I told him that, but also said he could probably get the “extras” from today reversed if he just went and spoke nicely to a branch manager. He then boggled my mind. He told me that this was just one incident in dozens this year.

Dozens?

Firstly, I have a hard time understanding why the guy even still has a checking account if he is that sloppy. But, that wouldn’t be helpful to say. What I asked instead was if he’d ever thought of getting a small amount of overdraft protection.

“Well yeah, that’s what all these charges are for” he told me.

“No, those are fees for you overdrawing. If you got overdraft protection, you’d just take an expensive but instant loan and not have to pay the fees.

I don’t know if the guy will do it. I told him to just go to a branch and apply. I made less money than him when I first applied for overdraft protection, and I think they like to give it out.

My point is simply this, and I hope if helps someone. You should have the money for the checks you write. If you don’t, and you know you are too sloppy to keep careful track of it, then get overdraft protection and make sure to pay it off immediately, every time. If you don’t know about it, then do your research online. It isn’t a great solution, but it is better than the formula (dozens * $29) = $too much wasted.

Technorati Tags: overdraft protection, checking, banks

It’s funny, I wasn’t sure what to call the investment. “Long term investment”, “part of my wealth cycle” or as an “FFA investment”. These are all terms from various wealth building books I’ve read. I think I like “FFA” the best. That stands for “Financial Freedom Account”, from “Secrets of the Millionaire Mind by T. Harv Eker. The very simple idea is that in order to get wealthy, you need to put 10% of your income into an account whose only purpose is to grow. All profits from that account go back into the account until it is large enough to support me all by itself.

Mr. Eker’s system, which I really should make some standalone entries about, doesn’t really go into much detail about how to grow that account. On the other hand, Loral Langemeier’s excellent new book, “The Millionaire Maker’s Guide to Wealth Cycle Investing” does an excellent job of explaining some of the strategies available to grow that money.

Reading Ms. Langemeier’s book, I got to thinking about Prosper.com, and how perfectly it seems to fit my needs as a wealth accelerator. It seems like a very straightforward way to make reasonable money, while retaining some degree of liquidity and also receiving monthly payouts.

How it works

Basically, Prosper is an loan buying and selling marketplace. I plan to be a lender in this system, so how it works for me is that I bid on loans. I bid on the specific rate acceptable to me. I don’t have to take the whole loan, I can take a part-share of a loan (or multiple loans), thus reducing my exposure risk. I can see the loan requesters’ credit rating, payment history and debt-to-loan ratio. That way, people with better ratings and ratios get better rates.

For example, I could take $100 each of 10 “A” rating short-term loans, at 11% interest. That’s how I plan to do it, spreading the risk around rather than taking on one lender at a time. Rates are higher for larger sums and for longer loan periods.

Prosper makes the loans themselves and then resells the debt to you. It collects the money and disburses it. That sounds ideal, keeping the paperwork for me at a minimum.

Prosper makes this all much more interesting by adding the idea of “groups” to the mix. People can belong to groups dedicated to various purposes. The groups themselves have ratings, so the lenders can see, for example, how many late payments members of the group have ever made. That way, groups get better rates than individuals, and peer pressure helps make sure people stay on time with their payments. I think that idea is brilliant.

I just got set up for Prosper on Friday. Like PayPal, it involves bank account verification, so I can’t fully participate just yet. I am very mucg looking forward to getting my feet wet on this opportunity. I’ll be sure to share how it is going!

Technorati Tags: prosper, prosper.com, lending, promissory notes, ffa, ekar

Short answer, it is fraud

Organized criminals have your credit or (much much worse) your debit card number. They are going to rip you off for as long as they possibly can. It won’t end until you take drastic action. If you have a credit card, possibly closing the card and getting another is sufficient, though I doubt it. But if you have a debit card, the hard and bad news is that you must physically close the actual linked checking account to stop the debit fraud drain.

My Experience

The fraud started with a huge hit of $1,200, followed by sets of four to eight smaller withdrawals every week to ten days. It continued for six months until I closed the attached checking account. Closing the debit card had no effect, and did not stop the fraud. Calling the bank and reporting the problem only got each fraud refunded after it was committed, it never cut off the fraud source itself.

When I was tracking down the companies involved with the fraud, I was initially quite confused. They included the following:

• A.C.E.S.A BRA.MARTBARCELONA
• A.C.E.S.A BRA.TARBARCELONA
• A.C.E.S.A BRA.TARRBARCELONA
• A.C.E.S.A BRA.VENDBARCELONA
• A.C.E.S.A ENT.ACC.BARCELONA
• A.C.E.S.A GRANOLL-BARCELONA
• A.C.E.S.A LA JONQ-BARCELONA
• A.C.E.S.A SAL.ACC.BARCELONA
• AUTOPISTAS AUMAR SVALENCIA
• AUTOST CONFINE STAENZA
• AUTST VENEZIA ESTZA TARV
• Alimentacion Nostacullera <— This is the one which hit me for $1,200

What I think is happening in Spain

No Spanish citizen has confirmed this for me, but I did have some spanish translation help in figuring out what ties these companies together. From what I gather, “A.C.E.S.A.” is the Spanish toll-road system. The companies listed appear to be a combination of toll-taking stations, and restaurants/convenience-marts along the toll roads.

What I’ve pieced together from these clues and from hints in other articles is that the fraud works by the scammers cloning the card somehow. I am still not certain how they got mine, as it never left my possession. Regardless, they clone it and do the big initial hit. They know that after that hit, the card will be closed, so they sell it to “little fish”. The little fish use it to buy little things and to pay tolls along the toll road. The international Credit Card authorization system does not appear to require actual confirmation/authorization for amounts under approx. $25. Or, if it does require it, it doesn’t require it as a hard-and-fast rule, so if a system just runs the card a few times, it will probably be accepted.

That last part was confirmed by Visa employees, who noted that my account showed tons of rejections for the closed card. They said “the system is just running it until it goes through”. My guess is that the Spanish toll-credit system does that for “efficiency”, and that it only incidentally supports international organized crime.

The cure is to close the account

Let me repeat emphatically, these criminals are really good at what they are doing. They know the system better than the bank employees do. The only way to stop it is to close the linked account. Do yourself a favor, don’t fight it once the fraud starts its steady slow drain, hoping that “this one will be the last one”. Yes, you can call and dispute each and every one. I did. By the time you get the refund, you’ll have another $100 drained from your account. Stop the losses as soon as you get your first initial “big hit” refunded, close the account and completely change banks. Sorry, but that’s the only thing that worked for me.

Technorati Tags: banking, credit fraud, debit fraud, identity theft

With a tip of the hat to pfblog and the Fat Wallet forums, I present this roundup and summary of credit-card cashback offers.

Citibank Dividend Platinum Select – 5% cash back on purchases at supermarkets, drugstores and gas stations, plus 1% on all other purchases, capped at $300 per year.
Citibank UPromise Platinum Select – 10% of purchases at UPromise grocery & drug stores. 2% at Exxon/Mobil, 1% elsewhere (1% purchases capped at $300), all goes into UPromise college savings account. This might really pay off if you shop at one of the participating grocery stores.
Citibank Driver’s Edge Platinum – 6% rebates on supermarkets, drugstores, and gas stations for 12 months, 3% after that, 1% rebates on other purchases, Rebates for the miles you drive. All redeemable for a new or used car, or repair on an existing car.
MBNA Cash Back – Simple card gives unlimited 1% cashback in $25 increments with no cap.
MBNA Ty Card – Earn a free beanie baby every year that you charge more than $5000! Wow, that’s quite the deal.
American Express True Earnings/Costco 3% eating out, 2% travelling, 1% elsewhere, $300 cap, paid as a Costco certificate (which can be cashed at return counter). Requires a Costco executive membership, which nets a 2% cashback on all Costco purchases as well.
MBNA/Fidelity 529 College Rewards Card – 2% contributed to your Fidelity 529 plan, capped at $1500.
MBNA/Fidelity Investment Rewards Card – 1.5% contributed to your Fidelity account (includes retirement accounts).
Chase Cash Plus Rewards – 5% at grocery, drug stores and gas stations, 1% elsewhere. Uses a point system with $50 increments. $300 cap.
Bank of America Power Rewards – earn points and spend them on various things, the best of which is $1000 for 50,000 points. That would be 2% if you get 1 point per dollar spent. Unfortunately the rules for earning points aren’t spelled out as clearly as I’d like.
Discover Platinum – 5% on “Get More” purchases, exactly what that merchants participate is carefully not detailed online. 1% elsewhere.

There are a few more options, but I am skipping all variable or tiered offers, and almost every “points” based card, since the cards change the rules too often to make those cards terribly useful.

I am planning to apply for the Citi Dividend card to back-up my American Express True Earnings card. I’m going to use them instead of my debit card, every time that is possible. Not only will I “earn” a small amount of money, my account will be much simpler to fix the next time some jerk scammer gets my card number. I will carefully pay off the balance each month. These are for safety, convenience and a little earnings, not for running a balance. I’ve had enough of that!

Technorati Tags: Citibank, Bank of America, Credit Cards, Cashback, Chase, Discover, American Express, Credit Fraud, Debit Fraud

The only positive element I can come up with is my lessons learned:

1. Banks and credit card companies simply do not care. They will not follow up, and they will certainly not take any proactive actions to block credit fraud. That means it is all on you. Do not expect any help.
2. Start by keeping a written log of timeline, amounts, actions taken, people and companies spoken to. I keep mine as a spreadsheet.
3. If you have any fraud at all, you must close your account.
4. This is especially true with a debit fraud. Your liability is unlimited, and has no horizon. Put more bluntly, once debit fraud starts, you are liable for an infinite amount of money for an infinite time.
5. If you must close your bank account due to debit fraud, it is better to change banks entirely. That way the bank will not be able to “attach” the money in your new account during the inevitable dispute to follow.
6. Actively follow-up. Return all information requested by the creditor or bank. Do this even though legally you may not have to do so.
7. Always look up any unknown charges. Do a quick internet search on the company name. Many scammers will put a test charge in, and if it is not challenged, they’ll start a regular “leak” on your account. Worse, they may hit you with an enormous charge after their trial is not noticed.
8. Charges under $20, especially foreign charges, appear to be possible with no authorization. I personally suspect that this is deliberate on the part of the credit companies, and I consider it to be criminal negligence. The lesson here is to be especially suspicious of such charges.
9. Find out if your credit card allows you to generate “one time use numbers”. American Express, Discover, MBNA and many other companies now allow you to create these numbers via their websites. This works by making a number you can enter on a website which will be valid only once and which must be used within a set amount of time, usually a few months. That way your card is not potentially saved or skimmed from a processing company.
10. Strongly consider ceasing the use of debit cards. Use a cash back credit card and pay it off every month. I know Dave Ramsey would slaughter me for this advice, but it is what I am going to do once I finish changing banks.

Technorati Tags: Credit Fraud, Debit Fraud, scams, cons, credit cards

I did a quick search on the internet. about.com, dslreports, robertkbrown all verify that this is a scam. Some propose that is may be due to the Card Systems heist that came to light earlier this year.

I found it about 7:00 PM on a weekday. Bank of America’s fraud department was not open at that time. I needed to call during the work day. The next day, I did so, calling from work. It may be the single worst runaround I’ve ever gotten from a company. At every turn, they transferred me and made me repeat every bit of personal information, as well as my fraud claim. I think I repeated my whole story at least 8 times over the course of two phone calls. Of course, they managed to disconnect me the first time I tried. The whole ordeal took about 45 minutes. For a $9.95 charge which they undoubtedly knew was a con and which was already claimed fraudulent by thousands of other victims. It was enough for me to reconsider ever having any account with them in the future. They simply did not care at all about my piddly little fraud problem.

Final resolution: 45 minutes of annoying phone calling during prime work hours. Dispute letter sent within a week, postage paid on the return envelope. Card cancelled and new card issued immediately.

Technorati Tags: Credit Fraud, Bank of America, scams, cons

This will be a four post mini-series which will name names and give details about my experiences.

Next post: credit fraud
After that: debit fraud
And finally: conclusions, silver-linings, and plans for the future

Technorati Tags: Credit Fraud, Debit Fraud, Scams

Technorati Tags: Credit Fraud, Debit Fraud, Scams