Daily Information Objectives: 1.Explain how to dispute errors on billing statements 2.Recognize credit scams and ways to protect yourself. Warm Up: Create a caption for the picture below Agenda: 1.Warm up 2.Vocab. 3.Resolving Credit P.P. 4.TPS 5.Consumer Advocacy Groups 6.Bottom Line

Credit Cards: Error and Fraud Disputing a charge: the process of informing a credit company of an error on your bill o 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 goods o 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 Negotiation o Mediation o Arbitration Filing a lawsuit o Small claims court o 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 !**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 agencies o Federal Trade Commission (FTC) Bureau of Consumer Protection o U.S. government ( o Consumer Action Handbook o Consumer Financial Protection Bureau o Federal Bureau of Investigation (FBI) State agencies

Consumer Advocacy Groups Better 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 management o Creates a plan to pay off debt o Debtor must turn over checking account and give up credit cards Debt consolidation o 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 bankruptcy o Involves the forfeiture of assets in exchange for discharge of debts o Allows 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 reorganization o Reorganization of debt as decided by the court. o Allows a business to remain viable Chapter 13 o Also called individual debt adjustment o Involves a 3- to 5-year court approved repayment plan for some of the debt o Good 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?