Think twice about credit repair offers – National Consumers League

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Good credit is important; a bad credit history can impact your ability to get loans, housing, or even a job. But while promises to “fix” bad credit may be tempting, they’re not true – and they may leave you in worse financial shape than when you started.

  • No one can erase negative information if it’s accurate. Only incorrect information can be removed. Accurate information stays on your record for 7 years from the time it’s reported (10 years for bankruptcy). Even information about bills you fell behind on but now are paid will remain on your report for these time periods.
  • Credit repair services can’t ask for payment until they’ve kept their promises. Federal law also requires credit repair services to give you a explanation of your legal rights, a detailed written contract, and three days to cancel (this applies to for-profit services, not to nonprofit organizations, banks and credit unions, or the creditors themselves).
  • You can correct mistakes on your credit report yourself. If you were recently denied credit because of information in your credit report, you have the right to request a free copy. Otherwise there is a small fee, unless your state law provides for one free report a year. It doesn’t cost anything to question or dispute items in your report. Follow the instructions provided by the credit bureau. The major credit bureaus are: Equifax, 800- 685-1111,www.equifax.com; Experian, 800-682-7654, www.experian.com; and TransUnion, 800-916-8800, www.transunion.com. Contact all three, as the information each has may vary.
  • You can add an explanation to your report. If there is a good reason why you weren’t able to pay bills on time (job loss, sudden illness, etc.) or you refused to pay for something because of a legitimate dispute, give the credit bureau a short statement to include in your file.
  • Know that you can’t create a second credit file. Fraudulent companies sometimes offer to provide consumers with different tax identification or social security numbers in order to create a new credit file. This practice, called “file segregation,” is illegal, and it doesn’t work.
  • If you have credit problems, get counseling. Your local Consumer Credit Counseling Service (CCCS) can provide advice about how to build a good credit record. The CCCS may also be able to make payment plans with your creditors if you’ve fallen behind. These services are offered for free or at a very low cost. To find the nearest CCCS office, call toll-free, 800-388-2227, or go to www.nfcc.org.

Groups unite to issue call for action against phishing scams – National Consumers League

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Consumer confidence in conducting business and protecting personal data online is threatened every day by phishing scams. In an initiative led by NCL, law enforcement, financial services, and technical industries have joined forces to combat this threat. The group have issued a “call to action” with the release of a paper outlining key recommendations that form a comprehensive plan for combating phishing more effectively.Phishing is a large and growing problem, in which identity thieves pose as legitimate companies, government agencies, or other trusted entities in order to trick consumers into providing their bank account numbers, Social Security numbers, and other personal information. In 2005, phishing scams ranked 6th in Internet complaints to NCL’s Internet Fraud Watch program and the scams continue to dupe consumers. A May 2005 consumer survey by First Data found that 43 percent of respondents had received a phishing contact, and of those, 5 percent (approximately 4.5 million people) provided the requested personal information. Nearly half of the phishing victims, 45 percent, reported that their information was used to make an unauthorized transaction, open an account, or commit another type of identity theft.

NCL’s new report, the result of a comprehensive three-day brainstorming retreat organized by the Washington-based consumer advocacy organization last September, makes multiple recommendations on how to combat it.

“There is no silver bullet to solve the phishing problem, but there are known responses that need more support and promising new approaches that could help deter it,” said Susan Grant, director of NCL’s National Fraud Information Center. The key recommendations in the report are:

  • Create systems that are “secure by design” to make consumers safer online without having to be computer experts;
  • Implement better ways to authenticate email users and Web sites to make it easier to tell the difference between legitimate individuals and organizations and phishers posing as them;
  • Provide better tools for investigation and enforcement to prevent phishers from taking advantage of technology, physical location, and information-sharing barriers to avoid detection and prosecution;
  • Learn from the “lifecycle of the phisher” and use that knowledge about how these criminals operate to exploit points of vulnerability and stop them;
  • Explore the use of “white lists” to identify Web sites that are spoofing legitimate organizations and use “black lists” to create a phishing recall system that would prevent phishing messages from reaching consumers;
  • Provide greater support for consumer education, using clear, consistent messages and innovative methods to convey them.

Sponsorship for the initiative was provided by the American Express Company, First Data Corporation, and Microsoft Corporation. The recommendations were developed by retreat participants representing financial services firms, Internet service providers, online retailers, computer security firms, software companies, consumer protection agencies, law enforcement agencies, consumer and ID theft victims organizations, academia, and coalitions such as the Anti-Phishing Working Group and the National Cyber Security Alliance. Peter Swire, C. William O’Neill Professor of Law at the Moritz College of Law of the Ohio State University, wrote the report for NCL.

In the next phase of this project, NCL is forming working groups and inviting organizations and experts who are concerned about phishing to examine how the anti-phishing strategies in the report can be adopted on a widespread basis. “We all need to work together in a systematic approach if we want to have a significant impact on the tidal wave of phishing that is hitting consumers and hurting legitimate organizations,” said Grant.

Online auctions: An in-depth look – National Consumers League

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Online auctions are wildly popular; nearly one third of adults in the United States who go online have participated in them—an estimated 35.6 million people. Most auction-goers are happy with their experiences and confident that they won’t run into trouble. However, at NCL’s Fraud Center, online auctions have consistently ranked as the top complaint since that category was added to the database in 1997.The average loss per victim in 2000 was $326. Auction victims often say that they never thought about the risks or how to protect themselves—until it was too late. As part of an effort to educate auction-goers about how to take advantage of this exciting new marketplace and reduce the potential for problems, NCL commissioned this Harris Interactive survey with support from Tradenable, a major provider of escrow services. The survey was designed to find out how and why people participate in online auctions, how confident they are as buyers and sellers, how they usually conduct the auction transactions, what problems they encounter, and how they deal with those problems.

Why online auctions are so popular

The Internet opens a global marketplace to consumers, one in which they can find anything they’re looking for and compare prices easily, no matter where they live. For sellers, it provides access to a greatly expanded pool of potential customers, and the low cost of access makes it easy for individuals as well as businesses to offer goods and services.

Most of the survey respondents who participated in online auctions did so only as bidders. A smaller group has participated only as sellers. Though most of the people who participate in online auctions have done so between one and ten times (65 percent), 22 percent said they had participated more than 26 times.

Online auctions appeal to bidders mainly because they’re looking for bargains (43 percent), hard to find items (23 percent), or things they collect (21 percent). When survey respondents who don’t participate in online auctions were asked why, most said they simply weren’t interested (52 percent) or didn’t see anything they wanted (12 percent); few expressed concern that they would not get what they paid for as buyers (six percent) or thought that it would be too much of a hassle as sellers (three percent).

Online auction buyers’ experiences

Of those who have participated as bidders in online auctions, 83 percent have actually bought something. The average value of most purchases was $100 or less (75 percent), but 21 percent of buyers said the average value of their auction purchases was between $101 and $500.

The vast majority of those who participate in online auctions are very or somewhat confident that if they are the winning bidder they will get what they pay for from the seller (94 percent). People who are mostly sellers but have also bought on auctions are also confident they’ll get what they pay for (99 percent).

Feedback about sellers’ previous transactions is obviously valuable information for potential purchasers. But only half of those who mainly bid on auctions say that if feedback information is provided on the auction site, they always check it before bidding; 37 percent usually check. Those who mainly sell on online auctions are also cautious when they’re bidders; 68 percent say theyalways check the information about the seller’s track record before bidding; 20 percent usuallycheck.

They are also reluctant to bid on items if there is no information available on the auction site about a seller’s track record. More than three-quarters (77 percent) of those who mostly sell on online auctions say they won’t bid on items in that case. Fifty-three percent of those who are mostly bidders are also reluctant to bid in these cases. People who are mostly bidders are willing to look for information from other sources like government agencies, consumers groups, or the Better Business Bureau before deciding whether to make a bid (17 percent). Overall, 29 percent of auction participants would bid on items even if there were no information on the auction site about the seller.

The most common way that people who buy items in online auctions pay is by sending a check, cashier’s check, or money order directly to the seller (69 percent). Unfortunately, by the time the buyer discovers that there is a problem with the transaction, the check or money order has usually already been cashed. And if the seller encounters a problem with the buyer’s payment, such as a check bouncing, the merchandise may have already been shipped.

Credit cards offer more protection because buyers have the right under federal law to dispute the charges if the goods were misrepresented or never delivered. Payment by credit card can also be safer for the seller than accepting personal checks. However, the frequency with which the auction buyers paid by giving their credit card numbers directly to the sellers is relatively low, only 17 percent. Services offered by or through some auction sites that facilitate payment by credit card are clearly helpful. Nearly half of all those who bought items have made payments through those services (44 percent).

Escrow services are another way that auction buyers and sellers can protect themselves. For a small fee, an escrow service holds the buyer’s payment and forwards it to the seller upon the buyer’s receipt and approval of the item within an agreed upon inspection period. But overall, only six percent of those who have bought items have paid through an online escrow service—the same percentage as a much more dangerous method of payment: sending the seller cash. Use of escrow services among those who are mostly sellers when they buy items is 15 percent.

Despite the high confidence rate that people generally have in online auctions, four in ten (41 percent) buyers have had problems, including: receiving items much later than expected (20 percent), receiving items that were different than promised (11 percent), receiving damaged items (ten percent), and never receiving the items (ten percent).

Most people who experienced problems were able to resolve these problems with the sellers by themselves (62 percent). Other actions buyers took included: complaining to the auction site (29 percent), disputing the credit card charges (eight percent successfully, two percent unsuccessfully), making an insurance claim (four percent successfully, one percent unsuccessfully), using an online mediation service (one percent successfully, two percent unsuccessfully), and complaining to a government agency, consumer group, or the Better Business Bureau (two percent). Many said they never took any action to solve their problems (21 percent).

Online auction sellers’ experiences

Nearly a third (32 percent) of those who offered items for sale on online auctions have sold 11 or more items. Smaller numbers have sold fewer items (24 percent sold 1-2 items, 19 percent sold 3-5, 9 percent sold 6-10). Most offered items for sale valued at $100 or less on average (69 percent), but 20 percent of sellers said they offered items with average values of $101-$500.

More than half of the sellers (52 percent) said they had experienced problems with buyers, including: late payments (34 percent), never receiving payments (27 percent), buyers changing their minds (20 percent), checks bouncing (five percent), and buyers using stolen credit cards (one percent).

The majority of sellers who experienced problems resolved their problems with buyers themselves (66 percent). Other actions that sellers took included: complaining about the buyer to the auction site (49 percent), participating in private online mediation (seven percent), contacting the escrow service they used to accept payment (five percent), and using a collection agency (two percent). Only seven percent said they took no action.

Familiarity with escrow services

Unfortunately, 42 percent of the survey respondents who don’t typically use an escrow service aren’t familiar with the services. Another 30 percent don’t think it’s necessary to use them, and 19 percent don’t want to pay the fee. Online escrow services are convenient for both auction buyers and sellers. The fee, usually a small percentage of the final purchase price, can be paid by either party as they mutually agree. For sellers, escrow may be a less expensive option than participating in the credit card payment system, especially if the buyer pays the fee. For buyers, it can help ensure that they will get what they pay for—or they won’t have to pay.

Conclusion: what does this mean for online auction participants?

Online auctions can offer great benefits to both buyers and sellers. But as the survey shows, when a consumer pays before receiving the merchandise, or a seller ships the goods before the buyer’s payment clears, there is some risk involved. Even though most people have good intentions, things occasionally go wrong. And some people are irresponsible, or even downright dishonest, in their dealings with others.

Auction participants need to be aware of the risks and know how to protect themselves. While there aren’t any guarantees in life, it is possible to reduce the potential for trouble in online auction transactions by following some basic safety tips, including

  • Understand how the auction works;
  • Check out the seller before you bid;
  • Get the contact information of the person or company you’re dealing with;
  • Look for information about insurance for buyers;
  • Payment by credit card can protect both buyer and seller;
  • Consider using an escrow service.

It’s easy to get carried away in the excitement of online auctions. Common sense and caution are the keys to happy auction experiences.

Survey methodology

This Harris Interactive QuickQuerySM survey was conducted via the Harris Poll Online, within the United States, from December 19-21, 2000. The poll was conducted among 2,196 respondents, 18+ years of age. Figures for age within gender, race, education, region, employment, and income were weighted where necessary to bring them in line with their actual proportions in the online population. QuickQuery is an omnibus service that provides approximately 2,000 respondents in two days.

In theory, with a sample of this size and after weighting the data, one can say with 95 percent certainty that the results have a statistical precision of plus or minus 3 percentage points of what they would be if the entire adult population of the United States had been polled with complete accuracy. There are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include question wording and question order, non-response, and screening. It is difficult or impossible to quantify the errors that may result from these factors.