AGEND A Managing Your Finances Predatory Practices Pyramid

AGEND A Managing Your Finances Predatory Practices Pyramid Schemes Online Fraud

KEY TERMS Credit Report Federal Trade Commission Credit Reporting Agency National Consumers League Credit Score Annual Percentage Rate Pyramid Scheme (APR) Collateral Fees Repossession Multilevel Marketing Distributer

MANAGING YOUR FINANCES Section One

Plan for Your Future Planning is the most important part of your financial management formula. Research shows that for every one minute you spend in planning, you will gain ten in execution. Planning will keep you on course in achieving your goals and objectives.

Developing a Budget A budget will help you combat the temptations of spending and take control of your money. Reasons to develop a budget: Help you meet monthly financial obligations. Make payments on time. Increase savings for emergencies.

How to Develop a Spending Plan To develop a Spending Plan, consider the following questions: What are my Fixed Expenses? What are my Variable Expenses?

Steps for Developing a Successful Spending Plan Determine your monthly income: List you fixed monthly expenses. Track and plan for large, periodic expenses. Compare income with expense. Set priorities, goals, and limits. Sets a savings plan and make it a priority. Always keep an emergency fund. Plan ahead for major purchases, thus avoiding impulse decisions.

Wants Versus Needs Wants are Wants things you desire, but can live without Needs are items that you must have for basic survival Needs

• • • Secure Your Future Track your expenses and create a spending plan Pay yourself first: Open savings and checking accounts Set up an emergency fund Be systematic: Use payroll savings Educate yourself about personal finance. • • Keep Your Credit in Good Shape Make all payments on time Cut your debt Limit the number and use of credit cards Review your credit report.

• • • Think Long-Term Estimate your pension or retirement fund Know your Social Security benefits Contribute to a 401(k) and/or an IRA Invest in stocks and mutual funds Refinance your mortgage, if rates go down. • • • Hope for the Best, Prepare for the Worst Check your insurance coverage Consider disability insurance Update beneficiary designations and prepare a will Organize financial records Don’t abdicate responsibility.

• • • Tips for sticking to a Budget Be determined and exercise willpower. Communicate with household members. Be prepared to compromise: purchase a less expensive item or hold back on the purchase altogether. Develop a user-friendly system of documenting expenses. Be creative and use incentives. Revisit your spending plan periodically. The Importance of Saving • Your potential savings is the difference between the amount of net income and the amount that you spend. • Savings and investments can help you to become financially secure and to meet your goals and priorities.

Saving Plan Considerations Ask Yourself: • Are there any variable expenses that I can reduce or eliminate? • What one thing do I spend money on that I eliminate this months and put the funds into a savings account? How to Establish a Savings Plan • Focus on saving. • Specify from which categories cuts will come to make up your projected savings.

Tips for Saving Money Save windfall income. Save lunch money. Try frugality. Collect loose change and deposit it in the bank. Have a “buy nothing week”. Brea k a habit. Save sale money. Use coupons. Compare costs of major items before purchasing anything.

PREDATORY PRACTICES Section Two

Auto Lending Scams When financing a new or used vehicle, keep these in mind: Secure financing beforehand. Compare rates and financing options. Read through all paperwork before you sign anything. Finalize contract before driving away.

Finding a good deal is often not based on the quality of the car or the creditworthiness of the consumer, but rather the consumer’s ability to survive a financial shell game with one of the largest investments most people will ever make. Some Known Abuses include: • • Auto Loan Markups. Loan Packing. Yo-Yo Sales. “Buy Here, Pay Here” dealerships.

Car Title Loans A loan for a small amount of money and for a short time in exchange for the title to your vehicle. Five reasons why you should avoid car title loans: • High Interest Rate for Small Cash Loan. • Repossession of the Borrower's Car. • Lender Has the Legal Right to Sell Your Car. • High Payments. • Extended Time for Repayment.

Rent-To-Own The initial payment to rent furniture a lot less than the cost to own outright. In time, you will end up paying much more than you would have paid to purchase the furniture without a payment plan. If you miss a payment, the company has the right to repossess the items.

Payday Loans & Cash Advances Very expensive short term loan. Expensive because a fee is charged to borrow the money. Miss a payment and fees increase. Payday loans & cash advances should be your last resort.

How do Payday Loans Work?

Tax Refund Anticipation Loan Some tax return preparers offer what they may call ‘instant’, ‘express’ or ‘fast money’ refunds. These refunds are actually loans borrowed against the amount of your anticipated refund. You can check the status of your refund at www. irs. gov/refunds.

Deceptive Mortgage Ads Deceptive mortgage ads offer low rates or low mortgage payments in order to persuade people to purchase a home or refinance an existing loan. These loans are deceptive because they do not tell homeowners the whole story on what it takes to qualify for low rates and refinance. Most will offer the following: -Low “Fixed” Rates -Very Low Payment Amounts

Consider the Alternatives I decided to get a loan. What should I do? Ask the lender to tell you the APR. Ask the lender to tell you how much it will cost in dollars. What are some other ways to borrow money? You might be able to borrow money from: Borrow only what you can repay by the date the loan is due. • Family or friends. • A bank or credit union. • Your credit card.

PYRAMID SCHEMES Section Three

Pyramid Schemes Share Several Characteristics Promise of large profit for recruiting Hidden sales structure Catchy pitch statements to lure in the public

Signs of a Pyramid Scheme Inventory Loading Lack of Retail Sales Pyramid Scheme

Ponzi Scheme Commonly referred to as Peter-Paul Scams Revolves around continuous recruiting. No product to sell. Pays no commission to investors who recruit “new” members.

Chain Letters & Emails Requests that recipient of the letter or email send a letter containing a small amount money to names on a enclosed list. The sender is to add their name to the bottom of the list. The idea is that eventually people will send the sender money.

Online Searches Cheap & easy way for scammers to find victims looking for quick money. Often times requires you to hand over your credit card or debit card information. You are charged recurring fees.

Rebate Processing Presented as a way of earning money by helping other process rebates. In the end you receive poorly written and useless training materials. There are no rebates to process, and few people ever see a refund.

Assembly or Craft Work Schemes Requires an investment of hundreds of dollars in equipment. Goods are produced by investor with promise of being bought once completed. Unfortunately, no work is ever good enough and you’re left with all of the equipment and supplies.

At-Home Medical Billing Schemes Investor pays thousands for supplies to launch medical billing business. Scammer promises software to process claims and a list of potential clients, but never delivers.

Wealth-Building Scams A letter, email, ad or infomercial promoting a seminar that promises to help you make a lot of money, but never really shows you how to become wealthy.

Why do so many people get tricked into fraudulent financial opportunities? The thought of being able to receive a high rate of return for a short term investment seems too good an offer to pass up.

Multilevel Marketing Companies (MLMs) Often confused with Pyramid Schemes Commissions paid for real retail sales, not for new recruits No requirement for consumers to pay anything extra to join MLM system MLM’s have real product sell

What Makes a MLM a Pyramid scheme? The main focus of Pyramid schemes is to sign up more distributors, not to sell products or services. MLMs should only pay commissions for retail sales of goods or services, not for recruiting new distributors.

How Pyramid Schemes Operate Many pyramid schemes present a payout formula or matrix much like this one: # Payment of $500 Level 1 $150 x 3 = $450 # # # Level 2 $30 x 9 = $270 # # # # # Level 3 $30 x 27 = $810 # # # # # # Level 4 $30 x 81 = $2430 # # # # # # # Total: $3960

Con-Artist $$$ Promoter $$ New Investors $

ONLINE FRAUD PREVENTION Section Three

Malware is short for “Malicious software”. Malware is short for “malicious software. " It includes viruses and spyware that get installed on your computer, phone, or mobile device without your consent.

How to Detect Malware? • Slows down, crashes, or displays repeated error messages. • Won't shut down or restart. • Displays web pages you didn't intend to visit, or sends emails you didn't write. Your computer • New and unexpected icons in your shortcuts or on may be infected if your desktop. • A sudden or repeated change in your computer's it: internet home page. • A laptop battery that drains more quickly than it should.

Protect yourself against Malware • Only click on links or open attachments in emails from trusted sources. • Download and install software only from websites you know and trust. • Minimize "drive-by" downloads. • Use a pop-up blocker and don't click on any links within pop-ups. • Resist buying software in response to unexpected pop-up messages or emails. • Talk about safe computing. • Back up your data regularly.

How Do I Get Rid Of Malware? • Update your security software. • Change your passwords. • Stop sharing personal information online.

Phishing When internet fraudsters impersonate a business to trick you into giving out your personal information. Can come in the form of an email, text, or pop-up message that asks you for personal or financial information.

Steps to Avoid Phishing Use trusted security software. Do not email personal or financial information. Use secure websites (https the “s” stand for secure). Review credit card and Bank account statements. Be cautious.

You receive a Phishing email, what do you do? Delete any email that ask you to confirm or provide personal information. Don’t reply, and don’t click on links or call phone numbers provided in the message. Report the email at reportphishing@antiphishing. org.

Report Phishing Emails Forward phishing emails to spam@uce. gov – and to the company, bank, or organization impersonated in the email. You also may report phishing email to reportphishing@antiphishing. org. If you might have been tricked by a Phishing email: • File a report with the Federal Trade Commission at www. ftc. gov/complaint. • Visit the FTC’s Identity Theft website. Victims of phishing could become victims of identity theft; there are steps you can take to minimize your risk.

Identity Theft When someone uses information about you without your permission Name and address. Credit card or bank account numbers. Social Security number. Medical insurance account numbers. You will be responsible for what the thief does while using your personal information.

What Can a Thief Do With Your Personal Information? An identity thief can use your name and information to: • • Buy things with your credit cards. Open a phone, electricity, or gas account. Steal your tax refund. Get medical care. Get new credit cards. He or she changes the address. The bills go to him or her, but he or she never pays them.

How can a Thief steal my identity? A thief can get your personal information in person or online. Here are some ways thieves might steal someone’s identity. A thief might: Steal your mail or garbage to get your account numbers or your Social Security number. Trick you into sending personal information in an email. Steal your account numbers from a business or medical office. Steal your wallet or purse to get your personal information.

How Do I Know If Someone Steals My Identity? Read your bills Watch your bank account statement Check your mail Get your Credit Report

What to watch for Read your bills and account statements and watch for: Things you did not buy Withdrawals you did not make A change of your address that you did not expect Bills that stop coming

How can I protect my Identity? At Home: On Your Computer: As You Do Business: Keep your financial records, Social Security and Medicare cards in a safe place Use numbers & symbols in your passwords Do not save personal information on public computers, like the library Only give out your SSN if you must Take mail out of your mailbox as soon as you can Have security software on your computer Be cautious with your credit card and/or debit card- do not give out your PIN number

What is a Credit Report? Your Credit Report is a summary of your credit history. It lists: • Your name, address, and Social Security number • Your credit cards • Your loans • How much money you owe • If you pay your bills on time or late

Why should I try to fix my Credit Report? Until fraudulent activity is corrected on your credit report, all information sited within the report will be considered your transactions. Get a cell phone Rent an apt Activate utilities Fraudulent activity on your credit report might prevent you from being able to: Get a credit card Borrow money from lenders Get some kinds of jobs

Get your Credit Report You can get one free credit report every year from each credit reporting company. To order: • Call Annual Credit Report at 1 -877 -322 -8228 or go to Annual. Credit. Report. com. • The company mails your report to you. It should arrive two to three weeks after you call.

Conclusion Legitimate business opportunities are out there, but you need to due your homework before investing your money. Don’t be pressured to invest, Ask questions. Before recruiting friends, family or church members for any business opportunity, consider what could be lost if things don’t pan out. It is your money, your time and your life. The decision and action you take are your own.

Have you ever been a victim of Fraud? Pyramid Schemes & Predatory Practices www. ftccomplaintassistant. gov 1 (877) FTC-HELP or (1 -877 -382 -4357) Online Fraud www. ic 3. gov/complaint/ You can also send an email to our fraud collection Resources to database Pocket. Smart@LULAC. org. It’s important to Report report incidents of fraud to prevent other consumers from Claims of falling into similar traps. Fraud Claims

Thank you for your participation. Any Questions? For more information, please contact: Karina Castellanos Program Coordinator League of United Latin American Citizens 1133 19 th Street, NW, Suite 1000 Washington, DC 20036 Phone: (202) 833 -6130 Ext. 114 Fax: (202) 833 -6135 KCastellanos@LULAC. org Randy Fox Regional Program Coordinator League of United Latin American Citizens 1225 8 th Street, Suite 550 Sacramento, CA 95814 Phone: (916) 551 -1330 RFox@LULAC. org