Credit Card Fraud
Credit Card Fraud – Credit Card Companies Victimizing their Cardholders
Certain credit card companies are charging their credit cardholders for additional services without the knowledge or consent of the cardholders. Services may also be declined or canceled once the cardholder is in need of the benefits provided by the services. Other deceptive practices include certain credit card companies failing to obtain the cardholder’s written consent and failing to provide required written disclosures prior to charging the cardholder. Once credit cardholders discover the fraudulent charges and call to report it, operators are falsely telling callers that the charges would not have been made without the cardholders consent.
Know the credit card rules.
Despite recent federal regulations to protect consumers from deceptive practices, credit card companies still manage to charge exorbitant fees and bury their rules and regulations in the fine print. If you use credit cards, you have many new and improved rights against the misleading practices of credit card companies.
Prepaid Cards – The Dangers of Hidden Fees
Prepaid cards, also known as re-loadable cards, are being marketed as a cheaper alternative to credit cards, debit cards, and traditional banking. These prepaid cards appeal to low-income consumers, those who cannot get credit, and those with limited access to banking. It is estimated that 80 million people fall into one of those categories, making prepaid cards a boon for the banking industry. However, there are numerous fees associated with prepaid cards making them unexpectedly expensive. These hidden fees are potentially putting consumers further in debt.
- Activation fees
- Maintenance fees
- ATM withdrawal fees
- Balance inquiry fees
- Inactivity fees
Some prepaid card companies perpetuate the damage even further – trapping consumers in a vicious cycle – by negatively reporting on the consumer’s credit rating if he or she closes the account.
The prepaid card’s hidden fees include initiation fees, monthly maintenance fees, cash withdrawal fees, fees to add funds, shortage fees, and overdraft fees. Some prepaid card companies perpetuate the damage even further – trapping consumers in a vicious cycle – by negatively reporting on the consumer’s credit rating if he or she closes the account.
While these fees may be disclosed in small print on the cardholder agreement, prepaid card consumers typically do not read the fine print and are unaware of the numerous fees involved. Prepaid cards look like other plastic credit cards. Some of the top prepaid cards include those from leading discount retailers. Each of these cards may also feature the logo of a major credit card.
Payday Lenders – Predatory Lenders and the Vicious Debt Cycle
Payday lenders – also known as predatory lenders – offer high-cost, short-term loans or cash advances to borrowers who are short on money. Predatory lenders are targeting low-income borrowers as well as elderly adults receiving social security benefits. Some payday lenders are charging the borrower as much as 400 percent or more in interest charges on their payday loans. While other payday lenders set up their borrowers with a line of credit on a prepaid card instead of giving them cash.
In California, the maximum amount a consumer can borrow on a payday loan is $300. The maximum fee a lender can charge is $45 on this $300 loan, which is equivalent to an annual percentage rate of 460% for a two-week loan. In contrast, a car loan would likely carry an interest rate of 8%. The payday loan business is a lucrative one for the predatory lenders, but financially devastating for the consumer.
Unfortunately, this short-term solution can result in devastating long-term ruin. If the borrower does not pay off the full amount of the payday loan or cash advance at the end of the term (typically two weeks), the borrower is required to pay more fees to the lender without receiving any additional money. Some payday lenders encourage borrowers to sign over their paychecks or social security benefits, allowing the payday lender direct access to the borrower’s income. Many unsuspecting borrowers, especially elder adults and seniors are getting caught up in a cycle of payday lender debt.