Scams, Schemes and identity theft

1. Business Foundations – Personal Finance Unit Scams, Schemes and identity theft

2. Rent-to-Own • Companies who rent and sell appliances, furniture and electronic products • Advantages • Can return product after certain time period • Allows rental for short period of time • Disadvantages • Costs 2-5 times as much as purchasing from department store!!! (rate can be over 100%)

3. Payday Loan • Allows a person to get cash until payday with NO credit check • Postdated check for repayment; APR can be 500% or higher • Recent regulations on Payday Loans • Easy to fall in financial trouble trying to pay off loan; can be cycle of debt

4. Pyramid Scam • Participants receive payment for recruiting additional participants • Example • Selling telephone cards • Buying clubs • Chain letters • Mail order operations • Pyramid schemes are illegal

5. College Financial Aid Scams • Need to pay up front fees for organization to find scholarships for you • Use guidance counselors and college financial aid officers – they know what’s good for you!

6. Credit Repair Schemes • Company advertises it can repair your bad debt and requires a fee up front. • Poor credit history CAN NOT be repaired

7. Loan Scam • Debt consolidation – rolling all of your debt into one payment. • Specific information is rarely given – usually only 1-800 number! • Requires fee to be paid before loan money received

8. Identity Theft • Electronic kidnapping? • Using YOUR information to open new accounts in their name. • ILLEGAL!

9. Reduce Identity Theft • Sign your credit/debit cards as soon as they arrive • Keep a separate record of account numbers, expiration dates and phone numbers of each issuing company • Open bills promptly and check information • Immediately call credit card company if your cards are lost or stolen • Do NOT give your account number out over the phone unless you can verify the call is coming from a reputable source