"I got a call from a woman who said I need credit card loss protection insurance. I thought there was a law that limited my liability to $50 for unauthorized charges. But she said the law had changed and that now, people are liable for all unauthorized charges on their account. Is that true?"
Don't buy the pitch - and don't buy the "loss protection" insurance. Telephone scam artists are lying to get people to buy worthless credit card loss protection and insurance programs. If you didn't authorize a charge, don't pay it. Follow your credit card issuer's procedures for disputing charges you haven't authorized. According to the Federal Trade Commission, your liability for unauthorized charges is limited to $50.
The FTC says worthless credit card loss protection offers are popular among fraudulent promoters who are trying to exploit consumers' uncertainty. As a result, the agency is cautioning consumers to avoid doing business with callers who claim that:
- you're liable for more than $50 in unauthorized charges on your credit card account;
- you need credit card loss protection because computer hackers can access your credit card number and charge thousands of dollars to your account;
- a computer bug could make it easy for thieves to place unauthorized charges on your credit card account; and
- they're from "the security department" and want to activate the protection feature on your credit card.
The FTC advises consumers not to give out personal information - including their credit card or bank account numbers - over the phone or online unless they are familiar with the business that's asking for it. Scam artists can use your personal information to commit fraud, such as identity theft. That's where someone uses some piece of your personal information, such as your credit card account number, Social Security number, mother's maiden name, or birth date, without your knowledge or permission to commit fraud or theft. An all-too-common example is when an identity thief uses your personal information to open a credit card account in your name.
Source: Federal Trade Commission
Feb 4, 2009
Buying on credit
Think about how you use your credit card for purchases. Some major credit card companies, including American Express, are looking at where shoppers are using their cards and basing business decisions based on those purchases. Some cardholders are seeing credit lines slashed or even cancelled.
American Express won’t reveal which companies or types of merchants they take into consideration for these decisions, but in a lawsuit filed by the Federal Trade Commission against a subprime lender, the financial institution penalized cardholders for shopping at eight different types of merchants, including bars, massage parlors, billiard halls, nightclubs and marriage counselors.
Source: Money magazine
American Express won’t reveal which companies or types of merchants they take into consideration for these decisions, but in a lawsuit filed by the Federal Trade Commission against a subprime lender, the financial institution penalized cardholders for shopping at eight different types of merchants, including bars, massage parlors, billiard halls, nightclubs and marriage counselors.
Source: Money magazine
Collecting payments 101 for small businesses
Okay, I confess. I sued a preacher for nonpayment on his bill. Yes, we went to court and I won. I’ll probably put off a small blue flame in hell for that, but my business needed to pay its employees. I had bills to pay myself.
This can be a trying time for small business owners trying to get ahead in the world. Uncle Bernie and everyone he knows, along with some of your most loyal customers, are having hard times. Did I have a tough time collecting on the preacher? Yes, but he was the rare case. Nearly all of my clients paid on time, which allowed me to operate the business. Here’s the strategy we used to collect on customers who dragged their tails:
Organize
1) First thing you have to do is establish and maintain a billing system that will allow you to track outgoing invoices and match them with incoming payments. We numbered our invoices and dated them numerically 2009-01-30 and moved them between Paid and To Be Paid folders. Fairly simple. What was most important was getting the bills out ASAP. We sent them out the day after the service was provided.
Play nice
2) For the first 30 days past due, we were empathetic, listened to customers’ stories, especially our most loyal customers. Sometimes collecting can be a phone call saying, “I noticed we didn’t receive you payment? What can we do to assist?” In a small town, it sometimes meant a walk down the street or around the corner to pick up a paper check. (This was back in the day.)
If the bill went beyond 30 days past due we tacked on an additional 3 percent fee every month. We made calls every other week beginning at the 30 day mark. If an account went 60 days, we conveyed it to our agency, which stepped it up a notch.
Accounts that reached the 30-day late mark were reported as such to the credit bureaus and this was reiterated in a letter we sent to the customer when the unpaid bill was forwarded to the collection agency. They collection agency made its money based on money collected. We hoped for anything and sometimes received a payment in full or sometimes a settlement. The agency made a percentage of the money collected.
Cracking down
3) We gave the collection agency another 30 days to collect. If the bill went unpaid at the 90 day mark, we increased the penalty to 5 percent and I walked over to the courthouse and filed a debt of warrant. In Virginia, the municipality charged a small fee (perhaps $27) and served the business owner with a warrant to appear in small claims court before a judge. This remedied about a third of the claims. The remainder, including the preacher mentioned earlier, went to court. We never lost a court case because we carried original signed contracts, copies of services rendered and copies of checks, if partial payments were made. It was usually cut and dry and the customer ended up paying court costs ($40 or so) as well. Did this cost us customers? Yes, it did; however, when you’re operating on a shoestring budget and have employees who have to feed their families, we forced to downsize or collect on unpaid bills.
Depending on the state, a business can recover up to $5000 in small claims court. Filing costs average about $40 and you don’t need a lawyer. If the court finds in your favor and the customer fails to pay, you’ll be entitled to garnish their wages or bank account to get your money. (For information on filing, go to the National Center for State Courts’ site at ncsonline.org. Search the links in the Small Claims State Links.)
This can be a trying time for small business owners trying to get ahead in the world. Uncle Bernie and everyone he knows, along with some of your most loyal customers, are having hard times. Did I have a tough time collecting on the preacher? Yes, but he was the rare case. Nearly all of my clients paid on time, which allowed me to operate the business. Here’s the strategy we used to collect on customers who dragged their tails:
Organize
1) First thing you have to do is establish and maintain a billing system that will allow you to track outgoing invoices and match them with incoming payments. We numbered our invoices and dated them numerically 2009-01-30 and moved them between Paid and To Be Paid folders. Fairly simple. What was most important was getting the bills out ASAP. We sent them out the day after the service was provided.
Play nice
2) For the first 30 days past due, we were empathetic, listened to customers’ stories, especially our most loyal customers. Sometimes collecting can be a phone call saying, “I noticed we didn’t receive you payment? What can we do to assist?” In a small town, it sometimes meant a walk down the street or around the corner to pick up a paper check. (This was back in the day.)
If the bill went beyond 30 days past due we tacked on an additional 3 percent fee every month. We made calls every other week beginning at the 30 day mark. If an account went 60 days, we conveyed it to our agency, which stepped it up a notch.
Accounts that reached the 30-day late mark were reported as such to the credit bureaus and this was reiterated in a letter we sent to the customer when the unpaid bill was forwarded to the collection agency. They collection agency made its money based on money collected. We hoped for anything and sometimes received a payment in full or sometimes a settlement. The agency made a percentage of the money collected.
Cracking down
3) We gave the collection agency another 30 days to collect. If the bill went unpaid at the 90 day mark, we increased the penalty to 5 percent and I walked over to the courthouse and filed a debt of warrant. In Virginia, the municipality charged a small fee (perhaps $27) and served the business owner with a warrant to appear in small claims court before a judge. This remedied about a third of the claims. The remainder, including the preacher mentioned earlier, went to court. We never lost a court case because we carried original signed contracts, copies of services rendered and copies of checks, if partial payments were made. It was usually cut and dry and the customer ended up paying court costs ($40 or so) as well. Did this cost us customers? Yes, it did; however, when you’re operating on a shoestring budget and have employees who have to feed their families, we forced to downsize or collect on unpaid bills.
Depending on the state, a business can recover up to $5000 in small claims court. Filing costs average about $40 and you don’t need a lawyer. If the court finds in your favor and the customer fails to pay, you’ll be entitled to garnish their wages or bank account to get your money. (For information on filing, go to the National Center for State Courts’ site at ncsonline.org. Search the links in the Small Claims State Links.)
Jan 25, 2009
Credit Card Strategy 501
Okay, we all have to use credit cards at some point, be it for a hotel stay, booking air travel, renting a vehicle, or putting a down payment on that Harley Sportster. Okay, maybe not the last one.
Consider this. Anyone who owns a home knows at some point they'll be buying appliances. Don't forget TVs, DVRs, home theatre systems, laptops for the wife and those freaky cell phones or toys for the kids. Do you remember replacing the last item because its predecessor didn't last as long as you thought it would. Well, wake up and smell the Folgers.
Nothing lasts like it once did. Do you know anyone with a 30-year-old Kenmore microwave that has traveled from Texas to Hawaii, then Virginia, Iowa and back to Virginia? Yep, it's true and it's still going like the Energizer bunny. Yet, a new one model microwave, car, computer, camera (or fill in the blank here) won't last very long.
Consider putting any purchase that's going to break down on your credit card for the protection it offers. Check the benefits tied to your Visa or Mastercard. Many of them now offer extensions on the manufacturer's warranty. It's common to see an extra year free of charge. No paperwork or registration is required for this.
Not sure if your credit card offers this free protection? Give them a call. They should be able to provide you something in writing. Once this arrives, keep it in a safe place- perhaps filed with your warranties. If the credit card company can't provide this or if it's unavailable, you may think about moving to another credit card.
Even if you have the cash ready to pay, put the purchase on your credit card (that offers the extended warranty) and redirect the cash. Pay it in full on the first statement to avoid finance charges.
Consider this. Anyone who owns a home knows at some point they'll be buying appliances. Don't forget TVs, DVRs, home theatre systems, laptops for the wife and those freaky cell phones or toys for the kids. Do you remember replacing the last item because its predecessor didn't last as long as you thought it would. Well, wake up and smell the Folgers.
Nothing lasts like it once did. Do you know anyone with a 30-year-old Kenmore microwave that has traveled from Texas to Hawaii, then Virginia, Iowa and back to Virginia? Yep, it's true and it's still going like the Energizer bunny. Yet, a new one model microwave, car, computer, camera (or fill in the blank here) won't last very long.
Consider putting any purchase that's going to break down on your credit card for the protection it offers. Check the benefits tied to your Visa or Mastercard. Many of them now offer extensions on the manufacturer's warranty. It's common to see an extra year free of charge. No paperwork or registration is required for this.
Not sure if your credit card offers this free protection? Give them a call. They should be able to provide you something in writing. Once this arrives, keep it in a safe place- perhaps filed with your warranties. If the credit card company can't provide this or if it's unavailable, you may think about moving to another credit card.
Even if you have the cash ready to pay, put the purchase on your credit card (that offers the extended warranty) and redirect the cash. Pay it in full on the first statement to avoid finance charges.
Stay on top of it
It's so easy to fall behind on your banking. We all get crazy busy with life and its details, but getting behind can cost you money.
Monitor your bank accounts and credit card statements for errors. These same errors may run in favor of the bank or credit card. If they know they made a mistake, let your financial instutition or credit card company know. They may be unaware of the situation, but they're usually quick to make corrections. This simple habit of monthly monitoring your statements could save you hundreds every year. Simple diligence folks.
One extra cost that easily stands out- extra costs to you for past due fees, overlimit fees, returned check fees, finance charges, etc.
Monitor your bank accounts and credit card statements for errors. These same errors may run in favor of the bank or credit card. If they know they made a mistake, let your financial instutition or credit card company know. They may be unaware of the situation, but they're usually quick to make corrections. This simple habit of monthly monitoring your statements could save you hundreds every year. Simple diligence folks.
One extra cost that easily stands out- extra costs to you for past due fees, overlimit fees, returned check fees, finance charges, etc.
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