Take-Aways From a Seminar About Fraud

 One of the activities that I pack into my busy schedule is volunteering as a room host for the same non-profit educational foundation, Master the Possibilities, that I am a paid instructor for. In short, I take attendance at other faculty members’ classes and get to learn a lot of interesting things for free.

I recently attended a class about fraud and below are my key take-aways:

 

Multiple Channels of Fraudulent Outreach- There are many ways that fraud victims are contacted including by phone, text, and e-mail. Also, pop-up messages on a computer with fake virus warnings that trick people into taking action that exposes personal information. The pop-ups may tell victims to call a “tech support” number and then panic them into providing remote computer access, personal identification information, or payment for fake fixes.

 

Fraud vs. Scam- The terms fraud and scam are closely related, but they aren’t exactly the same. Fraud, a broader term, refers to intentional deception used to gain something of value (like money, property, or identity) from someone else. Fraud can happen in many settings. Scam is more of an everyday term. It refers to a specific trick or scheme designed to deceive a person directly, often online, over the phone, or in person, to steal money or information. Scams are a type of fraud.

 

Skimming Devices are Passe’- Bluetooth technology is increasingly being used in place of traditional skimming devices to steal credit card information. Criminals discreetly install Bluetooth-enabled skimmers on card readers or gas pumps and retrieve data wirelessly (think laptops in a parking lot) from a 30 foot range away. Bluetooth skimming makes detection harder, allowing thieves to collect card numbers remotely and avoid frequent physical recovery of devices.

 

Tap to Pay- Tapping a credit card (i.e., contactless technology) is the safest and fastest way to pay for purchases. It uses encrypted technology that protects your credit card number. Transactions are completed in seconds, reducing time at checkout and limiting exposure to fraud. Tap-to-pay cards generate a unique, one-time code for each transaction, which helps prevent hackers from reusing stolen data. This feature makes it much more secure than swiping or inserting a chip card.

 

Keep Your Credit Card Close- Follow a personal decision rule that states “nobody ever takes my credit card out of my sight.” While most employees are honest, dishonest waiters or clerks have an opportunity to skim a card or snap a cell phone photo of card numbers and misuse your data. Three alternative payment options at restaurants are 1. pay with cash, 2. request a remote credit card payment device, or 3. follow a waiter to a cash register to oversee the transaction. Granted, the last two can be awkward but they do reduce the risk of fraud.

 

Three More Things- 1. Don’t do Facebook games or quizzes (e.g. “Find a dog that looks like you”) that require answers to questions that could also be security questions, 2. Pull your credit report at least once a year to check for errors and evidence of identity theft, and 3. Freeze (block) your credit to prevent new (fraudulent) credit from being opened in your name and thaw (unlock) your credit for 24-48 hours if you need to borrow money, open a bank account, or get a new utility service.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

PowerPay Your Way Out of Debt

 

Are you still revolving a balance on your credit card for purchases made during the 2024 holiday season or before? If so, you are not alone. Nearly half (48%) of credit cardholders are in the same boat, especially young adults in the Millennial and Gen Z generations.

I recently attended a webinar about current U.S. debt statistics and features of the PowerPay debt repayment acceleration program as a tool to reduce debt repayment time and interest costs. PowerPay is a free online program developed by Utah State University Cooperative Extension. Below are seven key webinar take-aways:

Outstanding Debt- The average American carries almost $7,000 in credit card debt, up from about $5,000 in 2021, largely due to inflation. In addition, average total debt per U.S. household is $149,358, with mortgage debt comprising 70% of this amount.

Causes of Debt- One cause is inflation, especially the historically high percentage increases in the Consumer Price Index seen in 2022. Credit card balances increased more than wages. Two other causes are medical debt (the primary reason that people file for bankruptcy) and child care costs, which have risen at nearly double the pace of overall inflation.

Student Loans- About 42.8 million Americans have outstanding federal student loan debt and 64% of student loans are carried by women, who earn lower average incomes than men. The average student loan balance in the U.S. in 2024 is $37,853 per borrower. Absent any debt acceleration, it may take borrowers up to 20 years to repay what they owe.

Debt Repayment Options- There are different ways to deal with debt including credit counseling with a non-profit agency, a debt consolidation loan, bankruptcy, and the use of PowerPay to create a debt acceleration payment calendar. PowerPay works by applying the monthly payment on a repaid debt to the amounts owed to remaining creditors.

Avalanche vs. Snowball Method-  PowerPay can do debt reduction calculations using both methods. The avalanche method prioritizes paying off the debt with the highest interest rate first, even if it has a larger balance. The "snowball method" prioritizes paying off the smallest debt balance first, regardless of interest rates on debts.

Benefits of PowerPay- PowerPay crunches all the numbers for users to show them how much time and interest they can save by following a personalized debt reduction calendar vs. paying off debts without PowerPay. Money going toward combined debt owed to multiple creditors remains constant but the way it is allocated to monthly payments changes as debts are repaid.

Key Caveat- The key to success when using PowerPay is not accumulating new debt. The debt reduction calendar that is created is based on existing debt only and will not work if balances on outstanding debts continue to grow.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

The Cost of Convenience

A key factor that determines what people spend money on every day is convenience. Convenience generally saves time but can add to the cost of products and services because somebody did some work for you (e.g., marinating meat or fish or making kabobs). 

An estimated $751 billion is spent annually by Americans on convenience items according to a study by Finder, an online data aggregator.

 

Consider the following ten examples:

¨    Buying sliced fruit at a supermarket vs. whole fruit (e.g., melons and strawberries) and cutting it up yourself; ditto for packaged salads vs. cutting up lettuce, tomatoes, etc. yourself

¨    Using food shopping delivery services vs. shopping yourself at a supermarket

¨    Ordering home food delivery (e.g., DoorDash, Grubhub) from restaurants instead of eating out

¨    Taking a cab or ride share (e.g., Uber, Lyft) vs. using public transportation or even walking

¨    Eating out, take-out, or meal delivery services vs. cooking food at home and brown bagging

¨    Visiting a drive-through vendor for coffee and/or breakfast vs. preparing these items at home

¨    Shopping online, being tempted to overspend, and having to pay shipping and handling fees

¨    Buying home-delivered books online that could be checked out for free from a public library

¨    Using vending machines to buy snacks or beverages instead of bringing them from home

¨    Hiring a home cleaning service or lawn mowing service vs. performing these tasks yourself

 

Another example of high-cost convenience spending is using plastic (debit or credit cards) or mobile (digital) wallets (e.g., Google Pay, Venmo, Apple Pay) to make purchases. Studies have found that people spend more when no physical money is changing hands...about 30% more when they don't spend with cash.

According to a Pew Research study, in 2022, about 41% of Americans said none of their purchases in a typical week were made with cash, up from 29% in 2018. Digital wallets are even more convenient than credit cards because people don’t need to carry a credit card and can pay with their phone. The easier it is to spend money, the more money people typically spend.

Bottom Line: convenience spending methods are here to stay and people often use them to help manage their busy lives. Convenience is not necessarily a bad thing but people need to understand the price tag and evaluate how convenience deccisions affect their finances. 

When money is tight, it may be wise to ditch convenience in favor of inconvenient, but lower cost, spending options. Personal decision rules are also useful (e.g., a spending limit for spontaneous purchases). 

For additional information about the cost of convenience, view this OneOp webinar.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Facebook at Its Best: Education and Collaboration

Facebook (FB) has had its fair share of criticism in recent years. Concerns include privacy breeches, failure to monitor and take down divisive or questionable content, and encouraging FOMO (fear of missing out), unhappiness, and even depression when FB users are exposed only to the curated best side of others and become anxious about “likes” for their content.

Much like credit cards, FB has two sides: as a negative tool with harmful effects and bad actors and 2. as a positive tool for education, positive collaboration, and information sharing. I'm going to do a 180º turn from Facebook's many "issues" (nobody says problems anymore!) and share a positive example of how FB helped members of my Florida community.

In February, I taught a class at a local community adult education center and heard a story about a fraud case that I felt I had to share with others, to warn them. So I posted the following message on the community FB page:

 

I just heard a true story from a local older adult (read: someone just like us) while teaching a class this morning. The person's credit card information was recently hacked by someone who placed a skimming device on a gas pump at a local gas station within 4 miles of our community. The victim only has one credit card and is now without any credit card access for a week or so until a new card arrives.

Here are 4 take-aways for everyone to consider:

1.   Consider paying cash for gas. I always pay cash for gas (to avoid possible skimmers) and at restaurants (to avoid dishonest waiters who could skim my account number- or take a cell phone photo of it- and commit ID theft). Nobody touches my credit card but me. It is a risk reduction strategy.

2.   If you use a credit card for gas, a red-flag for skimming machines is when you have to swipe your card multiple times to get the transaction to go through. If this happens, stop swiping and notify gas station staff of the issue with the pump.

3.   If you use a credit card for gas, try to use pumps closest to where gas station workers are. According to ID theft experts, pumps farthest away from where workers can see them are more likely to have skimming devices placed on them. The victim used a pump on the outskirts of the gas station.

4.   Have a second "Plan B" credit card just in case unexpected events like this happen.

Again, a true story from a local older adult that we can all learn lessons from.

From, there, community members shared additional cautionary advice related to credit card and online security. Not only did they discuss skimming devices, but also personal security strategies, RFID (radio-frequency identification) sleeves, and contactless “tap and go” credit cards that have the icon used to identify Wi-Fi on them. They also shared tips and fraud warnings of their own. Below are some examples:

¨    Another credit card tip. We use a credit card just for online purchases. It has a low line of credit attached to it. This way, if the card number is compromised, it will be easy to spot.

 

¨    Most credit cards allow you to set up alerts when the card is used for a transaction above a set dollar amount. I have all of mine set up to notify me of any transaction over 1 cent. So, I get an immediate text message whenever my cards are used. I've caught scam transactions this way and immediately contacted the credit card company.

 

¨    If you tap and pay with your card, it uses a different technology. You cannot be skimmed with tap and pay.

 

¨    Be careful using the drive-through cash machine at your bank also. Our debit card was compromised at our own bank. The drive-through machine is serviced by an outside vendor. Lesson learned. A branch of the bank in question is located close to our community.

The FB posts reminded me of a threaded discussion for an online college course where students are expected to read what their peers have posted and contribute new information to the conversation that adds value. However, in this case, the posts were not being graded. Instead, they were completely organic, positive, and helpful. 

Facebook (and other social media) has the potential to live up to its promise of connecting individuals in a positive way. My initial post about credit card fraud is an example.

This post provides general personal finance information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.