FICO changes how credit scores are calculated

The company that calculates our credit scores is making changes in the way it comes up with your number. The name of the company is Fair Isaac Corporation, hence the term FICO SCORE.

FICO scoring models are typically updated every few years. With the latest change, your score will still be based on how much you owe, the number and types of accounts you have, and of course your payment history. But in the future, even if you pay your credit card and loan bills on time, your credit score might drop if your report shows a trend that your debt balance is going up.

Ted Rossman of Bankrate.com says one key adjustment involves the use of what’s known as trended data.

“One prime example of that is that recent behavior has the potential to help or hurt you more than in the past,” Rossman explained. “So, if you have a recent late payment, that’s going to have a big negative effect. Also, if you used to have better credit habits, like maybe you used to have a better on time payment history or you used to have lower debts, your debt has crept up. Trended data has the potential to negatively affect you for that reason,” Rossman said

Experts say under the latest credit scoring model people with scores below 600 could see their credit score drop by 20 points or more. Reports indicate some people might also face a credit score penalty for signing a personal loan, which is generally considered more risky because it’s not secured by thing with collateral value like your home or car.

How will your credit score hold up to the newest scoring model changes?

“The flip side though is that if you’re improving. If your the proverbial C student that starts getting a bunch of As, that’s going to help you,” said Rossman, using student grades as a metaphor for debt management.

Professionals in the non-profit credit counseling industry say this is another reminder of the importance of identifying your risks of drowning in debt, if you’re barely keeping your financial affairs afloat.

“This is where a non-profit credit counseling agency can directly assist in helping you get a plan to fix the issues that are holding your credit score down, get back on track with any bills that you’re paying late, and have a chance to completely restore any issues that are having an effect on your personal finances. Now is the time to do that, said Bruce McClary with the National Foundation for Credit Counseling.

“Some people might look at that 20 point decrease and say, ‘Well, that’s not a big deal.’ But if you’re on the threshold of either qualifying for credit or not, that 20 points can put you totally out of the game.”

Both McClary and Rossman agree that people may not be impacted right away by the recent FICO adjustments, since many lenders are still basing their loan decisions on older FICO scoring models.

As months go by, however, that could change, especially since consumer credit debt nationwide is now higher then levels before the financial crisis of 2008 and more people are dangerously over their heads in credit card and loan debt.

“I wouldn’t worry too much about being impacted right away by this, McClary said. “But if you do think that you will be impacted, now is the time to start addressing the problems that are holding your credit back.”

People who follow these FICO changes say if your credit score is 700 or higher, you could see a 20 point increase in your score and some people will see no change at all. But the key for everyone is to always pay more than the minimum payment, keep your overall debt balance going down, and whenever possible, pay before your payment is due, since the information that goes on your credit report is usually based on how things look as of your monthly statement date.

If you do have poor credit, beware of credit repair scams that promise to help you lower your debt. Regardless what you hear or see in advertising or solicitations, always seek help from a certified, non-profit credit counseling agency, or a licensed attorney, and never pay sums upfront.

Banks Are Handing Out Beefed-Up Credit Lines No One Asked For

It might sound like a risky strategy at a time when millions of Americans are drowning in debt: keep raising the limit on people’s credit cards, even if they don’t ask.

But that’s exactly what big banks have been doing lately to turbocharge their profits, leaving customers with the potential to rack up even bigger monthly bills.

For years after the financial crisis, Capital One Financial Corp. resisted that step for customers who looked vulnerable to getting in over their heads. In internal conversations, Chief Executive Officer Richard Fairbank characterized the restraint as a radical theology, in part because it went beyond post-crisis requirements, according to a person with direct knowledge of the discussions.

But then Capital One — known for its “What’s in Your Wallet?” slogan — reversed course in 2018, after the bank came under pressure to keep revenue growing. The company’s revenue reached a record last year.

The same reversal is playing out across U.S. banking, as more customers get unsolicited access to additional credit, in what’s becoming a new golden age of plastic. The goal: to get consumers to borrow more. The question, just like in the heady 2000s, is how it will end for lenders and borrowers alike. Research shows many consumers turn higher limits into debt. And the greater the debt, the harder it is to dig out.

“It’s like putting a sandwich in front of me and I haven’t eaten all day,” said D’Ante Jones, a 27-year-old rapper known as D. Maivia in Houston who was close to hitting the ceiling on his Chase Freedom card when JPMorgan Chase & Co. nearly doubled his spending limit a year ago without consulting him. He soon borrowed much more. “How can I not take a bite out of it?”

The banks say the increases are good customer service and that they raise spending limits carefully, discourage reckless borrowing and let customers reverse the increases at any time.

Record Borrowing

Whatever the case, the immediate result is clear: debt, and lots of it. Outstanding card borrowing has surpassed its pre-crisis peak, reaching a record of $880 billion at the end of September, according to the latest data from the New York Fed’s consumer credit panel. That’s boosting profit at top lenders like Capital One, JPMorgan and Citigroup Inc. a decade after banks cut credit limits without warning during the crunch.

“Capital One examines a number of factors before determining whether a customer is eligible for a credit line increase, including reviewing their credit and payment history, debt-to-income ratio and ability to pay,” a spokeswoman said in a statement. She said the company offers customers tools to “help them manage credit wisely.”

JPMorgan said it makes sure borrowers don’t owe too much and avoids raising limits for subprime cardholders.

“In a very targeted way, we grant credit line increases to creditworthy customers who have demonstrated consistent usage of the card and have shown strong repayment patterns,” a JPMorgan spokeswoman said. Less than 1% of increases are reversed by customers, she said.

“I didn’t know there was a way to say no,” said Jones, the Texas rapper. He was making less than $30,000 after taxes when Chase gave him access to an additional $1,500 during the 2018 Christmas season. A lot of people would celebrate access to more money. But he said he was terrified he’d spend more than he could handle. After thieves damaged his car, he tapped the full credit line and could only afford to make the minimum monthly payment.

Banned in Australia

Proactive credit line increases, known in the industry as PCLIs, emerged in the 1990s but virtually disappeared after regulators clamped down on the practice following the 2008 financial crisis. But as banks struggled to ramp up lending, PCLIs made a comeback with executives finding more aggressive ways to work within the consumer-protection laws.

U.S. issuers boosted credit lines for about 4% of cards in each quarter of 2018, according to the Consumer Financial Protection Bureau’s most recent data. That’s double the rate in 2012.

Subprime and near-prime customers got increases at a higher-than-average pace, according to the agency. That means many of the people getting boosts have blemished or limited histories of paying bills.

Courtesy: Bloomberg

North Carolina Bankruptcy Court Announces Mortgage Loan Modification Management Program

Effective July 1, 2019, the United States Bankruptcy Court for the Western District of North Carolina has instituted a Loan Modification Management Program. The goal of the program will be to expedite residential mortgage modifications for Chapter 13 debtors and mortgage creditors. The program will use an internet portal and independent facilitators to assist communications and the transfer of documentation between the parties.

If you are interested in pursuing a modification of the terms of your home mortgage, we at Vujovic Law would be happy to discuss the procedures and possible options with you.

NACBA Calls to Restore the Student Loan Bankruptcy Discharge

The National Association of Consumer Bankruptcy Attorneys (NACBA) was recently given the opportunity to testify before the House Judiciary Committee Subcommittee on Antitrust, Commercial and Administrative Law during the hearing “Oversight of Bankruptcy Law and Legislative Proposals”.

NACBA’s Vice President, Ed Boltz of North Carolina, as well as the other witnesses on the panel, made a strong call for restoration of the student loan bankruptcy discharge. The call for bankruptcy relief for student loan debtors was unanimously supported by the witness panel that included Ms. Hollister K. Petraeus (Former Assistant Director, Consumer Financial Protection Bureau’s Office of Servicemember Affairs), Mr. Robert Keach (on behalf of The American Bankruptcy Institute), Mr. John Rao (on behalf of The National Consumer Law Center), Ms. Dalié Jiménez (Professor, University of California Irvine School of Law) and The Honorable Thomas Small (Professor, University of California Irvine School of Law and former North Carolina bankruptcy judge).

NACBA strongly supports current bipartisan legislation in the Senate (S. 1414) and House (H.R. 2648), introduced respectively by Senator Dick Durbin and Congress members Jerrold Nadler and John Katko, to restore the bankruptcy discharge for student loan debt. “Growing evidence indicates that student loan debts not only severely restrict borrowers’ futures, but also are choking economic productivity”, testified Boltz. “These minimal efforts show the inadequacy of piecemeal, non-comprehensive changes that stop short of restoring the general dischargeability of student loans in bankruptcy.”

The hearing comes one day after Senator Bernie Sanders introduced legislation that would cancel all of the $1.6 trillion in outstanding student loan debt in this country. This follows recent proposals from other national figures, including Senator Elizabeth Warren, all of which are bringing into focus the fact that the student debt bomb is real and has already overwhelmed many Americans who do not have the ability to pay this debt back.

NACBA’s Legislative Co-Chair Ike Shulman stated, “Because eligibility for bankruptcy is limited to people who must demonstrate their financial difficulty and their need for bankruptcy relief, these bills will not affect student borrowers who are fully able to pay back their student loans. Instead, this legislation will help those who most need relief and are unable to pay back this debt.”
To further strengthen the call to restore student loan bankruptcy discharge, NACBA is proud to introduce a new project: studentdebtbomb.com, a social media campaign to promote the Student Borrower Bankruptcy Protection Act of 2019 (S. 1414 and H.R. 2648), which seeks to make student loans fully dischargeable. The goal of the social media campaign is to encourage people to contact their Senators and Congressional Representatives, urging them to cosponsor the bills.

For further information, please contact Krista D’Amelio, NACBA Director of Government Affairs & Communications, at krista.damelio@nacba.com.

ID Theft Services That Charge a Fee Could be a Waste of Money, According to a Federal Government Report

ID theft services, which offer to help consumers monitor their credit accounts or restore identities for a fee, are a waste of money, suggests a new report from the investigative arm of Congress, the Government Accountability Office.

“We did not identify any studies that analyzed whether consumers who sign up for or purchase identity theft services encounter fewer instances of identity theft or detect instances of financial or other fraud more—or less—rapidly than consumers who take steps on their own,” the authors say.

Additionally, the services could actually create more opportunities for hackers to steal from you, the report observes. “One consumer group representative noted that identity monitoring services require consumers to provide additional personal information to enroll—which also could be compromised if the service provider’s information were breached,” the GAO report states.

The authors point out the services have limitations: among them is the vendors don’t address all data breach risks.

The Federal Trade Commission and Consumer Financial Protection Bureau urge people considering paying for ID theft services to compare them with free or low-cost options before signing up.

Hackers can make purchases, take out loans or seek medical care in a victim’s name with stolen financial account numbers, passwords and Social Security numbers.

If you haven’t been a victim of ID theft, you probably know a few people who have.

For FREE information on how to protect yourself from ID theft and how to “freeze” your credit to prevent hackers and unauthorized persons from accessing your credit files, visit the website of the North Carolina Attorney General: https://www.ncdoj.gov/Consumer/Credit-and-Debt/2-4-3-1-1-Freeze-Your-Credit.aspx

A “security freeze” blocks access to your credit unless you have given your permission. This can prevent an identity thief from opening a new account or getting credit in your name. All consumers can get a free security freeze online, by phone or by mail. A security freeze, also known as a credit or a file freeze, can be lifted (or “thawed”) temporarily when you are applying for credit, or removed permanently.

Parents and guardians can also shield their children’s credit report with a special Protected Consumer security freeze. These freezes can also be used to safeguard incapacitated adults.

How a Security Freeze Works:

Once you’ve placed a security freeze on your credit, a creditor who asks to see your file will see a message that your file is frozen. The creditor will not see your credit score, and may treat your application as incomplete but not rejected.

Government agencies collecting child support payments or taxes and your existing creditors or collection agencies acting on their behalf can continue to access your credit despite the freeze.

Other creditors may also use your information to offer you pre-approved credit. You can stop most credit offers by calling (888) 5-OPT-OUT or visiting www.optoutprescreen.com

You will still be able to get a free copy of your credit report annually from each credit bureau.

NC ATTORNEY GENERAL LEADS COALITION TO PROTECT BORROWERS FROM PAYDAY LENDERS

North Carolina Attorney General Josh Stein led a coalition of 25 states urging the Consumer Financial Protection Bureau (CFPB) to take immediate action to protect consumers from abuses in payday lending, vehicle title lending, and other types of high-cost exploitative consumer lending.

“In North Carolina, we drove out the payday lenders who hurt working people with loan shark interest rates,” said Attorney General Josh Stein. “I urge the CFPB to protect borrowers from these abusive loans that put borrowers on a debt treadmill and, all too frequently, lead to default.”

It was announced by CFPB in 2017 that a new rule would help protect borrowers and ensure they’d have the ability to repay loans while also prohibiting lenders from using abusive tactics when seeking repayment. The rule went into effect in early 2018, but compliance was delayed to Aug. 19, 2019, to give lenders time to develop systems and policies. CFPB has now proposed to further delay compliance to Nov. 19, 2020, more than three years after the regulation was finalized. At the same time, CFPB is reviewing another rule that would altogether rescind this one.

Together, these actions would put at risk hard-fought borrower protections. In their comments, the attorneys general cite CFPB’s own findings that demonstrate the many ways the short-term payday and title lending model is broken – specifically as a significant percentage of these loans are expected to fail. In fact, 90 percent of all loan fees come from consumers who borrow seven or more times in 12 months. Twenty percent of payday loan transaction series end in default and 33 percent of single-payment auto title loan sequences end in default.

Attorney General Stein is joined in filing these comments by the Attorneys General of California, Colorado, Connecticut, the District of Columbia, Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Nevada, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.

FTC Halts Deceptive Mortgage Loan Modification Scheme

The Federal Trade Commission has charged a mortgage loan modification operation with deceiving financially distressed homeowners by falsely promising to prevent foreclosure and make their mortgages more affordable. A federal court temporarily halted the scheme and froze the defendants’ assets at the FTC’s request.

According to the FTC, the defendants typically charged consumers $3,900 in unlawful advance fees, in $650 monthly installments, falsely promising expert legal assistance and touting a 98-100 percent success record. They also allegedly misrepresented they would cut homeowners’ interest rates in half and reduce their monthly mortgage payments by hundreds of dollars.

The FTC alleges that the defendants used doctored government logos in correspondence with consumers, falsely suggesting they were affiliated with or endorsed by the federal government’s Making Home Affordable loan modification program. They also claimed to have special relationships with particular lenders and unlawfully told consumers not to pay their mortgages to or communicate with their lenders. In many instances, the FTC alleges, consumers paid hundreds or thousands of dollars only to learn that the defendants had not obtained the promised loan modifications, and in some cases had never even contacted the lenders. As a result, many people incurred substantial interest charges and other penalties for paying the defendants instead of their mortgage payments, and some lost their homes to foreclosure.

The defendants, charged with violating the FTC Act and the Mortgage Assistance Relief Services Rule [MARS Rule (Regulation O)], are Preferred Law PLLC; Consumer Defense LLC (Nevada); Consumer Defense LLC (Utah); Consumer Link Inc.; American Home Loan Counselors; American Home Loans LLC; Consumer Defense Group LLC, formerly known as Modification Review Board LLC; Brown Legal Inc.; AM Property Management LLC; FMG Partners LLC; Zinly LLC; Jonathan P. Hanley; Benjamin R. Horton; and Sandra X. Hanley.

The FTC appreciates the assistance provided by the Utah Attorney General’s Office, the Utah Department of Commerce – Division of Consumer Protection, the New Mexico Attorney General’s Office, the Connecticut Department of Banking, and the Oregon Department of Consumer and Business Services in bringing this case. The Commission vote approving the complaint was 2-0. The U.S. District Court for the Nevada entered a temporary restraining order against the defendants on January 10, 2018.

For consumer information about avoiding mortgage and foreclosure rescue scams, see Mortgage Relief Scams.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357).

Credit Freezes, Credit Locks, and Fraud Alerts

Every few months it seems we hear about another major hack of consumer information from some huge company. None, however, had quite the chilling effect as the data breach at Equifax, one of the “big three” credit bureaus. The Better Business Bureau now warns consumers that is probably no longer a matter of if your data is available to scammers but more a matter of when they will use it against year. If you were a victim of the Equifax data breach (and most American adults were), Identity thieves now have everything they need to steal your identity and open new accounts in your name.

With this new fear, however, comes a lot of good information. For the first time, millions of consumers are adding fraud alerts to their credit reports, or considering a credit freeze or a credit lock. Our friends at the Federal Trade Commission recently explained how these three differ, and what each can do to protect your personally identifiable information.

Fraud Alert

What is it? A fraud alert requires companies to verify your identity before extending new credit. Usually that means calling you to check if you’re really trying to open a new account.
How does it work? The process is easy – you contact any one of the three nationwide credit reporting agencies (Equifax, Experian, TransUnion) and that one must notify the other two.
How long does it last? An initial fraud alerts last 90 days. After 90 days, you can renew your alert for an additional 90 days, as many times as you want. Military who deploy can get an active duty alert that lasts one year, renewable for the period of deployment. Identity theft victims (whose information has been misused, not just exposed in a breach) are entitled to an extended fraud alert, which lasts seven years.
How much does it cost? Fraud alerts are free.
Is this for me? With a fraud alert, you keep access to your credit and federal law protects you. But an initial fraud alert lasts only 90 days and then you’ll need to remind yourself to renew it every 90 days.

Credit Freeze

What is it? A credit freeze limits access to your credit file so no one, including you, can open new accounts until the freeze is lifted.
How does it work? To be fully protected, you must place a freeze with each of the three credit reporting agencies. Freezes can be placed by phone or online. You’ll get a PIN to use each time you freeze or unfreeze, which may take one to three business days.
How long does it last? A freeze lasts until you temporarily lift or permanently remove it (except in a few states where freezes expire after seven years).

How much does it cost? Fees are set by state law. Generally, it costs $5 to $10 each time you freeze or unfreeze your account with each credit reporting agency. You can get a free freeze if you are an identity theft victim, or in some states, if you’re over age 62. Equifax is offering free freezes until January 31, 2018.
Is this for me? Freezes are generally best for people who aren’t planning to take out new credit. Often, that includes older adults, people under guardianship, and children. People who want to avoid monthly fees also may prefer freezes over locks.

Credit Lock

What is it? Like a freeze, a credit lock limits access to your credit file so no one, including you, can open new accounts until you unlock your credit file.
How does it work? Like a freeze, to be fully protected, you must place locks with all three credit reporting agencies. With locks, however, there’s no PIN and usually no wait to lock or unlock your credit file (although the current Equifax lock can take 24 to 48 hours). You can lock and unlock on a computer or mobile device through an app – but not with a phone call.
How long does it last? Locks last only as long as you have an ongoing lock agreement with each of the credit reporting agencies. In some cases, that means paying monthly fees to maintain your lock service.

How much does it cost? Credit reporting agencies can set and change lock fees at any time. As of today, Equifax offers free locks as part of its free post-breach credit monitoring. Experian and TransUnion may charge monthly fees, often about $20.
Is this for me? Depending on your particular lock agreement, your fees and protections may change over time. So, if you sign up for a lock, it’s hard to be sure what your legal protections will be if something goes wrong later. Also, monthly lock fees can quickly exceed the cost of freezes, especially if the lock fees increase over time.

Additional information:

BBB offers advice in the wake of a data breach: go.bbb.org/databreach

FTC’s Credit freeze FAQs, Fraud alert or credit freeze – which is right for you?, and Free freezes from Equifax.

If your personal information is misused, visit IdentityTheft.gov to report identity theft and get a personal recovery plan.

How NC residents can protect themselves from the Equifax credit breach

What happened?
Equifax is a national credit bureau that collects information about the credit history of individual Americans. The company experienced the most significant security breach in American history. Hackers accessed the private information of an estimated 5 million North Carolinians. Information that can be used to commit ID theft and financial fraud including full names, dates of birth, Social Security numbers and in some cases driver license numbers, were stolen.

What is North Carolina Attorney General Josh Stein doing about it?
Attorney General Stein is taking action on behalf of North Carolina consumers affected by the breach. He is taking a lead role in an investigation into Equifax conducted with a bipartisan group of attorneys general from across the nation. In addition, Attorney General Stein has contacted Equifax to demand more information about how this breach occurred and what the company is doing to protect affected consumers. He has also written to the other two national credit bureaus (Experian and TransUnion) seeking information about their processes and how they plan to protect individual consumer’s private information going forward.

What do you need to do about it?
First, find out if you are impacted. If you are, we strongly suggest you consider freezing your credit with all of the credit reporting services. (You should also start checking your credit reports periodically – if you see a credit card or a charge account you don’t recognize, it could be a sign of ID theft or financial fraud.) Even if you aren’t impacted by this particular breach, we still recommend these steps.

“Chip” credit cards have reduced overall credit card fraud, but New Account fraud (where someone opens a new account using your name and information) has increased. Security freezes, also known as credit freezes, protect you against New Account fraud.

National news stories about the Equifax breach often say that you have to pay to freeze your credit. That is not true in our state – Security freezes are free for North Carolinians if you do them online. So it takes some of your time, but none of your money, to freeze access to your credit reports.

How to Get Free Security Freezes Online
To establish your security freezes, you will need to contact each of the three credit bureaus online:

Equifax Experian TransUnion
Online Form Online Form Online Form

(Note: the links above will take you to the websites for the three credit bureaus.  These sites are separate from www.ncdoj.gov.)

Be prepared to provide detailed information about yourself, including:

  • Your Full Name
  • Your Address
  • Your Date of Birth
  • Your Social Security Number

(Note: The credit bureaus already have this information in their files. You will be providing it to verify your identity. You may also be asked questions about your financial history, previous addresses where you may have lived, etc. to help confirm your identity to the company.)

Keep Your PINs or Passwords
When you freeze your credit online, the company will assign you a PIN (Personal Information Number) or password. Make sure to print or write down your PIN, and keep it in a safe place. You will need it when you lift or remove your security freezes, and this online transaction may be the only time the company displays your PIN to you.

If You Lose Your PIN
If you lose your PIN or password, the company must give you a new one free of charge. If you lose it a second time, the company can charge up to $3 to give you a new one.

To receive a new PIN from Equifax or TransUnion, you must make your request in writing and provide proof of identification. (A copy of your driver’s license, passport, birth certificate, etc.) Mailing addresses for those credit bureaus can be found below. To receive a new PIN from Experian, visit this page and select “Retrieve My Personal Identification Number.”

How to get Security Freezes by Phone or Mail
You can also establish and manage a security freeze by mail or phone. These methods are always free for identity theft victims who have filed a police report, their spouses, and consumers over the age of 62. Other consumers can be charged up to $3 per credit bureau each time they establish a security freeze by mail or phone, although some credit bureaus are not currently charging consumers these fees. Before requesting a security freeze by mail or phone, check the credit bureau’s website to see if they charge a fee.

Security Freezes by Mail
Credit bureaus will usually comply with your written request for a security freeze within three business days after they receive it. To request a security freeze by mail, send a letter to each of the three credit bureaus at the addresses listed below.

Your letter should include:

  • Your full name including middle initial and any suffix (such as Jr.)
  • Your home addresses for the last five years
  • Your Social Security number and date of birth
  • Two proofs of residence (examples: a copy of your driver’s license, utility bill, insurance statement, bank statement)
  • Police or DMV report, if you’re a victim of identity theft

If the credit bureau charges a $3 fee for security freezes by mail, include payment by check, money order or major credit card. (Include the card name, account number, expiration date, and three or four digit identification number on the back of card.)

To save time, you can use our Security Freeze Request form letters for EquifaxExperian, and TransUnion. Enter your personal information on each letter, then print each letter and sign it. You can send your letters to the three credit bureaus by first-class mail, but for additional security you may want to send them by certified mail.

(Note: The credit bureaus already have your name and other personal information in their files. You will be providing it to verify your identity.)

Security Freezes by Phone
Most credit bureaus will usually comply with your request by phone for a security freeze within 24 hours. To place a freeze by phone, call each of the three credit bureaus. Be prepared to supply the information listed above including your driver’s license number and account numbers. If the credit bureau charges a fee for security freezes by phone, be prepared to provide payment information.

Contact Information to Request a Security Freeze by Mail or Phone

Equifax Experian TransUnion
PO Box 105788 PO Box 9554 PO Box 2000
Atlanta, GA 30348 Allen, TX 75013 Chester, PA 19016
1-800-685-1111 1-888-397-3742 1-888-909-8872

Keep Your PINs or Passwords
When you establish a security freeze with a credit bureau, the company will provide you with a PIN (Personal Information Number) or password. Make sure you keep this information in a safe place. You will need it when you lift or remove your security freeze.

(Note: If you get your freeze by phone, be ready to write down your new PIN. Near the end of your call the automated system may state your PIN quickly, and with little or no warning. Your PIN may not be repeated, so be prepared to write it down.)

Protected Consumer Security Freezes
Under North Carolina law you can now freeze the credit reports of children and incapacitated adults.

Finally, scammers are always on the lookout for situations they can exploit to steal your money and as expected they are piggybacking on the Equifax breach. Beware of scammers trying to capitalize on the Equifax breach.

There are also additional steps you can take to protect yourself. The Federal Trade Commission, the Consumer Financial Protection Bureau, and Consumer Reports are all offering useful information.

Debt collection scams still top consumer complaints

Debt collection scams remain the top complaint among consumers in 2016 at 28 percent of all gripes, and impostor scams have become the second most common category of consumer complaints.

This development comes from more than three million reports that the Federal Trade Commission gathered from all over the United States, now contained in the latest annual consumer sectional data book released by the FTC, according to an ethnic media telebriefing moderated by National Media Network Director of the New America Media Odette Keeley on the 2016 top ten scams in America.

The FTC wants all consumers to be aware of these scams so they may be forewarned and not fall victims to unscrupulous modus operandi that continue to abuse victims, particularly seniors, retirees and undocumented immigrants.
The FTC’s Consumer Sentinel Data Book has both national statistics and a state-by-state listing of the consumer protection issues reported to the FTC in 2016; it is also broken down by states and areas with the most reports per capita.

Impostor scams
Speaking on scams in the telebriefing, Bureau of Consumer Protection Assistant Director of the FTC Monica Vaca announced that impostor scams not just climbed to the second spot of the most number of scams, but also have become the most risky phone calls that consumers have received supposedly coming from government agencies.

“Calls from supposedly the Internal Revenue Service (IRS) that that you owe taxes that was never paid and you are going to be fined, you are going to prison or you are going to be arrested if you don’t pay and pay it quick. They ask for immediate payment maybe via wire transfer, or maybe by loading up a prepaid card and giving them the number for them to retrieve the money. In the end, the caller is not from IRS. The impostor is pretending to be calling from the IRS. The caller ID may even say IRS or Washington DC area code,” Vaca elaborated.

This past fall police in India shut down a massive telemarketing fraud ring that was operating outside Mumbai, India, leading to the arrest of 70 people arrested and detention of 600, after they reportedly defrauded 3,000 victims of tens of millions of dollars.

Identity theft
Identity theft complaints declined from 16 percent in 2015 to 13 percent in 2016, with 29 percent of 2016 consumers reporting that their data was used to commit tax fraud. There was a jump in consumers who reported that their stolen data was used for credit card fraud; this figure rose from nearly 16 percent in 2015 to more than 32 percent in 2016.

FTC also gathered that people reported a loss of some $744 million in 2016 to fraud, which was lower than the 2015 figure of $774 million lost, including money lost to all kinds of scams, not just impostors.

“Among the most important thing to take note is that 77 percent of consumers tell us that scammers are reaching them by phone, with most people or 58 percent losing money to fraud by paying through wire transfer,” Vaca pointed out.
In California, there were 334,631 identity thefts, fraud and other consumer complaints reported in 2016, with fraud and other complaints from California consumers numbering 279,887. The top three fraud categories are debt collection with 100,717 (36%), telephone and mobile services with 38,828 (14%) and impostor scams with 37,147 (13%).

Avoid wire transfer requests
This also prompted FTC to urge consumers to be wary of any caller asking for a wire transfer as the government will not ask a consumer to wire money, and it is illegal for telemarketers to ask you to pay by wire transfer, which is a big red flag.
Consumers who get a suspicious call should take their time and check it out by calling the government agency on a verified official phone line and not the phone number given by the suspicious caller.

Nevertheless, the FTC is encouraged that even if a lot of people have not lost any money, they still wanted the FTC to know about suspicious calls they received and these calls are helping law enforcement when they file these kinds of complaints.
“The FTC cannot investigate unless people call the FTC to say what they see. FTC uses the reports in the system to build cases,” explained Vaca. “Apart from the FTC, other law enforcers including the local police officers, state attorneys-general, and agencies like the FBI look at these reports to find cases to try to stop scammers.”

FTC victories
Through these combined efforts to fight fraud, the FTC has obtained judgments totaling more than $11.9 billion for consumers harmed by deceptive and unfair business practices.
The FTC anticipates frauds on immigration and health care services to spike as frauds tend to follow the headlines that are likely to transform into a fraud following the trends in the last years.

“Because of the stricter policies, scams in immigration services could see a rise since it is in the headlines. Other stories that are in the news where we have seen fraud in the past include the affordable care act or anything related to healthcare,” reminded Vaca.

FTC has also seen a rise in incidents of family-and-friends scams sometimes referred to as the grandparents scam where the call is about a close relative is in distress and you need to help them in the medical expense or with some sort of emergency expenses to get them out of a bad situation.
Consumer Sentinel Data Book
According to the FTC’s Consumer Sentinel Data Book, the scams that are on the top ten list of complaints for 2016 with the number of complaints and their percentages are:

Number of complaints Percentages

Debt Collection 859,090 28
Impostor Scams 406,578 13
Identity Theft 399,225 13
Telephone and Mobile Services 292,155 10
Banks and Lenders 143,987 5
Prizes, Sweepstakes and Lotteries 141,643 5
Shop-at-Home and Catalog Sales 109,831 4
Auto-Related Complaints 94,673 3
Credit Bureaus, Information Furnishers and Report Users 49,679 2
Television and Electronic Media 49,546 2

To learn more about the FTC report, go to www.consumer.ftc.gov/ and to file a consumer complaint online go to www.ftc.complaint/complaint or by calling 1-877-FTC-HELP (382-4357).