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

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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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 products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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FTC Finds a Majority of Credit Report Disputes Go Unresolved For Years

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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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.

As required by the Fair and Accurate Credit Transactions Act (“FACT Act”), the Federal Trade Commission recently released its sixth and final report on a national study of accuracy and completeness of consumer credit reports.

In layman’s terms: the FTC is ensuring the three credit bureaus (Experian, Equifax and Transunion) are doing their due-diligence when it comes to correcting errors on credit reports.

A 2012 report discovered 26% of surveyed consumers found at least one potential error on a credit report with 21% receiving modifications to at least one dispute on a report and 13% seeing a change in credit scores as a result of the modifications.

This 2012 report led to a demand for a follow up study from policymakers, specifically focused on unresolved credit report disputes. The follow up study researched three key issues:

  1. “Quantifies the frequency of reinsertion, or the reappearance of previously removed negative information.”
  2. “Investigates several questions relating to the consumers who disputed items that were not modified in the original dispute process.”
  3. “Asses whether consumers continue to allege inaccuracies after the CRA (credit reporting agency) has verified the disputed information as accurate.”

The FTC followed up with survey participants who 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

Pointing to the difficulty and time commitment it can be to dispute errors.

  • 41% of people were not contacted at all by the bureau after filing their credit report dispute

A major concern, which reveals the possibility the credit bureaus need to adjust their notification systems. A consumer may have been notified, but the response went unnoticed.

  • 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

 The FTC did conclude this doesn’t mean the CRA failed to provide a reason, but that if there was one, it was not easily accessible to a consumer.

  • 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

This should be a big issue to the credit bureaus and a red flag that the process to dispute an item needs to be changed and streamlined. Notably, it can be incredibly difficult to tussle with errors, like with the very much alive George Sledge who has been marked as deceased by the credit bureaus.

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.

Dealing with a lingering credit report dispute? Submit a complaint to the FTC and Consumer Finance Protection Bureau (CFPB).

Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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Personal Loans

Discover Personal Loan Review: Decent Rates for Fair Credit and Higher

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Discover Personal Loans is everything you would expect from a traditional lender. It offers fixed rates depending on your creditworthiness, is available in all 50 states, and there are several terms to choose from, giving you flexible payment options.

Discover does offer a 30-day money-back guarantee, which is unique. Discover wants to make sure you get the best terms you can, so if you find something better within 30 days of accepting their loan, you can send the money you received back to them, with no interest charged. (Unless the funds went to a creditor, in which case, they can’t be returned.)

This guarantee can help put your mind at ease in case you do find something better, or decide that you can’t handle the payments. If this is something that interests you, read on to get the full scoop on this personal loan.

APR

6.99%
To
24.99%

Credit Req.

660

Minimum Credit Score

Terms

36 to 84

months

Origination Fee

No origination fee

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Discover is a financial services firm that offers credit cards, deposit accounts and personal loans. ... Read More

Discover Personal Loan Rates and Details

Discover LoansDiscover is very upfront with the terms they offer on their website. For starters, you can borrow up to $35,000.

Their rates range from 6.99% – 24.99% APR.

You can pay back your loan in 36 to 84 months, which is much longer than most lenders offer. However, be mindful that a longer term means you’ll be paying more interest over the life of the loan.

In order to qualify, you need to have a credit score of at least 660.

According to the loan estimation calculator on Discover’s site, if you have fair credit, and wanted to borrow $10,000 over 48 months, your APR would be 13.99%, and your minimum payment would be $273/month.

Also, if you ever need to change your payment due date, Discover allows you to make the change within your account online.

Credit Requirements

To apply for a personal loan with Discover, you need to be at least 18 years or older, be a U.S. citizen or permanent resident, have a minimum income of $25,000, and have at least a fair (660) credit score.

Discover states that rates depend on creditworthiness, so this loan is for those who already have established credit. They look at credit history, recent credit activity, and credit inquiries.

If you select that you have “poor” credit on Discover’s loan calculator, you’ll receive a message that you’re ineligible for a loan.

While you need a minimum income of $25,000, you can still apply for a personal loan with Discover if you’re unemployed, but have an annual household income of $25,000. Your credit report has to show that you have shared financial obligations within the household.

How Do Discover Personal Loans Compare With the Competition?

Discover makes it a point to feature a comparison chart on their homepage, listing out the reasons their loans are superior to Wells Fargo, Citi, LendingClub*, and Prosper.

Overall, Discover does come out on top in many of the categories, especially when compared to Wells Fargo and Citibank. Discover’s APR range is more favorable when compared to these two, and while LendingClub and Prosper have slightly lower starting personal loan rates.

Additionally, Discover’s personal loan has No origination fee, whereas LendingClub and Prosper have origination fees up to 5% of the loan amount.

The Fine Print – Are There Fees?

Discover does not have any hidden fees – there are no closing fees, prepayment penalties, or origination fees associated with their personal loan.

However, their late fee is a whopping $39, which is quite high compared to other personal loan lenders. You can enroll in their automatic payment service to avoid making late payments.

Discover Personal Loan Application Process

The application process for Discover’s personal loan is a little more in-depth than others.

You can apply online or over the phone, and you’ll be asked what amount you need to borrow, and what length of term you’d like. This is where the loan calculator comes in – be sure to choose an option you can afford!

Discover requires your salary and employment information, and they will verify both. You may have to submit pay stubs or bank statements, and Discover may contact your employer. You can upload documents directly to Discover during the application process.

If you’re looking to pay off debt, you’ll need the balances and account numbers of your creditors.

Once you’re done filling out the application, a loan specialist may call you to verify any details. Otherwise, Discover claims that you will receive a decision the same day you apply, and funds can be disbursed within 3 days of accepting the offer.

Who Would Benefit from a Discover Personal Loan?

Individuals that already have an established, positive credit history and need money quickly will benefit from a Discover personal loan.

Because Discover offers to pay off creditors directly, its loan is a great option for those looking to consolidate debt. Discover has a debt consolidation calculator to help you determine whether or not it you’d save money by going that route.

What to Use the Funds For

With a Discover personal loan, you can borrow anywhere from $2,500 to $35,000, which is a large range.

On the website, popular reasons people borrow from Discover include:

  • Debt consolidation
  • Wedding/Honeymoon
  • Vacation
  • Home improvement
  • Major purchases

The most popular option seems to be debt consolidation, because Discover offers decent terms for those with great credit. Having a fixed interest rate of 6.99% it might make a huge difference for you as opposed to balancing four different credit card loans with varying interest rates.

Discover also cites home improvement, specifically “green upgrades”, as a reason why people borrow funds. This could be a good idea if you plan on staying in your current home for a while, and will recoup the costs through money saved on utilities.

APR

6.99%
To
24.99%

Credit Req.

660

Minimum Credit Score

Terms

36 to 84

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Discover is a financial services firm that offers credit cards, deposit accounts and personal loans. ... Read More

So, Should You Take a Discover Personal Loan?

For a traditional lender, Discover’s personal loan offering isn’t bad. It beats out Wells Fargo and Citibank, and still looks more favorable than LendingClub and Prosper, both peer-to-peer lenders.

Due to the credit requirements, this loan isn’t a good fit for recent graduates or those who have poor credit. If you don’t think your credit is good enough, try the other alternative personal loan lenders that we’ve reviewed.

Keep in mind that Discover will do a hard credit inquiry when you apply for a personal loan with them. Even though it offers a 30-day money-back guarantee, you should shop around with multiple lenders before accepting an offer. Don’t worry that it will further impact your credit score – as long as you’re shopping around within a 45 day window, the credit bureaus will look at multiple inquiries that close together as one inquiry.

One of the easiest ways to compare multiple lenders and loan offers at the same time is to use LendingTree (full disclosure, LendingTree is our parent company). Dozens of lenders participate in LendingTree’s personal loan shopping experience and with one online form you can receive multiple loan offers with only a soft pull on your credit.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

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LendingTree is our parent company

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LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

*We receive a referral fee if you click on offers 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 products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at [email protected]

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