Daily Information
Objectives:
1.Explain how todispute errors onbillingstatements
2.Recognize creditscams and waysto protectyourself.
Warm Up:
Create a captionfor the picturebelow
Agenda:
1.Warm up
2.Vocab.
3.ResolvingCredit P.P.
4.TPS
5.ConsumerAdvocacyGroups
6.Bottom Line
Credit Cards: Error and Fraud
•Disputing a charge: the process of informinga credit company of an error on your bill
oDocument all steps of your dispute and senda letter to the credit company
•Credit card fraud: when someone uses yourcredit account to steal money or goods
oNotify creditor as soon as possible
Error Correction Policy
1.Write description of the error.
2.Mail your letter as soon as possible.
3.Letter must be acknowledged in 30 days. Errormust be corrected or explained in 90 days.
4.No collection letters will be sent or action takenwhile the charge is being disputed.
5.You are still responsible for other items on yourbill.
6.You will not be charged a finance charge ondisputed amount unless there is no error.
Credit Dispute: Next Level
•Alternative disputeresolution (ADR) uses aneutral third party.
oNegotiation
oMediation
oArbitration
•Filing a lawsuit
oSmall claims court
oClass action lawsuit
Prevent Credit Card Fraud
•Carry only the cards you need
•Verify all purchases
•Close inactive accounts
•Keep a list of credit cards
and phone #’s
•Do not loan your credit card to others
•Use only secure websites to buy online
•Monitor your credit activity online
•Do not give your information over the phone oremail!**rate in order of importance
Credit Scams
•Credit repair scams:when someone offers to“fix” your credit rating
•Identity theft: whensomeone uses yourpersonal information tocommit fraud or othercrimes.
What should I do if my identity has been stolen?
Close credit and bank accounts, place a fraud alert on yourcredit report, file a complaint with FTC and local police.
Focus On . . .
Telemarketing Fraud
•To protect yourself, know the danger signs
oExamples: upfront fees, pressure to actimmediately, no written documentation
•Use a credit card in case you need to disputethe charge later
•Be cautious when dealing with unknowncompanies
•Use caller ID to avoid unwanted calls
Page 287 of textbook
What Help Is Available?
•Federal agencies
oFederal Trade Commission (FTC) Bureau ofConsumer Protection
oU.S. government (www.usa.gov)
oConsumer Action Handbook
oConsumer Financial Protection Bureau
oFederal Bureau of Investigation (FBI)
•State agencies
Consumer Advocacy Groups
Better BusinessBureau
Promotes responsible business practices in themarketplace to build trust between buyers and sellers
Consumer Action
Promotes consumer rights, publishes educationalmaterials, and advocates for consumers in the mediaand before lawmakers
ConsumerFederation ofAmerica
Works to advance pro-consumer policies on a varietyof issues before state and federal legislatures,regulatory agencies, and the courts
Consumers Union
Provides advice about products and services in itspublication Consumer Reports
National ConsumersLeague
Sponsors the Fraud Center and addresses a widerange of issues in the marketplace
Public Citizen
Addresses issues such as the consumers’ right toseek redress; clean and safe energy sources; andstrong health, safety, and environmental laws
Nonprofit organizations that promote consumer rights
What Problems Arise from Debt?
•Credit delinquency
•Collection agencies(unlawful to call you atwork)
•Judgment
•Garnishment (paycheckwithheld)
•Repossession andforeclosure
Consumer Protection Laws
•Fair Credit ReportingAct
•Truth-in-Lending Act
•Credit Card Act of2009
•Fair Credit Billing Act
•Equal Credit Opportunity Act
•Fair Debt Collection Practices Act
Define the terms listed above. Textbook page 298
What is Bankruptcy?
Bankruptcy: a legal procedure to relieve aperson of excessive debt
•It can be voluntary or involuntary
•It gives debtors a fresh start
•It helps ensure fair treatment for creditors
•It should be a last resort because itdamages your credit rating
*Stays on your credit reportfor up to 10 years
Avoiding Bankruptcy
•Credit counseling
oSets up a budget and arranges apayment plan
•Debt management
oCreates a plan to pay off debt
oDebtor must turn over checkingaccount and give up credit cards
•Debt consolidation
oProcess of getting one loan topay off all debts
* You are required to receive credit counselingwithin six months of filing for bankruptcy.
Types of Bankruptcy
Chapter 7
oAlso called straight or liquidation bankruptcy
oInvolves the forfeiture of assets in exchange fordischarge of debts
oAllows for exemptions, or property that a debtordoes not have to forfeit, such as tools of trade
Assets sold to repay debt, remaining debts aredischarged.
Open textbook to page 292: What can and can not bedischarged?
Types of Bankruptcy
•Chapter 11 (Businesses)
oAlso called a reorganization
oReorganization of debt as decided by the court.
oAllows a business to remain viable
•Chapter 13
oAlso called individual debt adjustment
oInvolves a 3- to 5-year court approved repaymentplan for some of the debt
oGood source of steady income (no interest or late fees)
oIf you don’t qualify for Chapter 7, this may be an option
Credit Problems Activity
•Read each scenario and provide advicefor each person based on what you justlearned about credit counseling andbankruptcy.
Exit Question
•Why should you avoid bankruptcy at allcosts?