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IRS’s Top Scam Alert: Fraudulent IRS Calls and the Easy Solution: Hang Up or Ignore the Message
Precious few things in modern-day life are easy. Everything from big, weighty questions about where to live and what career to pursue all the way down to seemingly mundane matters like choosing a restaurant for dinner can contain a minefield of unanticipated complications and dilemmas (is there gluten on the menu?). But here’s a question nobody should have to think about for a millisecond before answering. If someone calls you and says they are from the Internal Revenue Service (IRS) and claims you owe taxes that need to be paid immediately using a prepaid debit card, hang up.

If they call back and demand payment using even more threatening language – like warning you that you face jail time or the loss of a driver’s license – hang up again. And again. And again, until they stop calling you. This is a top 2015 IRS scam alert and consumers are advised to be on their guard.

If you consistently hang up or ignore ominous messages on your voicemail, the calls will eventually stop. That’s because the calls come not from the IRS, but from criminals who are only interested in scamming you out of your money. Sadly, there’s a good chance that many of you have already been on the receiving end of one of these scams. Newspaper reports from around the country detail how pervasive these fraudsters have become.

In fact, the problem has gotten so bad that the IRS put phone scams at the very top of its 2015 list of “Dirty Dozen” Tax Scams. “These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said on the agency’s website. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”

Unfortunately, the IRS estimates that 3,000 victims have lost a total of $15.6 million due to these scams since 2013 – an average of $5,000 per victim. Additionally, between 9,000 and 12,000 people each week file a complaint about the harassment each week. To avoid becoming one of those statistics, here are a few important things to know:
- Not only will the IRS never calls you and demand money, the agency typically corresponds with taxpayers via regular mail.
- If you think you might owe taxes, or know that you do, it’s best for you to initiate a call to the IRS. The best number to dial is 1-800-829-1040.
- If you want to report a harassing phone call, contact the Treasury Inspector General for Tax Administration at 1-800-366-4484 or www.tigta.gov.
- Most of all, remember the cardinal rule if you happen to pick up a call from someone claiming to be from the IRS and demanding money: Hang up.
From the Editor: If you have had experience with these types of calls or similar scam calls, let us know in the comments below. If you like this article and feel it is helpful, please share it on Facebook, Twitter, Google+, LinkedIn or any other site you frequent. Our goal is to help you save money whether in saving on purchases, card selection or avoiding unscrupulous ripoffs.

Helpful Links
Here are some of links to other articles on the site related to helping you avoid scams.

Avoid Debt Collection Scams: The Wrong (And Right) Way to Use a Prepaid Card for Paying Debt Collectors

Tips from the Better Business Bureau: How to Avoid Credit Repair Scams

Green Dot Fights Scammers

New FBI Prepaid Card Scam – Alert By Better Business Bureau

Prepaid Debit Card Scams Proliferate
June 22, 2015
Avoid Debt Collection Scams: The Wrong (And Right) Way to Use a Prepaid Card for Paying Debt Collectors

Out of the blue, Gary got a call from a debt collector about a credit card debt he hadn’t thought about in years. Gary had fallen behind on some bills during the recession and it had been a long, slow climb back to solid financial footing. He had worked hard to repair his credit and thought he had finally closed that painful chapter of his life.

By Mary Reed – Debt Collection Answers.com

This particular debt was for a credit card he stopped paying sometime in early 2008. The call was disturbing: the collector said that if Gary didn’t make a substantial payment that day he would be served with a lawsuit for fraud the next day at work. The collector confirmed Gary’s employer’s address and asked for the name of his supervisor.

Gary couldn’t afford to lose his job, and so he did the only thing he thought he could do. He offered to make a payment to stop the collector from showing up at his place of work. The collector told him to purchase a prepaid card, put $300 on it and overnight it to the collector. He did as instructed.

That night, Gary began to feel uneasy about what he had done so he ordered a copy of his credit report online only to discover that there were no collection accounts on it. Then he searched for the name and phone number of the debt collector who had called him. He found numerous complaints, including complaints from consumers who were later dunned by other agencies for the debt they thought they had paid. Gary’s heart sank as he realized that the collector wasn’t legit: he had been scammed.

A prepaid card is one of the favorite payment methods used in debt collection scams, because when they get paid with one, scammers don’t need to worry about consumers requesting refunds and the funds are untraceable.

But that doesn’t mean you should never pay a collector with a prepaid card because there are some potential advantages to using one.

One advantage is that you won’t have to provide the collector with information about your bank account. If you allow a collector to withdraw payments directly from your bank account you may run into trouble (and incur expensive fees) if you are short of funds when the collector makes his withdrawal. It also prevents the collector from withdrawing more funds from your account than you have authorized.

The other advantage is that with a prepaid card you can make payments online or over the phone and avoid the hassle and expense of purchasing and mailing a money order. In other words, a prepaid card can provide you with a fast and easy payment method, assuming you use the card correctly.

The key is to never send the card itself to a collector. If you do, you’ll have no record of your payment. Instead, purchase a reloadable prepaid card that you can register under your name and that provides you with a record of your transactions. That way you can maintain a record of your payments to the debt collector, which can be crucial in case there is any question about your payments in the future.

You’ll find more tips and strategies for dealing with debt collectors in the free ebook Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights.

BIO

Mary Reed is a personal finance writer who writes about consumer money and legal issues in her own name and for her clients, which include attorneys and other experts. To date, she has written or ghostwritten 18 books. In addition to writing for Debt Collection Answers.com, Mary also owns Mary Reed Public Relations, a public relations and marketing firm that specializes in providing services to financial planners, consumer law attorneys, bankruptcy attorneys, and authors.

June 4, 2015
How to Raise Your Credit Score Quickly Using Current Credit Card Trends

According to a recent New York Fed survey, Americans are feeling positive about their ability to get credit. Looking at the trends, we indicate some easy actions to take and will show you how to raise your credit score quickly. In February 2015, the number of people applying for credit cards is up 12.45% from October 2013 and the rejection rate is down 5.55% from the same time periods. That is interesting to know, but you may be asking where the big trend is. That would be in credit limit increases. The number of requests for credit limit increases is up about 10% from 2013 while the rejection rate is down 35.4% from a rejection rate of 37.6% to 24.3%. If you are looking for a quick way to help raise your credit score, it looks like now may be a good time to ask for a credit limit increase.

A credit limit increase can help you and your credit score in a number of ways. First, it gives you more credit spending power. A raise in credit limit may mean that you are simultaneously getting a higher credit score. With a raised limit and no increase in new debt, you just lowered your credit utilization. So, what is that? Your credit utilization makes up the part of your score called “amounts owed”, and that accounts for around 30% of the scoring formula. Your credit utilization shows how much actual credit you are using compared to how much is available to you. So, with all things being equal and no new debt, your utilization lowers, which is a good thing when your credit limit increases. How about that? So, we are looking at a trend of a lower rejection rate for credit limit increases. If it has been a while since you last saw an increase, now may be the time to call your card company and ask.

So, with the ups come the downs in the data world. So, what’s down on this report? As mentioned earlier, the number of rejected card apps is down nearly 6% since October 2013 as well as involuntary account closures, which is down 29.27% since 2013. And, of course, should I mention again that the rejection rate for credit limit increases is down a whopping 35.4%?

It looks like the trends will be continuing with more people asking for credit limit increases over the next 12 months. It is also predicted that there will also be a rise in the number of people applying for credit cards over the next year.

In the 2015 Chase Slate Credit Survey, one sees that although 90% of Americans think that access to credit is important, less than 40% actually know their credit score. But, even more disturbing is that over 50% don’t know the primary driver for credit score. So, let’s see if we can help lower that number. The primary driver of credit score is your payment history. The more on time payments you have and the less delinquent payments, the better the payment history. Having a great payment history helps the most in determining your credit score. If you did not know that before, now you do. You would no longer be part of that over 50% statistic.

These are the primary drivers of the credit score formula.

Your payment history. When looking at your credit report these are the 0s, 1s and other numbers that go across the page over time. You want as many 1s as you can get, which means account current and paid on time.

The next one is the credit utilization or credit already used. You want to stay under 30 percent of your available credit to help qualify for higher credit scores.

The next driver is the negative information found in the Public Record such as bankruptcies, collections or judgments. Needless to say, you do not want these words to appear on your credit report.

If you are just establishing credit or are in the process of rebuilding your credit after some financial troubles, one great way to work on your credit score is to apply for a secured card. It does require a deposit, but it is great for starting out or rebuilding. We have some great cards listed on our Best Credit Building Cards page. You may also find a card or two that is available to those with lower credit scores that do not require a deposit, but those are typically harder to find and may have higher rates than many secured cards. But, if you do not have the money to deposit, the Milestone Gold MasterCard found on that page is an option to consider.

To wrap up, applications are trending up, rejections are trending down and credit limit increase rejections are really trending down. So, to answer the question of how to raise your credit score quickly, within reason, ask for that credit limit increase and see if you can’t qualify for a new card so that you can improve your credit utilization and raise that score. Along the way, stop by sites like BestPrepaidDebitCards.com to collect some great information about credit and tips to improve your score.

If you like what you have read and want to comment or add your thoughts, please comment below.

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April 10, 2015
CitiBank Offers Cardholders Access To FICO Credit Scores

By now many of us have heard how wise it is to request a free copy of our credit report once a year. It’s good advice. Keeping abreast of the information credit bureaus receive about how promptly and diligently you pay your bills can ensure there are no errors that might harm your credit score. Holders of CitiBank-branded consumer credit cards, however, can do much better than a once-a-year peek at the factors that influence their credit score.

First announced in 2014, Citi officially began making actual FICO Scores available online to holders of many of the bank’s credit cards. In doing so, Citi becomes one of the first major financial institutions in America to make the information that is used by lenders to determine whether or not they will offer a loan to a consumer readily available.

The information Citi provides to its cardholders won’t be stale. The FICO scores will be updated each month based on data from Equifax, one of the three major credit bureaus. Citi cardholders will also receive information about the two key factors that influence someone’s score. For instance, if the score is hurt by a late payment or by holding too high of a balance on one or more credit cards, that information will be provided.

The new Citi credit score feature also includes a graphic that will show a range of credit scores and what those numbers mean to potential lenders. For example, those who have a score of 579 or less will know that “lenders view you as a very risky borrower,” while anyone with a score of 800 and higher will understand that “lenders view you as an exceptional borrower.”

Making an up-to-date credit score available to its cardholders and providing context about the meaning of that score has won Citi praise from consumer advocates. “We are always pleased to see companies taking steps to empower consumers with information that helps them manage their credit wisely. Providing Citi credit customers with free access to the same FICO score often used to make lending decisions and insights into factors that impact their score gives consumers valuable tools to build a stronger financial future,” says Ken McEldowney, executive director of Consumer Action. “Consumer Action hopes it will soon be available to all credit card customers across the U.S.”

February 9, 2015
New Year, New Credit Score

If you’re like millions of other Americans, you began 2015 with at least one resolution to better yourself. Nearly half of us routinely begin January with some sort of commitment to self-improvement, usually to lose weight or perhaps establish a new credit score. Making the resolution is the easy part. Research out of the University of Scranton in Pennsylvania, however, shows just how difficult it can be to maintain those good intentions.[pullquote_right] Fully a quarter of Americans don’t last one week with their new habits, and after six months just 46 percent of people maintain committed to their resolutions.[/pullquote_right] Overall, less than 10 percent are able to pull off a permanent change.

Still, just because you haven’t been able to transition from eating burgers to tofu doesn’t mean you can’t take other steps to make 2015 better than 2014. As a start, don’t give up on that resolution to establish a new credit score. Doing so will improve your overall financial health significantly by convincing mortgage and auto loan companies to offer you their best interest rates. Here are a few tips to make 2015 the year of your new and improved credit score.

Don’t run up that balance If you went on a spending spree over the holidays, now is the time to take a sober look at your credit card accounts and get to work paying them down. Thirty percent of the popular and widely-used FICO credit scores are determined by an analysis of how much you owe on those accounts. Ideal is a so-called credit utilization of just ten percent, which means that your balance is ten percent or less of the total credit available to you.

Always be on time Even more important than maintaining a modest credit utilization is simply paying your bills on time. Fully 35 percent of a FICO score is determined by your history of making timely payments on your bills.

Get out the magnifying glass Nobody is perfect, including the companies that compile the credit reports that are used to calculate credit scores. Take advantage of your right to view a free copy of your credit report and take the many hours required to sift through it to find
mistakes that might be harming your score. If you do find mistakes – like accounts that aren’t yours or charges you never made – dispute those errors with the credit reporting companies.

Minimize applying for new standard/prime credit cards Another red flag for credit reporting companies is when people apply for more credit. If you already have pretty good credit and credit cards that you can use, avoid generating any unnessecary credit score dings by holding off applying for any new credit cards.

Now, if your score is currently very low, or if you are trying to build a fresh new score, the tips are a bit different.

Tips for Building Low / New Credit Scores

Apply for store and department store credit cards These are typically easier to get than standard credit cards and do not require as high a credit score for approval. They can offer perks and discounts at your favorite stores and they will report to the credit bureaus.

Apply for a secured credit card These cards are also easier to get, although there are typically fees associated with secured credit cards. But, they can help to establish or build up a low credit score. And when you start using these cards, always pay on time. We offer a list of some of the top secured cards on this site. If you are in the market for one, check them out.

Whether you are in the market for the best mortgage rate you can find or trying to rebuild your credit, knowing your credit score and what is on your credit report is a very healthy exercise that will help improve your overall financial fitness.

January 24, 2015
Nature vs. Nurture Which Affect Your Spending Habits?

This is an interesting item on the topic of nature vs nurture and how they may affect your spending habits. Although the study came out in 2013, it does not appear the information has changed. For those who are curious, read on.

Which affects your spending and borrowing habits more, nature or nurture? Does it matter? Well Dr. Hersh Shefrin, Chair in the Department of Finance at Santa Clara University’s Leavey School of Business seems to think so. In a recent paper for Chase Blueprint’s Resource Center for Mindful Spending, Dr. Shefrin, takes a deeper look into the psychology of why we spend and borrow the way we do.[pullquote_right]…financial education has largely been ineffective in increasing our degree of financial literacy …[/pullquote_right]]

Some would argue it is due to a genetic predisposition, while others would say it is a matter of financial literacy. Well, you would be surprised to find it is actually a little of both. While nature and instincts play a part, a strategic, well-educated thought process (nurture), can override habits and knee-jerk reactions for instant gratification.

According to Dr. Shefrin, Traditional financial education has largely been ineffective in increasing our degree of financial literacy because traditional methods fail to take into consideration the importance of psychology and the knowledge of how our brains make decisions. A recent study showed those with financial literacy training fared no better on tests than those who did not take the class.

Dr. Shefrin suggests the key to better financial literacy would be a two-fold approach. First, identify what motivates us, then design programs aimed at helping develop and maintain strong spending and borrowing patterns. Some ways to do this would be by designing smart, nurturing programs that help people carry out the basics of managing spending and borrowing. Another way would be with the use of modern technology, such as personal financial management tools aimed at providing consumers with their spending data in a straight forward way. Finally, turning finances into fun with the use of games would go a long way to help instill better spending and borrowing habits in children, particularly during the K-12 years.

“There is a high cost to making bad financial decisions,” says Dr. Shefrin. To make real progress, we should harness innovations that can make it possible for people to overcome poor spending and borrowing habits.”

Why do we spend this way?

For more information on the role nature and nurture plays in our spending habits, visit: https://www.chase.com/online/chase_blueprint/document/JPMC_Chase_BornToSpend_FINAL.pdf

For more information on the Resource Center for Mindful Spending, visit: https://www.chase.com/online/chase_blueprint/resource-center.htm

January 22, 2015