1. UNIT VII – Personal Financial Literacy Consumer Protection & Fraud

2. Credit Counseling – Help is out there! It can be very easy to get overwhelmed by debt The average college student graduates with $20,000 of debt not to mention another $2200 in credit card debt Help is available for individuals to get their finances in order

3. Free help is sometimes offered by employers, unions, banks, and credit unions Agencies (that will need to be paid) are also available to offer financial services This help can be face to face, over the phone, or online but you need to make sure that the agency is certified This counseling will help you to consolidate all of your loans into one lump sum to pay off

4. Consumer Protection Laws Unfortunately, credit businesses sometimes make mistakes and are not always honest The following laws have been created to help protected credit consumers...

5. LawDescription Truth in Lending Act Fair Credit Reporting Act Fair & Accurate Credit Transactions Act Requires lenders to give info about credit in simple terms, must disclose APR and all finance charges, protects against unauthorized use of card Governs credit bureaus, requires creditors to give accurate and complete information about your credit history, must allow for one free credit report per year Provides protection against identity theft by placing alerts on suspicious activity, limits the info that a business can print on receipts

6. LawDescription Equal Credit Opportunity Act Fair Credit Billing Act Electronic Funds Transfer Act Requires that all consumers will be given an equal chance to receive credit – cannot discriminate based on sex, marital status, race, religion, age, etc. Requires creditors to mail your bill at least 14 days before payment is due, establishes procedures for correcting billing errors Provides protection for people that use ATMs and debit cards, limits your liability if card is lost/stolen depending on when you claimed the loss

7. Financial Scams and Schemes Not all financial schemes deal with credit, some deal with investments They appeal to your desire to make a lot, quickly Be cautious – if it sounds too good to be true, it probably is!

8. Identity Theft All someone needs is your name, SS#, credit card #, or some other piece of information about you Thieves will then create credit accounts in your name without you knowing How do they get the info? Skimming – when info is stolen while using your card Phishing – pretend to represent banks or other companies to get your info Pretexting – request info about you from banks/businesses under false pretenses Hacking – use WiFi to access your info publically

9. What do you do if your identity is stolen? 1. Review credit reports and place a fraud alert on it 2. Close any fraudulent accounts immediately 3. File a complaint with the Federal Trade Commission to investigate 4. File a complaint with the local police to investigate

10. Loan Scam Commercial for loan consolidation with little business info and a 800 or 900 number When a person calls they give very little info about the loans and your financial history The explain they will call back to tell you if the loan is approved All “loans” are approved and you are told to send in a fee before you receive the loan The “loan” never comes

11. Credit-Repair Scheme Company advertises that they can erase your bad credit Company requests a fee paid up-front However, there isn’t really anything a company can do to repair your credit There is no quick and easy way to repair a poor credit history

12. College Financial-Aid Scam Company advertises that millions in scholarships go unclaimed every year Company promises to do research to find you scholarships Requests a fee (about $300) to be paid up-front and promises to pay you back if they cannot find you scholarships In the end they will keep your money and give you info that you could find on your own for free

13. Pyramid Scheme Disguised as a system for selling goods People are recruited by ads offering big profits to those who pay a fee to the right to sell a company’s goods Each recruit then recruits more to do the same, who also pay fees to the person in charge Recruits are promised a portion of money made but it becomes impossible to fund and the “business” collapses

14. Pyramid Scheme

15. Payday Loan Allows a person to get cash for use until his/her next payday with no credit check Applicant provides paycheck stub and savings/checking account numbers to the lender Applicant writes a post-dated check for more than the loan that the company cashes after a couple of weeks, this gives the company the loan back plus interest Interest rates are INCREDIBLY high, around 300%!!!! Even though this is a legal business, it gets many into a lot of trouble, especially because it targets low- income families

16. Rent-to-Own Company Rent and sell appliances, furniture, and electronic products Consumer agrees to rent something for a short period, if they continue to rent the item they can eventually pay enough to own the product The criticism is that the cost of the items is usually two to five times as much as purchasing the same goods from a store