Mortgage modifiers: Beware of upfront fees

Source: InsideTrack

By Edward W. Harness, Harness Law Offices LLC, Milwaukee

Mortgage modification is all the buzz. It seems we hear about a new program every week, Hope 4 Homeowners, Helping Families Save Their Homes Act, and the most recent Homeowner Affordability & Stability Plan. The latest plan is the Obama Administration’s attempt to stem the tide of foreclosures. These programs are the daily topic of discussions across cable television and the radio. What do you tell someone when they call your office with questions?

First and foremost tell anyone calling beware of any organization charging an upfront fee or advising homeowners to skip mortgage payments. Those tactics and fees are not a part of any government program. If they chose to do business with those companies, they are on their own and will likely not receive any benefit they could not achieve on their own.

Hope 4 Homeowners is a voluntary program that did not require any action by Congress or the President. It is a program supervised by Housing and Urban Development. Each state has a list of approved program providers and HUD Counselors. Participation in the program is without charge to the homeowner.

Helping Families Save Their Homes Act is currently being debated in Congress. The vote may come as early as the first week of March. It would allow judicial modification of mortgages under the bankruptcy code. It has court filing fees and attorney fees, and would not involve a mortgage modification company.

The Homeowner Affordability & Stability Plan is the latest proposal. A review of the executive summary shows a multifaceted plan to help homeowners. It contains the aforementioned judicial modification provisions. It also includes monetary incentives for mortgage services to voluntarily modify mortgages. Those incentives include bonus payments to modify before a homeowner is in default and supplemental payments to reduce principal on underwater mortgages. Those payments come from the government, not the homeowner.

So, tell those callers Modifier Beware. The law has not changed. Be wary of the servicer or third-party provider asking for upfront fees. Those programs are not a part of any government bailout.

Edward W. Harness, Harness Law Offices LLC, Milwaukee, is regional co-counsel for the National Consumer Bankruptcy Litigation Center and a member of the National Association of Consumer Bankruptcy Attorneys. 

“Caveat emptor” gains new urgency for Wisconsin homebuyers

Source: State Bar of Wisconsin, Public Affairs

Buyers have always been advised to “beware,” but a July 2008 ruling by the state’s Supreme Court makes caution an especially high priority for Wisconsin homebuyers. In Below v Norton (2008 WI 77), the court determined that the economic loss doctrine (ELD) bars certain claims for damages due to intentional misrepresentations that occur in the context of residential real estate transactions.

Sellers are required by Ch. 709 Wisc. Stats. to provide a Real Estate Condition Report (RECR) to prospective buyers. Previously, sellers who misrepresented or concealed the condition of the home in a RECR could be sued for intentional misrepresentation and could face both compensatory and punitive damages. The potential punitive damages, in particular, created an incentive for sellers to be honest about providing a complete and accurate RECR.

In this case, the sellers of a home completed a property condition report indicating that they were not aware of any problems with their home’s plumbing. After buying the property, however, the purchasers discovered a broken sewer line and commenced an action in circuit court to recover damages, alleging common law misrepresentation, false advertising and causing property damage by criminal failure to disclose. The sellers responded that the ELD precludes misrepresentation claims in residential real estate transactions and the courts agreed.

The ELD generally holds that claims for damages cannot be brought in disputes regarding contracts for goods or services (the court had previously determined that a residential real estate transaction is included under this doctrine). Because the property condition report was a part of the real estate contract, the ELD effectively bars the buyer from asserting intentional misrepresentation as the basis for a claim.

The court noted in its decision that purchasers in this type of situation are “not left without a remedy” because other state laws are available to address contractual misrepresentation. However, these laws offer less protection to buyers because sellers are subject only to compensatory – not punitive – damages. Thus, sellers who misrepresent the condition of their home could only be compelled to pay for repairs that should have been done in the first place (plus court costs and some legal fees), creating less of an incentive for sellers to be completely honest with buyers.

As a matter of public policy, this situation may merit legislative review and new law to better protect homebuyers. Until that happens, it is especially important for buyers to protect themselves by retaining an attorney, who can advise them on hiring independent inspectors; adding contingency provisions or other safeguards to contracts; and other steps prospective homeowners can take to protect their interests.

Protecting Wisconsin’s Children from Internet Predators

Source: Press Release from the office of Attorney General  J.B Van Hollen

Our kids are our most precious resource. Families work very hard to raise them, pass along values and traditions, educate them, and give them every opportunity to achieve their dreams. At the Department of Justice, we also work very hard to protect them. Nowhere is this commitment greater than in our efforts to fight Internet predators.

While the Internet has opened many doors for our children, from education to communication to entertainment, it has also become an active crime scene. Online sex predators use technology to connect with kids, using all the tools they use: instant messaging, picture and video trading, chat rooms, web cameras, web microphones, social networking sites like MySpace and Facebook, and even online gaming networks like X-Box Live.

Child pornographers have invaded the Internet in many forms. Commercial websites, often located abroad, find an endless supply of customers in the U.S., including in Wisconsin. Others use chat rooms to obtain and trade images and movies, while some simply use their own digital cameras, camcorders, or cell phones to manufacture images. As for cell phones, have you heard the term “sexting?” It refers to sexually explicit chat through text messaging that used to take place only in Internet chat rooms. Often, predators use cell phones after meeting children online.

Predators also use file sharing programs like LimeWire, which many parents believe are just used for music. We have identified approximately 15,000 separate computers in our state that possess and offer to distribute this filth.

Nationally, the story is no different. Statistics kept by the National Center for Missing and Exploited Children (NCMEC) illustrate the scope of the problem:

• Since 1992, for example, NCMEC’s Child Recognition and Identification System (CRIS) has reviewed more than 15 million child pornography images and movies seized by law enforcement.
• Since 1998, NCMEC’s Cyber Tipline has received more than 600,000 reports of suspected online child exploitation taking place around the country, including some one-thousand tips referred to our ICAC. 

To make matters more disturbing, surveys have shown a correlation between child pornographers and child molesters. In 2005, sobering results were released from a study at the Federal Correctional Institution in Buttner, North Carolina.  Researchers indicated that of about 200 federal inmates convicted of Internet child pornography crimes, some 89 percent admitted to molesting children as well.

The Internet Crimes Against Children (ICAC) Task Force of my office’s Division of Criminal Investigation (DCI) is dedicated to identifying and arresting those predators.  Since 1998, the ICAC Task Force has arrested more than 600 offenders and executed more than 800 search warrants. To help prevent kids from becoming victims, and to help parents, teachers, and child welfare advocates better protect kids, we have educated more than 160,000 citizens of all ages across Wisconsin. Parents are the first line of defense in protecting their children from online predators. We have included some tips for parents to help protect their children.

At my request, in its last budget, the state legislature funded two additional Special Agent positions for our ICAC Task Force, as well as three new forensic computer analyst positions. Those specialists perform the critical task of finding and analyzing digital evidence, sometimes right after agents seize it. This teamwork often allows us to take the predator into custody literally within an hour from the time a search warrant is executed.

Our DCI professionals partner with a growing list of local law enforcement agencies throughout the state. We now have 55 ICAC affiliates throughout the state, more than doubling our partnerships since 2006. Additionally, we work hand-in-hand with our federal counterparts to investigate crimes against children that result in a wide-range of federal charges.

Let Internet predators take note. My commitment is unceasing. We will identify you, arrest you, and take you off the street; we will follow you to every area of the Internet, no matter where you try to hide; and we will work together in law enforcement to stay one step ahead of you.

Follwing are Attorney General Van Hollen’s Internet safety tips for parents.

• Be an Active Parent. Keep open lines of communications with kids about Internet use.  This process should begin as soon as a child gets online.

• Prepare Your Children for the Online World as You Do the Real World. Make no mistake, the online world is real, and so are its dangers. Talk to your children about the benefits and dangers of the Internet. You tell your kids not to jump into a stranger’s car alone and why that’s dangerous; tell them why they shouldn’t travel the Internet Highway alone and why that is dangerous.

• Watch Internet Use. Internet predators are watching your kids online. You need to be, too. One suggestion: keep computers in common areas.

• Use Software Resources. Use filters that block inappropriate websites or online services that are harmful to kids. Consider installing monitoring software, which records everything kids do online, from instant messaging to videos to picture trading.

• It’s Not Just the Computer. Find out how your kids are communicating and understand the technology. If you can’t appropriately supervise use, don’t allow it.

• Report Online Exploitation. Call local law enforcement or the Wisconsin ICAC Task Force at (608) 266-1671.

• Find Out More. Visit the National Center for Missing and Exploited Children’s “net smartz” websites.  www.netsmartz411.org is geared to help parents; www.netsmartz.org includes information for parents, kids, educators, and law enforcement.  We use these materials. You should too.

For more information, contact Bill Cosh (608) 266-1221 or visit the attorney general’s web page.

Foreclosure Scams

Source: U.W. Law School Consumer Law Clinic

The worst nightmare for any family is the prospect of foreclosure. The process creates serious anxiety and desperation in the face of financial difficulties. Worse yet, the number of foreclosures in the United States has skyrocketed in recent years. As so-called, “sub-prime” and as adjustable rate loans continue to collapse, more and more Americans are facing this distressful situation. In response to this crisis, several individuals in the state of Wisconsin and elsewhere offer “foreclosure rescue” services to those suffering through foreclosure. These services often exploit individuals in distress and result in even further loss for those who accept the services. The State Bar of Wisconsin strongly advises avoidance and caution when dealing with foreclosure rescue offers.

Rising home prices over the last few decades have left many homeowners with substantial equity assets. Equity is measured by the value of the home less any amount owed on a mortgage. For example, a person who recently refinanced his or her $180,000 home with a $140,000 mortgage will own around $40,000 in equity. Even if you have refinanced your home throughout the years, you may be sitting on a substantial amount of equity.

Foreclosed homeowners with equity should beware of unscrupulous foreclosure rescue actors who are looking to take the deed to the house and all of its equity under the cover of their services. Foreclosure rescue schemes are complex transactions that can carry many variations, but the standard process will proceed as follows:

1. The homeowner misses payments on the original mortgage and falls into foreclosure;
2. The foreclosure scammer offers the homeowner services through a phone call or direct mail solicitation; scammers will usually pitch the deal as a way for the homeowner to “save the house” or get a “miracle refinancing”;
3. After building the trust of the homeowner and playing on the stress of foreclosure, the scammer gets the homeowner to agree to the services;
4. The complex contract transfers the house to the scammer in exchange for monies to pay off the foreclosed mortgage; the scammer now officially owns the home;
5. The former homeowner remains in the house, but only as a tenant; the contract will include an “option to repurchase” the home after one or two years for an unreasonably high amount that the former homeowner could never afford;
6. Unreasonably high rental payments or repurchase prices render the homeowners unable to pay back the scammer; this leads to an eviction and the loss of the home and all of its equity to the scammer.

For most homeowners who enter foreclosure rescue deals, the transaction ends with the consumer homeless and without tens or hundreds of thousands of dollars in equity lost to the scammer. In many cases, the homeowner would have been much better off selling the home during foreclosure for its fair market value, thereby cashing out the equity.

Foreclosure rescue scammers often violate the law by committing fraud and failing to provide proper disclosures to homeowners. If you are involved or were involved in a foreclosure rescue scam, be sure to document the scammer’s promises and representations, and keep all of your documents.

If you face foreclosure, it’s usually best to avoid foreclosure rescue services when you can. Even more legitimate foreclosure rescue services carry high fees and take a large portion of the equity out of the home. To learn your options and possible solutions to a foreclosure, contact a HUD-approved housing counselor. HUD counselors can be found by calling 1-800-569-4287 or by visiting HUD’s website.

Mandatory Arbitration Clauses

Source: U.W. Law School Consumer Law Clinic

What is a Mandatory Arbitration Clause?

If you signed a contract recently or clicked “I agree” on a company’s website, it is likely that you have legally agreed to be bound by a mandatory arbitration clause. Mandatory arbitration clauses state that any disputes you may have with that company must be settled through private arbitration rather than through the court system. This means that your dispute will not be heard by a judge or jury; instead, it will be heard by a private arbitrator whose decision is binding.

What is the difference between normal arbitration and mandatory arbitration?

In normal arbitration, parties to a dispute choose voluntarily and knowingly to enter into arbitration after a dispute arises in order to resolve it relatively quickly and inexpensively. In mandatory arbitration, however, you agree ahead of time to arbitrate any disputes that may arise in the future, thus giving up your right to choose how best to resolve the issue and your control over the process.

Why is Mandatory Arbitration a Problem for Consumers?

• You give up your right to a jury trial

• No ability to appeal – The arbitrator’s decision will be binding, leaving virtually no opportunity for review by a court of law.

• Lack of Impartiality – The terms of the arbitration, including selection of the arbitrator, will likely be dictated by the company, which may affect the impartiality of the process.

• Higher Costs – Arbitration will likely cost you more than regular court because it requires high upfront fees including hundreds of dollars in filing fees and thousands of dollars in the arbitrator’s daily or hourly fees.

• No Class Actions – You will likely give up your right to join a class action lawsuit, which can severely limit your ability to fight both large-scale scams and disputes with small amounts of damages.

• Inconvenience – You may have to travel to an inconvenient location for the arbitration instead of appearing at your local court house.

• Limited Investigation and Disclosure – Arbitration limits the amount of investigation that you can conduct in order to resolve a dispute, as well as the amount of evidence that each party is required to disclose to the other side.

• One-Way Requirements – Your arbitration clause may force you to arbitrate your dispute but allow the company to sue you in court if it so chooses.

• No Legal Precedent or Public Record – Arbitration decisions usually do not create legal precedent or a public record; thus limiting publicity of a business’ bad practices and keeping consumers or the government from policing similar conduct in the future.

• Limited Remedies and Consumer Protections – You will likely give up your right to seek certain remedies, like punitive damages and court orders requiring businesses to take or refrain from taking certain actions. In addition, you may be forced to resolve the dispute according to the laws of a different state that may not have the same consumer protections included in Wisconsin law.

What Contracts Contain Mandatory Arbitration Clauses?

You may have already agreed to dozens of these clauses without even knowing it. Some contracts that often include them are:

• Insurance
• Telephone and Cell Phone contracts
• Rented items
• Credit Cards
• Bank Loans
• Home Repairs
• Automobile Purchases or Leases
• Mortgages
• Payday Loans and Auto Title Loans

What Can You Do to Protect Your Rights?

• Shop around before buying; try to find a company without a mandatory arbitration clause in their contract.
• Read contracts thoroughly, including the fine print and any notices sent later.
• Attempt to negotiate the terms of your contract.
• Cross out the mandatory arbitration clause and initial the change before signing the contract.
• Keep a copy of all agreements that you sign in case you need to challenge any part of it in the future.

Predatory Mortgages

Source: U.W. Law School Consumer Law Clinic

What is a Predatory Mortgage?

A Predatory Mortgage is any mortgage loan that has abusive terms or conditions that misleads vulnerable consumers into paying more than they should for a home.

How destructive are Predatory Mortgages?

Predatory Mortgages can have devastating consequences. They can be so expensive that consumers cannot afford their mortgage payments and may end up in foreclosure.

Another consequence of a Predatory Mortgage is a practice called Equity Stripping, also known as Foreclosure Rescue. Some investors or small companies deceive homeowners in foreclosure into believing their home can be “saved.” In reality, homeowners are giving away their property and equity for the value they owe instead of what their house is worth. Victims are given false assurances that they will be able to buy their property back, but that rarely happens.

Who is at risk?

Anyone and everyone can be a victim of a Predatory Mortgage. However, predatory lenders usually target those who have less-than-perfect credit. Disproportionately targeted groups include women, the elderly, African-Americans, Latinos and other minority groups.

Common elements of Predatory Mortgages

Steering: Predatory lenders “steer” consumers into Predatory Mortgages even though they qualify for loans with better terms.

Non-Traditional Mortgages: Consumers are lured into complicated loans without fully understanding what they mean. Examples include:

• Exploding ARM (Adjustable Rate Mortgage): This is a mortgage that begins with a very low short-term fixed rate. Once the introductory period expires, consumers are stuck with a very high adjustable rate
• Interest Only Mortgages: Consumers pay interest only on their mortgage for a couple of years. Once the interest only period ends, consumers have no equity on their home and then must pay an extremely high mortgage that includes both principal and interest.
• Payment Option ARM: Consumers are given a minimum payment option on their mortgage. This minimum payment is less than the accrued interest and the difference is added to the loan balance.
• Balloon Mortgage: This loan has a number of monthly installments that do not cover the entire loan balance. As a result, consumers are forced to either make a large lump-sum payment or refinance their home.
• Excessive Fees: Consumers are sometimes unaware that they are paying for fees that total more than 5% of the loan amount on Predatory Mortgages. Typically, these fees are less than 1% of the loan amount.
• Prepayment Penalties: Predatory Mortgages usually charge a penalty if the consumer decides to pay off a loan early. These penalties can cost more than six months’ interest.
• Kickbacks to Brokers: Brokers in Predatory Mortgages receive a fee from the lender referred to as “yield spread premium,” or “YSP,” for giving consumers a loan with a higher interest rate than he or she qualifies for.
• Loan Flipping: In some Predatory Mortgages, the lender refinances a loan to generate fee income that ends up draining the consumer’s equity and can even increase the consumer’s monthly payments.
• Mandatory Arbitration Clauses: Some Predatory Mortgages have clauses that forbid consumers from seeking legal remedies in court if the loan has illegal or abusive terms. These clauses make it less likely that consumers will receive an appropriate remedy in case of wrongdoing.
• Unnecessary Products: Some Predatory Mortgages force consumers to pay more than they should by including unnecessary insurance and/or other products along with the loan.

How can I protect myself from a Predatory Mortgage?

Make sure your credit report is accurate. It will ensure that you will get the best possible terms on your mortgage loan. A free copy of your credit report is available once a year at http://www.annualcreditreport.com/.

Otherwise contact the credit reporting agencies directly.

• Equifax: 1-800-685-1111: www.equifax.com
• Experian: 1-888-397-3742: www.experian.com
• TransUnion: 1-800-916-8800: www.transunion.com

Shop around. Interest rates and fees vary from lender to lender. Obtain quotes from at least three different lenders.

Make sure you understand the terms of your loan. Learn what the main documents mean. For instance, the Good Faith Estimate which must be given to you within three business day of applying for a loan, estimates the fees due at closing. Use it to compare different loans. Another important document is the Settlement Statement (HUD) given to you at the time of closing. It itemizes each charge that you are paying. And the Truth in Lending disclosure form lists your APR (annual percentage rate) and how much you are paying for your loan in actual dollars.

Make sure you see in writing – and understand -how much your monthly payments will be and decide whether you can afford them. Some people are surprised by these actual figures after it is too late and end up making minimum payments or foreclosing on their property.

Take your time to read every document you sign and verify that there are no blank spaces.

Jury Duty Scam

Source: U.W. Law School, Consumer Law Clinic, November 2007

What is the jury duty scam?

The jury duty scam is a form of identity theft. The scammer calls claiming to work for the local court and says you have failed to report for jury duty. Next, the scammer tells you that as a result of your failure to show up, a warrant has been issued for your arrest. The victim will then respond that they did not know they were supposed to show up for jury duty and never received a notice. At this time, the scammer asks the victim for confidential information to ‘verify’ his alleged records.

The scammer asks for the victim’s social security number and birth date. The victim, who is often caught off guard and intimidated by the alleged arrest warrant, hands over the information. After confirming that the victim indeed failed to report for jury duty, the scammer offers to resolve the situation over the phone by allowing the victim to pay a fine by credit card. Once the victim has provided a credit card number, the scammer has all the information he needs to steal your identity.

Where has the scam occurred?

While the scam has not been reported in Wisconsin yet, it has been reported in Michigan, Minnesota, Illinois, Ohio, Texas, Arizona, Pennsylvania, Oklahoma, Colorado, Oregon, and Washington.

Furthermore, the jury duty scam has been going on for at least a few years, with reports dating back to February 2004.  

How do I know if the phone call is the scam or actually the court?

You will know the difference between a scammer and the court because court workers never ask for your social security number or other private information over the phone. In fact, most courts never call you; they only communicate via mail. The only time you may hear from a court by telephone with anything related to jury duty is after you have mailed back your completed summons information form. Even then, the court rarely calls. Some courts require you to call them shortly before your scheduled jury duty to ensure that your service is still required. In addition, whether it is the jury scam or anything else, you should never give out personal information to an unsolicited caller.

What if the caller insists that I give him information?

If you have received an unsolicited call from someone asking for personal information, do not give it to him and hang up the phone. If the caller insists, and you feel you have to respond, ask him to read the data he has from his notes, and you will let him know if the information is correct or incorrect.

What should I do if I think I have been scammed?

If you have already provided your personal information to a caller, examine your credit card and bank account statements every month. Keep an eye out for unauthorized charges. If you feel you have some unauthorized charges, challenge them immediately with your credit card company or bank.

Whether you have given out your personal information or not, if you have received a phone call you think may be part of the jury duty scam contact your local police to report the suspicious phone call.

You can also call your local FBI field office. Wisconsin’s only FBI office is in Milwaukee at 330 E. Kilbourn Ave., Suite 600 (414) 276-4684.

Auto Title Loans

Source: U.W. Law School Consumer Law Clinic

We have all seen the advertisements, and the theme is always the same: “Need cash fast? Let us help!” When money is tight, it sounds good – maybe even too good to be true. Like we were taught as kids, if something sounds too good to be true, it probably is. In the case of auto title loans, one of the industries that uses these advertisements, it is definitely too good to be true.

What is an auto title loan?

Auto title loans are the fastest-growing form of high-cost, high-risk loans in the country. Auto title loans are also known as car title pawns, car title loans, title pledge loans, sales and leasebacks, or motor vehicle equity lines of credit. They are marketed as small “emergency” loans and are secured by the title to a borrower’s vehicle. The annual percentage rate (APR) on auto title loans is in the triple digits, typically around 300 percent.

How does an auto title loan work?

Because auto title loans are secured by the title to a vehicle, the vehicle must be paid off in full before you can take out a loan. The lender will then advance a fraction of the vehicle’s value, typically a few hundred to a few thousand dollars. The loan must be paid off in full at the end of the designated time period, usually one month. During the time of the loan, the borrower stays in physical possession of the vehicle, but the lender retains the title.

If the loan cannot be repaid, there are usually three possible consequences: 1) The loan is “rolled over” (extended, with additional interest or fees due); 2) The car is repossessed; or 3) Legal action is taken against the borrower in the form of a lawsuit to recover the unpaid amount.

Why are auto title loans dangerous?

Auto title loans are dangerous because it is so easy to fall into a cycle of debt and loan rollovers. A person who needs a title loan rarely has money to cover the loan and fees in addition to his or her usual expenses, much less emergencies like illnesses. When that happens, the debt grows through a rollover. Say, for example, a lender advances a $600 loan. The finance chargeon that loan is $150 and must be paid up-front. At the end of the period (usually one month), $600moreis due to the lender. If the borrower does not have this $600, he or she can pay an additional fee (another $150) and the loan is rolled over until the next pay period. At the end of that period (usually another month), the original $600 loan will cost $900. And because many consumers must roll over these loans multiple times, this cycle continues until it is broken by repossession of the car or other legal action against the borrower. These actions also have negative consequences for the consumer’s credit ratings.

Another reason auto title loans are so dangerous is because some businesses have found ways to convince borrowers that they will not fall into this trap. One such method is to offer a lower APR, making a title loan seem like a less risky option. However, these lower APRs are often tied to very high fees to make up the difference in profit. Some lenders require payment of additional fees for random miscellaneous “expenses”, such as membership in a special club.
           
What alternatives exist for consumers? Consumers facing financial distress should look first to their community for assistance. Although resources will vary from community to community, there may be some available assistance for:

• Child care/Children’s Services
• Clothing
• Medical/Dental
• Utilities
• Food
• Rent
• Veterinary
• Other emergency situations

Consumers can try contacting their county human services department, clinics, churches, community centers, or direct providers for more information on available programs and services. Additionally, financial counseling services are available in many areas to help consumers avoid situations that may lead them to auto title lenders.

Costs and Benefits of Debt Consolidation

Source: U.W. Law School Consumer Law Clinic

For borrowers facing multiple loan payments, debt consolidation may provide some relief if done with caution. In many cases, however, consolidation can increase the debt and financial troubles of borrowers.

What is debt consolidation?

Debt consolidation occurs when a person takes out a new loan to pay off existing loans. The two most common forms of debt consolidation are:

(1) home equity loans, known as “secured,” and
(2) personal loans, known as “unsecured”

What are the benefits of consolidating?

Consolidation can simplify and lower monthly payments. Because a single loan is paying off multiple loans, a consumer will have a single monthly payment instead of numerous monthly payments. Most often, however, consumers consolidate to lower their monthly payment (even though the principle and interest rate often increase as a result).

If done with caution, consolidation through home equity loans can offer a lower interest rate that is tax deductible since the debt is “backed up” by collateral.

Because personal loans are only secured by a promise to pay, consumers are less likely to receive a lower interest rate. With personal loans, however, consumers do not risk foreclosure if they default.

What are the drawbacks of consolidating?
Debt consolidation often does not solve debtor problems and can make things worse. The cause of most debt burden is the overuse of credit cards. To get out of debt, consumers should pay as much off as possible each month instead of looking for the lowest installment. Low payments can hide high interest rates and fees stretched out over a long period of time.

Home equity loans are particularly dangerous because they substitute open-end credit (like credit card debt) with closed-end debt that puts a home in danger of foreclosure. Home equity loans can place a debtor’s home in real jeopardy.

Personal loans can carry interest rates anywhere around 15-25%. If you suffer from heavy debt, interest rates will be higher. Thus, consolidating loans often results in higher interest rates and a higher principal than previous loans.

When and how should I consolidate?

• Shop Around: Consolidation plans that benefit consumers have lower interest rates and fewer fees. The best deals should also come with the affordable largest monthly payment. This is important because a large installment plan allows the consumer to pay off the debt quickly and with less interest. Credit unions are known to offer very competitive rates. Always be careful of credit counseling services offering debt consolidation services. Many so-called “non-profit” agencies offer bad advice and charge high fees to consumers. Be especially weary of advertised counseling agencies, and always ask around for referrals from friends and family. If an agency aggressively pushes for your business, stay away.

• Stay away from credit insurance: Consumers should be weary of accepting “credit insurance” offers. This insurance is supposed to cover a consumer’s payments in case of injury or job loss. In most cases, however, the insurance doesn’t pay or is so overpriced that it isn’t worth the cost.

• Home equity loans are for emergencies: When looking to consolidate debt, home equity lending should not be used to pay off credit cards. Instead, this type of credit should only be used for emergencies, such as a medical crisis or the loss of a job. Outside of emergency consolidation, home equity loans can also be useful when remodeling a home because equity will increase with home improvements.

• See legitimate credit counselors: For advice for Madison residents, the Consumer Credit Counseling Service (608.252.1334) provides low-cost advice. The National Foundation for Credit Counseling (http://www.nfcc.org/ or 1-800-388-2227) can also refer you to a legitimate credit-counseling agency in your area.

Check Cashing Businesses

Source: U.W. Law School Consumer Law Clinic

What is a check cashing business?

Often located in working class neighborhoods and marketed to low-income consumers, check cashing businesses are a convenient but expensive way for consumers to get cash and pay bills.  Consumers should be aware of the costs involved in relying on these businesses, and are advised to seek less expensive alternatives. 

How do check cashing businesses work?

Check cashing businesses profit by charging a fee, usually expressed as a percentage of the check amount, for cashing checks for customers.  This fee can vary based on the type of check (governmental, payroll, personal) and even the time of day you go to the store, but is generally around 5% of the check amount.  In addition, many consumers use these outlets to purchase money orders with which to pay bills.  These money orders can cost $2-3 dollars each to purchase.  These fees can add up in a hurry, and represent a significant portion of a low-income consumer’s budget. 

An example:

The $696 in fees represents nearly 6% of the income of the hypothetical consumer discussed in the above example.  That is a significant amount that might be more than one month’s rent, or a winter’s worth of heat. 

What are the alternatives? 

• Checking Accounts: If you qualify for a checking account, this is probably your best alternative. You can have government benefits directly deposited into a checking account, and many employers offer direct deposit as well.  You can access your funds at the bank or credit union, or at ATMs.  You can use personal checks to pay your bills. Some banks require a minimum balance in order to get free checking accounts, but even an account that charges fees will still be significantly less expensive than using check cashing businesses and money orders.  Furthermore, your money will be much safer in a bank than in your pocket. 
  You should find a bank that is convenient to your home or workplace, and you should inquire about minimum balances, fees, and costs for overdrafts.  Even if you have had credit problems in the past, you should still inquire about opening a checking account; many banks will still consider you.  Usually they will only reject people who have had accounts closed in the past because of overdrafts.
  
  Another provider of checking accounts is credit unions.  These are institutions that operate much like banks, but are member owned.  Because credit unions are not for-profit enterprises, there are often even fewer fees involved.  For many credit unions, the membership requirements are minimal requiring only that you live or work in one of the counties that the credit union serves.  Credit unions are quite popular in Wisconsin, and exist throughout the state. 

• Electronic Transfer Accounts (ETA): If you receive benefits from the federal government, you can set up an ETA at participating local financial institutions, and the money will be deposited directly into the account.  The funds will be immediately available for your withdrawal, and you won’t have to bother with paper checks.  Participating banks are required to offer you an ETA unless you have had an account closed in the past due to fraud.  Bad credit does not keep you from opening an ETA.  Participating banks can charge a maximum fee of $3.00 per month, which is significantly less than using a check cashing business. Although ETA’s DO NOT include check writing privileges, they are a safe and inexpensive alternative to cashing paper checks. 

• Other Check Cashing Alternatives: If you are unable to open your own checking account, you may still be able to get your checks cashed at less cost than a check cashing business.  Some employers are willing to cash payroll checks for their employees. Most banks will cash checks drawn on their accounts for free. Look on the check to see which bank issued it, and then find one of their branches.  They will require at least one, and in some cases two forms of identification.  Some banks will cash government checks for free, even for non-customers. 

Wisconsin flood victims may be eligible for help from FEMA

Find out more information here, http://www.fema.gov/news/event.fema?id=8705

State court officials send warning on jury-duty scam

MADISON -- Wisconsin residents are being warned not to give out personal information to people who may be posing as court officials.

In recent weeks, residents in three Wisconsin counties reported being asked for personal information by telephone callers accusing them of missing jury duty, said A. John Voelker, director of state courts.

The scam sometimes works because callers are fearful they may be in legal trouble, said Glen Loyd, a consumer affairs specialist with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP).

In one case, a Green County woman gave out personal information after she was told she had missed jury duty. In La Crosse County, a caller asked a resident to report to the “old courthouse” with her drivers license and social security card. Three incidents were reported in St. Croix County, including one in which personal information was revealed.

The best way to protect yourself from this scam is to remember that a legitimate request for jury-duty service will arrive by mail as a summons from the clerk of circuit court in the county in which you live, Voelker said.

Many counties allow jurors to respond to juror questionnaires online, and a legitimate questionnaire will include instructions on how to do so through the clerk of circuit court’s Web site. Clerks may also follow up with phone calls, but initial contact regarding jury duty will not be made by e-mail or telephone, Voelker said. A legitimate summons and questionnaire for jury duty also can be verified through a phone call to the appropriate clerk’s office.

DATCP’s Office of Privacy Protection advises consumers that legitimate companies or agencies don’t call or e-mail asking for personal information like account, credit card or social security numbers. Never give out personal information unless you initiated the contact. To report an incident you believe was intended to result in the illegitimate release of your private information, call DATCP’s hotline at 1-800-422-7128.

Residential Utility Services

Source: U.W. Law School, Consumer Law Clinic, January 22, 2007

What should I do if I have a problem with utility service?

Contact your utility company and try to resolve it. If that doesn’t work, contact the Public Service Commission (PSC) at (608) 266-2001 with details of your situation. The PSC will review the dispute and help you reach an agreement with the utility company. As long as you pay the part of your bill that is not disputed, the utility company may not shut off your utilities while the PSC is reviewing the issue.

Can the utility company shut off my gas/water/electricity?

Yes, if you fail to pay the gas/water/electricity bill for your previous or current address, fail to make required deposits or to pay agreed upon installments, tamper with the meter, or refuse to allow a meter reader to check it.

The utility company should delay the shut off for up to 21 days if there is a medical problem or other crisis and you provide a letter about the crisis from a doctor, public health official, social services official, or law enforcement officer. The company may not shut off your water during a heat advisory or warning or because of other (non-water) unpaid bills.

Can the utility company shut off my heat in the winter?

In Wisconsin, the utility company cannot shut off your heat between November 1 and March 15 if your household income is 250% of the federal poverty level. If your family income is over the limit and the utility company can show it will not jeopardize health or safety, the utility company may shut off your heat in the winter.

What kind of notice must the utility company give?

Before shutting off your gas/water/electricity, the utility company must provide a notice telling you the date when service can be shut off, the reason for the shut-off, and how to contact the utility about the shut-off. The utility company must mail the notice at least eight days before water shut-off, and at least ten days before disconnecting gas or electricity. If the mailing and service addresses are different, the utility company must also post a notice at the service address. If service is not shut off within 15 days for gas or 20 days for water and electricity after the notice is mailed, the utility must post a new notice between 24 and 48 hours before the shut off.

What if I can’t afford my heating bills?

Wisconsin’s Home Energy Assistance Program (WHEAP) helps low-income households pay their heating bills. You can find out about eligibility and benefits from www.heat.state.wi.us, from the department of human services for your county or from 1-866-HEATWIS (432-8947). You can also contact your utility company to ask about setting up a budget plan that will spread your heating bills more evenly throughout the year.

Do these rules apply to telephone service?

Residential telephone service has slightly different rules. The phone company may cut off your service if you have a delinquent balance, fail to pay a deposit or agreed-upon installment plan, lie on your application for service, interfere with someone else’s phone service, or use equipment the phone company has warned you not to use.

Your phone company must notify you in writing five days before disconnecting your phone service, unless there is a dangerous or emergency situation, and the notice must explain the procedure that you can use to dispute the disconnection.

What should I do if I have a problem with my phone company?

If you have a dispute you cannot resolve with your phone company, you can contact the PSC at 608-266-2001 with the details of your situation. The PSC will review the dispute and help you reach an agreement with your phone company. As long as you pay the part of your bill that is not disputed, the phone company may not shut off your service while the PSC is reviewing the issue.

Do these rules apply to cell phones, Internet, or cable TV?

No, the Public Service Commission does not regulate cellular phone service, cable television providers, or Internet service providers—including voice over internet protocol services such as Vonage or Packet8. However, if any of these services are billed on your residential telephone bill, the PSC might be able to help you resolve a dispute. For more information about problems with these services, you should contact the Department of Agriculture, Trade, and Consumer Protection at (800) 422-7128.

What if I cannot afford telephone service?

Wisconsin has two programs to help low-income households get and keep phone service:

• The Lifeline program reduces monthly phone bills for basic services
• The Link-Up program eliminates local telephone connection charges. Eligible households can get a phone hooked up for free.

To find out if you are eligible, contact your local phone company. Most households receiving government benefits like W2, SSI or Badger Care are eligible.

Even if you do not qualify for the Lifeline or Link-Up programs, your local phone company may be able to help you work out a budget payment plan. If your bills are too high, you ay want to ask how much money you can save by giving up some optional features (like Caller ID or call waiting) or by changing the times you make calls to get a better rate.

Income Tax Refund Anticipation Loans

Source: U.W. Law School, Consumer Law Clinic

What are refund anticipation loans?

January 19, 2007 – Refund anticipation loans are high-interest bank loans offered by tax preparation services so that customers can get immediate payments on refunds they expect to receive from the IRS and the Wisconsin Department of Revenue (DOR). In the past, refund anticipation loans allowed taxpayers access to their refund payments months before their returns were processed. Today, however, most taxpayers can receive their actual refunds within two to three weeks by e-filing. With this technology, refund anticipation loans no longer benefit most taxpayers.

How much does it cost to receive a refund anticipation loan?

The annual interest rate (APR) for a refund anticipation loan can be as high as 1800 percent. A 2004 Consumer Federation of America (CFA) study found that the average APR for a refund anticipation loan ranged from 40 percent and 700 percent, with taxpayers who received the smallest refunds paying the highest fees. In 2004, 12.38 million American taxpayers spent $1.6 billion to receive refund payments as little as two weeks early, and these figures did not include fees charged by tax preparation services for filling out paperwork and filing returns.

Are there any other problems with refund anticipation loans?

Refund anticipation loans aren’t only expensive, they’re also risky. If your tax return is denied, you still have to repay the loan. According to the CFA survey, every year the IRS denies thousands of returns filed by taxpayers who have already received refund anticipation loans. If these taxpayers cannot payback their loans, they risk negative credit report entries, harassment from debt collectors, and even lawsuits. In many cases, taxpayers who cannot repay their refund anticipation loans one year end up returning to the same tax preparation services the following year, where this year’s tax refunds are taken to payoff last year’s refund anticipation loans.

If I don’t take the refund anticipation loan, how long will I have to wait for my refund?

Now that most income tax returns can be filed electronically, you can get your income tax refund from the IRS within two to three weeks from the day you file. The DOR is usually a few days faster processing Wisconsin income tax refunds. If you have a savings or checking account at a bank, you can make that time even shorter by having your refunds direct-deposited.

Can I file my income tax return for free?

Don’t be a victim of identity theft

Source: U.W. Law School, Consumer Law Clinic

December 1, 2006 – Identity theft is a growing problem in Wisconsin that costs businesses and consumers $570 million annually. Reports of identity crimes have increased by 20 percent over the last three years, and an additional 100,000 incidents go unreported each year. To combat this problem, Wisconsin has recently launched the Office of Privacy Protection, and enacted Identity Theft Legislation.

The two primary categories of identity theft are: (1) "Account takeovers" in which the identity thief uses the victim's bank accounts, credit cards, etc., in order to fraudulently obtain goods or services. (2) "True name fraud" in which the identity thief uses the personal information of the victim to obtain new credit cards, bank accounts and loans, utility services, etc. in the victim's name. The thief then obtains goods or services by using these items.

Precautions:

Internet:

• Avoid phishing/pretext scams. If you get an email asking you to click a link to enter identifying information – do not do it. If in doubt, call the institution, but look-up the phone number in a directory rather than relying a phone number from the suspect e-mail.
• Only use a credit card to complete online transactions on well known, mainstream encrypted Web sites. Never e-mail a credit card number.
• Be cautious of entering personal information on any Web site.

General:

• Protect your Social Security number. Never carry your Social Security card with you. Do not carry unnecessary credit cards and identification.
• Be careful about what you tell people. Some thieves get information just by asking!
• Check your credit report regularly. Inquire about suspicious activity or accounts.
• Shred. Many thieves get information by “dumpster diving.”
• Opt out of prescreened credit card offers at http://www.optoutprescreen.com and direct marketing at 1-888-567-8688.

If you are a victim:

• Alert the Wisconsin Office of Privacy Protection. http://privacy.wi.gov or 1-800-422-7128. Visit http://privacy.wi.gov/factsheets/what_to_do.jsp for detailed information.
• Call at least one Credit Reporting Agency to put your account on "fraud alert." Once you contact one agency, that agency must alert the other two agencies. Equifax: 1-800-766-0008, Experian, 1-888-397-3742, or TransUnion 1-800-680-7289. Follow-up with a certified letter.
• Report the identity theft to your local police. Ask for a copy of the report.
• (After 1/1/07) Place a “freeze” on your credit. Request in writing, via certified mail that each credit bureau place a “freeze” on your account. Request that they notify you of any new inquiries or new accounts.
• Contact your creditors and bank. Consider closing all checking and credit accounts.

***Source: www.privacy.wi.gov. Visit that Web site for detailed information!

Credit Reports: You are now entitled to a free copy of your credit report

Source: U.W. Law School, Consumer Law Clinic

November 29, 2006 – The Fair Credit Reporting Act (FCRA), a federal law, requires each of the nationwide credit bureaus – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. Nationwide credit bureaus sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

You may order one, two, or all three reports at the same time, or you may stagger your requests. It’s your choice. Some advisors say staggering your requests during a 12-month period may be a good way to keep an eye on the accuracy and completeness of the information in your reports.

How To Order Your Free Report – Visit www.annualcreditreport.com to request your report online, call 1-877-322-8228, or visit the Web site above to print an Annual Credit Report Form and send to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

The credit bureaus do not provide free credit reports directly. They are providing free annual credit reports only through www.annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Beware of “Imposter” Web sites: Only one Web site is authorized to fill orders for the free annual credit report you are entitled to under law – www.annualcreditreport.com. Other Web sites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one for which you must pay after a trial period. If you don’t cancel the trial period, you may be unwittingly agreeing to let the company charge fees to your credit card. Be sure to correctly spell www.annualcreditreport.com to avoid these sites.

Dispute any errors in your credit report. If you find an error in your credit report, send a written notice of the error to the credit bureau via certified mail with return receipt, as soon as possible. While the credit bureau may allow you to dispute errors in your report online or by phone, it is best to send the dispute in writing. We recommend that you dispute items in writing and send the dispute letter via certified mail with return receipt to the credit bureau. You may be able to download a dispute form from the reporting company’s Web site, otherwise you may draft your own letter. You should be as specific as possible about the exact item you are disputing and why you are disputing it. You should also send a copy of the letter to dispute to the business or other entity that supplied the incorrect information. Be sure to date the dispute letter and keep a copy for yourself.

Credit bureaus must investigate the disputed items within 30 days unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the credit bureau, it must investigate and report the results back to the credit bureau. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit bureaus so they can correct the information in your file.

When the investigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. (This free report does not count as your annual free report under the FACT Act.) If an item is changed or deleted, the credit bureau cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The credit bureau also must send you written notice that includes the name, address, and phone number of the information provider.

If the dispute is not resolved, you have the right to file a brief statement describing the nature of the dispute with the credit bureau. This statement, or an accurate summary of the statement, must be included in any future credit report concerning you.

For more information visit: www.annualcreditreport.com; www.ftc.gov/credit; www.ftc.gov/bcp/conline/pubs/credit/freereports.htm

Consumers Take Note: New Law Makes it Easier for Creditors to Repossess Your Car

Source: U.W. Law School, Consumer Law Clinic

October 5, 2006 -- Prior to April 12, 2006, Wisconsin law prohibited a creditor from repossessing goods without first obtaining a court order, unless the consumer voluntarily surrendered or abandoned the goods. By requiring the creditor to obtain a court order, the law automatically entitled consumers to raise concerns before the court regarding the validity of the underlying debt, abusive debt collection practices, and/or illegalities in the underlying contract.

As of April 13, 2006, however, creditors are no longer required to obtain a court order prior to repossessing a motor vehicle. Before repossession, a creditor is only required to mail the consumer a notice containing the following information:

1. Name, address, and telephone number of the creditor, an identification of the consumer credit transaction, and a description of the goods.
2. A statement that, as a result of the consumer’s default on the consumer credit transaction, the creditor may have the right to take possession of the goods without further notice or court proceeding.
3. A statement that if the consumer is not in default or objects to the creditor’s right to take possession of the goods, the consumer may, within 15 days after the creditor has given the notice, demand in writing that the creditor proceed in court.
4. A statement that if the creditor proceeds in court, the consumer may be required to pay court costs and attorney fees.

If the creditor sends the required notice and the consumer has not demanded that the creditor begin a court action, the creditor may repossess the vehicle. Creditors are not allowed to breach the peace and cannot enter the consumer’s home except at the voluntary request of the consumer.

On the other hand, if the consumer notifies the creditor that the creditor must sue the consumer before repossessing the vehicle, the creditor must do so. Therefore, if you receive a notice from a creditor indicating that it intends to repossess your vehicle, you have the following options:

1. Do nothing OR
2. Within 15 days, write to the creditor indicating that you want the creditor to begin legal proceedings against you. Consider sending this notice via certified or registered mail so that you have proof that you sent the request, and proof that the creditor received it.

If you choose to do nothing, the creditor can repossess your vehicle as long as the creditor does not breach the peace or enter your home/apartment. If within 15 days after you receive the required notice from the creditor you demand that the creditor sue you, the creditor must do so and may not repossess your vehicle until it has a court order allowing it to repossess.

If the creditor breaches the peace during a repossession or repossesses a vehicle after failing to obtain a court order after the consumer has demanded to be sued, the consumer is entitled to retain the goods, services, or money received without obligation to pay any amount. In addition, the consumer is entitled to recover any amount he or she already paid to the creditor under the contract.

As a side note, when a creditor lawfully repossesses your vehicle this does not mean that your debt regarding the vehicle is necessarily eliminated. A creditor may then sue you for the balance of the debt that is not satisfied in full after it sells the repossessed vehicle. Keep this in mind when you evaluate your options in response to a repossession notice.

Attention seniors: Beware of Medicare identity theft

August 2005 - Wisconsin Attorney General Peg Lautenschlager has issued a Consumer Alert, warning senior citizens about potential fraud and identity theft by scam artists hoping to take advantage of the new Medicare laws.

Beginning Jan. 1, 2006, new Medicare prescription drug coverage will be available to everyone with Medicare. This Medicare prescription drug coverage will be provided by private companies that have been approved by Medicare, and may help lower prescription drug costs and help protect against higher costs in the future.

Wisconsin seniors who have Medicare should thoroughly investigate the new Medicare drug plans and determine if they will be helpful in lowering individual costs. Seniors also should compare the new program with Wisconsin's SeniorCare program, which is also considered a highly effective way to lower costs. All Medicare drug plans will require a monthly premium, although some people with limited income and resources may qualify for extra help that could result in no premiums.

"Carefully evaluating all of the choices to make sure the plan an insurance company is proposing is legitimate, and will truly save costs, is not only prudent -- it is the best way to avoid fraud and identity theft, as these new laws take effect," Lautenschlager said. "Always know with whom you are doing business, and never give out personal or financial information. Report any suspicious activities of this nature to my office."

Lautenschlager urged seniors to remain vigilant about potential fraud and identity theft. No Medicare drug plan will be available for application until Nov. 15, 2005. Until that date, seniors should not provide payment for anything, or to anyone, purporting to be a Medicare prescription drug program even though they may be contacted by insurance companies marketing new plans.

Seniors should not give anyone, under any circumstances, their Social Security number or bank account numbers. Seniors may get calls from persons representing the Social Security Administration. If the caller does not already have your Social Security number, do not give them any personal information. After Nov. 15, seniors may sign up for a Medicare prescription drug plan, but they should only fill out the application in person while at an approved provider's place of business.

Before enrolling in a plan, call 1-800-Medicare to verify that the plan you are considering is an approved plan. In addition, look for the Medicare RX prescription drug coverage symbol. All Medicare-approved programs will have this seal on their materials.

Individuals who need help in choosing Medicare prescription drug coverage should visit www.Medicare.gov on the Internet or call 1-800-Medicare (1-800-633-4227). Individuals who believe they may qualify for extra help to reduce premium costs should contact the Social Security Administration at 1-800-772-1213.

Suspicious activities regarding the marketing of Medicare programs have already been reported in other Midwestern states. Anyone who believes they are the victims of identity theft or fraud related to Medicare prescription drug coverage should contact the Wisconsin Attorney General's Office at 1-800-998-0700.

Wisconsin joins nationwide crackdown on "work-at-home" and phone "business opportunity" scams

February 2005 - The State Bar Consumer Information & Protection Committee informs Wisconsinites that the Wisconsin Department of Justice has joined federal and state law enforcement agencies to charge more than 130 shady operations with violating consumer protection laws and engaging in fraud. The "business opportunity" schemes and "work-at-home" fraud schemes cause substantial consumer injury nationwide.

The Wisconsin Department of Justice joined the Federal Trade Commission (FTC), the U.S. Department of Justice, the U.S. Postal Inspection Service, and 14 state law enforcement agencies in a massive criminal and civil crackdown on promoters of illegal business opportunity and work-at-home programs.

The enforcement sweep, known as Project Biz Opp Flop, contains three key components: (1) criminal prosecutions against business opportunity fraud artists; (2) civil enforcement actions filed by the FTC and U.S. Department of Justice on behalf of the FTC; and (3) enforcement actions filed by state enforcement agencies.

Project Biz Opp Flop included 17 FTC actions against more than 70 corporate and individual defendants. The operations ranged from refrigerator magnet, medical billing, Web design, and envelope-stuffing work-at-home schemes to snack and soda vending machine businesses.

In some cases, such as a surplus goods brokerage business, the sellers overstated the demand for the products. In others, like vending machine businesses, the operators allegedly misrepresented the amount of assistance they would provide to the franchisee. All but one of the operators targeted by the FTC were allegedly characterized by one key element: unsubstantiated or deceptive earnings claims.

As part of the sweep, enforcement agencies in 14 states announced actions against business opportunity, franchise, and work-at-home promoters. These actions consisted primarily of cease and desist orders, consent agreements, and fines. Also included were civil lawsuits, criminal lawsuits, and a ban. The defendants were located in 22 states and Canada, with the greatest number of targeted defendants residing in Florida, California, and Arizona.

Investigate Before You Invest

Wisconsin Attorney General Peg Lautenschlager offers these tips for consumers before investing in any new business venture or work-at-home opportunity:

• Ask yourself: Does the ad promise big money for little effort? Fraudulent ads use similar bait: Fast cash. Minimal work. No risk. And the advantage of being your own boss or working from home.

• Before promoters can accept money from potential investors, the law requires that they give investors important disclosure documents. If the promoter does not make the documents readily available, be suspicious.

• Talk to current investors, but beware of paid "shills." Visit other business sites in person. And get professional advice if you need it. Do not lose your life savings just because you did not spend a few hundred dollars to talk to a lawyer, an accountant, or another expert before taking action.

Consumers can visit the FTC Web site at www.ftc.gov/bizopps or www.ftc.gov/workathome for information in both English and Spanish to help spot and avoid business opportunity scams. For more information, contact the Wisconsin Department of Justice Office of Consumer Protection at (608) 266-1852 or (800) 998-0700.

Online banking fraud

January 2005 - The State Bar Consumer Information & Protection Committee reminds Wisconsin consumers that along with the availability and ease of online banking comes risk. Criminals have devised schemes that trick or mislead online banking customers into revealing their user ID and password.

When such information is revealed to a criminal, the criminal can get access to the online customer’s bank account and records, including the customer’s Social Security number. This criminal activity can cause an online bank customer to lose money and credit standing and could perhaps lead to identity theft.

By using so called "online" banking, a bank customer can determine account balances and transfer and withdraw funds. Banks that offer online services should provide online customers with a secure connection so that unauthorized persons cannot access online customers’ bank accounts. Most banks’ security devices require a customer to provide a user ID (usually the bank customer’s name) and a password in order to access their bank account.

Because online banking is relatively new, many people who participate in online banking are unfamiliar with the protocols and techniques of online banking.

The current ploy being used by criminals is to email a message to an online customer asserting that "there has been some unusual activity in your account," that "access to your account will be limited" until the "problem has been resolved," and that failure to “take the steps necessary to restore your account” may lead to closing your account. The criminals’ message then politely tells the online customer to furnish the customer’s user ID and password so that the problem with the online account can be fixed.

Do not provide anyone with your user ID or password unless you are certain that you are accessing your bank accounts through a legitimate online connection with your bank. If you receive emails stating that some online account problem exists, communicate directly with your bank. Do not provide your user ID or password to anyone who emails you and requests such information. Report to your bank all efforts made to obtain such information from you.

No call list threatened!

January 2005 - The State Bar Consumer Information & Protection Committee wants readers to know that Gov. Jim Doyle has issued an alert warning that a national association of banks, including some banks in Wisconsin, is asking the Federal Communications Commission (FCC) to weaken Wisconsin's most popular consumer protection program -- the No Call List.

At the direction of Gov. Doyle, the Department of Agriculture, Trade and Consumer Protection has established a Web site -- www.datcp.state.wi.us -- where state residents can comment on the proposed change.

"The No Call List provides strong protection to more than 80 percent of state residents," Doyle said, "and we need citizens to tell the federal government to leave the No Call List as it is. Telemarketing is the #1 consumer complaint in Wisconsin."

As a result of a petition by the Consumer Banking Association, the FCC is holding hearings to consider invalidating important parts of the law and is seeking public comment that must be submitted by Feb. 2.

“The banks ask the FCC to replace the Wisconsin law with a federal law that allows companies to telemarket former customers for up to18 months after cancellation of services,” Doyle explained. “This would allow any business-long distance telephone or credit card companies, for example, to reinstate incessant calls to reclaim customers in Wisconsin. Also, if you buy a product from a company, any of its affiliates will be able to call you to telemarket any of their products.”

The current Wisconsin law, which allows only one call to former customers, was based on the strong voice of Wisconsin citizens saying they do not want to be telemarketed by any business with as few exceptions as possible, Doyle said.

What you can do to save the No Call List

Gov. Doyle urges consumers who want to keep Wisconsin's law strong to contact the FCC by Feb. 2.

To send a brief comment, go to the FCC's comment form at www.datcp.state.wi.us

or send a letter to: No Call List, Dept. of Agriculture, Trade and Consumer Protection, P.O. Box 8911, Madison, WI 53708.

"This is just the beginning of multiple attacks on state no call laws that are stronger than the federal law," Doyle warned. "If we want to continue to keep our home phones quiet, we must take a strong stand and tell the FCC to leave our law alone.

"If you feel that Wisconsin's No Call List has improved the quality of your life, please contact the FCC and tell them you want our law to remain as is. Wisconsin citizens need to make it clear to the federal government that we do not want to be exposed to telemarketing from a business or its affiliates simply because we have had contact with the business. We need to make certain that the FCC puts consumers, not big telemarketers, first."

For more information, call the toll-free hotline of the Wisconsin Department of Agriculture, Trade and Consumer Protection, (800) 422-7128.

Tsunami donations

January 2005 - The State Bar Consumer Information & Protection Committee alerts Wisconsinites that Wisconsin Attorney General Peg Lautenschlager has issued a consumer alert warning residents to be watchful of possible scams that take advantage of residents’ generosity toward the victims of the Asian tsunami.

Lautenschlager said that while Wisconsin citizens should be lauded for their efforts on behalf of victims of the Asian tsunami "It is extremely unfortunate that anyone would attempt to take advantage of the generosity of Wisconsin citizens working to alleviate the suffering of tsunami victims through cash donations, but such fraud schemes do happen," Lautenschlager said. "Citizens should take extra precautions to send money only to charities with a proven track record."

Lautenschlager said perpetrators of this fraud could be door-to-door solicitors, sound-alike charities, or even online scams.

The Department of Justice suggested using independent verification of charities, such as is found at http://www.guidestar.org/, which offers useful tools for checking out charities. GuideStar includes a listing of organizations that have registered with and met the guidelines of the IRS terms for a nonprofit charity. Consumers can also check the IRS Web site for information at http://www.irs.gov/.

The Better Business Bureau has a list of tips at http://www.give.org/ for people looking to contribute to a tsunami relief charity, including the following:

• Be wary of any charity that is inexperienced in carrying out relief efforts but that is soliciting donations for tsunami assistance.
• Be wary of appeals that are long on emotion, but short on describing what the charity will do to address the needs of victims and their families.
• Do not give cash. Pay by check or money order made out to the charitable organization, not to an individual who is collecting the donation.
• Check out a charity before making an online contribution. Some charities imitate the name and style of a well-known organization's Web site in order to confuse people. When clicking on the link to "donate," look at the organization's URL address to see if the name is the same as the name stated in the text on the page.
• Do not be pressured to make an "on-the-spot" donation. If you are unable to contribute at this time, reputable relief charities will welcome your donation next week or next month.
• Do not give your personal information to a telephone solicitor or in response to an email solicitation. Ask the caller or sender to provide you with written information about their organization before you make a donation.

Lautenschlager said relief aid workers recommend against sending supplies, food, or medicine at this time. Many of those items are available in Asia if there is money to buy them. Officials have said that sending anything other than money also would burden the already bustling airports and beleaguered distribution networks.

For more information, contact the Wisconsin Department of Justice Office of Consumer Protection at (608) 266-1852 or (800) 998-0700.

Check out your charities

December 2004 - The State Bar Consumer Information & Protection Committee alerts Wisconsin consumers to check out charities before making donations.

During this season for generosity and selflessness, make sure that you are giving to legitimate charities and not scams. Thoughtful giving takes time. Whether you're receiving phone calls, letters in the mail, email, or young children coming to your door, it is important to take the time to make sure that your money is going toward the stated goals of the charity and that you are not the victim of a scam or fraud. Here are some simple rules to follow before you part with your money, even if it's just leftover change going into a counter display.

1. No matter how you are approached, step one is to get the exact name, address, and phone number of the charity. This information should be clearly marked on the donation box or made available to you by the person asking you for money. Donate to recognized charities you have given to before. Watch out for similar sounding names. Some phony charities use names that sound or look like those of respected, legitimate organizations. Check out charities. For example, contact the Better Business Bureau's Wise Giving Alliance at 4200 Wilson Blvd., Suite 800, Arlington, VA 22203; 703-276-0100; http://www.give.org/.

2. Give directly to the charity, not to solicitors for the charity. Solicitors take a portion of the proceeds to cover their costs. That leaves less for the charity.

3. Don't give cash. For security and tax record purposes, pay by check. Write the official name of the charity on your check.

4. Do not be pressured into donating. If the solicitor does not have any literature stating the cause of the charity and how the money is used (make sure that the largest percentage of the money actually goes to the intended recipients, not for administrative or other purposes), then get a phone number to call for the needed materials. If your request for this information is met with excuses or objections, it could that the "charity" is not legitimate. Respectable organizations should be eager to give you information about their cause. They should not be eager to take your money if you still have questions about who they are and what they do. If you are met with pressure tactics to donate without the information you request, call your local Better Business Bureau or the State of Wisconsin Department of Agriculture, Trade & Consumer Protection (1-800-422-7128) to check on the charity in question and to register your complaint. If there are other complaints about the charity, do not give to that organization.

5. Even when a charity is legitimate, it may not be well managed. Ask how the money is spent and what percentage of your donation will go to the intended recipients. If it is less than 50%, avoid that charity. If you are researching charities to decide on your donations, consider donating to the charity that uses its money most efficiently.

6. Be very cautious about email seeking charitable contributions. Many unsolicited email messages are fraudulent. People often use the information they obtain from you, such as your name, address, social security number, credit card numbers, bank account information, and other financial information for illegal purposes. Do not give out personal or financial information, including your social security number or credit card and bank account numbers, to anyone who solicits a contribution from you. Scam artists use this information to commit fraud against you.

Scam operators may try to access your financial accounts with the information you give them or impersonate you to obtain money from other sources. Do not give anyone any information about yourself until you have checked out the charity.

Email users should beware “phishing” scam

November 2004 - The State Bar Consumer Information & Protection Committee alerts Wisconsin consumers that Wisconsin Attorney General Peg Lautenschlager has issued a consumer alert to email users. The consumer alert warns citizens to beware of email messages from familiar companies that are actually the bait in a fraudulent scheme known as “phishing.”

Phishing is a scheme in which Internet scammers lure consumers to a fake, but legitimate-looking Web site and then seek sensitive financial information from the consumer.

How Phishing Works

The Internet scammer sends consumers emails that are disguised to look like memos from well-known retailers, banks, credit card companies, and government agencies. These unsolicited messages often convey a sense of urgency or warn of account termination. They encourage consumers to click on the provided Web address, which supposedly links directly to the Web site of the legitimate business or agency. But it doesn’t. Instead, consumers are linked to the scammer’s look-alike Web site, which the scammer intentionally created to mimic the legitimate Web site.

The scammer makes subtle changes to these look-alike Web sites to lure consumers into entering sensitive information, usually to protect their account or to win a free gift.

Consumers are directed to enter such data as their Social Security number, credit card information, bank account numbers, passwords, and other personal information.

“Phishing is one of the ways that cyber criminals perpetrate identity theft,” Lautenschlager said. “Within minutes after an unsuspecting consumer enters personal information and account numbers, the criminals use that information to attempt to make credit card purchases and to withdraw or debit funds from the victim’s accounts.”

Lautenschlager said the “phishers” also sell this personal account information to other criminals. These fraudulent transactions are done very quickly so that victims do not have time to check on their account balances or consult with their banks or online merchants.

Know the Warning Signs

• Many companies and agencies that have been “spoofed” are aware of these scams and have posted warnings and alerts on their Web site main pages.
• Legitimate businesses, banks, and government agencies will not require consumers to send personal, account, and financial information via email.
• If you receive an urgent email or pop-up message directing you to visit a Web site where personal information is requested, that should be a big red flag that it is a scam.
• Opening phishing emails and clicking on their counterfeit Web-links pose the danger of infecting your computer with a virus. Some viruses contain spyware programs that can track your personal computer use and monitor Web surfing. Hidden spyware programs also can covertly change computer settings, promote unwanted pop-up ads, and cause your computer to malfunction, lose data, and even crash.

Take Action if You’ve Been ‘Phished’

Lautenschlager said that upon receiving unsolicited, suspect emails with attachments, consumers should simply delete them -- and should never provide any personal or account information.

If you have submitted sensitive information in response to such an email message you should immediately contact your bank or credit agency to check the status of your accounts, and consider taking any further actions these agencies may suggest to secure your accounts and information.

Reports of these scams can be made to the Wisconsin Department of Agriculture, Trade and Consumer Protection - Consumer Hotline at (800) 422-7128. The Wisconsin Department of Justice enforces consumer law and will continue to prosecute violators – as well as warn consumers of these hazards before consumers can fall victim to them.

Flu vaccines

October 2004 - The State Bar Consumer Information & Protection Committee alerts Wisconsin consumers that Wisconsin Attorney General Peg Lautenschlager has issued a consumer alert warning Wisconsin healthcare providers and consumers that Attorneys General in other states have received complaints and inquiries alleging price gouging of flu vaccines by either distributors or providers of the vaccines.

Some states are reporting that as a result of an anticipated shortage of influenza vaccines, some distributors may take advantage of demand and overcharge healthcare providers.

Lautenschlager said her office had not received such complaints, but urged consumers to report any such abuses to her office at (800) 998-0700 or (608) 266-1852 (Madison area) or to the Department of Agriculture, Trade and Consumer Protection at (800) 422-7128.

"If we receive information that healthcare providers are deceived or misled in connection with acquiring the needed flu vaccine, the Department of Justice will vigorously investigate and prosecute violators," Lautenschlager said.

Lautenschlager said the Kansas Attorney General has filed suit against Fort Lauderdale-based Meds-Stat, alleging that Meds-Stat violated Kansas law by proposing to deliver and sell a vial of five doses of flu vaccine to a Kansas City, Kansas, pharmacy for $900 with the knowledge that the vaccine was to be used in a "nursing home." On Oct. 1, the price for the same vial was listed as $85.

The Centers for Disease Control (CDC) reports it has received many complaints and inquiries about vaccine price gouging and is neither equipped nor empowered to take action against these alleged law violations. The CDC will refer such complaints to states' Attorneys General.

Voting

October 2004 - October 2004 - The State Bar Consumer Information & Protection Committee alerts Wisconsin consumers that Wisconsin Attorney General Peg Lautenschlager has issued a warning to Wisconsin citizens to be aware of their voting rights and to report any voting irregularities they may observe to the proper authorities.

"Given the importance of voting in our democracy and the importance of this fall's election, I am concerned that voting problems that have happened in other states not occur here in Wisconsin," Lautenschlager said. "To try to prevent such problems, I am encouraging all Wisconsin citizens to be fully aware of their voting rights, and to exercise these rights."

The following is a list of voter's rights:

• You have the right to vote by absentee ballot if you are already qualified and registered to vote in Wisconsin, or if you are in the Military or overseas on Election Day. [Wis. Stat. Ann. § 6.20]
• You have the right to vote if you are in line when the polls close at 8 p.m., or at any other time between 7 a.m. and 8 p.m. (In smaller cities, the polls are open from 9 a.m. to 8 p.m.) [§§ 6.78 and 62.05]
• If you have not registered to vote, or if you did register but your name is not on the registration list, you have the right to vote at that polling place if you are at the correct location after (i) signing a registration form and (ii) providing written proof of your residence or having another voter confirm your residence. [§§ 6.29(2)(a), 6.54, 6.55((2)(a)-(c), 6.55(3), and 6.55(7)]
• If you cannot read, have trouble understanding English, or are disabled, you have the right to request special assistance from anyone other than your employer, an agent of your employer, or an officer or agent of your union. [§ 6.82]
• You have the right to request a paper ballot if you cannot use the voting machine due to your disability. [§ 6.82(3)]
• All polling places should be accessible to the elderly and disabled voters - if your polling place is not accessible, you may be reassigned to a polling place that is accessible. [§§ 5.25(4)(a) and 5.25(5)(b)]
• If you live in a municipality that requires voter registration, you have the right to register and vote on Election Day. [§§ 6.54, 6.55(2)(a)-(c), 6.55(3) and 6.55(7)]
• If you are told you are at the wrong polling place, you should ask for the address of the correct site. Most polling places have a street index that links addresses to polling places.
• If you moved after the registration deadline, but at least 10 days before the election, you must bring identification and proof of your new address to your new polling location. You have the right to vote in your new ward or municipality as long as you complete a special registration form. [§§ 6.02(2), 6.10(3), 6.40(1) and 6.55(2)]
• If you moved within 10 days of the election, you have the right to vote in your old ward or municipality. [§§ 6.02(2) and 6.10(3)]
• If you make a mistake or "spoil" your paper ballot and you have not cast the ballot, you have the right to receive up to three replacement ballots. [§ 6.80(2)(c)]
• If you have been convicted of a crime other than a felony, treason, or bribery, you have the right to vote unconditionally. If you have been convicted of a felony, treason, or bribery but have served your complete sentence (including probation or parole), you also have the right to vote. [§§ 6.03(1)(b) and 304.078]
• You have the right to take time from work to vote, but no more than three successive hours, as long as you give notice to your employer before Election Day. Your employer may set the time of day. [§ 6.76]
• You have the right to spend at least one minute in the voting booth - and you may be entitled to more time, depending on the number of people waiting to vote. [§ 6.80(3)(a)]
• You have the right to bring your child or children who are under 18 into the voting booth with you. [§ 6.80(1)]
• You have the right to bring a sample ballot into the voting booth with you. [§ 6.80(2)(a)]
• No one is allowed to try to influence your vote within 100 feet of the polling place. [§§ 12.03 and 6.82(4)]

• Illegal verbal threats from poll watchers.
• Being turned away from voting on false pretenses such as being asked for two forms of identification (only one form is necessary), or being told there are no ballots left.
• Not being allowed to use a translator if you cannot speak or read English, or if you are disabled.
• The polling place is not accessible to persons with disabilities and you are not given the location of an accessible polling place.
• Broken ballot booths.

"Law At Your Fingertips" unveiled: A useful guide to Wisconsin consumer protection laws.

September 2004 - The State Bar Consumer Information & Protection Committee wishes to let Wisconsin consumers know that a new Web resource, “Law at Your Fingertips,” is now available at http://www.datcp.state.wi.us/cp/consumerinfo/cp/cp_laws/

Wisconsin laws that protect consumers can be difficult to locate and, once located, difficult to understand. “Law at Your Fingertips” is a new Internet resource that reviews all Wisconsin laws that protect consumers and helps consumers, businesses, and their attorneys quickly identify and understand the Wisconsin consumer protection laws that apply to them.  It pinpoints laws and identifies the state agencies that enforce them in plain language that everyone can understand.

Time to reregister for Wisconsin no-call

September 2004 - The State Bar Consumer Information & Protection Committee reminds Wisconsin consumers that it is time to reregister for the Wisconsin No-Call list. Over a million Wisconsin consumers initially signed up when the list first went into effect about two years ago.  Under the No-Call rules, consumers must reregister at least every two years.  Starting Sept. 1, 2004, those who registered when the No-Call list began will begin to be dropped from the list unless they reregister. 

You may reregister before your two years are up.  So, even if you're in doubt about when you first signed up, go ahead and reregister!  Caregivers also should be reminded that it’s time to reregister parents and nursing home residents.  To register or reregister for Wisconsin No-Call, call toll-free 1-866-966-2255 or go to the Wisconsin No-Call List Web site at https://nocall.wisconsin.gov/web/home.asp.

Beware of additional penalties when purchasing wireless service

September 2004 - The State Bar Consumer Information & Protection Committee urges Wisconsin consumers to be aware of a very common complaint about additional penalties being added to their bills when they cancel their wireless service contracts early.   Consumers who expected to pay the agreed upon early-cancellation penalty, around $200, later found out that there is an additional penalty of up to $600. 

It turns out these consumers purchased their wireless service at a kiosk, located in a mall or inside a major retail store.  What the consumers didn't realize was that the seller at the kiosk was not the wireless service, but an independent business that had an agreement with the wireless service.  The consumers did not remember that they had signed two separate contracts, one with the wireless service, and a second with the independent seller.   Both contracts contained early-cancellation penalty provisions that were to be independently enforced.

In fact, the second contract with the independent seller may contain several terms that add to the consumer's obligations under the first contract with the wireless service.  For example, the second contract may have a mandatory arbitration clause that allows the business to use Wisconsin courts to sue the consumer, but requires the consumer who wants to sue the business to go to arbitration in another state as well as pay for the arbitration costs.  Add this to the mandatory arbitration clause that may appear in the first contract with the wireless service and the result is that the consumer has no practical ability to complain.

Consumers need to understand that, when purchasing wireless services, there may be two separate contracts.  Consumers need to read both contracts carefully and understand that the contracts are separately and individually enforced.

Read the contract before signing it!

April 2004 - The State Bar Consumer Information & Protection Committee urges consumers to read all contracts carefully before signing them.

You should focus not only on the price of goods or services, but also on terms not related to price, which often are in small print. These terms may significantly limit your rights while releasing the seller from some of its legal obligations. Once you sign the contract, its terms are generally binding on you.

Spend as much time as you need to read the contract carefully. Some sellers may intentionally draft contracts to be very confusing to consumers. If you cannot understand the contract, you should consider not signing it until you consult with someone else, including an attorney.

Pay particularly close attention to these specific terms:

• Coverage of services (for example, insurance): What does the contract cover? Are there any exclusions or limitations to the coverage?
   
• Warranties: Are there any warranties? What do the warranties cover? For how long? Any exclusions or limitations?
   
• Your obligations: In addition to making payments, what does the contract require you to do?
   
• Limitations on the seller's obligations: Does the contract limit the seller's obligations?
   
• Waiver of your rights: Does the contract require you to waive your legal rights? What rights and under what circumstances?
   
• Mandatory arbitration: Does the contract require arbitration in case of disputes? Who must pay the arbitration fees?
   
• Right to cancel: Does the contract give you a right to cancel? For how long does the right to cancel exist? Under what conditions can you cancel?
   
• Choice of law and choice of court: Does the contract require that the law of a particular state must apply to any dispute? Does the contract require that lawsuits against the seller be filed in a particular state? Under some circumstances, these kinds of requirements are unenforceable.
   
• Attorney fees: Does the contract include a clause that requires you to pay the seller's attorney fees if the seller sues you and wins? Under some circumstances, these clauses violate Wisconsin law.

Some warning signs that a contract may include harmful provisions include:

• The contract is in small print and hard to read.
• The contract language is complex and confusing.
• The contract is lengthy.
• The seller tells you that you do not need to read the contract.
• The seller rushes you through the process of signing the contract.
• The seller covers part of the contract with other papers or a hand while directing your attention to the signature line.

Beware of payday loans

February 2004 - The State Bar Consumer Information and Protection Committee urges consumers to beware of payday loans. There are potential pitfalls to payday loans that consumers should know about.

What is a payday loan?

It is a short-term loan (usually for two weeks) for which a consumer writes a postdated check in return for an immediate cash advance and agrees to pay the lender by the agreed upon date. The cash advance is for less than the full amount of the postdated check.

Example: Consumer writes a check for $240 postdated in two weeks. Consumer immediately receives $200 and the postdated check for $240 is cashed at the end of two weeks.

The postdated check is cashed, unless the consumer pays the lender and reclaims the check. If the consumer notifies the lender that the check will not clear, then the lender will allow the loan to be refinanced ("rolled over") if the consumer pays the $40 interest on the previous loan. The lender may accept another postdated check for $240 and the process can repeat itself until the loan is fully paid.

What should I know about payday loans?

Payday loans are not a wise solution to your financial problems.

You may have seen advertisements:

NEED CASH! YOU CAN GET $50 TO $500 WITH NO CREDIT CHECK!

Payday loans are geared toward low or lower-middle income consumers who are living beyond their means, are in a temporary financial pinch, or have bad credit.

There is a good chance that you will renew or roll over the payday loan

If you believe that you will be able to pay off your payday loan right away, PLEASE CONSIDER THIS:

In a study conducted in Indiana , it was found that three out of four loans were renewed or rolled over. Out of these rolled over loans, it was found that they were renewed an average of seven times.

If you are behind in paying your expenses, it is unlikely that your situation will drastically improve in the short time you have in which to pay off your payroll loan when it is first due.

You will pay a lot of interest for a little money

The average annual percentage rate for a two-week payday loan is around 500 percent. For a loan of $200, you will have paid $40 interest. If you roll over your loan, the annual percentage rate increases higher and higher. In just 10 weeks, you will have owed $200 interest for a $200 loan.

Wisconsin law does not limit how much interest can be charged on a payday loan.

It is not uncommon for consumers to pay a 2,000 percent annual percentage rate in some cases

There may be other fees associated with payday loans besides interest

You may be charged additional fees for renewing or rolling over the loan, bouncing a check, or other administrative functions.

The lender may report your late payment to a credit reporting bureau

If you default on your loan, then your ability to obtain credit could be harmed.

IF YOU ARE STILL CONSIDERING A PAYDAY LOAN, HERE ARE A FEW TIPS TO FOLLOW:

1. Payday loan lenders must be licensed by the Wisconsin Department of Financial Institutions. You should only do business with a lender licensed in Wisconsin .
2.   Read the contract and other accompanying documents carefully. Do not sign unless you absolutely understand the terms.
3.   Take note of the annual percentage rate, the amount of interest you will pay, and the total amount of payments you will have paid.
4.   Pay off your loan as soon as possible. Do not rollover your loan.
5.   If you must roll over the loan, then consider refinancing the amount with a bank, credit union, or other conventional source if at all possible.

IF YOU HAVE QUESTIONS REGARDING A PAYDAY LOAN LENDER OR WISH TO FILE A COMPLAINT, you should contact the Wisconsin Department of Financial Institutions at (800) 452-3328, or visit its Web site at www.wdfi.org .

Beware of failure of telecommunication service provider to investigate consumer's billing dispute

October 2003 - The State Bar Consumer Information & Protection Committee urges consumers to beware of unfair trade practices in the telecommunication industry. One example is the failure of telecommunication service providers to investigate billing disputes. Occasionally, consumers receive a bill for telecommunication services that may contain erroneous charges or other billing mistakes.

Some of the most common problems are the service provider's:

• failure to investigate billing disputes in accordance with specific regulations promulgated in the Wisconsin Administrative Code;
• ignoring a notice of a billing dispute;
• pressure upon the consumer to pay disputed bills;
• disconnection or wrongful withholding of telecommunication services in violation of specific regulations promulgated in the Wisconsin Administrative Code.
• To avoid these problems, the customer must notify a service provider, in writing, of any billing dispute. The customer should mail the letter of dispute to the provider immediately upon or shortly after receipt of the monthly bill. The letter should be mailed via registered or certified mail.

Some additional issues to consider when dealing with a billing dispute with a telecommunication service provider include:

What is a billing dispute?

Formal notice of a billing dispute is a written notice of the dispute specific to certain charges posted on the consumer's monthly bill.

What should I do if the service provider refuses to investigate or has conducted inadequate investigation of my billing dispute?

• File a grievance with the Wisconsin Department of Agriculture, Trade and Consumer Protection, at: Wisconsin Department of Agriculture Trade & Consumer Protection, P.O. Box 8911, Madison, WI 53708-8911; (608) 224-4949;
• File pro se small claims action; or
• Contact a private attorney who practices in the area of consumer protection law.

Beware of moving company rip-offs

June 2003 - The State Bar Consumer Information & Protection Committee urges consumers to beware of moving company scams. Moving company rip-offs are some of the fastest growing consumer scams in the country. The law has been slow to catch up with the tactics of unscrupulous movers, with many such movers advertising over the Internet.

Some of the most common problems are:

• Low-ball, nonbinding estimates that are significantly increased when the mover shows up for the job.
• Additional charges for unnecessary packing.
• Nondelivery of goods when the customer refuses to pay the extra charges.

To avoid these problems, check the reputation of the company before signing an agreement. You can also ask the Better Business Bureau and Department of Agriculture, Trade and Consumer Protection (DATCP) about complaints.

Here are some additional issues to consider when dealing with a moving company:

What is a binding vs. a nonbinding estimate?

When a company gives a binding estimate it cannot require you to pay more than the estimate even if the goods weigh more than estimated. A nonbinding estimate is approximate; the mover is not bound by it if the load is larger than originally estimated. However, the moving company cannot charge more than 110% of the nonbinding estimate on the day of delivery.

What should I do if the moving company changes the bid they gave me?

The best way to prevent this from happening is to get a binding estimate--that way you won't have to worry if the company makes an error in estimating the weight of your goods. However, if you get a nonbinding estimate and end up paying a lot more than the estimate, you should report the company to the Federal Motor Carriers Safety Administration (FMCSA) at 1-800-DOT-SAFT. While the FMCSA won't be able to get your money back, there will be a record of your complaint for other consumers to check.

Unfortunately, the available legal remedies for many of the above complaints sometimes are inadequate, because the offending companies often are fly-by-night operations. This makes it difficult to enforce any potential legal remedies. Therefore, the best strategy is to avoid the situation. Consumers can do this by checking out the legitimacy of a company before agreeing to do business with it.

Beware of false information about credit report access

May 2003 - The State Bar Consumer Information & Protection Committee urges consumers to beware of false information about credit report access that is currently being distributed widely though email.

A rumor is spreading that after July 1, 2003, anyone who asks will have access to your credit report. This is FALSE. The rules about credit report access are not changing on July 1, 2003, and will continue with their current limitations.

Many consumers nationwide recently received the following email:

"Just wanted to let everyone know who hasn't already heard, the four major credit bureaus in the U.S. will be allowed, starting July 1, to release your credit info, mailing addresses, phone numbers... to anyone who requests it. If you would like to "opt out" of this release of info., you can call 1-888-567-8688. It only takes a couple of minutes to do, and you can take care of anyone else in the household while making only one call, you'll just need their social security number."

According to the Federal Trade Commission this email is full of half-truths and misinformation.

• Credit bureaus can release your credit information only to people with a legitimate business need, as recognized by the Fair Credit Reporting Act (FCRA). For example, a company is allowed to get your report if you apply for credit, insurance, employment, or to rent an apartment.
• In addition to the uses described above, lenders and insurers may use information in your credit file as a basis for sending you unsolicited offers. This is known as "prescreening." However, you have a right to opt out of these offers. The toll-free number in the circulating email -- 1-888-567-8688 -- is the "opt-out" line for the major credit bureaus for "prescreened" offers only.
• The July 1 deadline relates to the Gramm-Leach-Bliley Act (GLB), which set July 1, 2001, as the deadline for financial institutions to give you notice of their privacy policies and a way for you to opt-out of some of their information-sharing practices. You may recall getting mailings or statement inserts recently from your financial institutions, creditors, insurance companies, and brokerage firms about this. The July 1 date is not a deadline for consumers to do anything. In fact, consumers can contact their financial institutions anytime to opt-out under GLB.

The FTC strongly advises that you not give out personal information on the phone, through the mail, or over the Internet unless you know who you're dealing with. Identity thieves may pose as representatives of banks, Internet service providers, and even government agencies to get you to reveal your Social Security number, mother's maiden name, financial account numbers, and other identifying information. Legitimate organizations with which you do business have the information they need and will not ask you for it.

For additional information visit www.about-all-credit-cards.com/Credit_Scams/internet-scams-1.html

Beware of Internet auction fraud

May 2003 - The State Bar Consumer Information & Protection Committee urges consumers to beware of Internet auction fraud.

Buying and selling items over the Internet has become very popular over the past several years. Unfortunately, the incidence of fraud and deception in these transactions has skyrocketed. In fact, auction fraud is the single largest category of Internet-related complaints in the FTC's Consumer Sentinel database, which logged more than 51,000 auction complaints in 2002.

Here are several easy tips consumers can use to avoid falling prey to auction fraud:

• Become familiar with the auction site. Find out what protections the auction site offers buyers. Don't assume the rules are the same for all auction sites.
  
  
• Before bidding, find out all you can about the seller. Avoid doing business with sellers you can't identify, especially those who try to lure you off the auction site with promises of a better deal.
  
  
• If the seller insists on using a particular escrow or online payment service, check it out. Visit its Web site and call its customer service line. If there isn't one, or you call and can't reach someone, don't use that service.
  
  
• Protect your privacy. Never provide your Social Security number, driver's license number, credit card number, or bank account information until you have checked out the seller and the online payment or escrow service, if you're using one, to ensure legitimacy.
  
  
• Save all transaction information.
  
  
• If you have problems during a transaction, try to work them out with the seller, buyer, or site operator. If that doesn't work, file a complaint with your state attorney general's office and the FTC at www.ftc.gov or call toll-free 1-877-FTC-HELP (1-877-382-4357).
  
  
• Check out the FTC's Internet Auctions: A Guide for Buyers and Sellers, available at the FTC's Online Shopping Web site (www.ftc.gov/onlineshopping) for other tips on how to avoid Internet auction fraud.

How to obtain a credit report

January 2003 - The State Bar Consumer Information & Protection Committee urges consumers to know how to obtain their credit report and challenge or correct errors on it.

How do I get a copy of my credit report?

There are three main credit bureaus. Creditors may report information to one or more of these credit bureaus. As of Jan. 21, 2003, consumers can contact the three major credit bureaus in the following ways:

Equifax Credit Information Services, Inc.
Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
1-800-685-1111

Experian (formerly TRW)
Experian
Attention: National Consumer Assistance Center
P.O. Box 2002
Allen, TX 75013-2002
1-888-397-3742

Trans Union
TransUnion LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
1-800-888-4213

To get the most accurate credit picture, request reports from all three of the major credit bureaus (listed above). Reports can be ordered online, by mail, or by phone. There is a $9 charge for each credit report, and the payment must accompany each written request. The fee may be waived in certain circumstances. To find out if qualify for a waiver, contact the credit bureau. It is a good idea to check your credit report every six to 12 months to make sure all reported information is correct.

You should ask for a credit report and credit score. Include the following information in the request: your full name (including middle initial, Jr., Sr., II, III, etc.), date of birth, social security number, spouse's full name, current address, addresses for last five years, signature, and a copy of any letter denying you consumer credit.

What if there is an error on my credit report?

If there is an error on your credit report you have a right to have that error reinvestigated or removed by writing a letter explaining the problem. It is a good idea to send your dispute letter to the credit reporting agency via certified mail, return receipt requested, so that you have the return receipt showing when the credit reporting agency received your dispute notice.

Within 30 days of receiving your notification of dispute, the credit reporting agency must investigate the dispute free of charge and either record the current status of the disputed information or delete the disputed item from the file. (A 15-day extension is available in certain situations.)

Within five business days of receiving your notice of dispute, the credit reporting agency must provide notification of the dispute to any entity that provided any item of the disputed information. If the reporting agency determines that a dispute is frivolous or irrelevant, it must notify you of that determination no later than five business days after making it, and provide the reasons for the determination. If the reporting agency determines, after its investigation, that information is inaccurate or incomplete or cannot be verified, the agency must promptly delete the information from your file, or modify it, as appropriate.

A reporting agency must provide you with written notice of the results within five business days after completing the investigation. The notification must include:

1. A statement that the reinvestigation is completed;

2. A consumer report revised as a result of the investigation;

3. Notice that, if you request it, the agency will provide a description of the procedure used to determine the accuracy and completeness of the information, including the business name, address, and telephone number (if "reasonably available") of the contact who provided the information;

4. Notice that you have a right to add a statement to your file disputing the accuracy or completeness of the information; and

5. A notice that you have the right to request that the agency send the new report to anyone who had requested your report for employment purposes in the previous two years and for any other purpose in the previous six months.

If the investigation does not resolve the dispute, you may file a brief statement (not more than 100 words) describing the nature of the dispute. Unless the statement is frivolous or irrelevant, the reporting agency must, in any subsequent report containing the information in question, clearly note that you dispute it and provide either your statement or a clear and accurate summary of your statement.

If the reporting agency deletes any information from your file as a result of its investigation, the agency must, at your request, provide notification of the deletion to any person you identify who has within two years received a consumer report for employment purposes, or within six months has received a consumer report for any other purpose, that contained the deleted information.

Beware of Telemarketers Bearing Free Trial Offers

December 2002 - The State Bar Consumer Information & Protection Committee urges consumers to be aware of telemarketers bearing free trial offers.

Faced with stronger consumer resistance to telemarketing sales calls, telephone solicitors have recently been pitching free trial offers of products and services to Wisconsin consumers. According to the solicitors, these free trial offers represent "no obligation" opportunities to try out their wonderful products or services, typically a book, magazine subscription, or discount club membership.

What the solicitors often do not tell consumers is that the free trial offer is only good for a limited period of time. If the consumer does not act to cancel within that 30-60 day "free" period, the consumer will be charged for the product or service. What the solicitors also do not disclose is that they may already have your credit card number so that they can automatically debit your credit card when the "free trial" period elapses.

The Federal Trade Commission has recently promulgated rules to halt these deceptive telemarketing practices. In situations where solicitors are making free trial offers followed by automatic debits to preacquired credit card account numbers, the telemarketer must:

1. disclose all material terms and conditions of the offer's negative option feature, including that the consumer's account will be charged unless specific steps are taken to avoid the charge;
2. obtain from the consumer the last four digits of the account number to be charged;
3. obtain the consumer's express agreement to be charged for the goods and services; and
4. make and maintain an audio recording of the entire telemarketing transaction.

Although these new rules should help consumers avoid being charged without authorization in telemarketing transactions, the rules do not protect consumers from deceptive free trial offers received through the mail or by door-to-door sellers. Just remember that there is almost always a catch to any gimmick using a free offer to attract consumers.

"No Call List" Does Not Apply to Cell Phones

November 2002 - The State Bar Consumer Information & Protection Committee urges consumers to be aware of telemarketing on cell phones.

More and more people are using their cell phones as their main residential telephone number. Whenever you fill out a form using your cell phone number as your residential number, there is a chance that the number will be included on lists used by telemarketers to make sales calls.

The Wisconsin No Call Law does not protect a person from receiving telemarketing calls on cell phones - which means you cannot place your cell phone number on the No Call list.

If you get an unwanted telemarketing call on your cell phone, you can tell the telemarketer not to call you again. If the telemarketer calls again on the cell phone, the telemarketer may be in violation of state or federal law.

Your best protection is to avoid giving out your cell phone number in writing. If you must give it out, make it clear that you do not want to receive any telemarketing calls on the cell phone number.

If you have any complaints about telemarketing, call the CONSUMER HOTLINE at 1-800-422-7128.

Frequently Asked Questions about the No Call list Wisconsin Department of Agriculture, Trade and Consumer Protection

How to Lower Your Credit Card Rate

October 2002 - The State Bar Consumer Information & Protection Committee urges consumers to learn how to lower their credit card rates.

Credit card issuers are often willing to negotiate with their best customers in order to keep them from switching to a competitor.

More than half of the consumers that ask their credit companies for better rates get them. Annual percentage rates are often reduced from 16% to 10%. The first step toward persuading a bank to provide a lower rate is to find a better deal elsewhere. Offers from other credit card companies are plentiful.

Just as credit card companies have the power to increase rates, consumers should remember that the companies also lower rates. Credit cards are so profitable for financial institutions that they will go a long way to accommodate a profitable customer. Customers who pay their bills on time and whose credit limits are not at the maximum will have an easier time negotiating a lower rate.

Traditional rates are in the range of 10% to 20%. There are also "teaser" rates below 10% that usually are temporary. Rates can go as high as 30% for borrowers who regularly miss payments. Credit card issuers are most flexible with the so-called "traditional rates." Credit card issuers will negotiate with customers who threaten to transfer their debt to another financial institution that offers a better rate.

Mandatory Arbitration Clauses Can Affect the Rights of Consumers

October 2002 - The State Bar Consumer Information & Protection Committee urges consumers to carefully review contracts, including those of credit card companies, that may have a mandatory arbitration requirement.

Due to potential litigation, many companies have mandatory arbitration provisions in their contracts with customers. For example, credit card issuers, telephone service providers, and auto dealerships commonly require arbitration of any consumer dispute. The potential consequences of such provisions can be adverse to the consumer. Mandatory arbitration can eliminate an individual's right to a jury trial, limit discovery, prohibit class actions, and prevent appeals if an arbitrator incorrectly interprets the law.

In addition to general contract law, the following are arguments against mandatory arbitration of a consumer dispute that should be discussed with an attorney who practices in consumer protection:

• The consumer unknowingly or involuntarily agreed to arbitrate the claim
• The consumer is asserting a state or federal statutory claim that is not subject to arbitration
• The arbitration agreement denies state or federal statutory remedies

Know your rights when entering into any consumer agreement and seek the advice of an attorney when confronted with a dispute that is subject to mandatory arbitration.

For more information, please see the article entitled "Mandatory Arbitration of Consumer Rights Cases" in the September 2002 Wisconsin Lawyer.

Telephone Fraud

August 2002 - The State Bar Consumer Information & Protection Committee urges consumer caution specific to telephone fraud.

Here is a tip to detect whether a telephone call is a scam: The email, telephone, or computer message asks you to return to call to a telephone number with the 809 area code. The 809 code is in the Bahamas, and international rates apply.

It's not always easy to tell if you're dialing an international telephone number. In most cases, you have to dial 011 to begin a call to a foreign country. But there are locations outside the U.S. whose telephone numbers may look like domestic long-distance calls, but they are actually international calls and international rates apply. For example, area codes 809, 284, and 876 are in the Caribbean.

Criminals use prize announcements or scare tactics to get people to call the 809 number. According to AT&T and the National Fraud Information Center, these calls are not covered by U.S. laws that require them to notify you in advance of the charges and rates involved when you call a "pay per call" number. If you call, you will pay the charges. Do not give them any personal information, such as your social security number.

There are many scams that deceive consumers into calling international numbers. You may see an ad for a service that directs you to call a specific number, or you may receive a page, an email message, or an "urgent" message on your answering machine. All messages direct you to call a number for more information - almost always an international number.

Defense:

• Be cautious about area codes you don't recognize. Check your telephone directory or call the operator to determine where the area code is before making your call.
  
  
• Control access to your telephone so unauthorized callers do not use your phone to call these services. A block on calls to 900 services will not stop calls to 011 or 809 numbers. If you're sure you won't need to make international calls, ask your long-distance carrier to put an international block on your telephone line.
  
  
• For more information visit www.att.com/fraud/

Identity Theft: An Increasing Problem

July 2002 - The State Bar Consumer Information & Protection Committee urges consumer caution specific to identity theft.

Identity theft was the top consumer fraud complaint in the nation last year, making up 42 percent of the complaints filed with the Federal Trade Commission. Of the more than 85,000 complaints filed, 908 were from Wisconsin. Recently a ring working in Milwaukee took more than $200,000 in cash and jewelry.

An identity thief takes a piece of your personal information such as your social security number, date of birth, bank or credit card account number and uses it without your knowledge to commit fraud or theft. You can keep your risk small by managing your personal information wisely and cautiously.

How does a thief get the information he/she needs to steal your identity? Information can be stolen from a consumer in a variety of ways including:

• Going through your mail or trash to take pre-approved credit card offers, discarded credit card receipts, or other personal information
• Stealing your purse or wallet
• Calling you on the phone and posing as a solicitor in order to gain personal information including your name, date of birth, social security number
• Looking over your shoulder at an ATM while you are accessing your account, to steal your account number and password or pin.

How Will I Know if I Am a Victim of Identify Theft or Fraud?

• Your credit card statements show unauthorized charges and/or purchases that you know you did not make
• You don't get bills or credit card statements for charges you have made when in the past you received them at the same time each month
• You are getting phone calls from creditors trying to collect debts that are not yours

What Can I Do if I Am a Victim?

• Contact the fraud departments of each of the three major credit bureaus
• Contact the creditors for any accounts that have been tampered with or opened fraudulently and let them know that you are disputing specific inaccurate items in your credit report due to possible identity theft and ask them to investigate
• File a report with your local police or the police in the community where the identity theft took place.

How Can I Protect Myself from Identity Theft?

• Do not carry important documents such as your social security card, birth certificate, or passport with you unless absolutely necessary
• Only keep a few credit cards in your purse or wallet when shopping
• Keep a list of your credit card account numbers, with expiration dates and telephone numbers. Do the same for all your bank accounts. In an emergency, you can notify these companies quickly to stop fraudulent charges or purchases
• Always take credit card receipts for all purchases and store in a safe place, or dispose of by shredding, not by throwing away in a public trash container
• Invest in a shredder and shred all items including discarded credit card and bank statements, old receipts and utility bills, and new credit card offers you receive in the mail
• Use a mix of letters and numbers, not personal information such as your birth date, last four digits of your social security, or mother's maiden name when creating passwords and PIN's for important accounts. Do not store these in your purse or wallet!

Where Can I Get More Information?

• The Federal Trade Commission has a toll free number 1 877 438 4338.
• www.idtheftcenter.org - A nationwide nonprofit organization dedicated to developing and implementing a comprehensive program against identity theft.
• Credit Report Problems Information about credit reports and credit problems.

Consumers, Beware of "Bad" Tax Advice

March 2002 - The State Bar Consumer Information & Protection Committee urges consumer caution during the tax season in identifying qualified professionals and tax return preparers and of the accuracy of information provided on some Internet Web sites.

The federal and Wisconsin income tax systems require taxpayers to take the initiative in completing and filing properly completed income tax returns with the appropriate agency. Taxpayers may prepare their own tax returns or may retain qualified professionals and tax return preparers.

Consumers should know that some Web sites claim, but do not possess, expertise in interpreting the Internal Revenue Code and in completing income tax returns.

Many of these Web sites appear to be sponsored by persons who, for political or philosophical reasons, are opposed to governments imposing income taxes on their citizens. And, many claim to have developed rationales for the average taxpayer to avoid paying any income tax, either to the federal or the Wisconsin governments. Some of these Web sites are sophisticated, which lends an aura of legitimacy.

Remember:

• Taxpayers who rely on the validity of the advice and counsel presented by such Web sites can find themselves in legal and financial difficulty.
• Be skeptical of Web sites that suggest a strategy for eliminating a typical taxpayer's income tax liability. It is probably too good to be true.

There are Web sites sponsored by income tax experts that can provide useful and accurate information regarding income taxes and returns. Still, direct consultation with income tax professionals or other qualified income tax return preparers often is the least expensive solution to income tax problems or questions.

There have always been opponents, sometimes organized, to the collection of income taxes by the federal and the state governments. Some opponents continue to assert that income taxes are unconstitutional and illegal and that taxpayers should ignore the laws and not pay income taxes or file tax returns. However, our courts established the constitutionality and validity of income tax laws many years ago.

Bogus advice and counsel about how to minimize or eliminate liability for income taxes often is in direct conflict with the provisions of the Internal Revenue Code, other applicable income tax laws, and rulings of the Internal Revenue Service.

Relying upon such so-called tax advisors can:

• cause a taxpayer to violate the provisions of the Internal Revenue Code and other applicable tax laws
• expose a taxpayer to substantial extra costs, including interest and penalties, owed because of an underpayment of taxes
• result in improperly completed income tax returns
• under certain circumstances, result in the taxpayer incurring criminal penalties.

• Wisconsin Department of Revenue
• Internal Revenue Service

February 2002 - The State Bar of Wisconsin Consumer Information & Protection Committee wishes to inform you of an alert issued by the Internal Revenue Service warning taxpayers not to fall for one of the
"Dirty Dozen" tax scams.

The "Dirty Dozen" tax scams include:

"African-Americans get a special tax refund" - Thousands of African-Americans have been misled by people offering to file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law.

No taxes being withheld from your wages - Illegal schemes are being promoted that instruct employers not to withhold federal income tax or employment taxes from wages paid to their employees. These schemes are based on an incorrect interpretation of tax law and have been refuted in court. If you have concerns about your employer and employment taxes, you can get help by calling the IRS at 1-800-829-1040.

"I don't pay taxes - Why should You?" - Con artists may talk about how they don't file or pay taxes and then charge people a fee to share their "secret."

Pay the tax, then get the prize - The caller says you've won a prize and all you have to do to get it is pay the income tax due. Whether you've won cash, a car, or a trip, the prize giver generally sends you and the IRS a Form 1099 showing the total prize value that should be reported on your tax return.

Un-tax yourself for $49.95 - The IRS said that this scheme is as old as snake oil, but people continue to be taken in. And now it's on the Internet. The ads may say that paying taxes is "voluntary," but it is absolutely wrong. The U. S. courts have continuously rejected this and other similar arguments.

Social Security Tax Scheme - This scam works by the victim paying a "paperwork" fee of $100, plus a percentage of any refund received, to file a refund claim with the IRS. This scam fleeces the victims for the up-front fee. The law does not allow such a refund of Social Security taxes paid.

"I can get you a big refund ... for a fee" - Refund scheme operators may approach you wanting to "borrow" your Social Security Number or give you a phony W-2 so it appears that you qualify for a big refund. Two lessons to remember: 1) Anyone who promises you a bigger refund without knowing your tax situation could be misleading you, and 2) Never sign a tax return without looking it over to make sure it's honest and correct.

IRS "Agent" comes to your house to collect - IRS special agents, field auditors, and collection officers carry picture IDs and will normally try to contact you before they visit. If you think the person on your doorstep is an impostor, lock your door and call the local police. To report IRS impostors, call the Treasury Inspector General's Hotline at 1-800-366-4484.

If you think something may be improper, you can report suspected tax fraud to the IRS at 1-800-829-0433.

For a more extensive listing of the "Dirty Dozen"

• Download the IRS news release (PDF, 135KB)

Winter 2002 - The State Bar of Wisconsin Consumer Protection Committee alerts you to be cautious when looking to hire a contractor for home repairs. Home repair fraud ranks high on the list of consumer complaints, especially among the elderly or minorities. To avoid becoming a victim, pay close attention to the following hints:

• Always request official identification proving who the contractor is and the company the contractor works for or is representing.



• Always get more than one estimate and always get it in writing. The estimate should contain the following information:



• Contractor's full name, address and telephone number
• Description of work to be performed
• Starting date and estimated completion date
• Total cost of work to be performed (labor)
• Total cost of all materials to be used for the project
• Notice if any subcontractors will be hired to perform the work
• Schedule and method of payment, including the down payment, due dates of subsequent payments, and when final payment is due.


• Always ask for the contractor's proof of insurance



• Do not sign a contract if it has blank spaces or you don't understand something in the contract.



• Find out if the contractor guarantees their work and products and those of any subcontractors.



• Get lien waivers, which protect you from claims against your property, in the event your contractor does not pay suppliers or subcontractors.



• Do not make the final payment until you are satisfied that all subcontractors and suppliers have been paid. This proof can be in the form of lien waivers of the subcontractors and suppliers.

• Own or work for a company that lists only a telephone or post office box number when soliciting your repair work.



• Appear unsolicited at your door offering to do the repair work for substantially less than fair market price



• Will not provide identification of who they are or whom they work for



• Demand cash payments and/or full payment before completing a job



• Asks for a check to be made payable to a third party



• Offers to drive you to your bank to withdraw funds to pay for the work

The State Bar of Wisconsin's Consumer Protection Committee alerts you about your rights under automobile extended warranties. If the following conditions are met, you can save costs on automobile repairs:

• During the term of your warranty, your bring your vehicle to a dealership to report a problem.
• The complaint is documented on a dealer repair order, indicating the applicable date and mileage.

If the problem persists after the expiration of your warranty, the warrantor is required under Wisconsin law to continue any necessary repairs at no charge to you until the problem is resolved.

If you were not aware of this protection, you are not alone. Many consumers are not familiar with Wisconsin Administrative Code Department of Transportation 139.06(6), which provides:

"If a valid warranty claim made during the warranty period, as evidenced by a dealer repair order indicating date and mileage, cannot be remedied until after expiration of the warranty period, the warrantor shall continue to be obligated for the claim until properly remedied."

Furthermore, in this context, Wisconsin law provides that the term "warranty" includes "service agreements" - commonly referred to by dealers and consumers as "extended warranties".

Make sure your concerns are properly documented on a dealer repair order and save yourself unnecessary repair costs.

The State Bar of Wisconsin's Consumer Protection Committee wants you to know that if your vehicle qualifies for protection under Wisconsin Lemon Law, you could be entitled to compensation, or even a full refund or a comparable new motor vehicle at no charge.

In order for your vehicle to potentially qualify, it must have at least one "nonconformity" that is reported to the automobile manufacturer or any of its dealers before the expiration of the warranty, or within one year after first delivery of the vehicle to you, whichever is sooner.

Wisconsin law defines a "nonconformity" as a condition or defect which (1) substantially impairs the use, value or safety of a motor vehicle and (2) is covered by an express warranty applicable to the vehicle or a component of the vehicle. Nonconformity does not include a condition or defect which is the result of your abuse, neglect, or unauthorized modification or alteration.

A condition or defect that substantially impairs the use, value or safety of a vehicle must be more than a minor annoyance or inconvenience. However, your vehicle need not have been undriveable for the nonconformity to substantially impair its use, value or safety. Also, the nonconformity may substantially impair use, value or safety even if the vehicle was able to provide simple transportation.

If you think your vehicle may qualify for relief under the Wisconsin Lemon Law, and would like more information, contact the Wisconsin Department of Transportation Dealer Section at (608) 267-3635 or visit http://www.dot.state.wi.us

In light of the Sept 11 terrorist attacks, the State Bar of Wisconsin's Consumer Protection Committee and the Wisconsin Bureau of Consumer Protection warns the public of the following:

• There is no indication that the terrorist activities in New York and Washington D.C. have had any affect on the current and future oil supplies. The State of Wisconsin is following up on those businesses that may have violated state law when they increased gas prices. State auditors are reviewing the records of nearly 400 businesses in question. Businesses that are convicted of violating the law may be required to pay restitution to consumers and pay a forfeiture to the state. Consumers who wish to make a complaint should call the Wisconsin Department of Agriculture Trade & Consumer Protection at (800) 422-7128.



• Consumers also are warned about businesses that may have prices on the sign that are lower than those on the pump, which also is in violation of state law. If no sign is posted, consumers should be aware that the prices may be inflated. Unless there is an official statement given to consumers about supply concerns, consumers should not support unscrupulous business owners who are trying to take advantage of consumers.



• Consumers who want to give financial support to those affected by the recent terrorism should check out any organization seeking funds with a legitimate third-party source before actually making any donation. Consumers should call the Wisconsin Department of Agriculture Trade & Consumer Protection at (800) 422-7128 with questions or concerns.



• To assist consumers in making donations, the American Bar Association's Tax Section has developed information on its Web site to help donors identify legitimate charities and get the proper tax benefits for their gifts. Visitors to the site, www.abanet.org/tax/, will find a checklist of things to consider before making a contribution and, later, claiming a deduction. They also will find useful links and information on many of the complex tax questions that have surfaced due to the attacks.

August 28, 2001 - The State Bar of Wisconsin's Consumer Protection Committee warns consumers about free trial offers that promise a service "free for 30 days . at no cost to you!" Telemarketers and direct mail advertisers regularly bombard consumers with such offers. Consider the following questions before agreeing to the offer.

• When does the 30-day period start, and when will the important materials arrive at my home?
• What will happen at the end of the 30 days if I do nothing?
• If you intend to automatically bill me at the end of 30 days, what number do I call to cancel?
• If there is a charge, how much will it be? Will I be billed on my credit card? Will it be a month-to-month contract, or for a longer duration?

Consumers who don't ask these questions may find themselves in a bind later on. For example, a telemarketer calls and offers you an ongoing service, such as a membership in a buyers' club. The caller tells you it is free for 30 days. You may also get a magazine, coupons, and other "gifts" for agreeing to the 30 free days. This may sound tempting, but what happens at the end of the 30 days?

Frequently, unless you write or call to cancel your subscription or membership at the end of the 30-day period, you will begin receiving a monthly bill for the service. You might have not had time to evaluate the service in 30 days to decide if you want to keep it or cancel. Even if you decide to cancel within 30 days, you may not know how.

When you look at it closely, you are not really getting a free offer. You are agreeing to an ongoing service contract with payment for the first month waived. Instead of "no cost to you," you have agreed to pay for a service to be billed monthly, unless you go to the trouble of canceling it.

If service continues, an unwanted bill can be difficult to dispute. Government consumer protection agencies have been dealing with telemarketers who already have a valid credit card number for the consumer before calling that consumer. Even if you did not give your credit card number to the telemarketer, the bill may come to you as a credit card charge, which can be more difficult to dispute.

If you accept the offer, record the names of the telemarketer and the company he or she represents, the date and time of the phone call, and the representations made by the telemarketer that you relied on. Remember to cancel the contract in a timely manner if it becomes apparent that you do not want to pay for the service.

For more information, or if any part of the sales offer or transaction seems unfair, contact the Wisconsin Bureau of Consumer Protection at: (800) 422-7128; fax (608) 224-4939; TTY (608) 224-5058; email datcphotline@datcp.state.wi.us; Web site http://datcp.state.wi.us/.

August 28, 2001

- The State Bar of Wisconsin's Consumer Protection Committee warns consumers about unsolicited commercial email messages - commonly known as junk email, bulk email, or spam. Although some messages are from legitimate marketers, many are fraudulent solicitations from scam artists who make empty promises. Senders can confuse you by masking their identities.

If you get too much spam, try the following:

If problems continue, consider having two email addresses. Reserve one email address for correspondence and another for participating in chat rooms or completing online forms. Set the mail controls on the second address to receive NO MAIL. Friends can still contact you at your correspondence email account.

Consumers can forward fraudulent email to a Federal Trade Commission email address: uce@ftc.gov. Questions can be directed to the Consumer Hotline at 1-800-422-7128.

Watch TV for any length of time and you're likely to see an advertisement for a 10-10 dialing number claiming to save you money on your long-distance calls, but can these numbers actually offer you savings?

Careful use of dial-around providers may save you money in certain instances, especially for international calls. The most important rule is to not use them without investigating their rates ahead of time, warns the State Bar of Wisconsin's Consumer Protection Committee. Using a 10-10 number means that your call will, in effect, "dial around" your presubscribed, or regular, long-distance carrier and using a different carrier. There is often a not-so-obvious "catch" to many of these services.

Some things to look out for:

• Watch out for providers that have a minimum talking time. Some providers may require you to speak for 10 or more minutes before the discounted rates kick in.
  
  
• Some dial-arounds have one rate for calls up to a certain length. For example, a call up to 20 minutes using 10-10-220 will cost 99 cents. However, you will also pay 99 cents for a call only lasting a minute.
  
  
• Some providers will add a Universal Service Fee to your bill if you use their service. Your regular long-distance carrier may also charge such a fee, so by using a dial-around provider you will be paying these fees twice every month.
  
  
• Dial-around providers may also charge a monthly fee. This fee may offset any per-call savings that you receive. Make sure to consider whether, after charged this fee, the service will still offer a savings.
  
  
• Be aware that some providers have a per-call minimum. You will be charged a certain amount per call regardless of the length.
  
  
• Some 10-10 providers offer prizes for people who use their service. For the best value, you choice for long-distance service should be based on the rates and service a carrier/provider offers.
  
  
• For a comparison chart of the dial-around providers, including rates, fixed fees, and toll-free customer service numbers, visit the Telecommunications Research and Action Center Web site at http://www.trac.org.
  

If you have any questions or complaints regarding a 10-10 dialing number service, contact the State Bar's Consumer Protection Committee.

The investment scam that is making its way through Wisconsin, entitled "The Gifting Program," is just an investment scam, warns the State Bar Consumer Protection Committee. This pyramid scheme appears harmless, but it is an extremely costly adventure for anyone who participates in it. A typical pyramid scheme involves several individuals recruiting other individuals to give a "gift," usually cash, to individuals down the line. The object of the pyramid scheme is to have individuals recruit additional people who continually invest in this scheme. As long as new individuals are recruited for this scheme, additional monies continue to come in, leading to the misleading conclusion that participants become rich. Unfortunately, it doesn't work. The pyramid always collapses, leaving the participants, hundreds and sometimes thousands, unhappy and out all of the money they invested in the scheme, which sometimes totals thousands of dollars.

Pyramid schemes are illegal. If you are approached by somebody asking you to "gift" money to perfect strangers on the condition that you recruit additional individuals, beware. It is illegal. You will lose your money. Contact your local police department or the Wisconsin Department of Justice.

Be careful about being pressured to buy a revocable living trust, warns the State Bar of Wisconsin's Consumer Protection Committee. Take as much time as you need to be sure the trust meets your goals.

The State Bar consumer pamphlet, Answering Your Legal Questions About Revocable Living Trusts, helps consumers make more informed decisions about this confusing topic. Click here to download copy.

In July, a Columbia County judge ruled that a deceptive advertising lawsuit filed by the state of Wisconsin against Publishers Clearing House, one of the nation´s largest sweepstakes promoters, should proceed. Judge Richard Rehm refused to dismiss the lawsuit, despite an aggressive legal battle waged by Publishers Clearing House.

At least four states, including Wisconsin, have sued Publisher´s Clearing House, claiming the mail-order giant intentionally deceives consumers in its direct mail sweepstakes when offering merchandise and magazine subscriptions.

The State Bar´s Consumer Protection Committee issued an alert in Sept. 1999 warning Wisconsin residents not join an Illinois class action settlement against Publishers Clearing House. That suit, the committee said, would not provide sufficient restitution, not stop Publishers Clearing House from targeting vulnerable consumers, and not require the company to admit any wrongdoing.

If Wisconsin consumers receive a mailing for the Illinois law suit and ignore it, they automatically become part of that settlement, and therefore will be prohibited from participating in any other actions against the company. The Wisconsin Department of Justice has brought its own suit against Publisher´s Clearing House to change the way the promoter treats consumers. The Justice Department is also providing forms to the public to opt out of the Illinois suit. Those can be obtained by calling the Justice Department at (608) 266-1852.

The State Bar of Wisconsin´s Consumer Protection Committee is warning consumers to be careful when buying a used car. Checking for a warranty is always a good first step, says the committee. There are two possible remedies for a consumer if their new car is covered under a warranty and there is a condition or defect that needs repair. The Consumer Protection Committee says consumers should check for a warranty before going ahead with the purchase.

The committee says that if there is no warranty, the consumer should know that he or she may still be able to force the seller to pay for the repairs, under certain conditions. The lack of a warranty does not prevent the purchaser from possibly getting the problem redressed by the seller.