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February 17, 2020

Surprise: Stuff You Buy With Your Credit Card Could Be Repossessed!

Filed under: Finance — Edgar (aka MrConsumer) @ 6:10 am

MrConsumer recently applied for a new credit card and was shocked to see a particular clause in the credit card agreement. [See identical clause from a different credit union.] It said the credit union was taking a security interest in any goods I purchased with the card.

*MOUSE PRINT:

security interest

That means if I don’t pay my credit card bill, they could theoretically come to my house and repossess that big screen TV set I might have bought to watch the Super Bowl, or deduct the delinquent part of my unpaid balance from any savings accounts I have at the credit union.

We normally think of a security interest arising when taking out a mortgage on a house or buying a new car, but not when buying a refrigerator. Nonetheless, if your credit card issuer tucked a security interest clause in your credit card agreement, and depending on the wording they used, they could repossess that still unpaid for big-ticket item.

They will have to follow state law, which might impose restrictions such as the security interest does not apply to items under $200, or they can’t disturb the peace in the repossession process, or they have to get a court order first, etc. See some rules that apply in New York State, for example.

We’ve reported on various unexpected and sometimes funny clauses that have been secretly tucked into various contracts (see, for example, story one, story two), but this one raises potentially serious issues for those who fall behind in their credit card payments.

Does your credit issuer use one of these security interest clauses? To check, see if the Consumer Financial Protection Bureau has your bank’s credit card disclosure form in their database.




• • •

February 10, 2020

How Quickly Do Free Credit Monitoring Services Alert You When Someone Accesses Your Credit Report?

Filed under: Finance,Internet — Edgar (aka MrConsumer) @ 6:08 am

Like many people, MrConsumer has had a variety of ID theft notification services that have been offered by various companies that have experienced a data breach. He has also signed up for some from financial websites that offer credit monitoring as a free benefit. All these plans are supposed to be an early warning system to alert you when someone applies for credit in your name or when there are major changes to your credit report. If it was a crook and not you, a quick call could stop that new credit line from being opened.

On January 6, a little before 1 PM, I applied for a new credit card. I got an email confirmation of my application from the bank at 12:58 PM and received almost instant approval. Seconds after that, also at 12:58 PM, I received an email from Experian entitled, “Alert: Change to your credit file detected, Edgar.” It alerted me that a bank/credit card inquiry had been made on my account. Wow! How is that for being on the ball? However, it wasn’t until 24 days later that I received an alert from them that a new trade line (account) had been opened and added to my credit report. This service from Experian is called CreditWorks Basic, and it only monitors activity on Experian credit reports and not the other two credit reporting agencies — Equifax and Trans Union.

But what about all the other ID theft notification services I had subscribed to? How fast did I receive alerts from them?

*MOUSE PRINT:

Credit Monitoring chart

Experian’s other service offered to AAA members didn’t notify me of the credit application until the next day, and CapitalOne took three days. Worse, none of the other services ever let me know that someone (me) was applying for credit. Why is that?

We asked an Experian executive and found out that credit bureaus don’t generally share inquiries made by lenders with their competitors. In other words, if you apply for a credit card and the card issuer gets your credit report from Experian, Experian doesn’t share that information with Trans Union or Equifax.

If you don’t happen to have a credit monitoring service that explicitly watches the credit bureau which was contacted for a copy of your credit report by the lender, you are likely to never get a notice that someone has accessed your file. Yikes! If your monitoring plan is connected to the bureau from which your credit file was pulled, you will likely get an instant notification. So had my new credit card company asked Trans Union or Equifax for my credit file rather than Experian, services that monitor those companies would also have notified me either immediately or very soon after my application.

Now how come all the monitoring services took about a month to notify me that a new credit account had been added to my credit file? It is common practice in the industry for credit grantors to only let the credit bureaus know of a new account after the first statement is rendered. And that is typically close to a month after the account was actually opened.

So, what does all this mean for you? The best protection against anyone applying for credit in your name is to lock or freeze your credit file at all three credit reporting agencies. But if you want an early warning whenever anyone, including yourself, applies for credit in your name, you need all three bureaus to be monitored with one service (a three-bureau report) or a combination of ID theft protection services.




• • •

November 18, 2019

American Express to Drop Benefits From Some Cards

Filed under: Finance — Edgar (aka MrConsumer) @ 6:08 am

American Express just announced that it is dropping a number of pro-consumer benefits from a number of its free credit cards.

Tucked on page five of MrConsumer’s October billing statement for his American Express EveryDay card was the bad news.

*MOUSE PRINT:

Amex benefits cut
List edited for easier viewing

So no more double the manufacturer’s warranty, return protection, etc. They are retaining but shortening “purchase protection” for items that are lost or stolen. And collision damage waiver on car rentals will still be offered. (See more details here.)

AMEX’s announcement continues a disturbing industry trend of reducing traditional card benefits that have provided cardholders who utilized them with very valuable perks. See our previous story about Citi dropping benefits on its cards a couple of months ago.




• • •

August 5, 2019

Get 3% on Savings and 3% Cash Back on Purchases… BUT

Filed under: Finance,Retail — Edgar (aka MrConsumer) @ 5:42 am

The TV airwaves have been flooded by a new advertising campaign from Green Dot. Mostly known for their prepaid cards, Green Dot is branching out into bank accounts with an almost too-good-to-be-true offer.

They are offering a 3-percent interest rate on your savings account, and 3-percent cash back when you make purchases with the debit card that comes with that account. Unheard of benefits on both scores.

Don’t get too excited however. Their fine print is sure to put a damper on your enthusiasm.

The deposit agreement for the Unlimited Cash Back account is full of goodies.

*MOUSE PRINT:

The offer promises 3-percent interest on your savings up to $10,000. Well, how much is the interest rate on amounts over $10,000?

Answer:

Green Dot interest

So, you get no interest on larger deposits, and it is possible that the 3-percent interest rate could change.

That possible change in interest rate is an important disclosure because of the following additional disclosure:

*MOUSE PRINT:

Interest is only credited once a year, and at the rate in effect at that time!

Green Dot once a year

And the bank has fees for this account. If you make a deposit in cash at a retailer, you can be charged up $5.95. Here are two more fees.

*MOUSE PRINT:

fees

You have to pay $7.95 a month unless you spend $1,000 using their debit card. That seems pretty steep on both scores.

If you do spend any money with the card, you do get 3-percent cash back, but even that has some key restrictions.

*MOUSE PRINT:

in-app purchases

Only purchases made via an app or online qualify for the 3-percent back. And even certain of those purchases don’t count either, like airline tickets, person-to-person payments, bill payments, gift card purchases, etc. And to add insult to injury, the cash back you are entitled to is only credited to your account once a year.

With all these restrictions, you may not become green with envy of anyone using this card.




• • •

July 29, 2019

Cash Back Credit Card Correction;

Group Asks FTC to Investigate Prime Day Promotions

Filed under: Finance,Internet,Retail — Edgar (aka MrConsumer) @ 5:05 am

CORRECTION AND UPDATE:

Before our main story, I wanted to advise readers that the PayPal 2% Cashback credit card mentioned here two weeks ago as a good substitute for the Citi Double Cash card which is dropping almost all benefits soon does NOT have the benefits referred to on its website nor as confirmed by its customer service agents with whom I double-checked. That card only has one benefit – ID theft protection — but not extended warranty, price protection, return protection, CDW coverage, lost luggage coverage, etc. contrary to the link from the benefits section of its website states. I apologize to anyone who applied for this card as a result of the recommendation. I will be cutting up my card shortly. Synchrony Bank, the card’s issuer, just provided us with a response that basically says they are going to correct their link:

…we are taking some action to help further clarify the specific benefits of the PayPal Cashback Mastercard when a consumer is looking on the web. Already consumers can see the two key benefits including ID Theft Protection and Microchip technology. Additionally, we plan to post a specific version of the guide to benefits that you can find here.


Last week, Public Citizen, a Washington-based public interest consumer advocacy organization, sent a letter to the FTC asking them to crack down on websites that promote the sale of products from Amazon.com without clearly disclosing when they have a financial incentive to tout those items.

The group pointed out dozens of instances of stories published two weeks ago on popular websites and through social media that spotlighted certain items as great deals during Amazon’s big Prime Day sale. In most cases, the affiliate relationship the publisher had with Amazon was either not disclosed at all or poorly disclosed. (We documented this very issue last December in this story.)

In an affiliate relationship, a publisher or even a person with just a social media presence can earn a small commission on the sale of products if a reader clicks a link from the website or post and actually purchases the item. Under the Federal Trade Commission’s testimonial and endorsement guidelines if there is a financial connection between an endorser and the product being touted, that fact must be clearly disclosed. Similarly under the FTC’s native advertising guidelines when advertising masquerades as editorial content, clear disclosure of a sponsorship relationship must be made.

As one example of what is going on, Public Citizen cited this story from the Today Show website:

Today Show promotion

The story recommended a couple of dozen items as “the best Prime Day deals.” What the reader didn’t know was that NBC had a financial interest in the sale of those items.

*MOUSE PRINT:

Only if the reader clicked the “read more” link (and they would have no particular reason to do so based on the content that was already showing), would they learn NBC’s little secret).

NBC Today Show disclosure

The program makes a small commission if a reader buys any of the items featured through the links provided.

The problem here was that NBC hid that fact instead of openly disclosing it. At least their specific choice of which items to highlight was an independent editorial decision based on merit. This is how Consumer World selects its Bargain of the Week (which very rarely contains an affiliate link).

Last year, we called out ABC and others for an even bigger problem — running entire “deal” segments on their morning shows, where the network was getting a cut of the sale of each item featured, and not clearly disclosing that fact at the beginning of the segment. See our story.




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