Taking the Right Steps to Protect Yourself from Credit/Debit Card Fraud – Prudent Money Show – February 23, 2017

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Taking the Right Steps to Protect Yourself from Credit/Debit Card Fraud

Bob uses the results of a recent survey to illustrate that the consumer might be confused on the best way to preventing fraud. In fact, the steps they think they are taking as prevention is actually increasing their risks.

 

Why I Don’t Like Debit Cards and Digital Wallets

Why I Don’t Like Debit Cards and Digital Wallets

Fraud is rampant and on the rise and consumers are concerned according to a Capital One Rewards Card outlook. Compromised credit cards and associated data breaches continue to be a problem. In fact, over the past two years (2014-2016), data breaches worldwide rose 46 percent from the year prior (2013), according to creditcard.com.

In reading the results of the Capital One Survey I came to one conclusion. Consumers don’t have a good grasp on how fraud works. Here are some of the results:

“43% said that fraud protection is the most important thing to them when picking a rewards credit card.”

I get two interpretations from this survey. First, credit card companies don’t have the sophisticated fraud systems that immediately detect when fraud is occurring. Credit card companies can detect unusual patterns. That is about it. However, it sounds great in the marketing and shouldn’t really factor into the decision to apply for a card. If there is unauthorized use of your card, you call the credit card company and that takes care of it. It isn’t rocket science.

Second, if fraud protection was one of the most important aspects of picking a credit card, then why do so many people use debit cards?

It is pretty easy to correct a problem with a credit card. In most cases there is zero liability and no time constraints.

Debit cards on the other hand are a different story. There is a limit on the amount of time that you must report the fraud. If you miss that window you could be out the money. In addition, if someone breaks into your bank account, you could have major financial problems such as a period of time where you don’t have access to money, checks and payments that bounce, and time invested in getting it cleared up. There is a sense of urgency when it comes to debit card fraud.

Think of it this way – would you rather have someone use your credit limit temporarily or use your money?  Yet, consumers act as if this is not a threat.

A recent survey showed that at supermarkets, gas stations, discount stores, and dine-in restaurants, consumers either use their debit cards as much as their credit cards or they use their debit cards dramatically more than credit cards. For example 50% of those who were surveyed use debit cards in grocery stores versus 31% use credit cards.

The Preference of the Digital Wallet

Nearly 40 percent (39.8%) of rewards card holders would rather keep their cards in a mobile wallet. Digital wallets are of particular importance since 39 percent of survey respondents thought they lost or misplaced their credit card this past year.

Does a digital wallet solve some of these problems? There are two major problems with digital wallets. First consumers lose their credit cards and are probably more likely to lose their cell phones. Second, someone hacking into your phone and stealing personal information is much worse than an unauthorized use of a credit card.

I did a Google search on this topic. Articles from consumers not securing their phones to consumers lose $30 billion worth of cell phones a year to Smart Phone thefts rose to 3.1 million. I think you are creating more risk by using the digital wallet.

If you want to reduce the impact of fraud, consider two simple steps:

  • Stop Using Debit cards – If you have the luxury of having a credit card as a payment card only, consider this advice. Besides the fact that the unauthorized use of a debit card carries higher consequences than credit card fraud, debit cards do nothing for your credit score like the positive activity of a credit card.
  • Check your credit card statements monthly for unauthorized charges. That is just a good habit.

1 in 4 Auto Shops in Dallas Could Be Overcharging Women for Repair

Photo Credit: AutoServe1

1 in 4 Auto Shops in Dallas Could Be Overcharging Women for Repair

One of the reasons Tony Joe hosts the Special Car Corner edition on Fridays on the Prudent Money Radio Show is so you can learn what to look for and want not to do when it comes to repair jobs on your cars. It can be expensive. This is especially the case when it comes to getting ripped off. Let’s face it – People know very little as it is about money. For car repairs, I would suggest that people know even less.

As a result, you have to trust. Oftentimes, you have to make that call quickly. Car repairs demand your attention immediately. Repairpal.com did an interesting study to see what was really going on.

They had both a male and female customer separately call a random sample of 40 repair shops getting sample estimates on the same types of repairs. They even varied the types of cars they used.

Based on an undercover study that used anonymous calls, here is the shocking truth:

Nationwide, women are overcharged by an average of 8% compared to men.

In big cities like LA, San Francisco, and New York, women are can be overcharged by a whopping average  of 94%.

In Dallas, 25% of auto shops routinely quote higher prices for women clientele.

In a study conducted across multiple cities by RepairPal —the largest car repair estimator website and nationwide network of certified repair shops—women are still struggling to get the the same fair price for repairs at the auto shop.

Other Findings:

WOMEN ARE OFTEN DENIED OVER-THE-PHONE QUOTES
While not a single shop denied the male participants a quote, an astonishing 18 shops told our female participants to bring their car in to the shop for an estimate.

Key Takeaway – Ladies if they won’t to give you a quote over the phone, go somewhere else.

WOMEN WITH A LUXURY CAR WERE QUOTED HIGHER RATES
When women called the shops to inquire about repairs for their BMW, the shops routinely gave them a higher quote than the men who called about the same car issue.

Tony Joe Rule of Thumb – If the quote is $500 or more get a second opinion.

STEREOTYPES ARE STILL STRONG AMONG REPAIR SHOPS
The most likely scenario is that shops are taking advantage of what they believe to be a general lack of automotive knowledge amongst women. It’s stereotypical and unfair, to say the least.

Key Takeaway – There is a reason repair shops are one of the least trusted businesses and have the most amount of complaints.

Repairpal.com is an excellent source for getting a good idea of what is a fair estimate. Do a little homework. That is not advice only for women.  That goes for the guys as well. I know that I know nothing about what the true costs are for automotive repair.

How to Avoid Getting Ripped Off by an Advisor

Photo credit: CNBC.com “The top 10 investment scams”.

How to Avoid Getting Ripped Off by an Advisor

Investor scams are alive and well. I am amazed by the number of bulletins I receive through email that detail investment scams that are uncovered. Fortunately, if you know what to look for, you can avoid being ripped off. It is a matter of looking for red flags.

Red Flag #1 – High Interest Guarantees

When you are looking at a guaranteed rate of return, it should be in line with other guaranteed returns. If it is higher than the going rate for guarantees, there is a risk of some sort. A local financial advisor was brazenly advertising a 12% guaranteed rate of return backed by real estate.  Now keep in mind, the best guaranteed rate is around 3%. Of course, it was later discovered that this advisor was running a Ponzi scheme.

Red Flag #2 – Writing a Check Directly to an Advisor or Investment Company

Not to say that in every instance when you write a check to an advisor you are getting ripped off. However, just about in every scheme that is busted by regulators a check was written to an advisor. It is a red flag. What keeps that advisor from depositing that check into his or her bank account?

Red Flag #3 – Investing in Unregistered Investments

Regulators raise a huge issue with advisors that sell unregulated investments. Not to say that in every instance when unregulated investments are involved you are getting ripped off.  However, just about in every scheme the investments are unregulated.

Red Flag #4 – High Return, No Risk

This is good rule of thumb for any scam as well as for any legit investment. Anytime an advisor promises big returns with no risk, something is wrong.  Either they are running a scam or they are just trying to sell you a bad investment. A legitimate advisor will tell you of the pros and the cons of any investment. Every investment has pro and a con. Even a money market has risk.

Red Flag #5 – Just Because It Is on the Radio Doesn’t Make it Legit

You would think that if an advisor was going to break the law they would do so in secret. Thus, if an advisor is on the radio talking about investments with big guaranteed returns, it must be legit. Right? Unfortunately, that is not the case. Often a scam artist will be bold enough to talk about the scam on the radio as well as on their company website. There are two advantages for the scam artist. First, talking about it in public gives it some legitimacy. Second, common sense would tell you that no one would break the law that publicly and risk getting caught. This is how investors get ripped off.

The bottom line is that investment scams are happening all of the time. Unfortunately, investors just assume that it is not the case and blindly give these scam artists their money. Look for the red flags so that you can make better decisions with His money.

Great Resource for College Financing and Funding – Every Parent Should Read This!

Great Resource for College Financing and Funding – Every Parent Should Read This!

I wanted to take the opportunity to make you aware of a new Prudent Money Contributor, John Hupalo. John is an expert in the area of college funding. Just this morning we did a general show on financial aid which will air Thursday, February 9. In March we are going to do a show exclusively on student loan debt, how to eliminate it, and how to effectively use it. He is really committed to free education. I wanted you to be aware of these resources:

YouTube Channel for My College Corner

Website – www.inviteeducation.com

Book – Plan and Finance your Family’s College Dreams – The most comprehensive book on funding college education that I have come across.  Any parent with kids that are going to college need to be reading this book.

Do you have a financial aid or student loan question? Send it to the Ask Bob resource and I will get it to John. He is 100% available to help any of the Prudent Money readers or listeners in this area.

Also from time to time, I want to share with you some of the great information that he is writing about. This week I wanted to share with you his article on co-signing student loans. John says this is the best way to help your kids borrow for college.  Here is the link!

Eliminating the Johnson Amendment Could Be Bad for the Church

Eliminating the Johnson Amendment Could Be Bad for the Church

Lyndon B. Johnson was a brilliant politician (that isn’t necessarily a compliment). In 1954, he single-handedly removed the power of the church from politics with the passing of the Johnson amendment. The Johnson Amendment eliminates the ability of the church to endorse a political candidate from the pulpit. If a church were to endorse or oppose a candidate, they would risk losing their non-profit status.
Of course, you never know why a politician does what he or she does. Mostly those actions are political/self-serving in nature. From a political standpoint, passing legislation that (eliminates free speech) diminishes the power of the church was political genius (once again not a compliment).
Now President Trump wants to get rid of the Johnson Amendment. In fact, recent Republican legislation that has been introduced does just that.  Of course, they want to put a “limit” on how much money can exchange hands in terms of support. That is what I love about politics. On the surface, they write legislation that looks like it protects people from themselves. In reality, I am sure that it will be legislation that has many backdoors. If they really wanted to do this right, they would write it this way:
 
Churches can endorse or oppose political candidates from the pulpit. However, they cannot donate money or receive money as a gift for support in any shape or form. If that does occur, they automatically lose their 501(c)(3)status. Further, Pastors, church staff, or leaders cannot serve in any positions appointed by the politician that their church supported.  
Is it a good idea to give the Church a voice in politics when there is gray language on the money/favor part? My former pastor had a saying. If your head is made of butter, don’t sit by the fire. Pastors and people in general are all human. Temptation is temptation. Why place that kind of temptation on Pastors? Politicians are known for buying support. Churches need money. IT is human nature to rationalize anything. Pastors with the wrong motivations or rationalizations could throw their support behind a candidate for favors.
The reality is that politics and church are a bad idea if you don’t remove the money/favor part of politics. I wonder if they would even be spending time on the Johnson Amendment if it provided no potential financial benefit and favors? I apologize in advance for the cynicism.
I appreciate what President Trump is trying to do. At the same time, with politics as usual, I think it is a situation loaded with landmines.
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