Debtmerica Debt News

Dodd-Frank Act defended by Geithner

Friday, 03 February 2012 13:00

While many aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act have come under fire in recent months, particularly from Republican lawmakers and presidential candidates, Treasury Secretary Timothy Geithner recently defended the law.

Geithner recently issued a statement in which he said that many aspects of the Dodd-Frank Act are already working to help consumers and businesses alike, and that those who would either work to slow, reverse or completely repeal the bill in the coming months would be doing a considerable amount of harm to the economy. That's because lawmakers are now writing a number of additional rules and regulations, which are not finalized as yet, within the framework of Dodd-Frank. Scaling it back, therefore, might cause added delays in whatever is currently being written.

He also said that the Consumer Financial Protection Bureau is doing a lot of good for consumers who previously had little recourse in dealing with disputes related to their outstanding mortgage bills or credit card debt.

The CFPB has been working to develop a number of protections for consumer credit accounts and help boost debt relief efforts, including the testing of new disclosure forms that simplify lending agreements for both credit cards and mortgages. Add a comment

MasterCard will help roll out new credit card technology

Wednesday, 01 February 2012 13:00

In an effort to help make credit card information safer and protect consumers from being hit by bogus credit card debt, MasterCard is rolling out a new plan to introduce a safer type of credit card within the next 14 months.

MasterCard, the world's second-largest processor of debit and credit card payments, recently unveiled what it calls the "roadmap" to EMV credit cards, which are considered far more secure than traditional cards because of the way they store information. EMV cards, also known as "chip and pin," use a microchip embedded within the card itself to store information and require the user to enter a code to confirm a purchase.

Nearly every credit card ever issued in the U.S. still relies on the magnetic strip technology to store information, but rising credit card fraud totals have prodded payment processors to push for the more secure route. The U.S. is the last major country in the world to still rely upon the old credit card technology.

Consumers should always carefully look over their monthly bills to make sure there is no fraudulent credit card debt on them. Leaving these charges unattended can make it more difficult to reduce debt going forward. Add a comment

FTC settles debt buyer suit, issues new document

Tuesday, 31 January 2012 12:00

At the same time as the Federal Trade Commission settled a major suit with one of the nation's largest purchasers of consumer credit card debt, it also unveiled a document that will help clarify consumers' rights when they arebeing pursued by collectors.

The document, entitled " Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts," spells out how consumers should expect to be treated by collection firms under the law, the FTC said. For example, debt can fall out of the statute of limitations, meaning that consumers can no longer be held responsible for it legally, but many collection companies may try to mislead them into paying it anyway.

"Most consumers do not know their legal rights with respect to collection of old debts past the statute of limitations," said David Vladeck, director of the FTC's Bureau of Consumer Protection. "When a collector tells a consumer that she owes money and demands payment, it may create the misleading impression that the collector can sue the consumer in court to collect that debt."

If consumers are being pursued by debt collection companies, they will now be able to check online to ascertain what their rights may be in dealing with these businesses. Add a comment

Consumer credit card delinquencies took big fall in 2011

Monday, 30 January 2012 13:00

Consumer debt has fallen considerably over the last year, as have late payments across a number of loan types, but at the same time, consumers are once again starting to open new credit cards.

Consumers were far more conscientious in their attempts to reduce debt in 2011 than they had been in the past, as the total amount owed to lenders across all loan types slipped to $11.1 trillion nationwide, down from October 2008's all-time record of $12.4 trillion, according to the latest National Credit Trends Report from Equifax. Delinquent credit card debt on both bank- and retailer-issued cards slipped considerably in 2011, by 29 percent and 15 percent from 2010's totals, as did instances of late payments for mortgages, consumer finance loans and auto loans.

At the same time, though, origination of bank-issued credit cards for subprime borrowers increased significantly between January and October, rising 48 percent, the report said. In addition, retailers saw the number of cards opened by all borrowers tick up 7 percent, reversing a trend of four straight years of declines.

Experts believed that the recession drastically changed consumers' attitudes toward borrowing and led them to focus on debt relief, but new card originations may show consumers are eager to do so again. Add a comment

Lenders making credit card agreements clearer

Friday, 27 January 2012 12:00

While many consumers are trying to reduce debt and get a better hold of their finances, some of the nation's top credit card lenders may soon be able to help with that debt relief thanks to new documents that make borrowing agreements easier to understand.

Major banks are now starting to issue simplified documents for checking accounts, which clearly list the terms of the agreement in plain language, and it's expected that credit card contracts will come next, according to a report from the Columbus Dispatch. These financial institutions are likely taking the lead of the new federal Consumer Financial Protection Bureau, which itself is testing a simplified lending agreement at the Pentagon Federal Credit Union.

That document is just 1,100 words long, compared with the average of current credit card agreements that checks in at more than 5,000 words, the report said.

The CFPB is also working to set up a comprehensive database of all credit card offers available nationwide so that consumers can compare a number of accounts to determine which will help them limit their credit card debt. Add a comment

Bank of America credit card users may soon find more deals

Thursday, 26 January 2012 12:00

Many consumers are now taking advantage of social couponing services like Groupon and LivingSocial to find savings on items they may want to purchase. Now the nation's largest credit card lender is working on a similar program for its debit and credit card holders.

BankAmeriDeals, a kind of social couponing service that offers consumers daily discounts based on their previous card spending habits, is now being tested by Bank of America employees in three states and will be rolled out to its workers across the country over the next few weeks, according to a report from The Associated Press. The service works by offering Bank of America credit or debit card customers deals when they log into the company's online banking sites, based on what stores they've purchased from in the past. Consumers can then click the offers to link them automatically to the account, with no printing required. Currently, there is no timetable for the bank to introduce the service to the general public.

But instead of granting consumers the discount at the register, the program works more like a traditional cash back rewards program, by giving the consumers the lump sum of the money they saved using the service in one payment at the end of every month, the report said. Customers will typically receive 16 or 20 of these offers every month, but those who use it more often will likely receive more. Those who want to opt out from receiving these offers will be given the option to do so as well.

Bank of America is launching this program because it grants consumers what are essentially cash back rewards that it does not have to pay for, the report said. Merchants will be the ones offering and paying for these discounts, not the bank, but it still serves as a means of incentivizing card use and as a way of building loyalty. For this reason, other banks including Chase and Regions are currently testing similar programs.

Banks are still trying to boost use of credit cards since many consumers changed their purchasing habits during the recession and are still looking for ways to reduce debt. However, many Americans are slowly beginning to return to their pre-recession spending habits of adding to their credit card debt and then paying it off over time. Add a comment

Newport Beach Couple Face Prison for Tax Evasion

ORANGE COUNTY (OCWEEKLY) -- In the 1990s, you could not serpentine around a champagne server at a high society soiree in Orange County without bumping into Richard and Jolene Engel. They were everywhere, even landing aboard the P'zazz yacht when the Nordstrom family hosted a private Newport Harbor supper-cruise for New York designer Donna Karan and her artist-sculptor husband Stephan Weiss. That was then. Now divorced, the Engels pleaded guilty Friday to failing to pay taxes on more than $180 million in unreported income from their Costa Mesa business that was supposed to refurbish the AES Corp. power plant in Huntington Beach. Their next fancy parties could be in state prison.

It's been a mighty fall for the power couple, who were part of the small after-party for Mikhail Baryshnikov after Misha had just made his Orange County dancing debut in August 1993 in what is now known as the Segerstrom Center in Costa Mesa.

Opera lovers, the Engels routinely sponsored the appearance of divas who sang in Opera Pacific productions. They arrived at the now-defunct presenter's 1700s-themed masked Opera Ball in November 1990 wearing powdered wigs and matching, custom-made outfits in their signature colors--blue and cream--the same hues of their 12 cars and the offices of their Powerplant Maintenance Specialists, Inc. (PMSI) in Costa Mesa. Richard Engel told a society reporter covering the ball at the time that it was "better than Halloween."

Besides scaring up the party circuit, Jolene Engel gave generously to Republican candidates, including the presidential runs of both Bushes.

Jolene Engel was president of PMSI, which billed itself as specializing in building and maintaining coal-fired power plants for investor-owned utility companies, and Richard Engel was the chief financial officer between 1998 and 2001, when the company's gross revenue exceeded $180 million. Richard Engel's bio stated that among his areas of expertise as principal and corporate counsel were bankruptcy and unfair labor practices.

That last skill is interesting because in late 2000, the Orange County District Attorney's office (OCDA) got a call from a labor union regarding possible fraud related to unpaid PMSI workers rehabilitating the AES plant--the one with the big smokestacks along Pacific Coast Highway in Huntington Beach. A year earlier, the Engels had entered a contract with the plant's then-owner, Southern California Edison, to refurbish the facility for around $108 million.

The contract called for AES to make bi-weekly $6.13 million payments to PMSI to obtain a discount on the contract price, according to the OCDA, which notes the project was estimated to take 90 days from the date the project received the required permits. The contract called for work to be completed by June 1, 2001.

After two years of investigation by the OCDA and the California Franchise Tax Board that began with a search warrant served on PMSI in January 2001, tax evasion charges were filed against the Engels. "This is the first tax evasion case this office has seen where the money owed to the state is in the eight figures," Orange County District Attorney Tony Rackauckas told reporters at a press conference back then.

The Engels were "living lavishly in Newport Beach, flying on a Lear jet, driving beautiful cars and charging personal luxury items, such as jewelry, to the company," Rackauckas said. "Here is the bottom line: Everyone has to pay his or her fair share of taxes. No one has the right to refuse to pay their taxes and spend their money on luxury goods."

Denise Azimi, a spokeswoman for the state Franchise Tax Board, added that, "Our investigators painstakingly reconstructed their income," thanks to 88 boxes of evidence that included bank records, computer files and other documents.

An attorney for PMSI, while not yet having dug through the boxes, said at the time the company owed nothing, nothing was even owed to anyone and that the state and OC authorities had "overstated" their case and made "several misrepresentations."

But, as proven with the guilty pleas, between Oct. 4, 2000, and Dec. 31, 2000, the Engels received more than $36 million from AES, yet PMSI did virtually no work. Of that, the Engels diverted more than $24 million for their own purposes, which included buying expensive jewelry and cars (we know which colors!), a $1 million down payment on a Lear jet for Richard Engel and more than $1 million for other companies he owned. Richard Engel even used money from that diverted pool of AES cash to pay $8.5 million for Jolene Engel's stock in PMSI when they divorced.

Before the scheduled June 1, 2001, date of work completion, PMSI received nearly $100 million from AES as full payment on the balance owed on the contract. But no work was done by the deadline because PMSI had not obtained the required construction permits.

Nonetheless, the Engels continued diverting funds paid by PMSI for their personal expenses. Meanwhile, their company was left with insufficient funds to pay for workers and materials on the AES job. The plant owner paid another $35 million to keep the project afloat. Meanwhile, on June 30, 2001, Richard Engel took over as president of PMSI, which never completed the project, and left workers, subcontractors and creditors unpaid.

That's not all who failed to get paid. The couple routinely filed state tax returns claiming they received little or no income in years when PMSI made millions from projects all over the country. Even if their position was they made most of their money out of state, a California return must still be submitted annually, and at minimum $800 would have been owed each year.

Richard Engel filed false tax returns in 1998 through 2000 and no return for 2001. In late 2000, he claimed no income for 1998 and 1999, and in March 2001 reported only $144,231 in income. During this time, Richard Engel received millions of dollars from PMSI, which, the OCDA notes, he spent on personal luxuries including stays at Four Seasons Hotels, a 1999 Bentley, jewelry and other expenses." Jolene Engel also failed to file personal income tax returns for 1998 through 2000, despite receiving a salary from PMSI and unreported income including the $8.5 million she received in 2000 for her stock in the company and approximately $3.7 million in 2001.

Prosecutors got Richard Engel to plead guilty Friday to four felony counts of failing to file tax returns for his corporation, three felony counts of filing false personal tax returns, and one felony count of failing to file a personal return. He also admitted to sentencing enhancements for fraud in excess of $500,000 causing a loss in excess of $1 million. He could get up to 12 years and eight months in state prison at his sentencing scheduled for Aug. 3, 2012, in Santa Ana.

Jolene Engel pleaded guilty Friday to one felony count of failure to file tax returns for her corporation and one felony count of failing to provide material information in a tax return. She faces up to five years and eight months at her sentencing scheduled for Aug. 3, 2012.

Before they are sentenced, the now-ex-couple must pay the state tax board $1.2 million. They also have to come up with $2 million in restitution. Wonder what a used blue and cream Bentley fetches these days?

Originally published OCWEEKLY Wed, Dec. 21 2011 at 5:19 PM Add a comment

Growing IRS Workload Causing Problems

WASHINGTON (AP) -- The Internal Revenue Service can't keep up with surging tax cheating and isn't sufficiently collecting revenue or helping confused taxpayers because Congress isn't giving it enough money to do its job, a government watchdog said Wednesday.

To cope with its growing and increasingly complex tasks, the agency is relying more on computer software designed to weed out fraud, Nina E. Olson, the national taxpayer advocate, said in her annual report to lawmakers.

But errors are abundant, creating even more work for the agency when taxpayers dispute its findings, the report said. In addition, it said the agency is increasingly relying on computer systems to evaluate tax returns that sometimes end up eroding taxpayers' rights, and people are having a harder time getting through to the IRS by telephone or letter, she said.

"The overriding challenge facing the IRS is that its workload has grown significantly in recent years while its funding is being cut," said Olson, an independent watchdog within the IRS. "This is causing the IRS to resort to shortcuts that undermine fundamental taxpayer rights and harm taxpayers — and at the same time reduces the IRS' ability to deliver on its core mission of raising revenue."

IRS spokeswoman Michelle Eldridge said linking tight agency budgets to supposed infringements of taxpayers' rights "is inaccurate and without basis in fact." She said the IRS has been using congressionally approved compliance programs to curb fraud and which are constantly audited to make sure people's rights are protected.

"While fewer dollars in a tight budget environment impacts elements of taxpayer service, it does nothing to erode our protection of taxpayers," she said.

By pointing her finger at the IRS budget, Olson was highlighting a politically sensitive issue. Especially in times of huge federal deficits and tight budgets, many lawmakers have shown little interest in being generous to the widely unpopular agency, which processes 141 million individual tax returns annually, including almost 120 million requests for refunds.

Congress cut the IRS budget to $11.8 billion this year. That is $300 million less than last year and $1.5 billion below the request by President Barack Obama, who argued that boosting the agency's spending would fatten tax collections and provide better service to taxpayers.

Those arguments did little to win over lawmakers.

"Like families across the country, the IRS will have to do more with less," Rep. Jo Ann Emerson, R-Mo., who heads the House Appropriations subcommittee that controls the agency's budget, said last fall.

Olson's report came just days after the IRS estimated that people and companies underpaid their taxes by a huge $385 billion last year after audits and other enforcement efforts, compared with around $2.3 trillion that the agency collected.

Olson noted that these tax collections are what make government programs possible and that the underpayment comes as lawmakers hunt for ways to pare federal deficits exceeding $1 trillion yearly.

"Yet obtaining a little extra money to bring in a lot of extra money remains an intractable challenge for the IRS, and that is unfortunate," the report said.

Underscoring the IRS' volume of work, the report said the agency contacted taxpayers 15 million times in 2010 to change their claimed tax liability. Only 1 in 10 of those contacts was considered an audit, which gives taxpayers additional rights such as the ability to go to tax court.

To cope with its growing burden, the agency is relying more frequently on computers and having less personal contact with taxpayers. As a result, the IRS is increasingly using "practices and procedures that harm taxpayers by acting on assumptions of noncompliance arrived at by automated processes that do not solicit, encourage or allow taxpayer response."

The report said the number of returns seeking refunds that the agency computer program set aside for screening for possible fraud grew by 72 percent, to 1.1 million, from 2010 to 2011.

The report said the number of bogus refund claims is growing as people submit multiple false returns via electronic filing. The growth of refundable tax credits for purchases of first homes, college costs and other expenses is also contributing to the rising number of bogus claims. Refundable credits can produce cash payments to people who owe no taxes, making them enticing targets for fraud.

Olson's report said the IRS handled more than 226,000 cases claiming identity fraud in 2011, a 20 percent increase over 2010. Thieves often request refunds by using the Social Security number of a person they falsely claim as a relative, frequently early in the filing season before the actual taxpayer files his or her return.

Though the overall rate of fraud remains relatively low, Olson said in an interview, "you want to make sure you're not abusing the taxpayers by letting dollars go out the door." Otherwise, she said, "taxpayers are going to get disgusted" and lose faith in the tax system.

In one measure of errors the agency is making, Olson's bureau received 21,000 complaints from taxpayers last year after the IRS blocked requested refunds because it suspected fraud. Three in four of them eventually qualified for the money. Those refunds averaged $5,600 and it typically took six months for taxpayers to receive them.

In addition, the IRS corrected 10.6 million discrepancies in taxpayers' returns in 2010 that it considered mathematical errors, more than double the 4 million corrected discrepancies in 2005, the report said. But the IRS itself made some errors. On 300,000 returns on which it disallowed exemptions for dependent children, it later had to restore the exemption just over half the time.

The report said that at the end of last year, it took the agency more than six weeks to answer nearly half of taxpayers' letters and faxes dealing with adjustments to their returns. The agency does not accept emails from taxpayers, Olson said. The report also said that between 2004 and last year, the portion of phone calls from taxpayers the IRS answered fell from 87 percent to 70 percent.

"Few government agencies or businesses would be satisfied if their customer service departments were unable to answer three out of every 10 calls," the report said.

Further complicating the IRS' task are constant changes to the 3.8 million-word tax code. Over the previous decade, 4,428 changes have been made to it, including an estimated 579 changes in 2010.

___

Online:

IRS National Taxpayer Advocate report: www.TaxpayerAdvocate.irs.gov

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CFPB Plans Review of Payday Loan Practices to Help with Debt Relief

The state of the economy has stretched so many Americans beyond their means that the demand for emergency credit and debt relief is skyrocketing.

Payday lending has become a $7 billion-a-year industry. And even though some states limit the interest rate lenders can charge and a few states have banned payday loans all together, there has been little federal oversight. That is, until now.

Now the Consumer Financial Protection Bureau (CFPD) plans to examine both bank and non-bank institutions offering payday loans (called a deposit advance at banks) to ensure that lending practices are neither illegal nor harmful to borrowers.

Originally, payday loans were meant to be a temporary, short-term stop-gap between paychecks. However, too often when the next payday rolls around, borrowers have to roll-over their debt because they can’t repay what they owe: the sum they borrowed plus two-weeks of accrued interest. While that interest might be 17% for those two weeks, the annual rate often amounts to 400% to 600%.

While many insist that the industry helps people who have been overlooked by the banking system and denied credit elsewhere, there are plenty of horror stories from those who have been “churned through the system” (taking out multiple payday advances) or gouged by lenders.

There is an alternative to the never-ending cycle of payday loans: debt settlement. Debt settlement allows you to get out of debt at a fraction of what you owe.

Debt settlement companies negotiate with your creditors to reduce your current unsecured debt, like credit cards and payday loans, and pay off your creditors on your behalf. All you owe is one monthly payment to the debt settlement company. And often this amount is half of what you were paying to all your creditors combined.

If you are feeling the pinch of the never-ending payday loan cycle or you have other debts that are piling up, contact us to discuss how debt settlement can provide you with debt relief.

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New Federal Bureau Helps Consumer Debt Relief

There’s a new sheriff in town. It’s the Consumer Financial Protection Bureau (CFPB). And it was created about a year ago to ensure that financial products such as credit cards and loans work better for consumers who need debt relief.

According to the 2012 report “Consumer Financial Protection Bureau 101: Why We Need a Consumer Watchdog,” nearly 20 million Americans use payday lenders. Additionally, there is about $1.2 trillion in delinquent consumer debt. Here’s what else the CFPB cites:

One in five Americans over the age of 65 has been victim of a financial scam
50% of claims against debt collectors cite harassment
The default rate on subprime mortgages issued in 2006 exceeds 50%

What does the federal government hope the Bureau will be able to do? The CFPB offers three things:

Education. To provide consumers with the ability to compare the "costs, benefits, and risks of different products effectively—and to use that information to choose the product that is best for them. Fine print and overly long agreements can make it difficult for consumers to understand and compare products.”
Enforcement. Specifically, the Bureau offers federal consumer financial protection laws that restrict unfair, deceptive or abusive acts or practices against consumers.
Research. The Bureau takes consumer complaints, researches consumer behavior and monitors financial markets for new risks.

Because many consumers are confused about the Bureau’s work, the government put together answers to some of the more frequently asked questions.

We can help you with your questions as well. If you need debt relief, we can help you reduce your debt for one low monthly program payment. Contact us and we’ll explain how.

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Consumers still wary of credit card debt, using cash

Wednesday, 25 January 2012 12:00

Americans have slowly started using their credit cards more often again, but many are still relying on cash to make the smaller purchases - such as those for coffee or at the drug store - they need in their everyday lives.

A recent Javelin Strategy and Research study found that 79 percent of respondents had used cash to make a purchase in the previous seven days, compared with 65 percent combined who used either a debit or credit card, according to a report from the Huffington Post. This shift may indicate just how much consumers began to rely on cash to make small purchases during the recession.

However, experts say that even as Americans shift back to using their credit cards more often, cash will likely remain just as popular as it has, because during the recession, consumers who prefer to make purchases with cards simply used debit instead, the report said.

Consumers' credit card use took a serious dip during the recession because many were dealing with significant financial difficulties and looking for ways to reduce debt. Add a comment

Could credit card lenders see fee limit this year?

Tuesday, 24 January 2012 12:00

A court case between millions of businesses and the country's largest financial institutions could end up leading to lower prices and therefore potentially less credit card debt for consumers.

The lawsuit, a private antitrust case between about 5 million merchants large and small against financial giants like Visa, MasterCard and 13 of the biggest banks in the country, is over what businesses say are unfairly high interchange fees charged to them every time they accept a credit card transaction, according to a report from CNBC. And the case could have a far-reaching impact when it comes to those large financial institutions. Some analysts say they may settle - and that it could cost them as much as hundreds of billions of dollars to do so - or that it may come down to the judge making a decision that could lead to lower prices.

Some believe that the judge could institute a fee limit on credit card transactions of as little as 0.5 percent of the purchase's total value, down 75 percent from the current average of roughly 2 percent, the report said. That's equal to the limit imposed in Australia, but still well above the fee cap of just 0.3 percent in the European Union.

For banks, the damage of such a fee could be significant for financial institutions, which is why some expect a settlement instead of letting the case begin as scheduled in September 2012, the report said. Some of the nation's largest banks could stand to lose more than $3 billion annually to such a fee cap.

That limit would be imposed in addition to the similar one implemented for debit card transactions in July of last year, the report said. That restriction, imposed by the Durbin Amendment to the Dodd-Frank Act, cuts the amount a payment processor can charge a business for accepting a debit transaction to just 21 cents per purchase instead of the previous average of 44 cents, based on a percentage of the total value of a purchase.

Merchants say they typically have to charge higher prices because of the interchange fees they pay to lenders. But with these limits being imposed, it could lead to lower prices for the same items, which could help consumers save money and reduce debt. Add a comment

Bill would limit credit card swipe fees in New Hampshire

Monday, 23 January 2012 13:00

The fees charged to merchants for accepting credit card purchases may soon be limited in one state, which might allow for some debt relief for consumers and small businesses alike.

New Hampshire lawmakers are currently considering a bill that would limit what banks can charge for processing credit card purchases to just 1 percent of a transaction's value, according to a report from the Nashua Telegraph. Currently, merchants pay an average of about 1.75 percent of a purchase price but fees range anywhere from 0.67 percent to 4.76 percent, a price the merchant typically doesn't learn until after they've been charged by banks.

This limit would be applied in addition to the new federal cap on debit swipe fees for major banks, the report said. That imposed a limit of just 21 cents per purchase regardless of its size, down from the previous average of 44 cents, based on a percentage of the transaction's value.

The law could help consumers keep credit card debt under control because oftentimes, swipe fees are built into businesses' prices as a way of passing them on to the consumer. If the bill were to pass, some companies may be in a position to reduce their prices Add a comment

Ruling says telemarketers can be sued in federal court

Thursday, 19 January 2012 12:00

A recent ruling passed down by the U.S. Supreme Court states that telemarketers and other businesses, such as debt consolidation or collection firms, that repeatedly call homes can be sued in state and federal courts.

The decision came as the result of a lawsuit involving a man who was repeatedly harassed by debt collectors with recorded phone calls, according to a report from the Associated Press. The calls came from Arrow Financial Services, which was trying to collect student loan debt for Sallie Mae. The recipient, Marcus Mims of Fort Lauderdale, Florida, sued for violations of the Telephone Consumer Protection Act.

The case was originally thrown out of the 11th U.S. Circuit Court of Appeals, which said the law did not give permission for federal suits, only those in state courts, the report said. However, other courts ruled in favor of Mims and the suit moved forward until it reached the nation's highest court.

Consumers should do all they can to educate themselves about the rights they have when dealing with debt collection firms, which sometimes engage in harassing behavior when trying to collect credit card debt. Add a comment

Expect more credit card offers from credit unions

Tuesday, 17 January 2012 13:00

Many consumers may have noticed that their mailboxes are being filled with more generous credit card offers from a number of major lenders in recent months, but other financial institutions are likely to step up their marketing as well.

Federal credit unions are seen as the next big competitors when it comes to offering credit card debt to those who have had trouble with their accounts in the past, according to a report from Business Insider. That's because they're stepping up marketing efforts, particularly to those with limited or damaged borrowing histories.

These accounts may be beneficial to those with low credit ratings because federal law limits the interest rates on all types of loans - including credit cards - these institutions can offer at just 18 percent, the report said. That's considerably lower than the interest rate most low-credit borrowers can expect from lenders, which is usually closer to 25 percent.

Efforts to market credit cards to consumers who have been locked out of the credit system in the past have expanded in recent months, as many Americans have made more conscientious efforts to reduce debt and have cut instances of delinquent and defaulted accounts significantly. Add a comment

Credit card images seen as possible mobile payment solution

Friday, 13 January 2012 13:00

Consumers who are worried about being hit with fraudulent credit card debt may be interested to learn about a new mobile payment system being shown off by a global card issuer.

CSI GlobalVCard, which issues MasterCard-branded debit and credit accounts, recently unveiled its new virtual credit card payment system at the latest Consumer Electronics Show in Las Vegas, according to a report from InformationWeek. This system allows consumers to create unique account numbers and have digital credit card images bearing those details emailed to them so that they can be displayed to a cashier when completing a transaction.

The security of this platform comes because consumers can customize the credit limits and expiration dates on each new account they create as debt prevention steps, the report said. However, CSI GlobalVCard also acknowledges that there may be some obstacles to adoption, and future versions of the payment system will involve near-field communications technology to make it even more secure as well.

Mobile credit card payments are expected to be adopted on a large scale by consumers within the next few years, but security concerns are currently seen as the biggest obstacle to that goal. Add a comment

New type of credit card made to fight fraud

Wednesday, 11 January 2012 13:00

A new credit card device has recently been introduced and is designed to limit the chances of consumers being hit with bogus credit card debt.

The card, created by Dynamics Inc. and being shown off at this week's Consumer Electronics Show in Las Vegas, randomizes six digits of a user's credit card number every time they make a transaction, essentially making the card useless to fraudsters in the event it's lost or stolen, according to a report from tech news blog Ars Technica.

A new number is displayed on a built-in screen only during a transaction, and after the user types in a code on the card's embedded five-button keypad, the report said. Otherwise, the screen, and the magnetic strip on the back of the card, are blank. Citibank is already testing the card in a number of small pilot programs but more lenders may adopt the technology in the near future.

Credit card fraud is one of the fastest-growing crimes in the nation and consumers who lose their credit cards or have them stolen should alert their lenders to the incident immediately so they don't run into issues getting out of debt. Add a comment

Debt collection agency hit with suit from New York attorney general

Monday, 09 January 2012 13:00

Unicredit America, a now-defunct debt collection agency based in Erie, New York, has been hit with a renewed suit from the state's attorney general.

The suit is designed to hold the company's president and vice president, Michael and Anthony Covatto, personally liable for its violations of consumer protection laws, according to a report from the Erie Times-News. The original suit alleged that Unicredit operated a fake courtroom in Erie and used deceptive and intimidating practices to draw debtors into making payments.

The attorney general's office originally sought to add the Covattos to the suit in June, but a personal Chapter 13 bankruptcy filing by Michael slowed the process, the report said. In November, a bankruptcy court judge ruled that the personal filing did not insulate Covatto from the Bureau of Consumer Protection.

When consumers owe money to lenders or have their balances sold to debt collections agencies, it's important for them to know their rights. Doing a bit of research into what options are available to them given their particular state's consumer protection laws will do a world of good. Add a comment

Expired debt coming back to haunt some consumers

Thursday, 05 January 2012 13:00

Millions of Americans who have subprime credit ratings are now receiving offers for new credit cards, and some of those are the result of a controversial alliance between lenders and debt collectors.

Some companies are now issuing credit cards to consumers with thousands of dollars in old debts on the condition that they pay back some of the credit card debt lenders long since abandoned as being uncollectable, according to a report from the Wall Street Journal. Typically, this debt falls outside the consumer's state's statute of limitations for collection.

Consumer advocates say that this debt relief practice is deceptive and federal authorities have looked into some of these companies' practices, the report said. However, lenders and even some borrowers say that those who have bad enough credit ratings should welcome the opportunity to begin borrowing once again.

In general, many of the nation's largest credit card lenders are now offering consumers more opportunities to obtain new lines of credit. Recent studies suggest the average subprime borrower in the U.S. received several offers for new cards in the first nine months of 2011. Add a comment

Older consumers adding student debt

Tuesday, 03 January 2012 13:00

While many consumers are working diligently to reduce debt and get their finances under control, one type of credit many consumers are adding in large quantities these days is student loan debt.

Student loan borrowing has increased for nearly every consumer age group, but none moreso than for those between the ages of 35 and 49, according to a report from Reuters. The credit tracking website Credit Karma recently found that the amount of student loan debt carried by those in this age group has risen 47 percent in the last three years.

"More and more people are going back to school," Credit Karma CEO Kenneth Lin told the news service. "High unemployment, rising tuition costs, artificially low interest rates from the government, and increased for-profit school advertising... [adds up to] consumers taking on student loan debt at an alarming pace."

Many consumers are worried about their credit card debt, but student loan debts are another consideration many may overlook when setting a monthly repayment schedule. However, it is important to make sure all aspects of personal finances are accounted for when looking for debt relief. Add a comment

Increase seen in debt collection calls, consumer complaints

Wednesday, 28 December 2011 09:00

With the economy still struggling somewhat, officials in some parts of the country say residents are seeing a higher number of debt collection agencies, some of them using aggressive tactics.

In the state of Idaho, the number of agencies has grown 20 percent over the past few years, the Idaho Statesman reports. There are now more than 600 debt collection agencies operating in the area. However, some consumers have complained of illegal harassing behavior as they try to get out of debt.

"It's always our highest area of (complaint) calls we receive," Mike Larsen, head of consumer finance at the Idaho Department of Finance, told the paper.

Officials told the paper that they do have the power to take away a debt collector's license if they violate the law in trying to collect debt, but that's a power that isn't used very frequently. Most of the department's actions involve cracking down on companies without a license.

Similar issues have been seen across the country. A group of unlicensed debt collection agencies are the focus of a serious of lawsuits in South Florida, the Orlando Sentinel reports. Add a comment

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