Daily Information

Objectives:

1.Explain how to dispute errors on billing statements2.Recognize credit scams and ways to protect yourself.

Warm Up:

Create a caption for the picture below

Agenda:

1.Warm up2.Vocab.3.Resolving Credit P.P.4.TPS5.Consumer Advocacy Groups6.Bottom Line

Credit Cards: Error and Fraud

• Disputing a charge: the process of informing a credit company of an error on your billo Document all steps of your dispute and send

a letter to the credit company

• Credit card fraud: when someone uses your credit account to steal money or goodso Notify 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. Error must be corrected or explained in 90 days.

4. No collection letters will be sent or action taken while the charge is being disputed.

5. You are still responsible for other items on your bill.

6. You will not be charged a finance charge on disputed amount unless there is no error.

Credit Dispute: Next Level

• Alternative dispute resolution (ADR) uses a neutral third party. o Negotiationo Mediationo Arbitration

• Filing a lawsuito Small claims courto Class 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 or

email! **rate in order of importance

Credit Scams• Credit repair scams:

when someone offers to “fix” your credit rating

• Identity theft: when someone uses your personal information to commit fraud or other crimes.

What should I do if my identity has been stolen? Close credit and bank accounts, place a fraud alert on your credit report, file a complaint with FTC and local police.

Focus On . . .

Telemarketing Fraud• To protect yourself, know the danger signs

o Examples: upfront fees, pressure to act immediately, no written documentation

• Use a credit card in case you need to dispute the charge later

• Be cautious when dealing with unknown companies

• Use caller ID to avoid unwanted calls

Page 287 of textbook

What Help Is Available?

• Federal agencieso Federal Trade Commission (FTC) Bureau of

Consumer ProtectionoU.S. government (www.usa.gov)oConsumer Action HandbookoConsumer Financial Protection Bureauo Federal Bureau of Investigation (FBI)

• State agencies

Consumer Advocacy GroupsBetter Business Bureau

Promotes responsible business practices in the marketplace to build trust between buyers and sellers

Consumer Action Promotes consumer rights, publishes educational materials, and advocates for consumers in the media and before lawmakers

Consumer Federation of America

Works to advance pro-consumer policies on a variety of issues before state and federal legislatures, regulatory agencies, and the courts

Consumers Union Provides advice about products and services in its publication Consumer Reports

National Consumers League

Sponsors the Fraud Center and addresses a wide range of issues in the marketplace

Public Citizen Addresses issues such as the consumers’ right to seek redress; clean and safe energy sources; and strong health, safety, and environmental laws

Nonprofit organizations that promote consumer rights

What Problems Arise from Debt?

• Credit delinquency

• Collection agencies (unlawful to call you at work)

• Judgment

• Garnishment (paycheck withheld)

• Repossession and foreclosure

Consumer Protection Laws

• Fair Credit Reporting Act

• Truth-in-Lending Act

• Credit Card Act of 2009

• 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 a

person 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 it damages

your credit rating

*Stays on your credit report for up to 10 years

Avoiding Bankruptcy• Credit counseling

o Sets up a budget and arranges a payment plan

• Debt managemento Creates a plan to pay off debto Debtor must turn over checking

account and give up credit cards

• Debt consolidationo Process of getting one loan to

pay off all debts

* You are required to receive credit counseling within six months of filing for bankruptcy.

Types of Bankruptcy

Chapter 7 o Also called straight or liquidation bankruptcyo Involves the forfeiture of assets in exchange for

discharge of debtsoAllows for exemptions, or property that a debtor

does not have to forfeit, such as tools of trade

Assets sold to repay debt, remaining debts are discharged.

Open textbook to page 292: What can and can not be discharged?

Types of Bankruptcy

• Chapter 11 (Businesses) o Also called a reorganizationoReorganization of debt as decided by the court.o Allows a business to remain viable

• Chapter 13 o Also called individual debt adjustmento Involves a 3- to 5-year court approved repayment

plan for some of the debt oGood source of steady income (no interest or late fees)o If you don’t qualify for Chapter 7, this may be an option

Credit Problems Activity

• Read each scenario and provide advice for each person based on what you just learned about credit counseling and bankruptcy.

Exit Question

• Why should you avoid bankruptcy at all costs?