Minnesota Senator Al Franken recently announced that he plans on introducing additional protections for consumers under the Fair Debt Collection Practices Act. Franken’s actions were prompted by a newspaper’s investigative reporting which uncovered some of debt collectors’ shadier tactics, including seizures of bank accounts and paychecks, and the use of arrest warrants to collect consumer debts.
Under Franken’s changes to the law, it would be considered an unfair practice for private firms to use arrest warrants in debt collections, and consumers would be able to sue debt collectors who used those tactics. The amendment would also require debt collectors to give consumers more information about their debts, including a summary of fees and interest.
Under the bill, penalties for violations of the FDCPA would be increased, and enforcement of the law would be left up to consumers through lawsuits against the offenders. Judges would be allowed under the bill to issue injunctions to stop violations of the FDCPA. The bill would not call for an increase in the FTC’s budget or staff members.
Currently, Franken is discussing the bill with an unnamed Republican senator in the hopes of obtaining bipartisan support for the bill. According to Franken’s office, a wide range of consumer groups have been supportive of the bill.
You may be surprised to learn that your credit card information, which many of us go to great lengths to protect, is worth only about $1.50 on the black market.
A Washington Post reporter recently shopped for stolen credit and debit cards online. He found a variety of sites to choose from. He opened an account at one of the sites and found that U.S. card numbers are for sale for $1.50, and U.K. resident account information sold for $4. In addition to purchasing the card numbers, the site the reporter visited allowed extra cardholder information to be purchased, such as the cardholder’s mother’s maiden name and the cardholder’s date of birth. Most of the card information is obtained through malware that steals data from computers infected with a virus.
However, the reporter was surprised to find that if he wanted to use the website’s search tools, he was nailed for extra convenience fees. In order to buy a credit card number that was stolen from a certain city, it would cost an extra 60 cents. Apparently, the company that sells stolen information believes in nickel and diming the online would-be thieves.
You may be wondering if you can use data from a stolen credit card to purchase more stolen credit card data. No, payment on that particular website can only be made using LibertyReserve or Webmoney, which are popular in the underground.
If you believe that most professional debt collectors are honest, hardworking, salt of the earth type people, this story may change your mind.
Lamont Cooper, age 38 and from New York, owned a business called Legal Action Recovery, which was a professional debt collection firm. In April 2009, a court found that his company used intimidation tactics to scare its victims into paying debts, some of which they didn’t even owe, were discharged in bankruptcy or had already passed the statute of limitations. The collectors threatened to send the alleged debtors to prison for failure to pay, sometimes going so far as to pose as law enforcement officers.
Many individuals sent the firm money – between May and August 2009, deposits of $1.38 million were made into accounts which were connected to the debt collection company. These deposits are believed to be from payments from victims of the company.
In 1997 Cooper, the owner of the company, pleaded guilty to drug charges. He was later paroled. In October 2009, he violated the terms of his parole and was sentenced to 14 months, to be served at the Batavia Detention Facility in New York.
While he was in prison, he allegedly continued to operate his debt collection firm. Surveillance showed that during his time in prison, Cooper was still corresponding with his employees, telling them how to manage accounts and personnel issues, and he also requested that he be kept apprised of all banking activities. The New York Attorney General’s Office has filed charges against Cooper for continuing to operate the firm. He will be arraigned on the charges once he’s released from federal custody.
Did you know that you may be owed money and may not even know it?
Unclaimed property, also known as abandoned property, is money held by companies or financial institutions that have not generated any activity or been claimed by their owner for over a year. Some of the most common examples of unclaimed property are uncashed payroll checks, checking or savings account proceeds, insurance payments or refunds, utility deposits, CDs, trust distributions, and contents of safe deposit boxes.
All states have unclaimed property laws and programs that actively search for owners of lost or forgotten assets. State laws usually prevent property from reverting to a financial institution if you lose contact with that institution. Under law, companies have to turn that money over to a state official, who will then attempt to find you or your heirs. States have compiled databases of individuals owed money, as well as joined national databases such as MissingMoney.com and Unclaimed.org.
Searching either website or a state’s database of abandoned property is free, but some businesses find missing property and contact its owner, promising to tell the individual how to claim the property for a fee. Some of these businesses are legitimate, but if you are contacted by a business offering to tell you how to claim your property, it’s best to contact your state’s unclaimed property office first.
In today’s uncertain economy, increasing numbers of consumers are choosing to use cash or debit cards, which immediately deduct money from a checking or savings account, over credit cards. In fact, in 2009 more consumers used debit cards than credit cards. In 2007, 87 percent of consumers used a credit card in any given month. In 2009, only 56 percent of consumers used a credit card in a month. Credit card usage could fall to 45 percent in 2010.
Twenty-somethings are behind the trend, viewing debit cards as an easier way to budget. In addition, many low-income employees are having their salaries deposited onto reloadable pre-paid cards instead of receiving a check and depositing it into a checking account.
Credit card companies are struggling to maintain their levels of profitability, as more consumers are spending less and paying off credit card balances. Credit card balances at the nation’s six largest lenders have dropped by 20 percent since their peak in 2008, to $544 billion, which not only reflects consumers’ reluctance to obtain and maintain credit card debt, but also an increased effort by credit card companies to get rid of risky borrowers.
Credit card companies have been introducing new products in an effort to maintain profitable. MasterCard will soon be introducing a program that will allow its users to set spending controls and receive alerts about the card balance.
The first wave of freshmen affected by the new credit card reform act are beginning college this month, leading experts to wonder how successful the law will turn out to be.
Under the new laws, if you are under 21 and want a credit card, you must either provide proof of income or get a co-signer who’s 21 or older. The law is aimed at preventing students from graduating with thousands of dollars in credit card debt, which in recent years has almost become the norm.
Credit card companies are now restricted from marketing credit cards within 1,000 feet of a college campus, which includes events that are related to the college. Gone are the days of free t-shirts when filling out credit card applications – credit card companies are now forbidden from offering tangible gifts to college student. However, credit card companies will still be allowed to offer airline miles, reward points, and other intangible goodies to lure students.
Some experts are doubtful that the credit card reform laws related to college students will be entirely successful. Many parents will likely be willing to co-sign for a credit card in order to help their children build credit responsibly. Some students who want cards may be able to entice their older friends to cosign. Some doubt that credit card companies will strictly abide by the rules.
For parents who are unsure about whether they should co-sign for their children or not, there are alternatives, such as prepaid debit cards or allowing their children to become authorized users on the parents’ cards.