The days of receiving credit card solicitations in your mailbox on a weekly or even daily basis may be over… at least temporarily.
Facing increasing delinquencies, consumers who are already credit-stretched, industry competition and profit losses, credit card companies have pulled back the reins on mailbox pitches, reducing the number of direct mail offers by an average of nearly 14 percent in the first quarter of 2008 compared to the same period in 2007.
According to a report in MSNBC.com, JPMorgan Chase reduced its mail volume by 34 percent, HSBC had a 23.3 percent reduction, and Bank of America and Capital One both cut mail volume by more than 17 percent.
Mortgage and loan companies cut their direct mailings by 6 percent. A handful of companies, including American Express, Discover and Washington Mutual, increased their volume slightly.
Of course, while there is a measurable decline in direct mail volume from banks and consumer lenders, there still is an enormous amount of direct mail solicitations landing in mailboxes, with an estimated 4.2 billion pieces of mail sent by financial service companies. According to Direct Marketing Association, U.S. banks and credit institutions spent $13.4 billion last year on direct marketing, generating $178.8 in sales.
Thursday, July 31, 2008
Tuesday, July 29, 2008
Debt Collectors Using New Strategies and Technologies to Get Your Cash
As the economy slides and consumer debt and delinquencies rise, debt collectors are having an increasingly difficult time coercing cash-strapped people to fork over payments. Many are getting more creative – and often, more aggressive – in their efforts to collect payments.
According to an article in Newsweek, some collectors are even resorting to the types of harassing tactics that were made illegal years ago.
See You in Court
Collectors are taking people to court more often these days. Interestingly, some are going to court to defend themselves. Minnesota Attorney General Lori Swanson told Newsweek that she sued a debt collection agency for using illegal tactics, and expects this to be a growing trend among other AGs.
Debt Profiling
New software helps collectors assess debtors "most likely to pay big" by calculating what type of debt is owed, how old it is, how big it is, when the account was opened, credit reports, bankruptcy filings and the debtor's socioeconomic status.
Consumer advocates believe the software unfairly profiles debtors, as the data shows almost all of the people sued by debt collectors lived in low income, predominantly African American communities.
Telephone Tech
Collectors are using offshore call centers and automated dialers to find debtors. And about half of collectors are using automated calling systems with recorded messages. The problem with this method, however, is that many calls don't disclose who the debt collector is and what the call is about. Courts have held that this is deceptive. Even more problematic is that recorded messages may be left on a voice mail system used by more than one person – which could be considered unauthorized disclosure of the debt to a third party.
More and more collectors are calling cell phones – which often means that those in the lower-income bracket are paying for minutes spent on calls from collectors.
Negotiating Payment Plans
Under the philosophy of "a bird in the hand is worth two in the bush," collectors are becoming more open to negotiating partial payment plans.
Remember: debt collection agencies must identify themselves, and if you request it, they must prove that the debt is, in fact, yours.
According to an article in Newsweek, some collectors are even resorting to the types of harassing tactics that were made illegal years ago.
See You in Court
Collectors are taking people to court more often these days. Interestingly, some are going to court to defend themselves. Minnesota Attorney General Lori Swanson told Newsweek that she sued a debt collection agency for using illegal tactics, and expects this to be a growing trend among other AGs.
Debt Profiling
New software helps collectors assess debtors "most likely to pay big" by calculating what type of debt is owed, how old it is, how big it is, when the account was opened, credit reports, bankruptcy filings and the debtor's socioeconomic status.
Consumer advocates believe the software unfairly profiles debtors, as the data shows almost all of the people sued by debt collectors lived in low income, predominantly African American communities.
Telephone Tech
Collectors are using offshore call centers and automated dialers to find debtors. And about half of collectors are using automated calling systems with recorded messages. The problem with this method, however, is that many calls don't disclose who the debt collector is and what the call is about. Courts have held that this is deceptive. Even more problematic is that recorded messages may be left on a voice mail system used by more than one person – which could be considered unauthorized disclosure of the debt to a third party.
More and more collectors are calling cell phones – which often means that those in the lower-income bracket are paying for minutes spent on calls from collectors.
Negotiating Payment Plans
Under the philosophy of "a bird in the hand is worth two in the bush," collectors are becoming more open to negotiating partial payment plans.
Remember: debt collection agencies must identify themselves, and if you request it, they must prove that the debt is, in fact, yours.
Wednesday, July 23, 2008
Identity Theft Alert: Alaska Air Customers' Credit Cards Misused
If you bought tickets from Alaska or Horizon airlines, pay close attention to your credit card statements. (You should be doing this anyway, you know.)
About 1,500 customers have been notified that their credit cards were misused when a call center employee diverted some payments to a personal account.
The airlines' parent company is working with police to resolve the investigation and have stated that customers are not responsible for repaying the diversions that took place between August 2006 and June 2008.
About 1,500 customers have been notified that their credit cards were misused when a call center employee diverted some payments to a personal account.
The airlines' parent company is working with police to resolve the investigation and have stated that customers are not responsible for repaying the diversions that took place between August 2006 and June 2008.
Wednesday, July 16, 2008
I Never Said You Could Pull My Credit!
Dear Credit Mama,
I got a copy of my credit reports and noticed what appears to be a list of companies that have pulled my credit… companies that I had contacted about their service but never actually did business with or authorized to pull my credit. Don't businesses have to get permission to run a credit report? And should I do anything about this?
-- Danielle
Dear Danielle,
Yes, you are correct – under the Fair Credit Reporting Act, businesses must have your permission or a "permissible purpose" to pull someone's credit. (Permissible purpose means they have a legitimate need for the information.)
Merely inquiring about a service does not give the company the right to run your credit report. Companies should tell that they are pulling your credit or ask for your permission first. Employers must get written permission from you in order to check your credit.
These types of inquiries – known as "hard" inquiries – can have a negative impact on your credit score and will typically remain on your credit report for a year, sometimes up to two years.
Although the impact may be relatively minimal -- five points or so per inquiry -- recent studies show that an increase of just 30 points in one's credit score can have significant financial benefits… which means every point in your favor is important.
Hard vs. Soft Inquiries
Hard inquiries include requests for new credit (credit card or loan, or increase in credit card limit), employment credit checks, and applications for certain services such as cell phones or utilities.
Soft inquiries occur when your creditor reviews your files, creditors extend you offers of credit, or when you pull your own credit.
Action Steps
When inquiring about services, be upfront and let them know that you do not want your credit pulled without your permission.
If you believe that the companies listed on your credit report did not have a legitimate reason to access your credit, you can contact the company and request that they correct the information. You also can contact the credit bureaus directly to correct your report.
If the company is in the wrong and refuses to correct the information, you can sue them for up to $1,000 in statutory damages for violations of the Fair Credit Reporting Act.
I got a copy of my credit reports and noticed what appears to be a list of companies that have pulled my credit… companies that I had contacted about their service but never actually did business with or authorized to pull my credit. Don't businesses have to get permission to run a credit report? And should I do anything about this?
-- Danielle
Dear Danielle,
Yes, you are correct – under the Fair Credit Reporting Act, businesses must have your permission or a "permissible purpose" to pull someone's credit. (Permissible purpose means they have a legitimate need for the information.)
Merely inquiring about a service does not give the company the right to run your credit report. Companies should tell that they are pulling your credit or ask for your permission first. Employers must get written permission from you in order to check your credit.
These types of inquiries – known as "hard" inquiries – can have a negative impact on your credit score and will typically remain on your credit report for a year, sometimes up to two years.
Although the impact may be relatively minimal -- five points or so per inquiry -- recent studies show that an increase of just 30 points in one's credit score can have significant financial benefits… which means every point in your favor is important.
Hard vs. Soft Inquiries
Hard inquiries include requests for new credit (credit card or loan, or increase in credit card limit), employment credit checks, and applications for certain services such as cell phones or utilities.
Soft inquiries occur when your creditor reviews your files, creditors extend you offers of credit, or when you pull your own credit.
Action Steps
When inquiring about services, be upfront and let them know that you do not want your credit pulled without your permission.
If you believe that the companies listed on your credit report did not have a legitimate reason to access your credit, you can contact the company and request that they correct the information. You also can contact the credit bureaus directly to correct your report.
If the company is in the wrong and refuses to correct the information, you can sue them for up to $1,000 in statutory damages for violations of the Fair Credit Reporting Act.
Friday, July 11, 2008
Consumer Knowledge About Credit Improving… But Still Poor
Consumer awareness of credit scores is improving, but not enough to prevent $28 billion in credit card finance charges, according to a survey by the Consumer Federation of America and Washington Mutual, Inc.
According to the report, most Americans know why credit scores go up and down – for example, two-thirds understand that paying off a large credit card balance improves credit scores, and 80 percent know that missing monthly credit card payments lowers scores. And just about half of Americans have obtained their credit scores in the past two years.
However, the findings show that less than a third of Americans understand that a credit score reflects the risk that a consumer won't pay back a loan – most believe that it reflects factors such as their overall financial resources and that demographic factors such as income, education and age affect their score. And 59 percent did not know that maxxing out a credit card would lower their credit score.
According to estimates by Washington Mutual, a boost in one's credit score by 30 points would save a consumer $105 a year in credit card finance changes, as financial institutions offer lower interest rates to consumers with better scores. That translates to annual savings of $28 billion for all consumers.
To learn more about credit, check out the free webinars under "Your Credit Mama Recommends…"
According to the report, most Americans know why credit scores go up and down – for example, two-thirds understand that paying off a large credit card balance improves credit scores, and 80 percent know that missing monthly credit card payments lowers scores. And just about half of Americans have obtained their credit scores in the past two years.
However, the findings show that less than a third of Americans understand that a credit score reflects the risk that a consumer won't pay back a loan – most believe that it reflects factors such as their overall financial resources and that demographic factors such as income, education and age affect their score. And 59 percent did not know that maxxing out a credit card would lower their credit score.
According to estimates by Washington Mutual, a boost in one's credit score by 30 points would save a consumer $105 a year in credit card finance changes, as financial institutions offer lower interest rates to consumers with better scores. That translates to annual savings of $28 billion for all consumers.
To learn more about credit, check out the free webinars under "Your Credit Mama Recommends…"
Tuesday, July 8, 2008
Thieves Steal Gas With Stolen Sweetbay/Hannaford Customer Credit Cards
With gas prices floating over $4 a gallon and diesel approaching $5 a gallon, fuel is a valuable commodity that is attracting thieves along the East Coast.
The arrest of five Florida men who drove pickup trucks with hidden gas tanks that could hold up to 1,000 gallons of fuel brought to light a disturbing trend – the use of stolen credit card numbers to purchase excessive quantities of fuel at gas stations in several states. Murphy Oil, which runs Wal-Mart gas stations, reported losses of $1 million in one month as a result of similar gas thefts.
New cases involving the 4.2 million stolen credit and debit card numbers from the recent Hannaford/Sweetbay breach are being investigated as the crooks continue to try to convert the stolen numbers to cash.
If you used a credit or debit card at Sweetbay or Hannaford stores between Dec. 7 and March 10, keep a close eye on your bank or credit card statements and immediately challenge any purchases that are not yours.
The arrest of five Florida men who drove pickup trucks with hidden gas tanks that could hold up to 1,000 gallons of fuel brought to light a disturbing trend – the use of stolen credit card numbers to purchase excessive quantities of fuel at gas stations in several states. Murphy Oil, which runs Wal-Mart gas stations, reported losses of $1 million in one month as a result of similar gas thefts.
New cases involving the 4.2 million stolen credit and debit card numbers from the recent Hannaford/Sweetbay breach are being investigated as the crooks continue to try to convert the stolen numbers to cash.
If you used a credit or debit card at Sweetbay or Hannaford stores between Dec. 7 and March 10, keep a close eye on your bank or credit card statements and immediately challenge any purchases that are not yours.
Thursday, July 3, 2008
Are You a Recent Victim of Identity Theft? If So, the FTC Wants to Hear From You.
The Federal Trade Commission has announced in the Federal Register that it will conduct a wide-ranging study of identity theft victims in order to assess the current remedies available to them following the crime. Identity theft victims who have contacted the FTC between January 1 and May 30, 2008, will be asked about their experiences after contacting one or more credit reporting agencies and when they sought to use their FACT Act rights.
The FACT Act (Fair and Accurate Credit Transactions Act of 2003) gives consumers certain rights in dealing with identity theft, including the ability to place fraud alerts on their credit files if they are, or suspect they may become, victims of identity theft, to block information on their credit reports that resulted from identity theft, and obtain copies of their credit reports free of charge.
For the seventh year in a row, identity theft has been the top consumer fraud complaint handled by the FTC. The agency's recent report shows that of 813,899 total complaints received in 2007, 258,427 (32%) were related to identity theft. The monetary losses related to identity fraud totals more than $1.2 billion; the median monetary loss per person was $349. Not included in this is the time-value equivalent (for example, the hours spent on the phone with credit bureaus, creditors and police, or monitoring bank and credit accounts for fraudulent activity), which can be significant.
And it appears that even with data breach notification laws in place by nearly all of the states, it has not slowed the proliferation of identity theft. Part of this is attributed to consumers ignoring data breach notification letters. But in most instances, inadequate security practices by companies handling sensitive data are the culprit.
The deadline for submitting comments is Sept. 2, 2008. Comments filed in electronic form should be submitted at: https://secure.commentworks.com/ftcfactasurvey. To ensure that the Commission considers an electronic comment, you must file it on the web-based form.
*** Remember: If you had any type of loan account between January 1987 and May 28, 2008, you are entitled to learn your credit score – free of charge – and get at least six months of a monitoring service from credit reporting giant TransUnion. The monitoring service would provide e-mail notification of late payment reports or accounts opened in your name – red flags that would indicate identity theft. You can file a claim by visiting http://www.listclassaction.com/ or calling 866-416-3470.
The FACT Act (Fair and Accurate Credit Transactions Act of 2003) gives consumers certain rights in dealing with identity theft, including the ability to place fraud alerts on their credit files if they are, or suspect they may become, victims of identity theft, to block information on their credit reports that resulted from identity theft, and obtain copies of their credit reports free of charge.
For the seventh year in a row, identity theft has been the top consumer fraud complaint handled by the FTC. The agency's recent report shows that of 813,899 total complaints received in 2007, 258,427 (32%) were related to identity theft. The monetary losses related to identity fraud totals more than $1.2 billion; the median monetary loss per person was $349. Not included in this is the time-value equivalent (for example, the hours spent on the phone with credit bureaus, creditors and police, or monitoring bank and credit accounts for fraudulent activity), which can be significant.
And it appears that even with data breach notification laws in place by nearly all of the states, it has not slowed the proliferation of identity theft. Part of this is attributed to consumers ignoring data breach notification letters. But in most instances, inadequate security practices by companies handling sensitive data are the culprit.
The deadline for submitting comments is Sept. 2, 2008. Comments filed in electronic form should be submitted at: https://secure.commentworks.com/ftcfactasurvey. To ensure that the Commission considers an electronic comment, you must file it on the web-based form.
*** Remember: If you had any type of loan account between January 1987 and May 28, 2008, you are entitled to learn your credit score – free of charge – and get at least six months of a monitoring service from credit reporting giant TransUnion. The monitoring service would provide e-mail notification of late payment reports or accounts opened in your name – red flags that would indicate identity theft. You can file a claim by visiting http://www.listclassaction.com/ or calling 866-416-3470.
Wednesday, July 2, 2008
Credit Card Business "Rife With Scams"
Dear Credit Mama,
First, the credit card companies started changing the payment due dates on me. I used to get the bills about three weeks in advance of the due date. Then suddenly, it was two weeks. Now sometimes it seems like less than that.
I'm smart enough to always look at the due date right when the bill comes in and mark it on my bill-pay calendar. But last month they hit me with a late payment charge… when I KNOW I sent the check with plenty of time for it to arrive at the processing company. I'm lucky that this wasn't a card with a 0% "provisional" rate since that would have been bumped to 32% with this one wrongly-processed payment. I feel like their game now is to nickel-and-dime any extra fees they can squeeze out of the average consumer! Is it just me??
-- Joe "Fed UP" in N.C.
Dear Joe,
If you think that the credit card companies aren't necessarily on the side of consumers, you're right. The tactics that have been used increasingly over the past several years have capitalized on the tendencies of consumers not to look at their bills too closely, not to question extra fees, and to pay their bills as close to the due date as possible.
Thought I'd share an interesting comment that was posted on a diary on the dailykos.com blog. The author, KeepingItBlueKrstna, gives an insider's perspective on what it's like to work at a credit card company and offers some nuggets of advice:
I worked for a major credit card company, which has since been bought and then bought again, but it was one of the major players.
When I worked there, it was clear that the processing company we used was late posting payments that had arrived on time. They did it all the time.
The Customer Service Reps brought it to the attention of management and it was escalated all the way to the CEO. So did they fix the problem? No. They made a video (I kid you not) of how efficient the payment processing company was and how their systems worked and held a meeting to show it to us. They told us, sure you get a lot of calls about this, but it's because there are only so many possible due dates, and you'll get a wave of calls about late fees after certain due dates. They said "It's the customer's fault" (or the post office's fault) and don't waive too many late fees.
This was a large scale fraud like the one described above where statements are mailed late. And it wasn't just the late fee revenue they were after. They used people's "late" payment history as an excuse to raise their interest rate on the card to penalty levels, even if that was the only late payment. In some cases, they used that one "late" payment as an excuse to change someone to a card with an annual fee instead of none.
The credit card business is rife with scams like these, masquerading as a normal way of doing business.
I strongly advise paying your credit card bill online within the terms posted there. If it says your payment will be posted in 3 days, make it 4 days before the due date. This is, in my opinion, the only safe way to avoid late fees. If you are mailing your payment, no matter how careful you are, you could get screwed.
If you get an unfair late fee, you should not only call to ask for the fee to be reversed, but also at least ask to have that late payment wiped off your payment history. (We were able to do that - it was called a re-age, but don't use that term - someone may think it's fishy that you know it.)
We were told repeatedly only to waive fees for the very best customers and if we waived or re-aged too many accounts, we would get written up. But I did it all the time and never got written up. Especially for nice people.
First, the credit card companies started changing the payment due dates on me. I used to get the bills about three weeks in advance of the due date. Then suddenly, it was two weeks. Now sometimes it seems like less than that.
I'm smart enough to always look at the due date right when the bill comes in and mark it on my bill-pay calendar. But last month they hit me with a late payment charge… when I KNOW I sent the check with plenty of time for it to arrive at the processing company. I'm lucky that this wasn't a card with a 0% "provisional" rate since that would have been bumped to 32% with this one wrongly-processed payment. I feel like their game now is to nickel-and-dime any extra fees they can squeeze out of the average consumer! Is it just me??
-- Joe "Fed UP" in N.C.
Dear Joe,
If you think that the credit card companies aren't necessarily on the side of consumers, you're right. The tactics that have been used increasingly over the past several years have capitalized on the tendencies of consumers not to look at their bills too closely, not to question extra fees, and to pay their bills as close to the due date as possible.
Thought I'd share an interesting comment that was posted on a diary on the dailykos.com blog. The author, KeepingItBlueKrstna, gives an insider's perspective on what it's like to work at a credit card company and offers some nuggets of advice:
I worked for a major credit card company, which has since been bought and then bought again, but it was one of the major players.
When I worked there, it was clear that the processing company we used was late posting payments that had arrived on time. They did it all the time.
The Customer Service Reps brought it to the attention of management and it was escalated all the way to the CEO. So did they fix the problem? No. They made a video (I kid you not) of how efficient the payment processing company was and how their systems worked and held a meeting to show it to us. They told us, sure you get a lot of calls about this, but it's because there are only so many possible due dates, and you'll get a wave of calls about late fees after certain due dates. They said "It's the customer's fault" (or the post office's fault) and don't waive too many late fees.
This was a large scale fraud like the one described above where statements are mailed late. And it wasn't just the late fee revenue they were after. They used people's "late" payment history as an excuse to raise their interest rate on the card to penalty levels, even if that was the only late payment. In some cases, they used that one "late" payment as an excuse to change someone to a card with an annual fee instead of none.
The credit card business is rife with scams like these, masquerading as a normal way of doing business.
I strongly advise paying your credit card bill online within the terms posted there. If it says your payment will be posted in 3 days, make it 4 days before the due date. This is, in my opinion, the only safe way to avoid late fees. If you are mailing your payment, no matter how careful you are, you could get screwed.
If you get an unfair late fee, you should not only call to ask for the fee to be reversed, but also at least ask to have that late payment wiped off your payment history. (We were able to do that - it was called a re-age, but don't use that term - someone may think it's fishy that you know it.)
We were told repeatedly only to waive fees for the very best customers and if we waived or re-aged too many accounts, we would get written up. But I did it all the time and never got written up. Especially for nice people.
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