Vigilance is Key in Avoiding Consumer Fraud

As the internet and computer-based technologies become more and more advanced, the strategies used by criminals evolve to keep up. Where once a criminal had to actively confront their victims to steal money or personal property, many criminals now use the internet to enable them to steal money and personal information from the comfort of their own home. However, it's a common misconception that cybercriminals are highly-skilled hackers who can crack your bank's encryption and empty your account. It's much more common for a criminal to attack through misleading or illegitimate emails that trick the target into giving up personal information.

Consumer fraud is commonly defined as "any instance in which an individual suffers a financial or personal loss because of unfair, deceptive, false, illegitimate or misleading business practices." In recent years, consumer fraud has tended to be focused on identity theft, Social Security fraud, and credit card fraud. Additionally, the targets of such scams tend to be individuals with little financial and life experience, like college students, or those who are not very technically-savvy, like the elderly. However, all demographics of the population have been successfully targeted by fraudsters.

The Federal Trade Commission (FTC) is the main agency that works to protect Americans from being defrauded by these criminals, and in recent years, the Consumer Financial Protection Bureau (CFPB) has also joined the fight, especially regarding mortgage scams, banking/wire fraud, and student loan scams. Their goal is to educate the more vulnerable consumers, to try to prevent the fraud from happening to begin with, but they also step in to help get things back on track for people who have unfortunately been targeted successfully.

There are several common methods of consumer fraud that you should learn to quickly recognize so that you can more easily avoid being defrauded in the future. One strategy is referred to as phishing. Basically, the cybercriminal sends you an email that appears to come from your bank or credit card company. The email will say something about your account being compromised or terms of service being updated, then will provide a link that seems to take you to the website where you can sign into your account. This webpage is actually a clever copy that just looks like the real webpage, so when you input your username and password, the cybercriminal records that information for later uses.

In other situations, the criminal gets ahold of your Social Security number (often through phishing attacks, but they sometimes use other methods), and they open up credit cards using your identity. Millions of Americans every year experience this kind of identity theft, and for the inexperienced or elderly, who don't know enough to keep track online, this attack can leave their credit score trashed for many years to come. Targets of identity theft often don't even find out that it has happened until much later, at which point their banks or credit card companies make them jump through all kinds of hoops to try to clear things up. One thing to note: no matter how careful you are with your cyber security and keeping your personal information private, you could be the target of a cyber attack. Being vigilant and suspicious in your online financial life can save you months of stress and frustration down the road.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

**************************************************************************************************

CFPB Proposes New Regulations on Payday Loans

In an attempt to avoid situations in which borrowers get stuck in an endless cycle of debt, the Consumer Financial Protection Bureau (CFPB) released a set of new proposals this Thursday to regulate the market for payday loans and certain types of credit known as being "debt traps." James Rufus Koren, in his L.A. Times article, discusses the new rules and the effects they may have on the economy.

A payday loan is a special type of loan with very high interest rates that is made on the condition that the borrower will pay it back as soon as they receive their paycheck. Unfortunately, according to CFPB Director Richard Cordray, lenders often make the loans knowing that borrowers can't pay them back and will end up stuck in a never-ending cycle of debt. The new rules aim to limit the number of loans a consumer can take out in a year and make the lenders review the finances of potential borrowers much more thoroughly before making a loan. In a healthy credit market, lending and borrowing money should be a win-win situation. Both parties, not just the lender, should benefit from the transaction, and that is the situation the CFPB is trying to remedy.

Lenders have been outraged by the proposed changes, claiming that it will make their business more costly and will cause most of their loans to become unprofitable. The CFPB has responded that it isn't looking to put lenders out of business. Rather, the organization is trying to make sure that customers don't get stuck in debt traps, where they pay off a loan just to find out that they need to take out another loan to have enough money for day-to-day living costs. The new regulations will force the lenders to do in-depth analysis on income and living expenses to determine whether they will be able to make the payments every month without running out of money.

Already, the CFPB has enacted similar regulations for banks and mortgage lenders, but payday lenders may be right in complaining that the new rules are unfair or insensible. Many claim that the process will add time and cost, which hurts everyone. Under current practice, a borrower can walk into a loan branch and leave 20 minutes later with a $250 loan. A detailed analysis of "take-home pay" and expenditures would probably add a lot of cost in the form of fees, which could drive away potential borrowers. Those borrowers could end up going elsewhere to find their loans.

It is likely that the new regulations will naturally stop some people from getting loans. Some people worry about where those people will have to turn to make ends meet. Perhaps some will be forced to get a handle on their finances and will end up much better off in the long-run. Others will have to go to pawn shops or family members for help. Still others may turn to installment lenders, which are not covered under the new rules. The installment lender gives much larger sums of money, with smaller monthly payments over a long period of time, but the borrowers often end up paying more in interest on the loan than the actual value of the loan itself. Analysts believe that the regulations will help somewhat, but only in that they will stretch the debts out onto a longer time line, rather than reducing such debts altogether.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************