What is false advertising?

False advertising is an unfair method of competition forbidden under federal law and in most

States. Under consumer protection statutes, deception rather than fraud, is the significant element. There can be a breach of a consumer protection statute even though there is no proof that the wrongdoer intended to defraud or deceive anyone. The purpose of false advertising legislation is to protect the consumer rather than to examine the advertiser’s motives.

What is “bait and switch”?

In retail sales, a bait and switch is a form of fraud in which a party lures in customers by advertising a product or service at an unprofitably low price, then reveals to potential customers that the advertised good is not available but that a substitute is. The goal of the bait-and-switch is to convince some buyers to purchase the substitute good as a means of avoiding disappointment over not getting the bait. This practice is illegal in most states if the advertised model was never available in reasonable quantities.

What about unordered merchandise I receive in the mail?

Federal law requires that the sender of an unordered item through the mail mark the package Free Sample. You have no obligation to pay for the merchandise and may keep it. Sending you a bill for such merchandise may be mail fraud, which is a federal crime.

What are my rights as a consumer with debts that have been turned over to a collection agency?

The Fair Debt Collection Practices Act (FDCPA) prohibits harassment or abuse in collecting a debt such as threatening violence, use of obscene or profane language, publishing lists of debtors who refuse to pay debts, or even harassing a debtor by repeatedly calling the debtor on the phone.  Also, certain false or misleading representa­tions are forbidden, such as representing that the debt collector is associated with the state or federal government, or stating that the debtor will go to jail if he does not pay the debt. This Act also sets out strict rules regarding communicating with the debtor.

The FDCPA applies only to those who regularly engage in the business of collecting debts for others — primarily to collection agencies.  The Act does not apply when a creditor attempts to collect debts owed to it by directly contacting the debtors.  It applies only to the collection of consumer debts and does not apply to the collection of commercial debts.  Consumer debts are debts for personal, home, or family purposes.

When a collector contacts a debtor, if the debtor asks for verification of the debt, the collector must provide this verification in writing.  The debtor must include the amount of the debt, the name of the creditor, and the debtor’s right to dispute the debt.

The collector is restricted in the type of contact he can make with the debtor.  He can’t contact the debtor before 8:00 a.m. or after 9:00 p.m.  He can contact the debtor at home, but cannot contact the debtor at the debtor’s club or church or at a school meeting of some sort.  The debtor cannot be contacted at work if his employer objects.  If the debtor tells the creditor the name of his attorney, any future contacts must be made with the attorney and not with the debtor.  The debtor can call off the collection contacts at any time.  The collector would then have to use other collection means like filing suit.

The Act prohibits contacting other people about the debtors debts, with the exception of the debtor’s spouse and parents.  Another exception is that third parties can be contacted in order to get the debtor’s address, phone number and place of employment.  Contact with the debtor by postcard is prohibited because someone other than the debtor may see the contents of the postcard.

When a collection agency violates the Act, it is liable to the debtor for damages, and it is no defense that the debtor in fact owed the money that the agency was seeking to collect.  Debtors can collect up to $1,000 in actual damages in addition to actual damages.  Also the Federal Trade Commission can get a cease and desist order to stop any unlawful practices.

What is the Equal Credit Opportunity Act?

The Equal Credit Opportunity Act (ECOA) was passed in order to make sure that consumer credit was awarded based on an applicant’s credit worthiness rather than the applicant’s age, sex, color, religion, or national origin.  For example, a lender cannot consider the following when making a loan: race; marital status; receipt of public assistance income; receipt of alimony or child support; or future plans for children. Spouses have rights to individual credit application and consideration. The other spouses income does not have to be disclosed unless the applicant is relying on that income to qualify for credit. The penalties for violating the ECOA are the actual damages and the possibility of punitive damages of up to $10,000.  If there is a pattern or practice of violations, a class action may be filed which can result in damages up to $500,000 or 1% of the net assets of the defendant, whichever is less.

How do I get an error corrected that is reflected on a statement for something I bought on credit?

The Fair Credit Billing Act requires monthly statements on open-end credit transactions.  The bill must contain an address for the debtor to write in order to report errors in the bill.  Any such notification must be sent within 60 days of the bill’s receipt. The creditor then has thirty days in which to acknowledge the notification and ninety days to take action.  The debtor does not have to pay the protested amount during this period of time.  Once the matter is resolved, the debtor must pay the correct amount owed.  If the creditor does not comply with the time limits of the Act the debtor does not have to pay the disputed amount, even if it is correct.

Where do credit reports and credit data come from?

Credit reports are compiled by credit bureaus. Credit bureaus are private, for-profit companies that gather information about your credit history and sell it to any number of businesses that are allowed to see your credit report: banks, mortgage lenders, credit unions, credit card companies, department stores, insurance companies, landlords, and employers.  Credit bureaus get most of their data from creditors. They also search court records for lawsuits, judgments, and bankruptcy filings. They also go through county records to find recorded liens.

Credit reports include noncredit data such as names you previously went by, past and present addresses, Social Security number, employment history, and even marriages and divorces. Credit data includes the names of your creditors, type and number of each account, when each account was opened, your payment history, your credit limit or the original amount of a loan, and your current balance. The report will show if an account has been turned over to a collection agency or is in dispute.

How can I get a copy of my credit report?

Free annual credit reports are now available in every state. To order your free report, go to http://www.annualcreditreport.com, and either order your report online or download a form to mail in your request. You can also call 877-322-8228. You are entitled to one free copy of your credit report each year under the following circumstances:

• you’ve been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit;
• you’re unemployed and looking for work;
• you receive public assistance;
• you believe your file contains errors due to fraud or you are (or you think you are) a victim of identity theft;
• you’ve been denied employment (or another adverse employment decision has been made) based in whole or in part on information contained in the report; or
• your report has been revised based upon an investigation you requested.

What laws regulate credit bureaus?

The Fair Credit Reporting Act regulates the use of information on a consumer’s personal and financial condition.  The most typical transaction which this Act would cover would be where a person applies for a personal loan or other consumer credit.  Consumer credit is credit for personal, family, or household use, and not for business or commercial transactions.  Also, this Act can apply when a person applies for a job or even a policy of insurance when certain investigations are made of the applicant.

The purpose of the Act is to insure that consumer information obtained and used is done in such a way as to insure its confidentiality, accuracy, relevancy and proper utilization.  Under the Act, consumer reports are communications in any form by which furnishes informa­tion on consumers to potential creditors, insurers or employers.

Upon request, a credit bureau must tell a consumer the names and addresses of persons to whom it has made a credit report on that consumer during the previous six months.  It also must tell, when requested, what employers were given such a report during the previous two years.

Some information obtained by credit reporting bureaus is based on statements made by persons, such as neighbors who were interviewed by the bureau’s investigator.  Needless to say, these statements are not always correct and are sometimes the result of gossip.  In any event, such statements may go on the records of the bureau without further verification and may be furnished to a client of the bureau who will regard the statements as accurate.  A person has the limited right to request an agency to disclose the nature and substance of the information possessed by the bureau to see if the information is accurate.  If the person claims that the information of the bureau is erroneous, the bureau must take steps within a reasonable time to determine the accuracy of the disputed items.  If no correction is made, the debtor can write a 100 word statement of clarification which will be included in future credit reports, even it the agency disagrees with clarification.

The Fair Credit Reporting Act (FCRA) requires that a credit reporting agency follow reasonable procedures to assure accuracy of the information it gathers.  Adverse information obtained by investigation cannot be given to a client after three months unless it is verified to determine that it is still valid.

Credit reporting bureaus are not permitted to disclose information to persons not having a legitimate use for this information.  It is a federal crime to obtain or to furnish a credit report for an improper purpose. Under the FCRA, agencies can only disclose information to the following:

• a debtor who asks for his own report;
• a creditor who has the debtor’s signed application for credit;
• a potential employer; and
• a court pursuant to a subpoena.

How long can negative information stay on my credit report?

Most negative information can stay on your credit report for seven years. Lawsuits, judgments, tax liens, accounts sent to collection, arrests, late payments, and any other adverse information can normally stay on your credit report for seven years. Overdue child support can also stay on your report for seven years. Some adverse information regarding U.S. government insured or guaranteed student loans, or national direct student loans, may be reported for more than seven years. Criminal convictions may be reported indefinitely.

Bankruptcies, however, can normally stay on your credit report for ten years from the date of the last activity (usually the date you received your discharge, or the date the case was dismissed, although credit bureaus sometimes start counting from the earlier date of filing). Credit inquiries (requests by companies for a copy of your report) can stay on your credit report for only two years.

What should I do if I find mistakes in my credit report?

Complete the “request for reinvestigation” form that the credit bureau should send you, or send a letter listing each incorrect or out-of-date item and explain exactly what is wrong. Once the credit bureau receives your request, it must investigate the items you dispute and contact you within 30 days. If you let the bureau know that you’re trying to obtain a mortgage or car loan, it can often do a rush investigation.

Are there any laws that specifically prohibit identity theft?

In 1998, Congress passed the Identity Theft and Assumption Deterrence Act (18 U.S.C. § 1028). The Act makes the use of another person’s identification with the intent to commit any unlawful activity a federal felony. Federal agencies — including the U.S. Secret Service, the FBI, and the U.S. Postal Inspection Service — investigate suspected violations of the Act. The U.S. Department of Justice handles prosecutions. Federal law enforcement agencies usually do not investigate individual cases unless the dollar amount is high, or the victim is one of many people victimized by the same perpetrator or fraud ring.

Additionally, many states have passed or are considering laws related to identity theft. Even if your state does not have a law specifically called an identity theft law, the issue is likely covered under other state laws. A list of state identity theft laws may be found at the following site:

http://www.consumer.gov/idtheft.

How can my identity be stolen?

Someone could steal your identity by:

• stealing your wallet;
• filling out a change of address form for you and collecting your mail;
• retrieving credit slips from your trash;
• ordering unauthorized credit reports on you by posing as a potential employer or landlord;
• looking over your shoulder at ATM’s to gather PIN numbers (sometimes with binoculars);
• using phony telemarketing schemes in order to get you to give out personal data; or
• purchasing it at one of the identity search companies that have sprouted on the Internet.

For as little as $49.99, these companies will sell you someone’s Social Security number (the heart of identity theft), their mother’s maiden name (the second most valuable piece of information), their home and employment address, their previous addresses, their credit history, and more.

If my identity gets stolen, what can the thief do with my personal information?

A thief can cash a check, obtain a loan, open credit accounts and charge them to the max, rent an apartment, buy a car, purchase a cell phone and talk to someone long distance all day, and commit a serious crime — all in your name.

Will I be held responsible if a thief uses my identity to commit a crime?

If a thief uses your credit card in a credit scam, you will at most only be responsible for only $50. However, you may spend months hassling with credit agencies, financial institutions, and police departments trying to clear your name and repair the lingering damage. Almost certainly you will have to take time off from work to write letters, make calls, collect evidence, and demand action.

What can I do to protect my identity from theft?

Here are some tips for keeping your private information secure:

• Never carry your Social Security card in your wallet;
• Don’t have your Social Security number or your driver’s license number pre-printed on your checks;
• Use your initials (instead of your first name) and last name on your checks. If some one takes your checks, they will not know if you sign your checks with just your initials or your full name, but your bank will know;
• If you have a P.O. Box or work address, put that address on your checks instead of your home address. Put your work phone number on your checks instead of your home phone number;
• When writing a check to a credit card account, do not put the complete account number on the “For” line — just use the last four numbers;
• Install a locking mailbox or a mail slot that goes directly into your house. Send your mail, especially payments, directly from the post office (don’t put it in the mailbox for the postal carrier to pick up);
• Order your credit report every year. Promptly respond to any inaccurate information;
• Change your passwords and PIN numbers regularly. Don’t use obvious codes such as birthdays, or the name of your spouse or child. Memorize passwords and PIN numbers and shred any piece of paper on which they are written;
• Carefully review credit card statements, phone, and utility bills. Call if you do not recognize a charge or phone call;
• Always take your credit card receipts, and never throw them away in public;
• Tear up or shred any offers of pre-approved credit cards you do not  intend to use and beware of offers from companies you do not recognize. It’s easy to create an official-looking and completely phony credit application offering you pre-approved credit if you provide your Social Security number, mother’s maiden name (for supposed security reasons), and a signature;
• Do not give personal information over the phone unless absolutely necessary. If someone calls who says they are calling from your bank or credit company, ask for a number to call them back;
• Beware of anyone asking for your Social Security number. If they refuse to complete a transaction without it, consider taking your business elsewhere; Pick up your new checks from the bank instead of having them sent to your home;
• Don’t put personal information on a computer home page or personal computer profile.

What should I do if I discover that my identity has been stolen?

If someone steals your credit cards, driver’s license, Social Security number, or any other type of identifying information about you, that person has stolen your identity. The following steps can be taken:

• Make an identity theft affidavit (and plenty of copies). The Federal Trade Commission has an official identity theft affidavit that you can use to alert different companies, including the major credit bureaus, your credit card companies, your banks, etc. You can download the affidavit at http://www.consumer.gov/idtheft.
• Contact the police. File a police report and keep several copies. You may need to send copies to credit bureaus, creditors, collectors, banks, etc.
• Cancel your credit cards, ATM cards, and phone cards. Notify your bank of the problem and close all existing bank accounts. Banks may require that you sign an affidavit stating that you have been a victim of fraud.
• Call the credit bureaus. They can issue a fraud alert and attach a statement to your report. The alert means any company that checks your credit knows your information was stolen and they have to take extra steps to verify the identity of the person requesting credit. In some cases, company may need to call you to authorize the credit. The major credit bureaus are:

1.         Equifax: http://www.equifax.com; 800-525-6285;

2.         Experian: http://www.experian.com; 888-397-3742; and

3.         Trans Union: http://www.transunion.com; 800-680-7289.

• Get copies of your credit report from each of the credit bureaus. Check each report carefully when you receive it. Look for accounts that you did not  apply for or open, inquiries that you did not initiate, and defaults and delinquencies that you did not cause.
• Report stolen checks. Contact your bank and the following agencies:

1.         Certegy: 800-437-5120;

2.         TeleCheck: 800-710-9898; and

3.         TeleCheck (merchant services): 800-366-1054.

• Alert the post office if you suspect the thief may have filed a change of address form in your name. That form will be an important piece of evidence for the police to follow.
• Alert the utility and phone companies. They can close your existing accounts and be alert to attempted fraudulent uses. If you’re having trouble getting fraudulent phone charges removed from your account, contact your state Public Utility Commission for local service providers or the Federal Communications Commission for long-distance service providers and cellular providers at http://www.fcc.gov (or 888-CALL-FCC).
• Review your Social Security earnings statement. Look for evidence that your Social Security number has been used fraudulently. Get a copy of your Social Security Earnings and Benefit Statement and look for earnings for jobs you’ve never had. You should receive your earnings statement automatically each year if you have worked and are 25 or older, or you can request a copy by calling 800-772-1213 or by visiting SSA’s website at http://www.ssa.gov.
• Do not pay bills that you are not responsible for. Be persistent with police, credit bureaus, credit card companies, and banks.