’ll need a police report
    • Bring with you: A copy of the FTC Identity Theft Affidavit, proof of theft such as IRS notice or screen shot of your return having been filed, a government-issued photo ID and proof of address.
  • The IRS
    • IRS Identity Protection Specialized Unit or call at 1-800-908-4490
    • Be prepared to send a copy of your police report and/or IRS ID Theft Affidavit Form 14039
    • You will need to send proof of your identity such as a copy of your Social Security card, driver’s license or passport.
  • The Federal Trade Commission
    • Create an Identity Theft report to help remove fraudulent information and stop collections agencies from calling
  • The Three Major Credit Bureaus to place fraud alerts

Extensive information can also be found at Fraud.org.

Learn how to handle and protect against credit card fraud, other tax scams and identity theft.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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The OCC Acts Unilaterally Against Abusive Bank Overdrafts

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Earlier this month, the OCC (Office of the Comptroller of the Currency) quietly issued Bulletin 2015-13, which announced the publication of a revised handbook on deposit-related consumer credit. The OCC is getting tough on bank overdrafts, which have come under increasing scrutiny for being predatory. At MagnifyMoney, we have long called overdrafts one of the most expensive forms of short-term borrowing in the world.

The last booklet was issued in March 1990, and was used by OCC examiners to assess a bank’s deposit-related consumer credit activities, including overdrafts. The new handbook has established standards which would dramatically change the overdraft products currently offered by banks in the country. If the banks actually follow the rules outlined by the OCC, we should expect a revolution in the way products are designed, priced and marketed. However, banks are very good at making minimal change in the face of new rules, particularly when significant revenue is at stake. Banks generated an estimated $32 billion in overdraft fees during 2013, so they will not give up this revenue stream easily.

Bank overdrafts are marketed by banks as a “protection” that can help a consumer if they are running short of cash, or if they make a mistake.  However, they are extremely expensive. If you do not have overdraft protection (a linked account), a bank will typically charge you $35 if they approve the transaction (an overdraft charge), or $35 if they decline the transaction (an NSF, or non-sufficient funds, fee). The fee is charged on a per incident basis, regardless of the actual transaction value. If the transaction is approved, the total amount of the overdraft (which includes the shortfall and fee) is due immediately. Many banks will charge an incremental extended overdraft fee if the account balance is not brought positive quickly. For example, it could cost $70 to borrow $6 for 6 days from Bank of America, based upon their overdraft fees and rules. In addition, even the method of posting transactions has caused controversy. Rather than posting transactions as they happen, nearly half of the banks in America re-order the transactions, posting the highest value transactions first, thereby increasing the number of times that an individual can trigger an overdraft charge.

Reg E did provide some additional consumer protection. It required banks to receive opt-in for overdrafts that are triggered by ATM cards (when withdrawing cash), and debit cards (when making purchases in a store). However, the regulation did nothing to protect all other forms of transactions, which includes checks, automatic payments, billpay and others.

Bank overdrafts in the United States raise every red flag imaginable. The incredibly arcane and complicated fee structures lack transparency and exist to extract maximum value from consumer mistakes or misfortune. The costs charged by the banks for what is effectively a line of credit are obscene when compared with the actual cost of providing those services. And, although banks like to point fingers at payday lenders and focus on their CRA activities on reducing the number of unbanked, many people have left the banking sector because overdrafts are more expensive than overdrafts.

The new handbook has some shocking new requirements, which we detail below:

  • Opt-in for all overdraft products: under Reg E, customers are only required to opt-in to overdraft protection for debit/ATM overdraft protection. However, the handbook requires proof of opt-in for all protection, dramatically expanding the scope
  • Banks will have to perform underwriting of customers before extending an overdraft product. The OCC explicitly requires an analysis of income and debt. which provides information for an affordability check.
  • Our favorite requirement focuses on “prudent limitations on product costs and usage.” Most importantly, the OCC states that “while permitting appropriate returns, fees should be reasonably correlated to the actual costs of offering, underwriting, and servicing the product as well as associated risks.” The OCC is particularly concerned about “repeated usage of high-cost, short-term loans for longer-term borrowing needs.”
  • Critically, the OCC requires that “banks should structure credit terms to reduce the principal balance of the loan over a reasonable period of time.” The worst form of short-term loan offers a customer a choice: pay off the entire balance today, or renew the product for another fee. This method, a favorite of the payday loan industry and copied by many deposit advance products, creates the perfect debt trap. Consumers are unable to pay off the full balance at once, yet banks do not offer an amortizing option. So, people just pay a fee and never get out of debt.
  • Finally, the OCC suggest that “banks should consider reporting payment information to credit bureaus.” Currently, the banks tend to report negative information, on a haphazard basis, to Chex Systems. Responsible customers are not able to benefit from on-time repayment. And an alternative credit reporting universe is created, with limited transparency.

Using common sense as our guide, these new rules make a lot of sense. Before lending someone money, make sure they can afford it. Don’t force people into the product: let them have a choice before you start charging them fees. Don’t rip them off with outrageous fees. And provide a repayment method that actually gives someone the chance of getting out of debt.

Overdrafts have become so out of control, that even these new rules will really shake up the overdraft market if banks actually follow the spirit of the requirement. However, I think banks will likely hire expensive law firms to build a robust defense. They will somehow prove that it actually costs $35 for an automated computer algorithm to approve a $6 loan. I just hope the OCC backs up these rules with strict enforcement. And we hope the CFPB builds on this and issues explicit rules that remove the predatory structure of these products.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Fine Print Alert

Fine Print Alert: Citibank & ChexSystems, Scams to Avoid and Credit Report Disputes

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In our weekly Fine Print Alert we call out any good news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

Citibank Forced to Rely Less on ChexSystems…

Attorney General of New York reached an agreement with Citibank. Citibank will consult Chex for anti-fraud purposes, but the bank is altering its use of negative information going forward. Citi has promised it will no longer refuse to open a bank account because of minor errors, like isolated examples of bounced checks or overdrafts.

Learn more about ChexSystems here.

Look At The Top Scams of 2014 to Prepare for 2015…

The National Consumers League (NCL) recently released the top scams of 2014, ranking the overall top ten scans as well as the top scams by category. It should come as no surprise that Internet scams featuring general merchandise sales took the top spot with 26.32% of total scams in 2014. People fall victim to this rouse when crooks offer the sale of a good and item is paid for and never delivered or misrepresented. Prize, sweepstakes and free gifts were the second place scam with “Phantom Debt” skyrocketing up to fourth place and check scams dropping from first to third.

Fraudster phones a consumer to demand payment on an old debt (aka phantom debt), which likely never existed in the first place. The crook will threaten jail time and legal action. If you receive this call and are unsure if it could be real, hang up and look to see if you have an item in collections.

You can read the full report from the NCL here.

Credit Report Disputes Going Unresolved…

Finding an error on your credit report is relatively common. The reason can be as innocent as misreporting because someone shares your name or a clerk mistyping your Social Security Number. It can also be the result of a villainous act like identity theft. Regardless of the reason, disputing incorrect information on a credit report can lead to a consumer nightmare.

A recently released FTC report followed up with survey participants from a 2012 report that had unresolved disputed and found the following:

  • 69% of people believe there is still an error, while the other 31% agree that there was no error to begin with and thus agreed with the CRA’s finding
  • Of those who believe there is still an error, only 45% plan to continue their credit report dispute
  • 41% of people were not contacted at all by the bureau after filing their credit report dispute
  • Of those who did get notified, 48% of them received no reason provided as to why there was a modification in the credit bureau’s response
  • Of this who still believe there is an error but are giving up on their dispute, only 20% are giving up because they don’t think it’s hurting them or aren’t looking for credit. 42% are giving up because it’s too hard, or the time sink is fruitless

You can read the full report from the FTC here. You can information about credit reports and credit scores in our blog section, Building Credit.

FAVORITE READS FROM AROUND THE WEB

Want to lose weight? Get on a budgetIt’s almost the end January. How’s it going with those New Year’s resolutions? The most common goals people set at the start of the year are to lose weight and to get their finances in order — two seemingly distinct areas for improvement. Now a survey from TD Bank suggests they may go hand in hand. Jonnelle Marte of the Washington Post discusses why physical and financial health just may go hand-in-hand.

How Your Workplace Can Help You Manage MoneyFunches’ experience [taking a financial education class] is an increasingly common one, as more companies are incorporating financial education into their workplace benefits. A big driver of this movement is the realization that many employees are feeling financially stressed, and the understanding that reducing their stress levels can increase their performance. Kimberly Palmer of US News & World Report details why employers should offer financial education courses and why employees should take advantage.

4 Reasons Zero-Sum Budgets Are AwesomeOne of my clients hasn’t paid me in three weeks.  Another just asked for additional work, which was fine, but it means that my invoice will be late.  Meanwhile, my website made considerably less money this month than last month, meaning my income projections for January are going to be off. But pssshhhttt…. I don’t care, even though most people I know would be freaking out.  Why? Because I use a zero-sum budget.  That’s why. Read why Holly uses a zero-sum budget, and what exactly that means, on her blog Club Thrifty.

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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Consumer Watchdog

Consumer Watchdog: Top Scams of 2014 Serve as a Warning for 2015

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Predatory scams are one of the most common ways thieves attempt to part people with their hard-earned money. The National Consumers League (NCL) recently released the top scams of 2014, ranking the overall top ten scans as well as the top scams by category. These scams should serve as a road map for consumers to safeguard against losing money to crooks in 2015.

These scams were ranked based on analysis of more than 10,000 consumer complaints submitted to the NCL in 2014.

Top Scams

It should come as no surprise that Internet scams featuring general merchandise sales took the top spot with 26.32% of total scams in 2014. People fall victim to this rouse when crooks offer the sale of a good and item is paid for and never delivered or misrepresented.

Prize, sweepstakes and free gifts come in a close second to Internet scams. These scams are perpetuated by telling a consumer he or she won a prize, but needs to pay a handling fee or service fee in order to receive the gift. Consumers should never pay upfront for something they supposedly won and taxes on lottery winnings should always be paid directly to the IRS.

Phantom Debt Scams are On the Rise

Refund and recovery scams (also known as phantom debt) are in the rise. The trend started in 2013 as the fastest-growing telemarketing scam reported to NCL and continued in 2014 to place fourth on the top ten list.

Fraudster phones a consumer to demand payment on an old debt (aka phantom debt), which likely never existed in the first place. The crook will threaten jail time and legal action.

If you receive this call and are unsure if it could be real, hang up and look to see if you have an item in collections.

You can check your credit reports via annualcreditreport.com to see if an item has been sent to collections. These items are often also reported on sites like Credit Karma, Credit Sesame and Quizzle – and you’ll also see a big drop in your credit score.

If it’s legitimate, the collections agent will certainly be calling back and you should be prepared with these 7 tips for dealing with an item in collections.

A Scam Being phased out

The old fake check scam reigned king on the NCL’s top ten list for years, but has now dropped to the number three spot.

Check scams work like this:

  1. You receive a letter saying you won a prize and a check is attached as a portion of the prize, perhaps to taxes.
  2. You’re instructed to cash the check and wire the money back to prize sponsors.
  3. The deposited check will bounce because it’s fraudulent and the wired money is already in the hands of the fraudsters. You will be responsible for the bounced check and the wired money. If you don’t have enough money to cover the loss, it can result in negative bank account balance, derogatory marks on your ChexSystems report or even litigation with your bank.

If an unexpected check comes in the mail from someone you don’t personally know, don’t cash it, especially if the request is to wire money! Even if it is from someone you know, don’t cash it and wire money until funds have cleared.

Shift in How Scammers Were Paid 

The NCL report unearthed a positive trend in scams – credit cards are becoming a more common form of payment, with 48% of people reporting they paid a con artist with a credit card instead of wire transfer. Fortunately, it’s far easier to recover lost funds made on a credit card thanks to fraud protection from most banks and credit card issuers. However, this protection doesn’t extend to wire transfers or prepaid debit cards.

You can read the full report from the NCL here.

Don’t be the victim of a phishing scam! We provide actionable steps to protect yourself (and your money) against scams in this blog post.

 

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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