FTC.gov image

FTC.gov image

A “debt collector” call can arrive at any time for just about anyone. Even if you’ve never missed a payment on a bill. There’s only one way to protect yourself: Know what questions to ask.

Debt collector telemarketing scams are incredibly persistent because they work. “Debt collectors” can sound scary, and when they catch consumers at the right time, they can quickly trick people into paying up before they realize what’s happened.

The IRS has issued near-continuous warnings about the taxman flavor of this scam for years.

“Taxpayers across the nation face a deluge of these aggressive phone scams,” IRS Commissioner John Koskinen said earlier this year.

These scams work because fake debt collectors have a huge advantage over other kinds of telemarketing scam callers: You really can’t just hang up on them. Even if you are sure you’ve paid all your bills and taxes on time, a call about a debt could be an important warning signal that your identity has been stolen or some other foul play is at work. So it’s unwise to simply hang up on a debt collector. You should stay on the line long enough to get answers to the questions posed below.

(This story first appeared on Credit.com. Read it there.)

Of course, many fake debt collectors aren’t randomly dialing victims. They are working off lists that make it more likely they hit a decent “mark.” Online payday loan lead generators are known for selling consumers’ personal information to scammers, even if the consumers don’t ultimately take out loans. Why? People who look up payday lending information are much more likely to be in some kind of financial trouble, and ripe for the taking. Similarly, consumers with old debts that are no longer collectible (every state has a different statute of limitations on debt collection) often receive phone calls from collectors hoping they can talk consumers into paying up anyway.

Whatever the circumstance, here are the questions to ask anyone who calls claiming to be a debt collector. They’ll help you sniff out potential scammers.

Part 1: Establish Identity

1. Who are you? Who do you represent? What is your direct telephone number? What is the address?

If the caller is at all squeamish about sharing his or her name and full contact information, that’s the biggest red flag of all. Don’t continue any conversation with anyone who won’t answer these questions. Do repeat them several times, as any contact information you can get – even partial information – might be useful to you in any legal action later on (such as a Do Not Call lawsuit). You can learn more about your debt collection rights here.

2. What is your professional license information?

Many states require debt collectors to be licensed. This is the easiest way to verify a collector’s identity. Take the information provided, and double-check it with your state’s authorities online – don’t just take the caller’s word for it.

3. What is the name and address of the debtor you are trying to reach?

That might sound obvious, but it’s not always the case. A “cold call” scammer wouldn’t have this information, for example.

4. Can I call you back in a few minutes?

After you get this information, it’s probably a good idea to hang up and call back. This will verify that the contact information is accurate, and will often trip up scammers who are lying about their location – if the call is coming from overseas, for example, but spoofed to appear local. It also gives you a moment to stop and collect your thoughts.

Part 2: Establish the Financials

5. What is the amount of the alleged debt and who is the current creditor?

The current creditor should be the party calling. Be sure to ask for specifics, such as: What was the original amount, and what is the breakdown of other fees that have been added?

6. How can you seek verification and validation of the debt?

Debt collectors do not have to provide debt specifics during the initial call, though they often will. Collectors legally have five days from initial contact to supply it. This legal process, defined in the Fair Debt Collection Practices Act, is called “verification.” Simply asking, “How can I request written verification of this debt,” and getting the paperwork in hand, is good practice. (A sample debt verification letter is here). The process is also called “validation.” Any legitimate collector will not balk at requests for verification or validation.

7. How can I dispute the debt?

Disputing a debt initiates another legal process that requires collectors to produce additional documentation supporting its right to collect, such as paperwork from the original creditor. No one should ever pay a debt bill to a firm that can’t produce paperwork supporting it.

Remember, it’s a good idea to regularly check your credit for any errant or erroneous debt information. You can get your credit reports for free once a year at AnnualCreditReport.com and you can find out how the information they contain affects your credit by checking your credit scores. (You can get your credit scores for free on Credit.com, updated monthly.) If you discover your credit report contains erroneous information, dispute it, but give yourself plenty of time to get the item(s) corrected and the dispute resolved before you apply for a mortgage, car loan or credit card.
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Corporations hack people.  They hack consumers, and they hack their own employees. Mere mortals don’t stand a chance when high-powered computers with finely-tuned algorithms attack them.  Computerized cheating is among the most frightening developments of our time, and it should alarm you much more than it does.

The latest frightening example of this comes from allegations made against Domino’s that it exploited well-known “errors” in its software to cheat workers out of pay. The software enabled stores to pay workers less than the minimum wage and avoid overtime pay, according to the New York state attorney general’s office. Formulas used to calculate pay rates were incorrect, for years. Domino’s management knew this was happening, and didn’t care to fix it — or didn’t want to, the allegations claim.

You know the well-worn movie plot where an evil genius worker figures out how to steal millions from a bank, a fraction of a penny at a time?  Ironically, it’s sometimes called “salami slicing.” This is that — but with the corporation stealing dollars from minimum-wage workers for profit.

To back up a bit, consumers are quickly enraged to learn that corporations have developed software designed to manipulate people them into overpaying. For example, banks that carefully stacked the order in which checks were processed to maximize overdraft revenue had their head handed to them in the court of public opinion. Target caught Hell when people found out the firm could use Big Data to learn when teen-age girls were pregnant, even before other family members.  Websites that cleverly hide hidden fees in fine print or fonts tested for invisibility spark protests when exposed. We don’t like being hacked.

We should feel the same outrage — probably more — when workers are hacked.

Let’s provide some context.  We all know restaurant workers earn very little, even in places where the minimum wage has been bumped up.   You might not know that restaurants where workers get tips can be paid even less than minimum wage.  In Washington D.C., the minimum wage is $10.50, but restaurant workers can be paid as little as $2.27, for example. Restaurants can claim “tip credit” for the difference – a presumption that staff earn the other $8.23 per hour from nice patrons.

The labor costs for restaurant service can be stunningly low. And yet, Domino’s allegedly used software to make it even lower. The firm requires that stores use software named PULSE, which tracks every single activity at pizza-making franchises.  There are four allegations about the way PULSE cheated workers:

Domino’s employees often do both tipped and non-tipped work on the same shift: they deliver pizzas sometimes, work in the franchise at other times.  They are required to pay two different rates for these tasks, for obvious reasons. PULSE made it hard to pay workers the higher, non-tipped rate even when they weren’t earning tips, a violation of labor law.

Second, PUSLE didn’t recognize that employees did shifts at multiple stores, which prevented workers from surpassing 40 hours in a week and earning overtime pay. Someone who worked at one store 30 hours and another store 20 hours was paid 50 regular hours, rather than 40 hours and 10 over time hours, because the software had no way to add up hours worked at multiple locations.

Third, New York restaurant employees who work more than 10 hours per day are entitled to one extra hour of pay; those wages were not calculated by the software.

And finally – the most complicated but perhaps most troubling flaw: Domino’s incorrectly calculated time-and-a-half pay for tipped workers. Stores gave themselves a time-and-a-half discount by illegally multiplying what the “tip credit” they can claim by 1.5.  In an example included in the lawsuit, the difference in calculation meant a worker earned $7.50 per overtime hour, rather than $9.28. (See below for a specific example)

Dollars to a poorly-paid worker, but hundreds of thousands to store owners. Three franchisees who own 10 stores investigated in the lawsuit owe at least $567,000 in back wages to employees.

For its part, Domino’s distances itself from this illegal activity, saying that its stores are operated independently.

“We were disappointed to learn that the Attorney General chose to file a lawsuit that disregards the nature of franchising and demeans the role of small business owners instead of focusing on solutions that could have actually helped the individuals those small businesses employ,” the firm said in statement to media outlets.

Here’s the problem: Domino’s forced stores to use this software, and in fact, stores paid between $15,000 to $25,000 to buy and operat the system.  And Dominoe’s knew it was flawed. For years.

“I’m told the Pulse system does not currently function to pay a driver a different rate of pay in the same shift and therefore franchisees are just paying the tip wage for the entire shift which is not following the law,” wrote one executive – who was responsible for communicating with franchisees — in an email back in 2007.

In its lawsuit, New York says Domino’s knew workers were underpaid for years and did nothing, making it culpable for the lost wages.

“Domino’s actions and knowing omissions cannot be characterized as simply an unfortunate programming glitch: the company knew about the flaws; it knew about the impact on franchisees and workers; it made many other fixes and changes to PULSE and communicated those updates to franchisees. But year after year, Domino’s failed to address the PULSE programming flaws,” the lawsuit says.

Was it a bug, or a feature?  We’ll probably never know. But I am increasingly worried — and you should be too — that software is being used to systematically cheat people. It’s an invisible weapon; there is often no defense.  When Volkswagen used software to evade emissions tests, I warned that the firm had hacked its consumers. How many other products are loaded with mysterious software that does invisible things to us? How would we find out?

The immediate lesson from this Domino’s story is that payroll checks can be wrong. Workers should be well-versed in calculating their own pay rate and should ravenously double-check the work of the payroll department.  Yes, in this case, pay stubs create an audit trail that wasn’t available in the Volkswagen situation.  On the other hand, if you believe below-minimum-wage restaurant workers living off tips are in a good position to complain about the subtle miscalculations on their paystubs to management, I have a bridge to sell you.

And this is why the minimum wage debate sounds like so much noise to me.  Yes, $15 an hour would be a big help to a slice of the population. But it should be obvious that our income and wage problems run much deeper. America doesn’t respect its workers any longer; that hostility can now be automated. That should frighten you.

Here’s an example of Domino’s wage miscalculation and the wrong overtime pay rate:

“One investigated franchisee paid $5.00 per regular hour to tipped delivery workers and $7.50 per overtime hour. However, under the Labor Law at that time the franchisee should have been paying $9.28 per overtime hour ($10.88, which is one-and-a-half of $7.25, less a $1.60 tip credit) and a “tipped” minimum wage of $5.65 per hour (the $7.25 minimum wage at the time less $1.60 tip credit). This approach of simply multiplying the lower, tipped rate by 1.5 has the effect of multiplying the benefit of the tip credit to the employer, in clear violation of the Labor Law.”

Here is Domino’s response to Eater.com

Here is a copy of the firm’s letter and settlement offer to New York, as provided to Eater

And here is a statement from the NYAG office:

“At some point, a company has to take responsibility for its actions and for its workers’ well-being. We’ve found rampant wage violations at Domino’s franchise stores. And, as our suit alleges, we’ve discovered that Domino’s headquarters was intensely involved in store operations, and even caused many of these violations,” said Attorney General Schneiderman.  “Under these circumstances, New York law – as well as basic human decency – holds Domino’s responsible for the alleged mistreatment of the workers who make and deliver the company’s pizza. Domino’s can, and must, fix this problem.”

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debt collector imageCan a debt collector contact family, friends, or co-workers in an attempt to find you?

Yes, yes, and yes. But she or he can’t say very much.

(This story first appeared on Credit.com. Read it there.)

The Fair Debt Collection Practices Act offers consumers a wide set of protections about how collectors can go about their business. But it doesn’t prevent them from contacting whoever they want while looking for you.

There are very strict rules about what they can say, however. The law says collectors can only ask about a debtor’s “location information,” meaning their “place of abode and … telephone number at such place, or … place of employment.”

What Can a Collector Say? 

Critically, collectors are not allowed to share any information about the debt with these third parties. Collectors do have to identify their employer if asked, which probably tips off neighbors or relatives that the debtor has money trouble. But otherwise, collectors cannot reveal anything about the debt. Generally, they can’t even leave voicemails requesting callbacks.

The law also only gives collectors one bite of that apple. They can’t call friends, neighbors or co-workers more than once, unless they have some reason to believe there is new information to be gleaned.

Here’s what the law says:

“(A collector can not) communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.”

A bunch of other rules further limit who debt collectors can contact and how. If a collector knows a debtor can’t take personal calls at work, the collector can’t call their workplace, for example.

And most importantly, once a debtor tells a collector to stop calling third parties, or stop calling the office, those calls must stop. Their only legitimate reason to contact a third party is if collectors have no way to contact the debtor, so a request to stop third parties eliminates the grounds for contacting them.

Also, if a debtor is being represented by an attorney, the collector must contact that attorney instead of the debtor or any third party.

While the law is pretty clear on what is and isn’t permitted, there are ample opportunities for abuse. Collectors who reach family members or friends may hint — or directly express — threats aimed at the debtor. They may even request or demand payment. Those activities are illegal, but it’s easy to see how they can happen.

“If you don’t want your friend to get in serious trouble with the law, make sure you deliver this message,” for example.

A Different Kind of Block Party 

Collectors who repeatedly use these tactics with multiple neighbors are conducting what’s known as a “block party.” It’s illegal, and victims can sue collectors for sizable damages when a block party is conducted. A similar tactic, when used to call a debtor’s workplace, is sometimes called an “office party.” That’s also illegal.

Third parties who believe they have been harassed – if stop contact requests aren’t honored, or if they are contacted at inconvenient times – can potentially have their own cause of action against collectors, in addition to potential legal action by the debtor.

The Federal Trade Commission makes the full text of the Fair Debt Collections Practices Act availablein brochure form on its website.

Remember, a debt collection account can damage your credit. You can see how any of these accountsmay be affecting your credit score by viewing your free credit report summary, updated each month, on Credit.com.

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Xerox.com. Click for more.

Xerox.com. Click for more.

The brilliant Joanna Stern wrote a piece for the Wall Street Journal this week decrying the silly “put a bluetooth device in everything” gold rush with a brilliantly-headlined story, “Smart Tampon? The Internet of Every Single Thing Must Be Stopped.”  You should go read it, and then come back and read this story. It’s nearly 20 years old (gulp!), but it’s among my favorites, and it’s still full of rare technology wisdom.

Back in 1998, I was lucky enough to spend a day with the man most call the father of ubiquitous computing, Mark Weiser.  When I met him, he was chief scientist at the legendary Xerox PARC, which wasn’t that far removed from being responsible for inventing the computer mouse, etc. etc.  Weiser was keenly aware, even then, that computers were on the verge of driving people crazy. He predicted disastrous techno-distractions before most Americans had cell phones, let alone smartphones, and before Mark Zuckerberg had even enrolled in Harvard.  But he was an eternal optimist. He had a solution. He wanted ubiquitous computing to become “calm computing.” He was working on making machines so smart that they didn’t need to interrupt us, so we could once again focus our most precious commodity — our attention — on people we loved.

Weiser died less than a year after I published this story. The world still misses him. Probably more than ever.  I’m still convinced his ideas will have their day.  But for now, “Panic Computing,” with its smart tampons, rules the day. Please take a moment to hear from Weiser, below.

ARCHIVE, DECEMBER 7, 1998 — Computers in your clothes, in your walls, small enough to hang in the air like dust. All connected to you, right to your subconscious, and to everyone else, no wires necessary.
It will be like walking through, or even living in, the Internet. This is ubiquitous computing – data and computations taking place all around you, even inside you, so small and so well that you don’t even notice. Feeling unnerved, or even vexed? PARC’s Mark Weiser believes we will call this “the era of calm computing.”

Calm? Why would the complete digitalization of our universe make us calmer?

Two reasons, Weiser says. Needing information is annoying; and today, so is getting it.

“There’s a bunch of information annoyances that are part of everyday life,” Weiser says. “Can I park my car? Where’s a restaurant that can seat me immediately? Does my child have any homework that she’s behind on? These are all information-type questions that add a little bit of trouble to every day.”

Like checking your e-mail to see if your friends want to meet you after work. Checking the Net to see if you should sell a stock. When computers are all around you, such information will be immediately available, even before you ask.

“Ubiquitous computing, I think, is going to take care of a whole other layer of information annoyances and do it in a way that doesn’t require me to be constantly logging in and checking … in a way that I am just constantly regularly informed. I don’t even have to worry about these things.”

And without all those cares, mankind will be much more productive, able to spend time on more important things, from “reducing poverty, to getting people to Mars, to having better entertainment, better novels, better books – there’s nothing like the human mind to create a wonderful new world. Why should our minds be filled with these information problems that can be solved if we can get ubiquitous computing into everyone’s lives?”

If these promises sound familiar, they should. You remember, technology was going to make our lives easier, do so much for us that we’d be able to work less; it would free our minds. Well, six e-mail addresses, a pager, a cell phone, two voicemail boxes and an answering machine later, you probably don’t feel freer.
In fact, you’re probably more annoyed, not less.

Precisely Weiser’s point.

Attention span
The term ubiquitous computing gets thrown around a lot, particularly by folks excited about Sun Microsystems’ Java, which allows little applets to run everywhere, from Coke machines to gas pumps.

Ubiquitous computing is about much more than computers everywhere, taking orders from you. We already have that kind of command and control – you can plug some devices into your home that let you turn on the lights by yelling at them.

“ATTENTION! Lights off!”

And there’s the problem. Shouldn’t the lights “know” when to go on and off, just like the door in “Star Trek” knows when to open and close?

See, you can’t look at your pager and drive. You can’t read e-mail and read a book. You can’t answer your cell phone without interrupting your other conversation. All our electronics demand our attention, hundreds of children all dressed up for gym class, grabbing at the basketball you hold. Nothing calm about that. How do we change that?

In the flow
It’s really a user interface problem, Weiser says. Today’s computers just don’t think like we do or talk like we do. These devices just don’t work well with people.

Things would be better, he says, if you didn’t have to pay attention at all to your machines. If they sent you messages even without your being aware. If they communicated right to your subconscious. Instead of information hitting you in the face like cold water, you would then be “in the flow” with the river of information.

“When you are driving a car, you are in control, but your conscious mind is actually … looking ahead at the flow of cars in the distance, you’re thinking about your destination,” Weiser says. And if the light turns red, you don’t answer a message that asks, “Would you like to hit the brakes? – Yes/Cancel.” You just hit them. “In fact, a voice-controlled car would probably be a disaster,” Weiser says.

“So the challenge is to create that kind of information flow that we have when driving a car. It’s basically a challenge of the interface into our unconscious mind or our subconscious mind. That’s the real challenge. It’s not commanding and controlling, but it’s being in the flow with information that is the interface challenge.”

It’s no accident Weiser is a musician. (“If you call being a drummer being a musician.”) Playing in a band requires all kinds of subconscious or semiconscious communication to take place. Done right, it’s a very relaxing experience, to be in synch with the bass player. Weiser want to bring that experience to everyone through these tiny computers.

What would it look like?
The idea is to use information source inputs you already have – smell, hearing, touch – and let computers tell you things without you needing to think about it.

“Maybe you have made an arrangement with your mother and your sister who live in New Jersey to tune into their day to have a kind of information sharing with them,” he said. “Not in the sense of a videoconference, but for instance there’s been work at the Royal College of Art on awareness servers that use feathers. If the feather is fluttering, then you know your significant other, whoever he or she is, is up and walking around, and you have a sense of connection to them.”

Or imagine a tone or a vibration stuck somewhere within the environmental sound that represents the stock market. Tone goes up, market goes up. After a certain point, you realize you had better turn your attention to your investments.

Xerox has a toned-down version working already – coffee pots that communicate with desktop PCs to tell employees there’s a fresh pot of coffee brewed.

Now, you might be inclined to think that information agents could take care of all this for you – like an agent that tells you when a stock has reached a certain threshold. Far inferior, says Weiser. Agents work entirely outside your control. You have to train them, and you’d better train them right.

“What’s not so good about that is it actually – it’s a little bit dehumanizing,” he said. “What we’re great at as human beings is being in this flow of information and responding intuitively to things that our conscious mind has no idea why we’re responding that way, but nonetheless we’re staying on the ski slope, we’re responding to some intuition about ‘Well, I think I ought to check the stock now.’

“And that happens because there’s much more of our brains and our bodies that’s unconscious than conscious.”

What’s so scary?
So you’ve decided there are benefits to allowing computers to communicate with you without demanding your attention, on some subconscious level. But do I really want a computer hooking into my brain like that?

“Well it does sound a little bit dangerous if you say the computer’s going to tap into my subconscious,” says Weiser, gently, not unlike a 19th-century electrician must have talked to first-time customers. “It’s more like my subconscious is going to tap into the computer. It’s still me in control.”

“Right now, what is informing our subconscious? It’s everyday life, it’s the furniture, it’s whoever designed the office that I’m in or the home that I’m in…. It’s the advertisements I see…. Constantly things are already bombarding my subconscious and influencing my decisions.

“The one place that we’re not letting inform our intuitions and our subconscious is the flow of technological information. So it’s a way of making us smarter.”

OK, fair enough. But what about the boss? No doubt you’re right now contemplating what an amazing guilt tool this could be for your employer.

“Of course, the danger is that people in our lives can add annoyance that would be harder to escape from,” says Weiser. Like your boss breathing down your neck, no matter where you are. “So they’ll be an evolution of being better-informed and also being able to kind of turn off things.”

“We’re going to need new social standards, new laws that will start to at least set the standards for what these boundaries are going to be,” Weiser says. “This happens with every new technology. Things that used to be physically impossible suddenly are possible, and now you need some kind of new social systems, at least, if not laws, to govern proper behavior. And there will always be law breakers, as well.”

Between here and there
When Weiser first began his quest in the 1980s., there were four obstacles. Serious progress has been made on all four. Power: All these computers need electricity. You can’t be changing the batteries all the time. “We’re now creating a generation of low-powered devices (MEMS, or micromechanical electronic systems). There are computers that can operate off the difference in skin temperature or ambient light. Communications: There are plenty of low-cost wireless communications systems, like infrared systems, which are available. Standards: All these little devices must speak a common language. Thanks to the Internet, and IP, TCP, HTML, etc., there are such standards in operation today (“We’ll be using HTML 100 years from now,” Weiser says.) User interfaces: Getting into the subconscious. This is the biggest challenge. Perhaps influenced by his musicianship, Weiser believes the biggest potential is in what’s called non-speech audio. “We developed our hearing to be alert to things all around us. And so it’s actually quite a bit more difficult to get audio interfaces right than to get visual interfaces right because the nuances of how our brain interprets audio is extremely subtle.”

When will we see it?
Sounds interesting, this world of computers floating all around us. But it also sounds a million miles away.

Weiser says we’ll see the first ubiquitous computing devices within five to 10 years. They will be smart information cards, wirelessly connected to the Web. And they’ll be as cheap and as common as phone cards today.

“I’ll take out that card, and my school will have given me one, and it will tell me what’s happening in my daughter’s school. I’ll have one for the town I live in that will tell me about parking places and restaurants. And I’ll start to have these little information cards with me all the time and just expect to be more in touch with my everyday world and up-to-date.”

It remains to be seen when more information about your child’s school, or about parking space, will make us all calmer.

NOTE: Mark Wesier died of cancer only a year after this story was written, leaving the world decidedly less wise.

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Yes, this hat costs $30. I wish it were affordable.

Yes, this hat costs $25. I wish it were affordable.

A friend posed a question recently that’s particularly relevant to our current national conversation:

When, exactly, was America great?

The question is on everyone’s mind, thanks to Donald Trump’s surprise ascendancy to star in the world’s biggest reality TV show, our presidential election.  His central theme, or at least the theme of his hats, is a promise that a Trump administration would “Make America Great Again.”  That promise does lead to a logical question.  When was that?  What would it be like?

“I do wish those who want to make America great again would pinpoint the exact era we were perfectly great. Give me a decade, even,” my friend said.

There is an answer, I told him. Back when families with a decent income could afford food and shelter. In the 1950s.  More in a moment.

First, let’s try to suspend our love or hatred for politics and particular politicians for a moment. Let’s also suspend the implied message of my friend’s question: That old farts with bad memories and nostalgia-poisoned hearts are yearning for a past that never really existed. That’s always true.  Let’s take the question at its face. Because it hints at what I’ve been writing about in The Restless Project for the past couple of years.  And I think it also helps explain both the Trump and Sanders phenomenons.

When I was in grade school, I remember a social studies textbook with a chapter titled: The American Century: 1950-1963. My teacher was annoyed that none of us got the joke.  I remember my embarrassment at missing the sarcasm. What was supposed to be the American “Century,” she pointed out, lasted only about a decade. Why? The afterglow of winning World War II could only outshine America’s deep social flaws for so long. No one in their right mind would trade our time for that time. President Barack Obama has been making this point repeatedly at graduation speeches and in interviews for the past year or so, and he’s right when he says, “Even with today’s challenges, this is the best time in history to be alive.”

Still, when folks yearn for something in the past, they vaguely mean the 1950s. And in one way, they are quite right.

Since the 1950s, the relationship between income and living expenses in America has broken down disastrously.  Back then, workers earning minimum wage could earn enough in about 10 days (56 hours) to pay a month’s rent – roughly one-third of income.  Don’t try that now.

Moving up the income chain: In 1950, the average family income was $3,300, and the median home price was $7,354. In 2014, family income was $51,017 and median home price was $188,900. (Source) The ratios are completely out of whack now.  Homes cost nearly four years of family income, vs. less than three in the 1950s.  And recall that because many households now include two incomes, not one.

People are working harder – or at least, double the time spent on labor – for less.  Most critically, as I’ve chronicled repeatedly, people with average incomes can’t afford average homes. That’s why so many people feel like they are running around on a rat wheel.

There are 100s of caveats to these data points. You could easily convince me that two office jobs today are nowhere near as tough as one factory job in the 1950s.  People’s homes are bigger, and full of far more amenities, they 1950s homes.  We also have cheaper clothes, and televisions, and all manner of creature comforts.

Still, there’s a deeper issue at play.  The social contract, the American Dream that those who works hard can earn themselves a decent living in America has broken down. Sure, you can afford a large television and Netflix.  But where will you start a family? Every young person I know is on half-crazed scavenger hunt trying to find some affordable neighborhood in America’s great cities – New York, San Francisco, Seattle, Portland. We are driving ourselves nuts.

Plenty of folks have made similar observations in different ways. Liz Weston, a treasure of financial writing now at NerdWallet.com, recently observed that Americans are pissed because they own so much less than they did a generation ago. Personal wealth – largely a measure home value – has fallen 20 percent for the middle class since 1998. And the value of the possessions owned by America’s working class has fallen by half since then.  By half!  You hear folks complain that their kids won’t be better off than they were; that’s putting it nicely. Americans, from the poor up through the middle class, are losing ground. Fast.

“This is not a few families getting in over their heads. This is a tsunami threatening to drown the American dream,” Weston wrote.

For many reasons, it is foolhardy to wish for the past.  We all know that in the 1950s, the American Dream was just a myth to entire swaths of the population.  Make America Great Again is an insult to them.

But if someone made a hat that said, “Make America Affordable Again,” I’d wear it. Because there was a time…

America is yearning for a genuine discussion of how we got from there to here, and better yet, how we get back there. Sadly, we’re busy buying $25 hats, or making fun of those who do.  Not great, America. Not great.

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There's a new warning on Apple's iTunes gift card page. (Click for site)

There’s a new warning on Apple’s iTunes gift card page. (Click for site)

iTunes gift cards have become a common tool for online scammers to wring money out of victims, according to new warnings from Apple and U.S. federal authorities.  One agency received a deluge of complaints during a recent weekend, including word from one victim who lost $31,000 in a recent iTunes payment scam, according to the Federal Trade Commission. The problem has grown so bad that Apple recently posted a notice on its gift card page, the agency said.

“iTunes Gift Cards are solely for the purchase of goods and services on the iTunes Store and App Store. Should you receive a request for payment using iTunes Gift Cards outside of iTunes and the App Store please report it at ftc.gov/complaint,” the notice on Apple’s site says.

Apple did not immediately return a request for comment.

Criminals convince victims to buy iTunes gift cards, either online or in a store, and then email the secret code so the value can be drained – or traded.

“As soon as you put money on a card and share the code with (scammers), the money’s gone for good,” the FTC warned in a blog post.

Karen S. Hobbs, an attorney with Federal Trade Commission’s Bureau of Consumer Protection, said scammers like iTunes gift cards because they are “cash-like” in a few critical ways. It’s pretty hard to reverse an iTunes payment — unlike a credit card payment — and movement of iTunes dollars can be virtually untraceable.

With any fraud scheme — from sweetheart scams to fake IRS tax bill scams — a criminal’s biggest challenge is getting paid.  Wire service payments are their preferring method, because wire payments are generally impossible to reverse.  But apparently consumers are slowly heeding warnings about wire services, leading criminals to turn to other payment methods.

iTunes gift cards aren’t the only alternate money system scammers have adopted.  The FTC warns that they are using Amazon gift cards, PayPal, reloadable cards like MoneyPak, Reloadit, and Vanilla, too.

Of course, criminals aren’t using the iTunes gift cards to feed their voracious appetite for music. They sell the cards on thriving gift card black markets, where iTunes cards — all cards, really – cman sell for pennies on the dollar.  Still, that gives criminals a great way to receive funds from victims and quickly cash the out.

“I think most people are surprised about the black market for iTunes cards,” Hobbs said.

It seems a bit far-fetched that consumers would believe the IRS, or any government agency, would ask for payment via iTunes “bucks.”  But clearly, people are falling for the tactic.

“In some cases, (criminals) stay on the phone (with victims) while they go to the store and buy the gift cards, talk them through it,” Hobbs said.

The trend is international, too.  Here’s a story about a similar tactic – a criminal tricks a victim into believing they have a big tax bill that must be paid immediately — working in the United Kingdom: a victim payment:

“One victim is revealed to have purchased over 15 iTunes gift cards from Argos – each one valued at £100 – and handing over the codes to scammers on the phone. Another victim shelled out an incredible £15,000 on iTunes gift cards after receiving a cold call, the codes for which went straight to criminals,” TrustedReviews.com wrote on Friday.
One reason these scams might be working: Apple and iTunes are both recognizable brands, and criminals may be borrowing a bit of their “halo effect” to gain credibility.

So the big message the agency is trying to deliver is simple:

“If you’re not shopping at the iTunes store, you shouldn’t be paying with an iTunes gift card,” the FTC says.

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It's that easy!  Titlemax.com

It’s that easy! Titlemax.com

If you’ve ever turned on late-night television, you’ve seen the ads. They are ubiquitous in some parts of the country.  Need cash?  Drive in and give us your car title, we’ll give you a loan….at about 300 percent interest.  Title loans are payday loans with higher maximum limits — up to $10,000 in some states– thanks to the collateral consumers offer.

Naturally, you’re thinking it’s a bad idea to put your car at risk of repossession with a high-interest loan. And these kinds of short-term lending products are under the microscope right now, as the Consumer Financial Protection Bureau is set to issue new rules about them.

These loans have their defenders, however.  One is Vanderbilt professor Paige Marta Skiba, who’s written several papers warning against more regulation of title loans.  Here’s an article on Vanderbilt’s website that makes a critical assertion: “The trouble with car title loans is NOT people losing their cars.”  She claims fewer than 10 percent of borrowers lose their cars, a “small percentage.” Skiba and others surveyed 400 title loan customers “in partnership with a title lending firm” to get their results.

“The standard knock against car title loans is a toothless assertion that the transaction leads to people losing their cars,” the article goes on to say. (Here’s a link to the full study)

Contradictory information arrived from federal regulators this week.  In the run-up to its new short-term loan regulations, the Consumer Financial Protection Bureau has been issuing a series of studies ; the title loan  study landed Tuesday.  After examining 3.5 million title loans made to 400,000 consumers (many are repeat customers), the CFPB found that one in five borrowers had their car seized by lenders.  In other words, the trouble with borrowing money against you car is indeed the high likelihood that you will lose your car.

My full story on the study is below.

Another defender of title loans, Todd Zywicki of the George Mason University Mercartus Center, also asserted back in 2009 that repo rates were between 5 to 10 percent, and said that might not be so bad.

“While borrowing against one’s car may seem to be an inherently dangerous practice, actual experiences with auto title lending have proven it to be a relatively reliable and stable lending tool,” he wrote. “Furthermore according to the American Association of Responsible Auto Lenders, more than 70 percent of its customers own two or more vehicles, making repossession more of an inconvenience than a disaster.”

Toothless. Inconvenient. I’ll let you be the judge.


Here’s my full story as it appeared on Credit.com.

About one in five drivers who take out a title loan ultimately have their vehicle seized by the lender, federal regulators said Tuesday when issuing a report on the high-cost, short-term lending practice.

Title loans are similar to payday loans, but are secured by a car or truck, meaning the borrower risks losing her vehicle if she falls behind. More than four out of five borrowers fail to pay off the loan in the initial borrowing period, and two-thirds renew the loan at least seven times, according to the Consumer Financial Protection Bureau. A high percentage of those who renew repeatedly ultimately lose their cars and trucks, the CFPB warned.

Nationwide, the title loan industry is roughly the same size as the payday loan industry, amassing $3.9 billion in fees each year from consumers, according to the Center for Responsible Lending. However, in some states, the title business far exceeds the payday business. In Mississippi, for example, title loans brought lenders $297 million in fees, compared with $230 million for payday loans. In Alabama, title loans totaled $357 million, compared with $125 million. Both states are in the top six for short-term loan fee volume, along with Ohio, California, Illinois and Texas.

The 20% seizure rate is higher than previously reported estimates, such as this one from a team of university researchers and this one from the Mercatus Center, which pegged the rate at about 10%.

The median car title loan is about $700, and the average is $959 — larger than payday loans since it’s based on the value of the collateral. The typical annual percentage rate is about 300%, the CFPB says. While the loans are advertised as one-time stopgaps for strapped consumers to pay bills, only 12% of borrowers manage to be “one-and-done – paying back their loan, fees and interest with a single payment without quickly reborrowing,” the CFPB said.

“Our study delivers clear evidence of the dangers auto title loans pose for consumers,” said CFPB Director Richard Cordray. “Instead of repaying their loan with a single payment when it is due, most borrowers wind up mired in debt for most of the year. The collateral damage can be especially severe for borrowers who have their car or truck seized, costing them ready access to their job or the doctor’s office.”

The report examined nearly 3.5 million title loans made to 400,000 borrowers from 2010 through 2013.

The CFPB is preparing new rules to govern the short-term lending industry and has issued numerous studies. Most recently, they reported online payday borrowers frequently end up losing access to checking accounts when they fail to make payments. The new short-term loan rules are expected to be released later this year.

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Posted by @flanvel. Click for original

Posted by @flanvel. Click for original

QUICK: What was your LinkedIn password in 2012? OK, now think of every password you have set at every service you use and make sure that LinkedIn password isn’t re-used anywhere.

If ever you needed a reminder not to re-use passwords, here it is.  We knew that LinkedIn got hacked in 2012, but at the time, we thought “only” 6.5 million passwords had been taken.  Now, we learn the real figure was something more like 100 million-plus.  That means your oldLinkedIn password, and probably any derivations of it, should never be used anywhere else. You already knew that, but now you *really* know it.

A security researcher found an ad yesterday posted by a hacker offering a list of 167 million LinkedIn passwords for sale – for about $2,300.  LinkedIn confirmed to Ars Technica on Wednesday that it is aware an “additional set of data has just been released.” It’s working to invalidate any passwords on the list that might still be in use. Because of duplicates, etc., the real number is probably far less than 167 million, but it’s certainly much larger than 6.5 million.

Of course, LinkedIn can’t help you with any *other* services where you might use that LinkedIn password. And you probably forgot it, anyway.  Sadly, computers never forget these things.  Even if you only signed up for LinkedIn once, back in 2012, and never used it again, the password you set at the time is now poisoned.

There is no need to panic.  No doubt, whoever had this list had wrung all the value out of it before offering it for sale – probably many times over, and by multiple whoevers.  If it  were really a gold mine, it wouldn’t be for sale at $2,300.  Most of the user/pass combinations in there have no doubt already been tried at obvious places like Amazon and Bank of America.

Still, your job today is to think about all the critical sites you use — places where you keep your money (banks) and places where you spend money (Amazon, Expedia) — and make sure those passwords are clever and fresh.

Then let your mind wander to places where hackers might make bank by escalating through your personal, digital life: Hacking into your email account, for example, or even your Facebook account. Using your email, they could reset passwords at your bank. Using Facebook, they could trick friends into sending money, or just embarass you.

Doing that kind of digital security inventory is a good exercise at any time. But today presents a great reminder.

“There needs to be a sense of heightened security every day when it comes to cyberattacks and thinking passwords could be stolen,” said John Peterson, Vice President of Enterprise Products at cybersecurity company Comodo.  “Consumers, small businesses and large enterprises all need to understand that criminals have established, working organizations with paid hackers, spammers and phishing experts who think of ways to steal and leverage passwords, bank records, social security numbers, company trade secrets and data, and credit card and financial data every minute of every day.”

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Click to visit Credit.com, where you can find the helpful "Debt Management Learning Center."

Click to visit Credit.com, where you can find the helpful “Debt Management Learning Center.”

You just listened to the voice mail, and your heart is in your throat. A debt collector called. What now?

Your next step could be the difference between a manageable bump in the road and a years-long nightmare. So here, we’re going to walk you through these critical first few moments.

When a debt collector calls, a million thoughts race through your mind — everything from “I thought I paid that” to “I thought they forgot.” (Rest assured, very few people forget about unpaid bills nowadays.)

Ultimately, your primary goal should be to pay off your debts as smoothly and quickly as possible — as long as you have the means to do so, and the debt really belongs to you. If not, we’ll deal with those possibilities, too.

(This story first appeared on Credit.com. Read it there.)

First and foremost, don’t immediately return the phone call. You have a bunch of homework to do first. But do call. Ignoring a debt collector, even one who is calling in violation of the law, is probably the biggest mistake you can make. The problem, whatever it is, will only get bigger. (Learn more about your debt collection rights here.)

Before the Call 

First, take a deep breath. Next, grab a pen and notebook. Every interaction you have with a debt collector — and frankly, anyone calling about money — needs to be documented. Play the message again and transcribe it; you just never know what may be useful later. Carefully note the time, date, name of caller and any other specifics. You’ve just begun what some folks call a “collections log.”

When you are done, give it a home right near the phone so you can find it easily next time. Yes, you can do this on a digital file if you like, but only if you’re confident in your typing skills and religiouslyback up data. You don’t want to lose this.

Now it’s time to do some research. You want to be as prepared as you can before you talk to the debt collector. That might mean talking to family members about the debt; going toAnnualCreditReport.com to see if the debt is on your credit report; or digging through old mail. Get your ducks in a row, as you want as few surprises as possible. This will also help your brain and your heart slow down.

During the Call 

There are several specific things to do (and not do) during the initial debt collector call, but before we get to that, here are two critical things to keep in mind:

  1. Drive the call. Be active, not passive.
  2. Say as little as possible.

Don’t call only to let a collector bully you or make you uncomfortable. When you know your rights and the truth about the debt, you can do this. Ask the questions. Remember, you don’t have to answer any at this time, but by law the collector does.

From this advice comes the second tenet: Don’t volunteer anything about income, property, or bank accounts. You can agree on a payment plan later. During this first call, you need to get all the data you can about the collector’s claims. One-word answers are fine. Don’t tell sob stories, and definitely don’t make promises like, “I’ll pay,” which could be interpreted as a contract in some cases.

As for specifics, here’s what to ask: Get the name of the firm, the creditor and the amount. Ask for a breakdown, if possible. These questions are the beginning of a process called “validation.” Then, tell the collector you want the name and address of the original creditor, along with any account numbers tied to the debt. You can also ask for other evidence the collector may have, such as a judgment. You may have to send a written request to file a formal dispute in order to obtain that information, but debt collectors sometimes offer it straight away.

Do all the above firmly but politely. Remember, you might end up negotiating with the collector. There’s no reason to be rude or hostile — just be firm and say very little.

During this initial call, don’t keep your credit card or checkbook nearby. If the collector makes threats, even veiled ones, like ‘I’m sure you don’t want me to call your workplace about this,” that’s a sign something is wrong, and it’s critical for you to get off the phone as soon as possible.

The biggest don’t of all is not being talked into making some kind of small “good faith” payment towards the debt. That’s often a trick debt collectors use to get consumers to pay debts they don’t legally owe. Any payment can restart the statute of limitations clock, re-aging the debt.

After the Call

The statute of limitations issue is one reason to hang up, digest what you’ve collected and make a thoughtful payment plan. When you get all the information you are legally entitled to, you can then make a plan of action. Again, be active, not passive. If the debt isn’t yours, you can begin the formal debt dispute process. If you feel like the debt is accurate but the late/penalty fees are unfair, you can try to negotiate with the collector or dispute the overages.

If you are ready to start paying but want gentler terms, make a budget and call the collector to make an offer. Hold firm and don’t answer questions like, “How much money do you have in your 401(k)?” Just make your offer.

This is also the time to realistically look at your family budget and decide if you can or can’t pay your bills. If you can’t, consider talking to a bankruptcy attorney before you call the collector back.

The biggest mistake consumers filing for bankruptcy make is filing too late. Many raid retirement accounts or make other foolish last-ditch efforts to pay bills, so they lose assets that could have been preserved in the process.

That debt collector call, however scary, could be a sign it’s time to admit the depth of the problem and the need for dramatic steps to make it right.
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What is Spokeo? It's good to know. (Spokeo.com)

What is Spokeo? It’s good to know. (Spokeo.com)

What’s the harm if someone gets your zip code wrong in a database?  Well, that question ended up at the center of a Supreme Court ruling today — and a popular Twitter hashtag,  #zipcodeharms.  I’ll get to that in a minute.

But first, is it a good or a bad thing when all parties can claim victory after a Supreme Court decision? I’m not sure — but that’s what happened Monday when the Supremes issued a down-the-middle ruling in what was supposed to be a landmark case about consumer privacy, Internet “slander,” and the future of class action lawsuits.

I’ve written a few times about the case, which pitted small-time online background company Spokeo against a consumer who said the firm spread bad information about him that hurt his employment prospects.  Spokeo, which doesn’t have a great reputation and had been hit with an FTC fine over a different issue, somehow had big-name supporters, like Google and the U.S. Chamber of Commerce.  On the other side, consumer groups lined up for the consumer’s right to sue a company that allegedly violated his privacy — and the Fair Credit Reporting Act.

The case attracted a lot of attention because it was among the first to test the Court’s appetite to declare digital privacy invasions and harms. But even more was at stake: Part of Spokeo’s case — supported by industry heavy-hitters – rested on the notion that the consumer in question, and all others like him, suffer no real harm when data collectors get things wrong. And if there is no harm, there is no case. (No “standing.”) Saying someone is unemployed in a report is not like breaking their leg, the thinking went, so there’s nothing to sue over.

Such a finding would have flown in the face of Congressional intent.  Congress has passed several laws, including the Fair Credit Reporting Act, that specify statutory damages for consumers if companies break the law. Class action lawyers use these provisions as a weapon to keep companies compliant — if there were no punishment, there would be no compliance.  A popular example is the Telephone Consumer Protection Act, which created the Do Not Call list and enables lawsuits that can net consumers $500 per violation.

Spokeo “won,” sort of. The Supreme Court affirmed that some kind of harm, over and above a technical violation of law, must occur for consumers to win damages. It then sent the case back to the appeals court for a re-examination of the harm in question.

On the other hand, the justices affirmed that harms can be “intangible” and “difficult to prove or measure.”

So, both sides claimed victory. Here’s Spokeo:

“With its opinion in the Spokeo v. Robins case, the Supreme Court has squarely rejected the contention that merely alleging a violation of a statute alone gives a plaintiff standing to bring a claim under federal law on behalf of a class of hundreds of thousands or millions of people,” Spokeo said on its website. “The Court’s standard will make it much harder to turn individual cases like this one into million-member class actions. Spokeo looks forward to the chance to continue advocating against no-injury class action lawsuits that threaten American businesses and the overall economy.”

And here’s a quick take from Public Citizen, a consumer advocacy organization:

“The Court’s opinion acknowledges that Congress’s objective in FCRA was to curb the dissemination of false information, and it appears to recognize, at least implicitly, that a plaintiff about whom significant falsehoods are disseminated, or who faces a risk of dissemination of false information, will likely have suffered a sufficiently concrete injury,” it said in a blog post. 

If you’ve been following along, you are probably wondering how someone is supposed to prove “harm” by the publication of data that may or not cause them trouble some day.   You might not care, or even know, that you are listed in a data broker’s files as related a person who committed manslaughter (as I was a few years ago).  And maybe no one will ever find out. Or maybe someone will find out 10 years from now, and it will cost you a job, or a date.  How can a consumer prove that they’ve suffered harm when it hasn’t happened yet?  The Supreme Court doesn’t seem very inclined to tackle that question at the moment.  In the majority opinion, this appeared:

“It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.”

So, back to the hashtag.  Privacy experts quickly seized on what they saw as a mistake in the logic:

Ryan Calo, a professor at the University of Washington, made the point elegantly on Twitter:

I don’t get interviewed for a job that requires employees to reside in the city. #spokeo#zipcodeharms,” he wrote.  Then, “My kid gets kicked out of our public school because we supposedly don’t live there #spokeo#zipcodeharms.”

Still, many consumer advocates found things to be happy about in the ruling.

“The court could have done immeasurable harm to consumer and civil rights laws and they did not,” said Ira Rheingold, Executive Director of the National Association of Consumer Advocates. “I think for the most part it’s a good decision for consumers. It reaffirms that Congress can create statutory rights for consumers. While this has always been everyone’s working assumption – Spokeo was an attempt by the Chamber, et. al. to strip this right away from consumers. The Court – at least – firmly rejected this effort, which is extremely important.”

And Joel Winston, a consumer law attorney in New York, was even more effusive.

“The decision … is a nuanced ruling that resoundingly affirms the ability of Congress to create statutory rights and protections,” he said. “This is a win for the rule of law. Statutory rights are everywhere and are relied upon by persons and companies alike. (i.e., intellectual property law (copyright and trademarks) and social security income payments (Social Security Laws provide administrative/ statutory rights to payment and appeal).

“Finally, this is a resounding affirmation of the application of the Fair Credit Reporting Act to the digitization of credit reporting and the ubiquitous collection of personal data. The Court’s opinion in Spokeo reinforces the strength of the Fair Credit Reporting Act to regulate the credit reporting industry and protect individuals from unfair and harmful behavior.”

For a very nuanced look at the legal issues, read Adam Klein’s blog post at Lawfare. “The Court has threaded the needle well here,” he writes.

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