Bank Makes Rewards Harder to Earn With Card Changes

Although credit card companies try to promote their reward programs as valuable benefits to their customers, new reports suggest they less benefits to consumers then you would think. Earlier today WalletPop.com put together a consumer warning post about CitiGroup and how they are making it difficult for their customers to take advantage of their so called “rewards” program. Check out a section of their article below.

We've written recently about some tricky things credit card companies do that can whittle away at the value of your hard-earned rewards, and recent news reported in the Consumer Reports blog illustrates that banks are still trying -- and trying very hard, in some cases -- to keep you from getting those perks.

Consumer Reports says that Citigroup recently switched most holders of its Dividend Platinum Select MasterCard over to its Citi Dividend World MasterCard. One major difference between the two cards is that the Platinum Select offered 2% cash back in several commonly used retail categories like supermarkets, gas stations and drugstores. The World has a different rewards structure that puts the onus on the customer to keep earning their rewards.

With the World rewards program, users can earn 5% cash back on hotels and rental cars. This blog post says most of the new rewards are travel related, which is in line with the new card's enhanced benefits of trip insurance, lost-baggage reimbursement and the like. But if you got the card hoping to earn a nice cash-back bonus at the grocery store, you're out of luck. But there's an even bigger caveat: The reward categories change every quarter, some have lower redemption rates (in line with the old 2% rate) and - here's the kicker - customers have to remember to sign up for them every three months. No sign-up, no rewards.

Linda Sherry, director of national priorities for advocacy group Consumer Action, blasts the practice. "The idea of having to contact the company at quarterly intervals to continue your rewards is inconvenient and seems designed to avoid paying rewards," she told WalletPop via e-mail. What's more, she added, there's nothing in the CARD Act that prevents card issuers from pulling these kinds of switcharoos after you've already gotten established with your card. "This is precisely the reason we believe restrictions on one-sided contractual agreements is so important," Sherry said. "The current practice leaves consumers as sitting ducks."

Perhaps even more frustrating to the changes in the reward program is the fact that Citi issued new card numbers for every customer. In other words, if you had the old card and had any auto-bills or recurring payments set up, you'll have to tell all of those

Continue reading at WalletPop.com…

U.S. Insurance Regulators Issue Consumer Alert on Death Benefits

From Bloomberg.com:

State insurance regulators, under pressure to improve disclosure of death-benefit payment options, issued a consumer alert about the industry practice of retaining funds rather than paying them in a lump sum.

“You may be able to earn a higher rate of interest on the life insurance proceeds if you select a different payout option,” the National Association of Insurance Commissioners said in the alert. “While the documents you receive might look like a checkbook, it might actually be drafts, which are similar to checks, but different in some ways.”

The alert was issued after an NAIC panel met yesterday in Seattle to review retained-asset accounts. The regulators created the panel after Bloomberg Markets magazine reported in July that insurers profit by holding and investing $28 billion owed to 1 million beneficiaries.

“Disclosure is paramount,” said Thomas R. Sullivan, co- chair of the working group, at its first meeting yesterday. “That seems to be the central issue.”

Retained-asset accounts let insurers keep proceeds of a life insurance policy in their general corporate accounts, earning investment income, while providing the beneficiary with a checkbook-like account that’s not insured by the Federal Deposit Insurance Corp. The NAIC heard testimony from Peter Gallanis of the National Organization of Life & Health Insurance Guaranty Associations that the accounts are covered by state insurance backstops. While beneficiaries can draw drafts on the funds, they don’t always clear as easily as checks.

Can Stores Really Ask You For That?

When it comes to our money, most of us are aware that we have rights as a taxpayer. However, what many of us do not know is that we also have rights as consumers. Unfortunately many of these rights are being ignored lately as retailers attempt to reduce shoplifting. MSN Money.com posted this great article earlier this week on how stores are walking all over consumer’s rights in the following ways:

• Stopping customers to check their receipts before they let them out the doors.
• Posting minimum-purchase requirements for credit cards.
• Insisting that customers present identification when using credit cards.
• Asking customers for personal information, such as phone numbers, addresses or (heaven forbid) Social Security numbers before starting transactions.

As MSN Money.com explains, these behaviors are so common place that you might not realize there's anything wrong with them.

But there is.

The receipt checkers

If you've signed a membership agreement with a warehouse club such as Costco or Sam's, you've agreed to present your receipt upon exiting one of their stores. Other retailers have no such agreement with you, but some station employees at their doors to ask for your receipts anyway.

Continue Reading at MSNMoney.com…

Credit Card Companies Like Making Money! (DUH!)

Most of the much hyped credit card legislation went in to effect today, and the Huffington Post has put together a summary of all the new changes consumers should be aware of. Although many of these changes are beneficial to most Americans, credit companies will always find ways to get more money from their customers, so it is important to understand these new regulations. I have included a section of their article below, but be sure to checkout the full text at Huffington Post.com.

As of today, February 22nd, all credit card companies must do the following:

Keep all due dates the same on your credit card: Now you can better plan for your credit card payments each month without fear of being late because they have arbitrarily changed the grace period.

Provide you 45 days notice before they raise rates: While there are no limits as to how high the rates can go and they can still jack up your interest rates, at least you now have much more time to prepare for these rate increases.

Younger adults under the age of 21 will find it much harder to obtain a credit card: I used to have a portion of my workshop for college freshmen that cautioned them against credit card companies that solicited their business... that practice will severely be limited because of this age restriction.

No more double cycle billing: Card companies used to be able to charge interest on a debt that had already been paid in a previous month. As wrong as this practice was it was legal... not anymore.

Open a Checking Account, Get $100

With new restrictions and customers with tighter budgets, many banks are finding it hard to pull in new customers. In an attempt to bring in new business, several banks are offering deals where you can get free cash (often ranging between $50 and $200) to new customers. However, as this article from MSNMoney.com warns, many of those banks offset the free cash by introducing new fees, minimum balance rules, direct deposit requirements, etc.

For decades, banks have been trying to get consumers to open checking accounts with freebies like toasters, George Foreman grills and even iPods and Home Depot gift cards.

Now, they're upping the ante with offers of $100, $150 or more in cold, hard cash. This month, Capital One launched a promotion offering a $200 bonus to customers who open a Rewards Checking account through Feb. 28. Bank of America offers $100 to anyone who opens a checking account through Feb. 28.

While cash incentives aren't new -- Chase has been offering cash bonuses for four or five years, according to spokesman Tom Kelly -- at a time when consumers are starting to receive their holiday shopping bills and are mindful of their budgets, such promotions may seem particularly attractive. And thanks to new credit card legislation coming into effect next month and new regulations limiting banks' ability to charge overdraft fees, banks are likely to make such offers even sweeter.

"Banks are wondering how they'll recoup some of their lost revenue, so they're focusing on generating revenue through checking accounts and debit card activity," says Ron Shevlin, a senior analyst with market research firm Aite Group. (See "Credit card rates, fees soar as new law looms.")

Yet consumers shouldn't jump at such offers without reading the fine print. "These deals sound very attractive, but they come with behavioral restrictions and requirements," says Shevlin. "It's great that you'll get $200 upfront, but will you pay $200 in ATM and safety-deposit fees?" Many banks require consumers to set up direct deposit, maintain a minimum account balance or make a certain number of debit-card purchases each month.

Continue reading at MSNMoney.com…

Five Alarming Tactics Used by Dishonest Tax Relief Companies

Yesterday my law firm posted a blog entry (the RoniDeutch.com Tax Relief Blog) describing a handful of tactics used by dishonest tax debt resolution companies. Over the past 19 years, my team and I have heard hundreds, if not thousands, of horror stories about these unethical companies and their practices.

1. Cold Calling Solicitation

Because of high sales demands, some tax debt resolution companies have turned to cold calling in order to solicit new clients. This is alarming because unpaid taxes are not something most people want to freely disclose. Having a stranger leave you an unwelcome message regarding your tax debts can be intrusive and discomforting. These companies may also use half-truths to try and scare you into believing that immediate action is required by you to resolve your tax debt.

2. Guarantees

Some tax debt resolution companies represent that they can obtain a settlement offer with the IRS for significantly less than what a taxpayer may owe to try and convince taxpayers to retain their services. However, don’t be fooled. No one can guarantee that the IRS will accept your settlement offer. Whether the IRS will accept a settlement offer, otherwise known as an Offer in Compromise, or another tax debt resolution depends on each taxpayer’s unique financial situation, tax liability, and tax filing compliance. The IRS has strict guidelines for some types of tax debt resolutions and the IRS will not accept a particular tax debt resolution if a taxpayer’s financial situation does not meet the established guidelines.

3. No Pre-Analysis, No Attorney Review

Many tax debt resolution companies will sign up new clients without knowing anything about their financial situation. My law firm will not agree to sign up anyone without first performing a free and confidential tax analysis. In order to perform the tax analysis, our law firm asks a series of questions to obtain an understanding of a taxpayer’s unique financial situation. The tax analysis is performed by a tax attorney. After reviewing a taxpayer’s financial information, a tax attorney will recommend which particular tax debt resolution would be the most appropriate for the taxpayer. Unfortunately, performing a tax analysis for a taxpayer and providing the taxpayer with tax resolution options prior to enrolling the taxpayer does not appear to be a common practice with many of the tax debt resolution companies.

Continued at RoniDeutch.com…

IRS Alerts Public to New Identity Theft Scams

The IRS has recently become aware that a handful of new tax scams have popped up using their official logo, name, and even website URL to trick taxpayers into believing they are dealing with a federal agency. Unfortunately, after being fooled these taxpayers will have their identities stolen, which can quickly turn into an expensive mistake. To help American taxpayers the IRS has put out this new press release with details on these new scams, and advice on how to avoid them. Since their article is so in-depth and informative, I wanted to make sure all of my readers had a chance to learn from it. Check out details of the various scams the IRS is warning about below.

Making Work Pay Refund

This phishing e-mail, which claims to come from the IRS, references the president and the Making Work Pay provision of the 2009 economic recovery law. It says that there is a refundable credit available to workers, consumers and retirees that can be paid into the recipient’s bank account if the recipient registers their account information with the IRS. The e-mail contains links to register the account and to claim the tax refund.

In reality, most taxpayers receive their Making Work Pay tax credit, which was designed for wage earners, in their paychecks as a result of decreased tax withholding, not as a lump sum distribution from a federal fund. Additionally, consumers and retirees who are not wage earners are not eligible for this tax credit.

Inherited Funds / Lottery Winnings / Cash Consignment

In this phishing scheme, recipients receive an e-mail claiming to come from the U.S. Department of the Treasury notifying them that they will receive millions of dollars in recovered funds or lottery winnings or cash consignment if they provide certain personal information, including phone numbers, via return e-mail. The e-mail may be just the first step in a multi-step scheme, in which the victim is later contacted by telephone or further e-mail and instructed to deposit taxes on the funds or winnings before they can receive any of it. Alternatively, they may be sent a phony check of the funds or winnings and told to deposit it but pay 10 percent in taxes or fees. Thinking that the check must have cleared the bank and is genuine, some people comply. However, the scammers, not the Treasury Department, will get the taxes or fees.

Form W-8BEN

In this scam, fraudsters modify a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to request detailed personal and financial information. This could include nationality, passport number, bank account and PIN numbers, spouse’s name and mother’s maiden name, or other personal or financial information or security measures for financial accounts. The scammers may use the genuine form number and name or may make up a new form number, such as W-4100B2.

They either e-mail or fax the form or letter. If only a letter, the letter itself contains the request for the personal and financial information. The letter, which claims to come from the IRS, states that the recipient will face additional taxes unless he or she quickly faxes the required information to the number provided by the scammer.

In reality, taxpayers file the genuine Form W-8BEN with their financial institutions, not with the IRS. Additionally, the genuine W-8BEN does not request the taxpayer’s passport number, bank account number, security or similar information.

The Latest on FICO’s Lawsuit and What it Means to Consumers

Earlier today the Wall Street Journal posted a new story on Fair Isaac, or as they refer to the company, the “keepers of your credit history.” For those of you who may not know, Fair Isaac maintains the FICO scores most lenders use to determine your eligibility for a loan and potential interest rates. The lawsuit surrounds the difference between what the company calls bono fide FICO scores, and non-FICO scores, sometimes called “FAKO” scores. Check out the following article on the development courtesy of the Wall Street Journal.

In a suit filed in October 2006, FICO alleged that Experian and TransUnion deliberately marketed VantageScore to customers as the bona fide FICO score, when they are actually purchasing access to Experian or TransUnion’s proprietary score.

There’s argument over how credit scoring played into the current financial crisis, but there’s little argument that credit scores have become a fundamental part of our consumer economy in the past decade. The FICO score is comprised of information submitted by all three major credit-reporting agencies, Experian, TransUnion and Equifax.

However, all three agencies sell additional products, like credit monitoring services and their own scores. Although some consumers like seeing these separate scores, these scores aren’t what most lenders consult when deciding whether to extend credit. Sometimes, these scores can be very different from a FICO score — which FICO says causes confusion and error should a consumer apply for a loan.

“There’s been some confusion in the marketplace,” said FICO CEO Mark Greene. (Anyone who has seen one of those freecreditreport.com ads knows this.) Credit score ads online have proven particularly problematic, he says.

It poses a company challenge for FICO, which has to work with credit reporting agencies Experian and TransUnion to gather information from credit reports to formulate its scores.

The Price of Recovery: Are You Inflation Ready?

From USAA.com:

In the first quarter of 2009, consumer prices, as measured by the Consumer Price Index, decreased by 2.4%. The Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, was down 1%. The most recent data shows there is no evidence of inflation in the U.S. economy.

The government is spending trillions of dollars using a broad swathe of initiatives to fight deflation, which is the opposite of inflation. And therein lies the rub. Should the government's efforts succeed, and there are some signs that they may, the huge new debt issuance that's supporting them could lead to a spike in inflation that we have not experienced since the 1970s.

The deftness and agility that will be required in the pivot from fighting deflation to fighting inflation is tremendous. In essence, the government has to provide enough monetary stimuli to get the economy firmly on the growth path, while standing ready to reverse course without stepping on the recovery. At USAA, our view is that the government will err on the side of letting inflation run a while, rather than risk a double-dip recession.

In response, we are acting now to build additional inflation-protection tools into our asset allocation products. In doing so, we are being driven by the following principles:

While inflation is not likely in the next few months, it is the likeliest outcome over the mid- to long-term.

U.S. Treasury-backed securities without inflation protection are probably in a bubble, and will suffer price declines amid all of the new issuance when the Treasury and the Fed take their foot off the monetary gas.

There are certain asset classes that should perform better than others in an inflationary environment, and it will be important as asset allocators to have the ability to shift assets to these vehicles across our product lines as the deflation/inflation pivot occurs.

USAA: Building an Intelligent Inflation-Fighting Toolbox

As always, we study what's happened in the past as a strong guide for how markets will behave in the future. Here's a rundown of how some important asset classes have performed.

Common stocks overall have had no correlation with inflation since 1926. We believe that our preference for active management would benefit given our sub-advisers' abilities to shift among sectors. For instance, exporters would benefit from the fall in the dollar that would accompany inflation, as would commodity-based companies in growth-driven markets.

Real estate has been positively correlated with inflation, as both rent and value tend to go up along with rising prices in other portions of the economy. The data on equity real estate investment trusts is less conclusive, and in fact these vehicles have been uncorrelated with inflation since 1972. We think recent changes in equity REIT structures should make them perform more like direct real estate in a coming inflationary period.

Gold is positively correlated with inflation, and also acts as a currency substitute that would rise in the face of a falling dollar.

Commodities have a relatively strong correlation to inflation, and are especially good for inflation caused by excessive demand, as opposed to inflation sparked just by increases in money supply. Commodities are also a powerful diversification tool, since they are negatively correlated with both stocks and bonds.

Bonds tend to suffer because inflation eats into the purchasing power of both income and principal repayment. Shorter-term bonds do better than longer-term issues, bonds with credit risk are less sensitive to inflation and rising rates than Treasuries, and there is a new class of inflation-linked securities and derivatives, including Treasury Inflation-Protected Securities.

IRS Warns of Rebate Scams

According to the IRS, there are a few new e-mail and telephone "scams". These scams pretend to be from the Internal Revenue Service and attempt to get taxpayers personal or financial information The IRS is expecting the scams to continue through April 15th.

This time around the IRS is warned to lookout for scams that mention advance payment checks from the IRS. Congress has not yet passed the economic stimulus package, and even so, the checks are not expected to be mailed out until this spring.

The IRS’s new release claims: "identity thieves use a victim’s personal and financial data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows "scamsters" to act quickly and cover their tracks before the victim becomes aware of the theft."

Therefore, it is important to be aware of these scams so you do not fall victim to their gimmicks. The IRS never sends out e-mails requesting personal or financial information. If you do receive an e-mail like this, do not reply to it. Instead, forward it to phishing@irs.gov.

IRS Warns About Yet Another Email Scam

Yesterday the IRS put out a consumer warning on yet another email scam. According to the IRS, the two-step e-mail scam falsely promises people they will receive $80 for participating in an online customer satisfaction survey. The email masks itself as an email from the IRS, with a link to an IRS "Member Satisfaction Survey." "We have seen many e-mail scams using the IRS name," IRS Deputy Commissioner for Operations Support Linda Stiff noted. "The IRS does not initiate contact with taxpayers through e-mail. Taxpayers should always use caution when they receive unsolicited e-mails."