After data loss, ID theft risk soars
Posted: Friday, November 20 2009 at 06:00 am CT by Bob Sullivan
I call them Dear John data letters, because of the bad news they bring and their decidedly warm and fuzzy tone.
"Dear Consumer. We've lost your personal information. It's fallen off a truck/was on a laptop that was lost/was stolen by a hacker. We're sorry and we promise to be better in the future. Good luck."
About one in nine consumers receives a Dear John data letter each year, and nearly half of all consumers have received at least one since the year 2000, when California law forced these kinds of disclosures on corporations and government agencies, according to a new study. The letters have become so familiar that many folks just ignore them and relegate them to the junk mail heap. But that's a big mistake. That same study shows consumers who receive such a notice are four times more likely to be hit with identity theft than members of the general population.
In fact, U.S. adults who get a Dear John data letter have a one in five chance of being victimized in the next 12 months, according to the survey, conducted by financial services research firm Javelin Research.
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Confessions of a credit card telemarketer
Posted: Tuesday, November 17 2009 at 06:00 am CT by Bob Sullivan
What if there were a way to have your credit card debt erased if you lost your job or became disabled? That's the pitch behind debt cancellation, a service offered by many credit card issuers and retailers.
Debt cancellation doesn’t come cheap: it costs between $1 and $2 per $100 balance. A consumer with a $3,000 balance, for example, could pay nearly $60 a month for debt cancellation service.
That might not sound like such a great deal, but thousands of consumers sign up anyway. Why? One telemarketer who sells the service told msnbc.com recently that there’s only one reason: Sellers intentionally confuse cardholders about the programs and their costs.
"I hate flat-out lying to someone, but that's exactly what we do, 150 calls a day," said the telemarketer, who requested anonymity out of fear of losing his job. "I have seen so many people ripped off that I had to attempt to let people know."
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Now's your chance to spy on Google
Posted: Tuesday, November 10 2009 at 06:00 am CT by Bob Sullivan
If you only have time to visit one new Web site this week, make it the new Google dashboard. Last week, the search engine behemoth announced the new feature, which helps Web users keep track of all the ways Google keeps track of them.
Visiting this single page gives Googlers centralized access to privacy settings on all the various Google applications -- Gmail, Calendar, Google Docs, YouTube, etc. That's important, because you might not realize that you opened a YouTube account four years ago and divulged your age or zip code -- and that now that information could be available to all other Google products, or even to other Google users.
"The scale and level of detail of the Dashboard is unprecedented, and we're delighted to be the first Internet company to offer this — and we hope it will become the standard," Google wrote in its announcement.
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'Fakeosphere' latest Web trap for consumers
Posted: Wednesday, November 4 2009 at 06:00 am CT by Bob Sullivan
This blog-like service is really an ad for a Web sales company.
Click on a weight-loss, work-at-home or acai berry ad and you’re likely to land on what looks like a blog or discussion board. Regular folks appear to be debating the merits of the product – you might even see some contrary opinions. But in the end, the bloggers and their readers always win over the skeptics and persuade them to buy the product from a convenient nearby link.
Welcome to the “fakeosphere.” Internet marketing veteran and analyst Jay Weintraub says fake blogs – or flogs – fake news sites and manufactured testimonials are the fastest-growing segment of Internet advertising. He thinks it’s a $500 million-a-year industry – and he compares it to the explosive growth of spam a decade ago.
“I don’t think people realize how big this has become, and how quickly,” said Weintraub, adding that a popular top flog campaign can generate 10,000 daily sales.
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Wicked new wrinkle: Scammers impersonate FTC officials
Posted: Friday, October 30 2009 at 06:00 am CT by Bob Sullivan
Criminals are stealing the Federal Trade Commission's identity and using it to scam consumers around the country, the agency warned on Thursday. Scam artists are even impersonating individual FTC employees -- in one case, a criminal posed as a recently deceased press officer -- to enhance their deception.
"Our good name is being used to defraud people, and that's very disturbing," said Betsy Broder, head of the FTCs privacy and identity theft division. But the use of individual FTC employees' names as bait is particularly worrisome. "Some of our people have been very shaken up once they find out their personal names were used. ... This is particularly pernicious because it gives people a sense that this is legitimate and reliable."
In one case, a 67-year-old building inspector from Washington state named Ralph (he requested that his last name not be used) sent $1,300 to a criminal who identified himself as FTC Secretary Donald Clark from the "fraud division." The imposter said the agency was overseeing a sweepstakes, and the money was needed to pay for insurance on delivery of a $500,000 prize that Ralph had won.
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The right way to break up with your credit card
Posted: Tuesday, October 27 2009 at 06:00 am CT by Bob Sullivan
Stephanie Skinner recently received one of those letters that credit card account holders dread; her 11 percent rate had been raised to 29.99 percent. And when she called Citibank to complain, she was placed squarely between a rock and a hard place.
Accept the higher rate, she was told, or close the card and accept the damage to her credit score.
"I said to them, 'You're giving me the option to either shoot myself in the foot or shoot myself in the hand. That's just unacceptable,'” said Skinner, from Greenville, S.C.
She holds only two credit cards, so the hit to her credit score from closing one would be significant. "What am I supposed to do?" she wondered.
It's a frequent question for American consumers these days. Half of all account holders say they've been hit either with a higher rate or a lower limit in recent months. While consumers are customarily given the choice to decline the new terms and close the account, doing so flies in the face of all standard advice from personal finance experts because closing credit cards usually has a negative impact on credit scores.
“Credit utilization” is one of five important factors used to determine a consumer's score. Closing a card with a $10,000 limit means the consumer has $10,000 less in credit. If that consumer owes $5,000 on a second card with a $10,000 limit, their utilization just shot from 25 to 50 percent, a credit score killer.
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Overdraft fee reform debate begins now
Posted: Friday, October 23 2009 at 06:00 am CT by Bob Sullivan
Congress took a major step toward restricting the way banks charge overdraft fees this week with the introduction of legislation in both the House and Senate.
It was an active week for Congress and banking legislation: on Thursday, a House committee also approved a bill to create a Consumer Financial Safety Commission, and passed another measure designed to speed up enactment of new consumer protections for credit card users.
But overdraft fees are a particular sore spot with consumers, who will pay $27 billion to banks for overdrafts this year, according to research firm Moebs Services Inc. The Center for Responsible Lending says one in six U.S. consumers were hit by overdraft fees last year.
Earlier this week, Sen. Chris Dodd, D-Conn., introduced the Fairness and Accountability in Receiving Overdraft Coverage Act, or “FAIR Act”, which would require financial institutions to obtain explicit permission from all their customers before enrolling them in a system of fee-based overdraft protection for debit card and ATM transactions.
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Exclusive: Fees, not loans, help banks recover
Posted: Wednesday, October 21 2009 at 06:00 am CT by Bob Sullivan
While the struggling U.S. banking industry has shown signs of life, recent SEC filings reveal that banks are relying heavily on fees and other non-interest income -- not loans and interest -- to make their comeback. Some say this trend is bad for consumers, and shows banks are still unnecessarily fragile, but the banking industry said it's just good business sense to diversify their revenue streams during tough times.
An analysis of the banks’ quarterly filings with the Security and Exchange Commission since 2006 by the investment research firm EDGAR Online also shows a clear correlation between non-interest income and employee compensation. In other words, the higher a bank’s fees, the more money its workers make.
Of the nation's top 500 banks, 384 have increased so-called non-interest income – dramatically in many cases. Considered on a per-employee basis, Wells Fargo has increased its non-interest income by 80 percent since the first quarter of 2007, for example, while Bank of America and Fifth Third Bank have seen non-interest income rise by 28 percent and 26 percent, respectively.
Only 80 of the top 500 banks showed a drop in fee-based income, while fewer than half of all banks reported an increase in interest earnings over the same period.
And some banks with high non-interest income increases have seen drops in interest income. BB&T Bank saw a 33 percent increase in fee-based revenue at the same time its lending-based revenue declined 6percent. Bank of America's interest income dropped 12 percent during the same stretch.
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Lobbying said to clip consumer protection bill
Posted: Tuesday, October 13 2009 at 06:00 am CT by Bob Sullivan
The grand plan for a new federal agency that would fight for consumer rights in financial transactions has been given a hatchet job by industry groups, a consumer group charged on Monday.
The latest version of legislation (PDF) that would create the Consumer Financial Protection Agency carves out wide-ranging exceptions for the nation's credit reporting agencies, car dealerships, realtors, and tax preparation firms, among others, according to Consumer Watchdog, an advocacy group. Those industries would be largely exempt from the new regulator, according to the most recent draft of the legislation, sponsored by Rep. Barney Frank, D-Mass., chairman of the House Financial Services committee. The committee will consider changes to the proposal at a formal markup session scheduled for Wednesday.
Carmen Balber, head of Consumer Watchdog's Washington, D.C., office, said the new agency won't be able to do its job unless it has oversight over firms like Experian, Equifax and Trans Union, which help determine consumer interest rates through credit scores, or car dealerships, which engage in complex loan transactions.
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What will talking power meters say about you?
Posted: Friday, October 9 2009 at 05:00 am CT by Bob Sullivan
Would you sign up for a discount with your power company in exchange for surrendering control of your thermostat? What if it means that, one day, your auto insurance company will know that you regularly arrive home on weekends at 2:15 a.m., just after the bars close?
Welcome to the complex world of the Smart Grid, which may very well pit environmental concerns against thorny privacy issues. If you think such debates are purely philosophical, you’re behind the times.
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