Up-front processing fees for loan may indicate scam

November 26, 2012 22:37 by Consumer Ed

Dear Consumer Ed: 

I applied for a loan online. I then received a call from business reps from an out-of-state bank telling me that my loan had been approved but that I had to pay a $120 processing fee via Green Dot MoneyPak card. I got the card and gave the number to the business rep, who then asked for $300 for another processing fee. I bought another card and gave them the number.  They then asked me to pay another fee, and I realized I was being scammed.  Is there any way I can get my money back?

Consumer Ed says: 

It is a violation of Georgia’s Fair Business Practices Act for someone engaged in telemarketing to employ a scheme to defraud another person or to commit theft.  If the bank violated the telemarketing laws when they called you about the loan, you may want to consult a lawyer to learn about potential legal claims against the company.  You should also report your situation to the Attorney General’s Office and the Department of Banking & Finance in the State in which the bank is headquartered. They may be able to take action if the bank engaged in illegal activities. 

However, it is important to realize that the representative who called you may not have actually worked for the bank, and that, unfortunately, you may have been the victim of a scam.  In that case, you are very unlikely to recover your lost money since the representative who called you will not be easily traceable.  Regardless of whether or not this was a scam, you should also report your situation to the following government agencies in order to attempt to recover your money and to spread the word about the possibility of a scam:


Another avenue worth exploring is attempting to recover your money from Green Dot MoneyPak.  As the seller of prepaid cards, Green Dot MoneyPak is required to include the terms of use in the packaging that accompanies the cards at the time of purchase, as well as making such terms available upon request.  Green Dot MoneyPak features the following disclosure on its website, moneypak.com:  “Green Dot is not responsible for paying you back. Your MoneyPak is not a bank account. The funds are not insured against loss.”  MoneyPak suggests that its customers treat the money on the MoneyPak like cash—once the MoneyPak is lost, there is no way to trace and recover the money.  If Green Dot did not display the required disclosures clearly and conspicuously, then it may have violated the law.  If the required disclosures accompanied the card at the time you purchased it, then you will likely not be able to recover your money from Green Dot MoneyPak.  You may want to consult an attorney for legal advice. 

While this will not assist you in retrieving your money in this instance, you should take the following steps in the future when attempting to obtain a loan:

  • Don’t pay up front.  Legitimate offers of credit generally do not require an up-front fee. Any fees are taken from the amount borrowed after the loan is approved. 
  • Don’t fall for promises that you’ll get a loan regardless of your credit record.  If you have poor credit or haven’t established a good credit record yet, it’s unlikely that a reputable company will lend you money. 
  • Do business with licensed companies.  Ask Georgia’s Department of Banking and Financing (http://dbf.georgia.gov/general-information) if the lender operating in Georgia has complied with the licensing requirements.  If it has not, then you should not do business with that company.
  • If you can’t get a loan yourself, get a co-signer.  Having a co-signer may allow you to obtain a loan from a reputable lender when you would ordinarily not be able to.  A co-signer, usually a friend or relative, is someone willing to apply with you for a loan.  You and the co-signer would both be equally responsible for the loan payments. 
  • Get all the costs and other details before you decide.  Shop around for the best loan rates and fees.  Research several lenders, and look for consumers’ reviews of the different lenders.
  • Have proof of what you were promised.  Make sure to get the loan agreement in writing or in an electronic form that you can use to document the deal.  You want the deal in writing so you know the precise terms of the agreement and so the lender cannot change the terms after you enter into the loan agreement.

 

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How do I know if a website is secure?

August 24, 2012 20:10 by Consumer Ed

Dear Consumer Ed:  

When I started shopping online and banking online, I was told that if I saw a closed padlock symbol on the screen that the site was safe for me to use because it is encrypted. Is that still true with all the stories I read about online hacking?

Consumer Ed says: 

Because online fraud cases have increased substantially from year to year, anytime a web page asks you for sensitive information, you do need to be able to identify whether the page is secure.  The padlock symbol is one of several ways of knowing if a page is secure. 

Here are a few tips to help you determine whether a page is safe. First, while all web page addresses (URLs) begin with the letters “http”, the address displayed over a secure connection should begin with “https”—note the “s” at the end.  This indicates that the data you enter is encrypted for security, meaning it is scrambled before being sent to the remote site and then decrypted so it can be used.  The same process occurs when the remote site has to send information back to you.  That way, if an unauthorized person intercepts the data, it is unreadable. 

The home page of a site will probably just have a regular “http” URL, such as http://www.Amazon.com.  But if you go to a page within the site that asks you to enter your email address, account number, password, credit card information or other sensitive information, the URL should change to one that has “https” at the beginning.  If it doesn’t, do not enter your information.

Second, when you are on a secure site, your web browser will usually show a “padlock” icon somewhere on the edge of the browser window (but NOT in the web page display area).  For example, Microsoft Internet Explorer displays the lock icon near the right end of the address bar.  The lock icon is not just a picture:  you can click on it to see details of a site’s security.  This is important to know because some fraudulent web sites are built with a bar at the bottom of the web page to imitate the lock icon of your browser.  Before you can know that the lock icon is genuine, you should test its functionality by clicking on it to see whether it actually takes you to the company’s security policies. 

Third, if you arrive at a website from a link in an email message, verify that the website is legitimate before you provide any information to the site – even if you received the email from someone you trust.  Phishing websites can sometimes send email messages that mimic, or spoof, legitimate email addresses.  Phishing is an email scam in which the sender tricks the recipient into revealing personal or confidential information, which the scammer then uses for illicit purposes, such as to commit identity theft or to make unauthorized financial charges.

A good example of this type of scam is a phony Bank of America email that has been circulating recently.  The subject of the email says: “Bank of America Alert: Your Online Statement Is Ready”.  The message appears to be legitimate (especially if you actually are a Bank of America customer), however it is actually a bogus email intended to get you to divulge your banking credentials.  If you ever receive any email messages from an institution with which you have an account, it is always safest to go directly to their main website in order to access your account. 

If you are suspicious about an email, you can determine whether a website link is legitimate by first placing your mouse pointer over the link WITHOUT ACTUALLY CLICKING ON IT. This allows you to notice what web address is displayed in the little window that comes up.  If it displays anything other than the legitimate web address of the financial institution, then it is probably bogus. In the Bank of America email mentioned, there is a link that says “View your statement online today.”  However, when you place you pointer over that link the address that is revealed is very clearly NOT a Bank of America address.

If you are visiting a retail website, check the site for a phone number or street address.  If the site only provides an email address, send a message to the address to request additional contact information. Do not provide personal information to a website that has no contact information.

All this aside, if you are still reluctant to put your financial information out there, you can almost always contact the company via telephone to place your order.

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Refund policies for online merchants

April 11, 2012 18:54 by Consumer Ed

Dear Consumer Ed:

I purchased some merchandise online.  The company shipped the order, which I later returned.  The merchant never posted a credit, so I notified my credit card company and requested a chargeback.  The merchant is now saying, "All refunds are for merchandise only.”  Can they do this?  I'm pretty sure the website did not have this language before, but I can't be sure.

Consumer Ed says: 

It sounds as if the merchant is saying that when an item is returned, they will only give store credit or exchanges rather than a full refund.  In Georgia, merchants are not required to give a refund or credit unless the merchandise is defective, or if the buyer was persuaded to purchase the item based on deceptive or misleading advertising.

Most sellers offer some sort of refund or credit because they want customers to return, not out of any legal obligation.

However, sellers are required to clearly state their return/cancellation policies. If you were sure that the website did not say "all refunds are for merchandise only" at the time of your purchase, then you might be able to claim that it was deceptive of them to misrepresent your refund or cancellation rights. But if the seller did disclose this policy previously, then you are probably out of luck.

If you believe the product you bought was defective, that the advertising was misleading or deceptive, or that the website did not disclose the return policies before you made the purchase, you can submit a complaint to the Better Business Bureau at www.bbb.org; to the Federal Trade Commission at www.ftc.gov; or to the Governor's Office of Consumer Protection at  www.consumer.ga.gov or by calling 404-651-8600 or 1-800-869-1123.

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