Michelle Singletary

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WASHINGTON -- Our financial lives have become a series of debit card swipes.

We swipe for groceries. We swipe for gas.

We tap our toes with impatience if we find ourselves behind someone using something so seemingly outdated as cash or a check.

Why bother with paper when access to all your money for just about any purchase is accessible within seconds on a small plastic card?

But the card you rely on to conduct your business has a vulnerability that thieves have become masters at exploiting.

During a financial workshop I conducted at my church, several people talked about their recent experiences of having money stolen from their accounts because of a debit card breach. One person lost $700. And we all gasped when one woman said $3,500 was drained from her account, including her rent money. Eventually the banks, as often is the case, returned the stolen funds. But can you afford that kind of hit, even if it’s temporary?

Over the last several years, the percentage of debit cards that have been compromised has increased dramatically, according to FICO, the company that created the credit-scoring model most used by banks to determine borrowers’ creditworthiness.

There was a 26 percent jump from 2015 to 2016 in the number of locations or businesses where debit cards were compromised, FICO’s Card Alert Service reported. And those breaches meant that hundreds of thousands of consumers needed new cards.

It has become relatively easy for criminals to steal debit card data. Crooks place cameras and/or skimming devices over the keypads at ATMs or at gas pumps to capture card numbers and PINS and then load the information onto a plastic card they can use to tap into your bank account.

Contributing to the rise in debit card compromises is the improvement of skimming technology, said Michael Betron, senior director of product management for FICO.

“For under $100, someone can buy a skimmer from an online marketplace,” he said. And they are making them smaller and more discrete.

And the ease of the skimming breeds more theft.

“People become successful and then they become more organized,” Betron said.

Under the federal Electronic Fund Transfer Act, if you report that your card is missing or stolen before someone uses it, you are not responsible for unauthorized transactions.

But if someone uses your debit card before you get a chance to report the fraudulent activity, your liability depends on how fast you spot the hack. Within two business days the most you could be held liable for is $50. Wait longer to notify your bank and you could be on the hook for up to $500. If you report the loss 60 days after receiving your bank statement, you may not get back the money you lost.

And even if you do report the loss right away, it can take awhile for the banking institution to investigate and replace your funds.

Here are some tips from FICO to reduce the chance your card will be compromised.

-- Pay attention to the ATM you’re using. If something looks funky or your card doesn’t easily go into the machine, walk away.

I probe around any ATM I use to see if anything can be lifted up or pulled out. Still, no matter how careful you are, you may not detect anything wrong.

“The skimmers are camouflaged, so unless someone knows what to look for, it’s hard to tell it’s there,” Betron said.

I won’t use any ATMs that don’t belong to my financial institution. I limit the use of my debit card to just a few places. I don’t use it to get gas, since the pumping machines have been particularly vulnerable.

Be leery of stand-alone machines and ATMS located in convenience stores, especially if they are placed in a spot out of the view of store clerks. FICO said that most compromises occur at non-bank ATMS.

-- If you use an ATM and your card isn’t returned immediately, contact your financial institution right away. It might be that the crooks staged the capture of your card.

-- Be mindful of the people standing around you. If someone is positioned just a little too close, don’t complete your transaction. (I give the person a look that says, “You better back up.”)

-- Regularly check your bank account. I have set up online alerts for all my accounts -- credit and debit. I get an email whenever a purchase or withdrawal is made.

-- Be sure that all your contact information -- address, email, and mobile number -- is updated on all your accounts. You don’t want a possible fraud alert from your bank to bounce back.

I’m not telling you all this to put you in a panic. But just be careful out there.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.

(c) 2017, Washington Post Writers Group

WASHINGTON -- If you’re going to allow a friend or relative to live with you for financial reasons, there needs to be a plan in place before the move to make sure your future roommate doesn’t take advantage of you.

But what happens when there is no plan?

That’s the situation in which one reader from East Orange, New Jersey, finds herself. She took in a friend who was in need. A year later, the friend is living large on her hostess’s generosity.

The houseguest is 36 and has never lived on her own. She works various part-time jobs, one paying about $11 an hour. Tutoring brings in between $60 and $100 per week. She had been living with her mother, where the only bill she was responsible for was Internet service. When the mother decided to sell her home, the woman didn’t have a place to go.

“The 11th hour was coming, so I offered my place,” the reader wrote.

There was no rent discussed or required.

“I wanted her to take this time to improve her income, save, and find her a place.”

But where there’s no plan, there is often no progress.

“Throughout this period, her lifestyle has remained much the same as it was with her mother,” the reader wrote. “She goes out and shops like she doesn’t have the goal to move out; there is no urgency.”

Raising questions produces vague answers.

“She told me she felt bad for mooching off me, that she has applied to jobs and government assistance, and nothing has happened. I am at my wit’s end. I don’t know what to do.”

I applaud this reader’s kindness. Yet in this case, some tough love is in order. Here’s what I recommended.

-- (BEG ITAL)Call a meeting ASAP(END ITAL). Set aside enough time -- at least three hours -- to discuss the living situation.

After agreeing to a meeting time, ask your friend to bring all her financial information -- everything. She should bring her pay stubs, bills, at least six months’ of bank statements, and information about any long-term debts, such as student loans. (In my experience, it helps to bring a laptop to go online and get any missing information. This signals that you are not playing around!)

You need to see the numbers. If your goal is to assist your friend or family member, you need to know how much time the person may need to regroup and whether you’ll be able -- or willing -- to give the person that time in your home.

-- (BEG ITAL)At the meeting: (END ITAL) Share your feelings before you get into the financials. Be kind but candid. The situation cannot continue as is.

Don’t be an enabler. You can help someone grow up by demanding he or she be responsible. (And I’m also speaking to the parents who let grown trifling children live off them with no endgame. Stop it!)

If you are willing to continue helping by not charging rent or having your friend contribute to expenses then tell her you(BEG ITAL)must(END ITAL) see some progress. There has to be a budget. You need to see goals and a specific plan to accomplish them. If you’re budget challenged yourself, seek outside help. Insist your friend set up an appointment with a budget counselor by going to the website for the National Foundation for Credit Counseling (nfcc.org).

If you’d like your friend to pull her weight -- pay some rent, contribute to other expenses -- then say that. Set amounts and due dates. In fact, for your protection, you might want to draw up a month-to-month rental agreement, even if you aren’t collecting rent.

-- (BEG ITAL)Demand transparency(END ITAL). Initially, as you are getting the plan underway, meet weekly. Then as you see progress, you can move to biweekly or monthly meetings to assess how things are going.

You get to ask any questions related to her finances. If she’s not paying rent, she does not get to take a Jamaican vacation. Retail shopping bags coming into your home? You can inquire if the purchase is necessary. Of course, don’t be snarky. Indicate that you are asking because you just want to be sure the person stays on track.

If your family member or friend balks at full disclosure, then he or she needs to find another living arrangement. This is about accountability. You are willing to share your space to help someone get up on his or her feet financially, but the price for such generosity is transparency.

If you want to give a hand up to someone by opening your home, go into it with a plan. Otherwise, you could get a moocher who won’t or can’t move out.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.

(c) 2017, Washington Post Writers Group

WASHINGTON -- The Consumer Financial Protection Bureau may be under attack from Republicans, but if it’s going out, it’ll be like a lion, not a lamb.

In issuing a new rule, the watchdog agency just took away a powerful tool that financial institutions used to avoid being sued by groups of consumers.

Whenever you obtain a financial product, such as a credit card, you get a written legal contract. In it, consumers often unknowingly agree to mandatory arbitration to settle disputes. Tens of millions of people use financial products or services that are subject to pre-dispute arbitration clauses, according to the CFPB.

Under the new rule, companies can still include arbitration clauses in contracts but they can’t stop consumers from being part of a class-action lawsuit. This is a game-changer, folks.

Mandatory arbitration clauses, according to CFPB Director Richard Cordray, have allowed companies to “avoid accountability by blocking group lawsuits and forcing people to go it alone or give up.”

This rule came about because of the 2010 Dodd-Frank financial reform package, which the Trump administration and Republicans have been trying to dismantle. The legislation required the CFPB to study the use of arbitration agreements and report back to Congress. The rule is a result of that report.

I see it as bittersweet. The rule change is a win, for sure, but not necessarily for aggrieved individuals who may dream of a big settlement in a court case to punish wrongdoing.

In class-action cases, lawyers can walk away with millions. Consumers may get some money, but it’s seldom a huge payday individually.

Recently, I was reading a message board about a class-action suit filed against AT&T in 2010. Accused of mistakenly collecting taxes from customers for certain state and local taxes for Internet access on their smartphone, the company ended up settling, agreeing to help people get a refund for the overage.

One customer complained about receiving a check for one penny. “Guess they couldn’t find a way to send less.”

“A whopping 3 cents,” another person wrote. I betcha those attorneys made out like bandits on this settlement.”

In response to this customer, a company representative wrote, “The legal fees associated with the settlement and the costs of administering the fund, etc. will be deducted from each class member’s share of the settlement.”

There were 92 attorneys who represented customers in the AT&T case. They stand to collect 20 percent of the cash recovered from the taxing authorities, which, at the highest estimate, could net $191 million plus costs and expenses. And therein lies the problem with class-action suits: Customers often feel cheated even when they win.

I’ve been critical of the outcomes for individual consumers in class-action settlements, having been on the receiving end myself of pitiful payouts. The settlements I really loathe are those promising a discount on my future business with the company. How is that a punishment?

However, I do support the new arbitration rule from the CFPB, which applies only to new contracts with financial institutions. This is an important consumer protection.

Settlements in class-action lawsuits generally include orders for companies to change their conduct.

In its report to Congress, the CFPB found that, in settlements involving 53 groups that represented 106 million consumers, the companies in question agreed to implement new procedures and/or stop what they were doing.

Key to the new rule is also the transparency it will require. More information will be made public about individual arbitration cases and the outcomes. The data on how cases are settled in arbitration is limited, the CFPB wrote. In the cases the agency was able to review, consumers won an average of 12 cents for every dollar they claimed.

It’s important to note this fight is not over.

“We anticipate that this moderate rule will be strongly challenged by industry lobbyists pushing members of Congress to once again choose Wall Street interests over Main Street,” said Linda Sherry, director of national priorities for Consumer Action.

I agree with one point that critics of the arbitration rule attempted to use to derail the rule-making by the CFPB: Class-action attorneys stand to get a greater financial benefit because more group lawsuits will be allowed to go forward. I don’t begrudge the attorneys earning fair fees. Yet when you get a check for a few dollars and the lawyers get millions, it’s hard to view that you’ve won a battle.

But -- and this is worth underscoring -- although individual consumers might not get big payouts, class-action settlements or even the potential for a legal challenge can result in the end of bad business practices. This makes the settlements valuable to all of us.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.

(c) 2017, Washington Post Writers Group

About

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money,” which appears in The Post on Wednesday and Sunday. Her award-winning column is syndicated by The Washington Post Writer’s Group and is carried in more than 100 newspapers. She has written three personal finance books, including her latest “The 21-Day Financial Fast: Your Path to Financial Peace and Freedom.” Singletary was the financial expert for “The Revolution,” a daytime program on ABC. For two years, she was host of her own national television program “Singletary Says” on TV One. She is a frequent contributor to various NPR programs and has appeared on national talk shows and television networks, including “Oprah,” NBC’s “Today Show,” “The Early Show on CBS” and CNN.

In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges. As part this ministry, she and her husband also volunteer to teach financial literacy to prison inmates. She is a graduate of the University of Maryland at College Park. She has received the Distinguished Alumni Award from The Johns Hopkins University, where she earned a master’s degree in business and management.



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