Archive for the ‘scams’ Category
Tuesday, November 17th, 2009
The Nashua Telegraph of New Hampshire has a humdinger of a court story this morning. (I love local papers, and am hoping the internet will eventually help them thrive rather than killing them. Really, when would I have read The Nashua Telegraph in print?) Anyway, one Meredith Moore-Flores, 31, divorced mother of four, was sentenced to one to five years in state prison for stealingÂ $62,000 from her employer.
Moore-FloresÂ confessed to skimming the funds from Insight Technologies by filing bogus expense reports. (She also claimed to be a student at a local college to score tuition reimbursement.) Assistant Rockingham County Attorney Amy Connolly, the Telegraph noted, said Moore-Flores had been involved in similar schemes at two previous employers in Massachusetts, andÂ was making $1,000 a month restitution to one of them.
Moore-Flores told the judge that she has a “spending addiction” for which she is now receiving therapy.Â According to the Nashua Telegraph, Moore-Flores said: “It isnâ€™t just about spending money you donâ€™t have or maxing out your credit cards. Itâ€™s an attempt to buy happiness â€¦ and push aside feelings of self-doubt.”
"Confessions of a Shopaholic" looked at the lighter side of spending addiction.
In a study published in the Journal of Personality and Social Psychology,Â Â researchers Abhishek Srivastava, Edwin Locke and Kathryn Bartol asked more than 250 graduate students and 145 entrepreneurs how important financial success was versus their other goals, and what their motives were for making money. TheÂ researchersÂ offered alternatives such as security, the ability to donate to charityÂ or pursue leisure activities.
Among respondents who placed a heavy emphasis on materialism, the primeÂ reasons offered were social comparison (“To have a house and car that are better than those of my neighbor”), seeking power, showing off, Â and overcoming self-doubt (“To prove that I am not as dumb as some people assumed.”) The researchers foundÂ a negative relationship between the importance of money and subjective well-being because of the motives driving acquisitive behaviors. (Interestingly,Â Moore-Flores was also an entrepreneur who owned a consignment shop.)
Could it be a genetic predisposition — something about the way neurotransmitters fire off in the brain, or the level of testosteroneÂ – that causes people to see money as the fast ticket to alpha dog status? Is it some childhood experience that tells themÂ money can buyÂ enough power andÂ stuffÂ to fill a gaping hole of self-doubt? Several recentÂ studies
suggest people who are sad and self-absorbed spend more.
The tragedy, of course, is when shopaholics have financial responsibility for people other than themselves.Â Â Moore-Flores’ attorney had asked for minimal jail time because she is the primary caretaker for her kids — ages 8, 6, 4, and 2. AsÂ the tearful mother toldÂ the judge: â€œI thought, â€˜How did I get to this point in my life? How do I explain this to my children?â€™ â€
Do you think Moore-Flores should get a minimal sentence or the max?Â DoesÂ a “spending addiction” excuse her behavior?
Wednesday, October 28th, 2009
Scammers are trying to take advantage of the rash of bank failures — more than 100 so far this year — by sending outÂ fraudulentÂ emails that appearÂ to come from the Federal Deposit Insurance Corporation (FDIC).
On its website this week, the FDIC warned ofÂ a possible phishing scam — an attempt to collect personal information, which is then used to gain access to consumer’s accounts or to conduct identity theft.
The subject line of the e-mail states: â€œcheck your Bank Deposit Insurance Coverage.â€ The e-mail tells recipients that, “You have received this message because you are a holder of a FDIC-insured bank account. Recently FDIC has officially named the bank you have opened your account with as a failed bank, thus, taking control of its assets.â€
The e-mail then asks recipients to â€œvisit the official FDIC website and perform the following steps to check your Deposit Insurance Coverageâ€ — and a fraudulent link is provided. It then instructs recipients to â€œdownload and open your personal FDIC Insurance File to check your Deposit Insurance Coverage.â€
The FDIC says the email is an attempt to collect personal or confidential information, which may be used to steal the recipient’s identity or gain unauthorized access toÂ online accounts. The FDIC does not send unsolicited e-mails to consumers — so if you see it, delete it!
Tuesday, October 27th, 2009
Parents will be interested in a story in The New York Times today about Baby Einstein videos. Walt Disney Company is offering a refund of $15.99 each for up to four videosÂ purchased between June 5, 2004 and September 5, 2009. For those who’ve never seen one, Baby Einstein videos feature bright colors, puppets,Â flashy graphics andÂ classical music. The company, founded in 1997, claimed the products were educational for babies. Disney bought the firm in 2001
But the American Association of Pediatrics recommends that children under age 2 do not spend any time in front of a screen. I wrote about this issueÂ in 2007 when I interviewed Susan Gregory Thomas,Â author of “Buy Buy Baby,” an excellent expose of the children’s “educational” video andÂ toyÂ business. Some child development experts even suggest there is a connection betweenÂ early exposure to videos and attention deficit disorder (ADD).
Back in 2006, the Campaign for a Commercial-Free Childhood filed a complaint with the Federal Trade Commission over DVDs marketed to babies. As a result, the Times reports, the companies dropped the word “educational” from their marketing materials.Â The Campaign for a Commercial-Free Childhood thought that didn’t go far enough, and last year threatened a class-action suit for unfair and deceptive practices unless Disney offered a refund to all consumers who purchased the video since 2004. That’s now part of a settlement; click here for information on how to get your refund.
Thursday, October 1st, 2009
If there is an industry rife with streamlining possibilities for smart entrepreneurs, it’s got to be the cell phone industry. Last week I pulled the charger plug out of my Palm Treo and the entire bottom of the device popped out with it. I headed over to Verizon with a simple request: Please fix my phone or sell me the exact same model, and I willÂ go along my merry way.
This being the cell phone industry, neither option was available. Instead, the salesman suggested, I could exchange my dead Treo for a new Blackberry, which was free — but only if I mailed in the $100 rebate, and agreed to extend my existing contract for another two years. But this would require learning an entirely new phone, I said, which doesn’t even have a touch screen. What if I don’t like the Blackberry?
No problem, he replied, you have 30 days to return it, no questions asked –Â although it will cost you a $35 restocking fee. And if I change my mind after 30 days and decide to switch to, say, an Iphone? Then it would be the restocking fee plus $175 ifÂ you break the new extended contract agreement, he said.Â But no worries, it’s pro-rated.
Huh? Can anybody make this industry simply give the customer what they want?
And here’s a question for youÂ IPhone users out there. Tell me if the product is revolutionary enough and the experience life-changing enough to warrant returning my new Blackberry (with the no-touch screen) in the 30-day window. As regular readers know, I’m a practical gal. I buy products (like used cars andÂ generic groceries) because they are useful and do the job.Â Neither myÂ self-image nor my self-esteem are related to said purchases, and IÂ don’t even know who the Joneses are, much pay attention toÂ what they think.
However, I keep running across such interesting IPhone apps that I am wondering ifÂ this productÂ has crossed the threshhold from luxurious item to impress the neighbors to useful item that will grow in usefulness over time.Â Would love to hear your response…within 30 days if possible.
Wednesday, September 30th, 2009
In my moral values class at Seton Hall University, we were discussing some of theÂ universal moral themes that researchers believe may be genetically hard-wired (see this article by Harvard psychologist Steven Pinker in The New York Times Magazine). These are values thatÂ when violated prompt a universal moral reaction orÂ a sense of outrage,Â across a variety of countries and cultures. The valuesÂ areÂ harm, purity, community/group loyalty, authority and fairness.
I think fairness is the underlying value thatÂ provokesÂ disgust when we feel nickel and dimed by the products we buy and the services we use. Perfect example: Picture Day this week at school. Lifetouch, the vendor that seems to have a monopoly on school pictures in New Jersey, sent home the form to be filled out — photo sizes, back- grounds,Â cropping, retouching options,Â and an envelope for payment.
Frankly, I think school pictures are a waste of money,Â because I take waaaay better photos of my children. But the kidsÂ really want them, and of course we want the class picture, so I pony up $28 for each kid to getÂ some 5 x 7s andÂ 2 x 3s — that usually come home and go right into the drawer with the last eight years of school pictures.
This year, Lifetouch began charging $3 if you order a background in any other color than “traditional gray.” Now traditional gray would be better described asÂ ”your child’s school picture will be takenÂ against a concrete prison wall.” Â If you want blue,Â or fakey reddish fall foliage, or the somewhat sappy patriotic background with the American eagle, it’s an extra $3.
Well anyone who’s ever used photoshop knows thatÂ it costs Lifetouch nothing to insert a grayÂ background orÂ a blue one. The unfairness, the outrage!Â I felt taken, cheated, nickled and dimed. Filling out the forms the night before the photos, I ordered the gray. My daughter protested — she wanted the blue. I fumed that I wasn’t going to pay a $3 rip-off fee to Lifetouch (and actually wrote that on the order form. I need to take some yoga classes or something).Â
The next morning I relented, and told my daughter if she really wanted the blue background I would throw another $3 in the envelope. “Nah,” she said. “It doesn’t really matter.” Interesting how the things weÂ desire immediately don’t seemÂ as important the next day. Perhaps I should pay Lifetouch $3 for a lesson in delayed gratification.
Thursday, July 9th, 2009
Bernard Madoff’s attorney said today he will not appeal his 150-year prison sentence. The Wall Street Journal had a moving piece last week called “Downsized Lives and Shattered Dreams” that profiled some of Madoff’s victims.
I was inspired by the story of Jesse Cohen, who livesÂ in Summit, NJ, a few miles from me. He’s a 50-year-old former bond traderÂ who built aÂ successful business, sold it andÂ gave the money to Madoff to invest.Â He lost it all, and his parents lost their savings as well. Cohen, the story said, recently took a math exam toÂ apply for a university program that turns former finance professionals into math teachers in three months. He past the test but is still looking for a position.
In other words, he has picked himself up, dusted himself off, found a new direction, and is pursuing it vigorously.Â He’s focused on how he will overcome a horrific situation over which he had no control.
In today’s Yahoo!Finance column, I interviewed Daryl Conner, an organizational development consultant who has been studying change for 35 years. He finds that people who successfully overcome negative situations and move gracefully through transitions have a number of character traits and behaviors in common.
AsÂ he writes in his book Managing at the Speed of Change:
“Assimilation is the process we use to adjust to the positive or negative implications of a major shift in our expectations. Assimilating is costly â€“ reduced intellectual energy, increased psychological stress, and diminished physical health and stamina. Resilient people have learned how to increase the number of their assimilation points and how to stay within their personal assimilation budget.” Click here to read my interview with Conner find out more about the strategies of resilient people.
Meanwhile, ifÂ you neededÂ yet anotherÂ good reason to pay off your credit cards in full, see today’s Wall Street Journal (sub. may be required.) Bank of America and J.P. Morgan Chase have notified a number of its customers that it will now tie their credit card interest rates are no longer fixed and will be a variable rate tiedÂ to the prime rate.Â Read the story here.Â Personally, I’m still get 0% rate offers in my mailbox. Has your credit card company changed the terms of your agreement? Comment here or email me at laura at laurarowley.com.
Monday, April 6th, 2009
Three federal agencies and state Attorneys General are cracking down on foreclosure fraud. There’s plenty of it following the announcement of President Obama’s $75 billion plan to help homeowners. If only we had had this level of attentionÂ during theÂ sub-prime mortgage debacle. In an interviewÂ on Bill Moyers Journal this weekend, University of Missouri professor and author William Black noted that in 2004 the Federal Bureau of Investigation publicly warned about “an epidemic of mortgage fraud, and if it was allowed to continue, it would produce a crisis at least as large as the Savings and Loan debacle.”
So why wasn’t anything done? After the 9/11 attacks, Black says, 500 white-collar crime specialists in the FBI (the folks who went after bad S&Ls in the early 90s) wereÂ moved to nationalÂ terrorism duties. That’s understandable — exceptÂ the Bush Administration refused to replace them. Virtually no one was watching the store as the mortgage industry — brokers, lenders, securitizers, investment bankers, ratings agencies — committed widespread fraud. You’ll also want to hear what Black has to say about Robert Rubin, Lawrence Summers and Phil Gramm aligning to block Brooksley Born, chair of the Commodity Futures Trading Commission,Â from regulating derivatives. (Other news reports say Alan Greenspan and Arthur Levitt also opposed Born.) Why are Rubin and SummersÂ still advising President Obama? Can we sweep the rascals out already?Â How aboutÂ having Born replace Summers? Click here to watch the interview.
While you’re at it, listen to this interviewÂ on National Public Radio’s Fresh Air,Â withÂ Frank Partnoy, former derivatives trader at Morgan Stanley and author of Fiasco: Blood in the Water on Wall Street. The bookÂ was just reissued in paperback (and out of stock on Amazon). It’s a clear-eyed examination ofÂ what de-regulation run amok looks like.
I recentlyÂ interviewed Robert Manning, professor at Rochester Institute of Technology and author of Credit Card Nation, about a wide range of scams.Â (I followed upÂ on my March 19 post about the “Card Services” fraudsters in this Yahoo!Finance column, exposing how the scam works.)
Manning told me he’s seeing a couple different version of the foreclosure rescue scams. Watch out for services that demand an upfrontÂ fee to process your application for foreclosure relief. â€œSome companies are charging $300 a pop just to talk to someone over the phone,â€ he says. â€œThe consumer really needs to be engaged with the service thatâ€™s being offered so they understand what it is the firm can do and what they canâ€™t do. Are they simply collecting information and passing it on to someone else, who passes it on to someone else?â€ Someone seeking foreclosure relief should be engaged with the decision-maker he says. See this information from the Center for Responsible Lending to avoid scams and click here to find a certified housing counselor in your area.
If you’ve been scammed, tell your story and help warn others. You can comment here or email me at laura at laurarowley.com.
Thursday, March 19th, 2009
Update: I tracked down the scam artists that I wrote about below and reported on their activities in this Yahoo!Finance column.
Twice in the last month or so I’ve received a call from a recorded voice that says, “This is your last chance to lower your credit card interest rates! Press one to lower your rate now.” Since I always pay off my cards in full, and the caller doesn’t identify the financial services company, I sensed a scam. Twice I have pressed “1″ on the phone and gotten a live voice; when I said, “Can you identify the company you are from and give me your phone number?” I was immediately disconnected on both occasions. When I called back the number on the caller ID, a recording said the number was unassigned.
Next time I’ll try a little subtlety to keep them talking, and report them to the Federal Trade Commission. I didn’t find this particular scam under the FTC‘s list of “credit and loan phone scams,” but itÂ could have been any number of things, such as identity theft or a credit consolidation scam, in which the firmÂ offers to negotiate with your creditors.Â You pay the consolidation company, whichÂ neverÂ pays your creditors andÂ disappears with your check.Â
Amid the recession, scams are multiplying. The FTC received 1.2 millionÂ consumer complaints in 2008. Identity theft accounted for one in four of those complaints. Watch out for work-at-home scamsÂ and foreclosure rescueÂ scams, among others.Â For a primer on recognizing and reporting phone fraud, click here.Â
In the meantime, here’sÂ thatÂ segment I did on the Weekend Today ShowÂ about someÂ legitimate websites that can help you learn about and better manage your finances.
Tuesday, February 12th, 2008
Back in 2007, I wrote a column about how creditors are seizing social security checks, despite a federal law prohibiting the practice. Now payday lenders have figured out a back-door way to do the same thing â€“ see this story in todayâ€™s Wall Street Journal.
Â The Journal interviewed a former worker for one of the biggest payday lenders. After reading his account, I canâ€™t help wondering: How do the people who work in the payday lending industry live with themselves? How does anyone who makes a buck exploiting the poor?
Saturday, January 26th, 2008
Itâ€™s no wonder that Bob Sullivanâ€™s new book, Gotcha Capitalism, is on the New York Times Bestsellers list this weekend. (See my Jan. 31 Yahoo!Finance column for a full review and interview with Sullivan). Columnist for MSNBCâ€™s Red Tape Chronicles, Sullivan has touched a nerve among consumers suffering from â€œsmall-print rage,â€ as he calls it.Â
AmericansÂ are bombarded with sneaky fees andÂ meaningless disclosure notices (Wells Fargoâ€™s fee schedule runs 55 pages). The banking industry, for example, made $17 billion in fees in 2006, Sullivan reports. The latest egregious charge: Bank of America is charging a record $3 fee to non-customers who make withdrawals from its ATMs.Â Â
Sullivan discusses a mailer sent to 60 million customers by AT&T that was intentionally designed to be discarded. It notified customers that they had waived their rights to sue the company, and agreed to use mandatory binding arbitration. AT&Tâ€™s attorneys used a â€œnegative optionâ€ strategy in the mailer: If you didnâ€™t respond to the notice, you were assumed to be in agreement.Â
The notion that â€œthe customer is always rightâ€ is meaningless babble in todayâ€™s cut-throat, fee-slapping marketplace. â€œNow companies are only loyal to the right customers,â€ says Sullivan. In the credit card industry, â€œthatâ€™s the people just above the poorest â€“ who can afford to pay something, but not everything, on their credit cards.â€ See the film Maxed Out for more stomach-turning rip-off tales.
SullivanÂ predicts that one day, that grocery store loyalty card will be used against you by yourÂ health planÂ (“we see you’re a regular buyer of Ben & Jerry’s ice cream; that will be an extra $100 a month for your coverage.”) They are already being subpoenaed by attorneys in divorce cases (to prove an unfit parent has been buying junk food).
Part of the problem is the Federal Trade Commission budget has been gutted over the years, so hidden fees, deceptive practices, privacy concernsÂ and false advertising have become norms in the U.S. economy. (One of my personal pet-peeves is all the â€œfree credit reportâ€ sites that sprang up after Congress passed the Fair and Accurate Credit Transactions Act in 2003, which required consumers to receive one free report a year. Hereâ€™s a study by Consumer Reports Webwatch on two dozen fakers, which are simply lures to sell other products. The real site is www.annualcreditreport.com.)Â
â€œYou need government to build roads and make sure bridges donâ€™t fall down, and set up a marketplace thatâ€™s fair and trustworthy,â€ says Sullivan. â€œWeâ€™ve stopped pursuing that in favor of deregulated economy. But it doesnâ€™t only hurt consumers, it hurts honest businesses too.â€Â Here are a few of Sullivanâ€™s pointers:Â
-Avoid private student loans like the plague: Private student loans are â€œradioactive,â€ says Sullivan, even when offered by the same bank thatâ€™s giving you a government-backed loan. Never use student loan debt to finance other purchases or pay down credit card debt because of the way bankruptcy law works.Â
-Avoid â€œauto loan packingâ€ by invoking â€œregret lawsâ€ or â€œfree lookâ€ laws: The biggest auto dealership hazard is tacked-on fees packed into monthly payments, like extended warranties or rust-proofing. Sometimes dealers will tell naÃ¯ve buyers that they are required. In one case, it added $2,000 to the $13,000 purchase of a car.Â
-Get out of early termination fees: Many cell phone firms will let you out of a contract if you move to an area where they donâ€™t offer coverage. You can also use a pre-paid phone; trade your phone at a site such as CellTradeUSA; or use Verizon, which pro-rates termination fees.Â
-Avoid excessive mortgage fees: Get Good Faith estimates from banks and brokers using the exact same rates and terms (i.e, 30-year fixed) and have the papers reviewed for $45 by the National Mortgage Complaint Center. Get at least two bids for title insurance.Â Also check out www.feedisclosure.com; see this story in the New York Times for more info.
Gotcha Capitalism is a great resource, and youâ€™ll likely cover the cost of the book by following just one or two of the dozens of great tips.
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