MONEY Tech

Our National Robocalling Nightmare May Soon Be Over

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Take that, spammers and robocallers!

In the phrase “unwanted robocall,” the word unwanted probably isn’t necessary. Is there any automated sales call that is actually wanted? Ever?

Earlier this year, 200,000 people signed a petition asking telecom companies to give customers the means to block commercial robocalls. They probably could have gotten tens of millions of such signatures with a little more time and outreach.

In any event, on Thursday, hallelujah, the Federal Communications Commission adopted a package that will make it much easier to put a stop to the extremely annoying and unwanted robocalls. The commission’s decision “affirmed consumers’ rights to control the calls they receive,” while also clarifying that it was fully legal for telephone companies to offer robocall-blocking technology to customers.

“Complaints related to unwanted calls are the largest category of complaints received by the Commission, numbering more than 215,000 in 2014,” an FCC statement explained. (The Federal Trade Commission, meanwhile, reportedly received an astounding 3 million complaints about robocalls in 2014.) The new rules are intended to address consumer concerns by “closing loopholes and strengthening consumer protections already on the books,” according to the FCC.

Despite heavy lobbying from multiple industries on the pro-robocall and pro-spam side, the FCC ruled to uphold and clarify the Telephone Consumer Protection Act, while also bolstering the protections offered by the Do Not Call Registry. Specifically, the package affirmed:

• Phone service providers can offer robocall-blocking technology to customers.

• Consumers can decide to opt out of robocalls at any time.

• The same protections and opt-out rights regarding telemarketing messages apply to text messages as well as calls to wireless and landline phones.

A group of consumer advocates jointly applauded the measure as soon as it was announced. “We applaud the FCC for holding the line to keep the plague of unwanted robocalls from becoming even worse,” said Susan Grant, director of Consumer Protection and Privacy at Consumer Federation of America. “Since the FCC has now clarified that telephone companies can block these types of calls, we expect the companies to act quickly to implement blocking options for their customers.”

On the other hand, speaking on behalf of the business community, the U.S. Chamber of Commerce warned that the FCC’s move could lead to more class-action lawsuits against companies, which would “likely lead to increased costs for consumers.”

Or perhaps businesses could simply stop robocalling and avoid lawsuits entirely.

MONEY Scams

New Scams Target People Buying and Selling Gift Cards Online

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baona—Getty Images

In some cases, victims are out thousands of dollars.

The Federal Bureau of Investigation published an alert Thursday warning of a worrisome trend: Thieves are using gift card exchange and auction websites to steal money from unsuspecting card buyers and sellers.

There are several traps that target people selling gift cards in particular, the FBI reports.

In one scam, fraudsters pay you for a card (or the code on the card), but then dispute or cancel the charge after they have already used the gift card. In another, they ask you to buy a bunch of gift cards in exchange for an item on an auction site—and then never actually send you the purchase.

To avoid becoming a victim, the FBI suggests you take several precautions when you use gift card websites.

  • Check reviews of any website you use.
  • Always review gift card balances before and after purchasing the card.
  • If you are selling a gift card, don’t ever give out the card’s PIN until your payment transaction is complete.
  • Be wary of auction sites selling gift cards at a discount or in bulk.
  • If you are buying a gift card in a store, examine the protective scratch-off area on the back of the card for evidence of tampering.

And beware of social media postings offering vouchers or gift cards: Fraudulent messages can sometimes appear to have been shared by a friend when they really come from a scam artist.

 

MONEY Banking

How to Get Bank Alerts on Your Phone

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They're the best way to stop fraudsters.

If you haven’t already signed up to get alerts on your mobile phone from your credit card issuer, what are you waiting for?

Mobile alerts can tell you within minutes if your card is used in another country or if your payment is overdue. They can save you the embarrassment of being blocked at the cash register if a transaction seems suspicious by asking you via two-way text if the purchase is legitimate. And as I recently learned firsthand, they can help you catch fraud almost instantly.

I had just started receiving mobile notifications of every transaction on my American Express card when a transaction I didn’t recognize for $748 popped up. I immediately got on the phone. Sure enough, it was fraud. And even though AmEx hadn’t flagged it as a suspicious transaction, I was able to shut it down right away because I saw it.

That’s the beauty of mobile alerts and notifications, said Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research: “It’s a way to involve the customer and deputize them, because they often know better than the banks if something is legitimate or not.”

The alerts can also help you manage your personal finances by alerting you before a payment is due, if your balance goes over a specific amount or if you’re close to your credit limit. About four in every 10 consumers today have received some kind of alert from a financial institution, according to a Javelin report published in April. The company predicts that number will rise to more than half of U.S. consumers by 2019.

However, the report said most banks aren’t doing enough to promote their alerts, that it’s confusing and difficult for customers to enroll, and the alerts are “remarkably difficult” to turn on. “Finding alerts settings is akin to a Where’s Waldo’ search,” the authors wrote.

Since the issuers may not make it easy, here’s what you need to know to sign up:

How do you want to get your alerts?
You can get alerts through email, text message or “push notifications” that pop up in the status bar or notification tray of your cellphone. Email alerts are still the most common, according to Javelin, with 36 percent of consumers receiving them, compared to 22 percent for texts and 14 percent for notifications. Here are the pros and cons of the different types:

  • Email: Every bank surveyed by Javelin offers email alerts, and this type has been around the longest. The problem, of course, is that some folks don’t have email on their phones. Even if you do, you may not check it regularly. “Fraudulent transactions happen fast,” said Julie Conroy, research director at Aite Group. “A thief will do a little testing and then go to town, so it’s important to catch fraud as quickly as possible.”
  • Text message: About 95 percent of banks allow their customers to receive at least some financial alerts via text. Because we’re conditioned to give texts our immediate attention, this type of alert is a good choice for news you consider urgent. “Since you use texts to communicate with people, it might be annoying to get a text for every transaction,” Conroy said. “Also make sure you consider whether you’re going to incur charges for texts.” Some banks offer two-way texts that pop up instantly on your phone if you try to make a transaction that looks suspicious. If you respond that the purchase is legitimate, your card will go through instead of being blocked at the point of sale.
  • Push notification: This is the type of notification that I received from American Express. They pop up on your phone’s lock screen, in the banner at the top of your phone or in your “notification tray” even when you’re not using your card’s mobile app. They are more likely to get your attention than an email, but they’re less obtrusive than a text. Fewer than half of banks offer these, but Javelin predicts they will surpass text notifications as the No. 2 form of alert by 2019. Fueling that prediction: 45 percent of consumers surveyed said they think push notifications from their bank would be valuable, even though only 14 percent receive them.

When do you want to get an alert?
Signing up for at least some mobile alerts should be “a no-brainer choice for the customer,” said Brian Riley, principal executive adviser at CEB TowerGroup. “You don’t necessarily need an alert for every transaction. But everyone should want some type of notification,” he said.

Most issuers allow you to customize the type of notifications you receive and how you get them, so you can make sure you don’t get too many. “Typically there’s a control panel that says, ‘Text me or email me based on these specific conditions,'” Riley said. You can also turn them on or off anytime.

Some alerts are designed to enhance security; others help you stay on top of your personal finances. Here are some options you may see:

Security alerts:

  • Suspicious transaction: When issuers suspect fraud, they automatically try to contact you. But federal law requires them to get permission before they can notify you via text instead of calling you or sending an email.
  • Card-not-present transaction: This notifies you anytime a purchase is made without a swipe, so it’s mostly Internet transactions. “These transactions are much more vulnerable to fraud because all they need is your account number, not your actual card,” Riley said, “so this option should be first on your list.”
  • Gasoline transaction: Gas stations are another hot spot for thieves; you’ll be notified anytime a purchase is made at one.
  • International transaction: Because a lot of fraud originates overseas, this can be a good way to catch fraud if you rarely travel abroad; you can turn it off when you leave the country.
  • Transactions over a preset amount: You can choose to be notified of every transaction over a specific dollar amount. If you choose $0, you’ll be alerted to every transaction; set a higher dollar amount to minimize the number of alerts.

Personal finance alerts:

  • Available credit: Sent when your credit falls below a specified amount you set.
  • Balance: Sent anytime your credit card balance exceeds an amount you set. This can be particularly useful if you have multiple people using your card or if you’re trying to stay within a budget.
  • Low balance: An alert if the balance in an account linked to your debit card falls below a specified amount.
  • Payment due: Notifies you a specified number of days before a payment is due.
  • Missed payment: Sent if no payment was received by the due date.

How to sign up
Banks are cautious about automatic enrollment, Schwanhausser said, because “they don’t want their customers to feel like they’re being spammed or overwhelmed.” Most send automatic security alerts via email (or through a call to your home phone) anytime your personal information or settings are changed or if they notice suspicious activity.

To start getting text messages or push notifications to your cellphone, you have to proactively sign up. Though it can be difficult to enroll, it’s worth doing simply so your bank can reach you quickly on your cell if it detects suspicious activity. “It’s also a lot more convenient for you to hit reply to a text and say, ‘Yes, this was my transaction,’ or ‘No, it wasn’t,’ than to get an email about something and have to take the time to call in,” Conroy noted.

Every card has a slightly different process, but here are the basic steps to start getting text message alerts:

  • Log in to your card’s website.
  • Look for something in the menu that says “manage alerts” or “go to alerts.” If you don’t see the word ‘alerts,’ you may have to click on “Profile” or “Settings.”
  • Look for an option that will allow you to put in your mobile number, change your contact information or add text messages.
  • Because federal law requires you to opt in to receive text, you’ll have to activate the service by entering a code that the bank will send as a text.
  • Most issuers then list the types of alerts you can receive and how you want to receive them (email or text). Make your choices and then hit save.

To start getting push notifications, follow these steps:

  • First, find out if your card issuer offers the service. Javelin’s report in April said the following financial institutions were using push notifications, but more banks are adding them every day: American Express, Bank of America, M&T, BBVA compass, Regions, Chase, USAA, Citibank, Wells Fargo and Fifth Third.
  • Download the institution’s mobile app.
  • In most cases, you can add push notifications through an app menu option that says something like “Manage alerts.” If you don’t see it as an option in the mobile app, you may have to add push notifications through the card’s website. Call the phone number on the back of your card if you’re having trouble.
  • Once enrolled, you may still have to change the settings on your phone to “allow notifications” from your bank’s mobile app. On most phones, you can go to settings and look for “notifications.” Some, including iPhones, let you decide whether to turn on sounds and badges with the notifications.

After my own experience with fraud, I took the time to turn on mobile alerts for all of my active credit cards and bank accounts (it did take some time and a few phone calls). To keep my messages box from filling up, I elected to receive texts only for news I considered urgent: suspicious activity, a low balance or a payment missed. But I’m receiving push notifications on my phone for most other transactions, and so far, I haven’t minded the extra communication. In fact, I take comfort in knowing that if fraud happens, I’ll catch it quickly.

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MONEY Scams

10 Phone Scams You Should Hang Up on Immediately

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Credit card rate reduction scams are the most common.

It might sound like an unexpected blessing — a call from out of the blue, promising to help reduce the interest rate you pay on your credit cards.

In reality, if you take the shysters up on their offer, you could end up losing thousands of dollars in fees or becoming the victim of identity theft.

These credit card rate reduction scams were the most common telephone scam during the first nine months of 2014, a study by Pindrop Security found. Pindrop helps companies prevent phone-based fraud.

Todd Mark, director of fundraising for Navicore Solutions, one of the nation’s largest nonprofit credit counseling firms, isn’t surprised by the prevalence of the scam. “People feel a bit more confident in the economy or in a better position to try to protect what they have.” So when a call comes in offering to help cut their credit card interest rates, “people hear what they want to hear,” Mark says. They think, ” ‘Wow, this just fell into my lap!'”

Pindrop analyzed more than 26,000 comments from online forums and complaint sites, and nearly 20 percent were about credit card rate reduction scams.

The callers promise interest rate reductions, but first the victim needs to pay the caller an upfront fee, Pindrop found. The victims rarely received a rate reduction, and might be asked to disclose personal and financial information, which then can be used to commit identity theft.

According to the Federal Trade Commission, these callers claim they’ll save you thousands of dollars in interest and finance charges, and you’ll pay off your credit card three to five times faster. Those promises seldom materialize, and victims rarely get their money refunded.

You should never give out your credit card information to callers, the FTC warns. Scammers can use it to make charges to your credit card or sell the information to other bad guys.

Even if a caller offers legitimate services, you don’t need to have a third party involved if you want to try to get your credit card interest rate reduced, Mark says. Instead, you can work directly with your creditors or nonprofit consumer credit counseling agencies. Consumer credit counselors will help you for free, looking at your debt, the interest rate you pay and your credit score. They can advise you on how to ask your credit card company for a lower rate, or you can enter into a debt repayment plan for a minimal monthly fee in which the agency will negotiate your interest rates for you and handle bill repayment.

If your credit card company won’t budge, you can shop for a new credit card or apply for a bill consolidation loan from your bank or credit union, Mark says.

The credit card rate reduction scam is just the tip of the iceberg, with consumers plagued by scammers doing everything from offering free cruises to threatening arrest because of nonpayment of debt.

In fact, the telephone is the most popular means of communication for shysters, according to Fraud.org. Of the more than 10,000 consumer complaints filed to the site in 2014, more than 40 percent of the scams originated with a phone call, while about 30 percent originated electronically via email.

Of the complaints examined by Pindrop Security, about 60 percent of the phone scams involved the caller impersonating a representative from a government agency or financial institution.

Many of the fraudsters have enough of your personal information, such as part of your Social Security number, your address or your bank account details, to sound legitimate.

The remaining nine top scams identified by Pindrop are:

No. 2. Home security systems: The caller offers a free home security system, and may mention a rash of burglaries in the neighborhood to frighten the victim into action. But the system is far from free. It comes with expensive long-term monitoring costs or fees.

No. 3. Spam text messages: Victims receive a text saying to call a certain number or check a particular website to win a prize. The message is designed to get you to reveal personal information, or to put malware on your computer.

No. 4. Free cruises: This scam involves calls or texts offering victims a free cruise. They’re pressured into disclosing credit card information to pay for taxes and fees.

No. 5. Government grants: Victims are told they’re receiving a government grant of between $5,000 and $25,000 just for being good citizens. They’re charged hundreds of dollars in “processing fees” and may be asked for their bank account information.

No. 6. Microsoft tech support: The caller claims to be from Microsoft tech support and says your computer is infected with a virus. He’ll request remote access to your computer to fix the problem and then may install malware to steal your personal information. You may be charge for this “service.”

No. 7. Auto insurance: The caller says you’re eligible for a lower auto insurance rate and asks for your personal information, which is used for identity theft.

No. 8. Payday loans: The caller targets those who have applied for a payday loan, claiming to be a debt collector. He’ll demand payment and late fees. You’ll be told to send payment, and you’ll be threatened with arrest if you don’t pay up.

No. 9. IRS scam: This is a quickly growing problem. Someone claiming to be from the IRS says you owe taxes and penalties. If you don’t pay by prepaid card, wire transfer or credit card, you’re threatened with arrest or legal action. Your personal information also may be targeted.

No. 10. Bank scams: The caller claims to be from your bank and says there’s a lock on your account or a hold has been placed on your debit card. You’re asked to verify your financial information, which the bad guys then use.

If you get a call from someone claiming to be from your bank, saying you need to verify your financial information or offering to help reduce your credit card interest rates, red flags should go up, says Chantel Negron, loss prevention manager at Grow Financial Federal Credit Union in Tampa.

Your financial institution may call, but won’t ask for your bank account number, PIN or card expiration date because the information is already on file, she says. It also won’t ask you to “pay fees upfront and work out a loan on the backside.”

Don’t fall for Friday scam
Scammers also may make an urgent call on a Friday afternoon, saying your debit card is about to be deactivated and asking for your financial information. “People react to that,” Negron says.

If you receive such a call, hang up the phone, then look up your bank’s phone number yourself and call directly. Never use a number the caller provides.

Matt Anthony, vice president of marketing at Pindrop Security, said the company’s research found “the same bad actors for multiple scams,” with several scams run from the same call center.

Some scams, such as the Microsoft tech support scam, have persisted for years. That means they’re effective, Anthony says. “The bad guys do what works.”

The fraudsters may doctor their phone numbers so it appears as if the call is coming from Microsoft or the IRS.

If you receive a robocall, hang up. Don’t press a number to speak to a live person or to get your name removed from their call list. It will just lead to more robocalls.

If you think you’ve been hit by a credit card interest rate reduction scam or other fraud, you should file a complaint with the FTC, or call 877-FTC-HELP877-FTC-HELP FREE.

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MONEY Scams

Most People Can’t Spot an Email Scam

'Spear phishing' is especially hard to detect

Plenty of folks think they could never be outsmarted by a hacker; plenty of them are wrong. In fact, perhaps 97% are wrong.

Two new studies make this point, and show the devastating consequences of being wrong.

Security firm McAfee has created a tool that lets consumers test their ability to distinguish between real emails and fake “phishing” emails designed to steal their personal information. So far, consumers have failed the test — miserably.

In a report released earlier this month, McAfee said that of the 19,000 plus visitors from more than 140 countries, only 3% of test-takers identified every email correctly.

Even worse, four out of five thought at least one phishing email was real.

“The worldwide average score was 65.4%, which means test takers missed one in four phishing emails on average,” McAfee said.

Those results are dismal. It costs criminals almost nothing to send phishing emails, and this study suggests that they only need to get four of them into a potential victim’s inbox in order to pull off a caper.

That’s bad enough, but traditional phishing attacks are little more than vaguely targeted spam — a fake Bank of America email sent to a million people in the hope than 25,000 are actually Bank of America customers. The really insidious, and increasingly successful, crime is known as “spear phishing.” Rather than send out a million fake messages, spear phishers send out only a handful — or even only one — at a time. These emails are meticulously designed to trick the recipient. A common tactic: A booby-trapped email sent to an important person’s administrative assistant with a realistic-sounding urgent message, such as “Traveling: Please review this document immediately.”

Spear phishing is blamed for some of the most high-profile hack attacks ever. A report released earlier this month by the InfoSec Institute blamed spear phishing for the Target and Sony attacks, and cyberattacks operated by the Syrian Electronic Army and others. The group Citizen Lab provided evidence last year that the Islamic State in Iraq and Syria (ISIS) had used spear phishing attacks against a group attempting to document human rights abuses in an effort to unmask its members’ location.

“Thank you for your efforts to deliver a true picture of the reality of life in Raqqah,” reads a translation of part of the email, Citizen Lab claims. “We are preparing a lengthy news report on the realities of life in Raqqah. We are sharing some information with you with the hope that you will correct it in case it contains errors. …We also hope that if you happen to be on Facebook, you could provide us with the account of the person responsible for the campaign.”

A recipient who clicked on the attachment in the email was infected with software that attempted to transmit the victim’s location to the sender, Citizen Lab says.

It should be no surprise that phishing emails have also been used to attack workers at America’s critical infrastructure plants and other crucial systems.

“Spear phishing represents a serious threat for every industry, and the possibility that a group of terrorists will use this technique is concrete,’ the InfoSec report concludes.

The best defense against phishing and spear phishing is humility. Yes, you can fall for a well-crafted trick email. It only takes one moment of weakness, one click when you are distracted by something seemingly more important, to make a critical lapse in judgment that can ruin your whole day, or much worse. Your best defense: Be skeptical of every email, even those that appear to be sent by friends or co-workers. If you have any feelings of doubt, don’t click — call.

McAfee offers these additional tips:

  • Keep an eye out for telltale signs. Bad grammar, bad syntax, suspicious senders and links to misspelled URL addresses are all telltale signs of phishing.
  • Also watch for emails from unknown senders or ones asking you for personal information, especially if it’s in a threatening manner.

You may not always know that your information has been compromised until the damage has already been done. However, regularly checking your account statements, credit reports and credit scores for signs of fraudulent transactions and new accounts can help you spot many problems before they become even bigger.

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MONEY Taxes

Thieves Stole $50M in Tax Refunds Using IRS’s Online Tool

The hackers apparently used already-stolen identity information to send phony requests through the IRS's website.

MONEY Scams

Feds: Millions Targeted By ‘Phantom’ Debt Collection Scheme

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A Georgia firm called millions of consumers attempting to collect on "phantom" debts, federal investigators allege.

A Georgia firm called millions of consumers attempting to collect on “phantom” debts, and tricked consumers by citing personal information purchased from payday loan lead generators, federal investigators allege.

A lawsuit against Universal Debt and Payment solutions and a host of related companies was revealed Wednesday, alleging the firm’s tactics included purchasing personal information from data brokers that operators could use to convince victims to pay debt they didn’t owe. Agents would use names like “LRS Litigation Group,” “Worldwide Requisitions,” and “Arbitration Resolution,” and tell consumers they risked jail time if they didn’t pay immediately. The claims were bolstered by operators’ citing personal information, including bank account numbers, the CFPB alleges, that had originally been obtained by payday loan lead generation websites and sold to data brokers.

“Our lawsuit asserts that consumers were harassed, threatened, and deceived as part of a reprehensible scheme to collect debt that was not even owed,” said CFPB Director Richard Cordray. “We are taking action against the many parties that allegedly contributed to this phantom debt collection operation. The ringleaders of the scheme, the telemarketing company that broadcast millions of robo-calls, and the companies that processed the payments should all be held accountable for taking advantage of vulnerable consumers.”

In one example cited in the lawsuit, a consumer complained that he received a threatening call while he was asleep.

“The caller stated that he had a ‘restraining order against (the consumer) to appear in court if I didn’t settle with them.’ The caller said the consumer had 24 hours to pay $500 on a $1,600 debt to Bank of America, or the collector would ‘contact (the consumer’s) employer to levy (his) wage, and they were also contacting the local police to serve papers,’” the lawsuit alleges. “According to the complaint, because he was scared, the consumer provided his bank card information. After making the payment, the consumer’s wife informed him that they had never done business with Bank of America.”

A phone call to the number listed for Universal Debt was answered by a man who said he was sick and was unable to answer questions about the lawsuit. Asked if he had a lawyer, he said he couldn’t afford one.

The CFPB lawsuit also names several service providers, including Global Payments, which processed the debt collector’s credit card payments.

“Payment processors provided substantial assistance … enabling the Debt Collectors to accept payment by consumers’ bank cards when the Payment Processors knew, or should have known, that the Debt Collectors were engaged in unlawful conduct,” the CFPB alleges.

The firm did not immediately respond to requests for interview.

The CFPB also named Global Connect, LLC in the lawsuit for enabling the debt collectors to initiate millions of calls.

“(It) provided this service when it knew, or should have known, that the messages it broadcast for the Debt Collectors were unfair or deceptive, and materially contributed to the Debt Collectors’ scheme,” the lawsuit says.

Global Connect did not immediately respond to a request for comment.

The alleged scheme plays on a common problem — consumers who don’t know if a debt collection call is legitimate. If you’re worried about whether you have any debts haunting you, you can check your free annual credit reports for collection accounts. And if you want to see how a collection account can hurt your credit, you can check two of your credit scores for free on Credit.com.

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This article originally appeared on Credit.com.

MONEY Taxes

Last-Minute Tax Filers: Beware of This Obamacare Scam

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If you don’t have health coverage, you pay a penalty to the government. And scammers are ready to take advantage of that.

For all stripe of rip-off artist, tax season might as well be called open season. Scams are legion, and navigating a solution after the fact can be somewhere between maddening and negotiating an Iran deal that everyone likes. Last month the IRS issued a warning that received scant attention from the media, but nonetheless could impact millions of taxpayers this year — particularly targeting low-income, elderly and Spanish-speaking taxpayers.

The scam takes advantage of the Individual Shared Responsibility Provision of the Affordable Care Act. It’s a penalty, but one with many exemptions. Because it is somewhat complicated, the new provision has become the object of many fraudsters’ affections, especially during tax season.

This is the first year that taxpayers must confront this new liability. In the simplest of terms, if you don’t have health coverage, you pay a penalty to the government.

The provision is intended to induce people to get coverage, since individual shared responsibility is all about increasing the number of Americans enrolled in health insurance plans in order to enlarge the pool to spread risks and reduce costs. Regardless of what you think of that theory, that’s the informing principle.

So what is the penalty? While at first blush it doesn’t sound like a huge amount of money, it’s not nothing either — especially to a family who is forced to live paycheck to paycheck. It can be 1% of a family’s annual income (minus the tax return filing threshold for your filing status), with a maximum penalty being the national average cost of a bronze plan, or it can be calculated as $95 per adult and $47.50 per child under the age of eighteen, capping out at $285 for a family. The amount per adult will increase each year. In 2016, it will be $695 per adult and $347.50 per child, capping at $2,085 per family.

For an unscrupulous tax preparer the Shared Responsibility penalties can add up to quite a caper. How so? Because the scam involves A) taking advantage of the inherent complexity of the exemptions and B) pocketing the penalties. Sometimes the scammer claims he or she can reduce the cost of the penalty because they have created a pool for leverage, or they simply claim that paying them directly instead of the government is “how it’s done.”

The only thing you need to know is: That’s not how it’s done. The easiest way to avoid this scam is to remember one rule: Only pay the IRS. Period.

There is some good news. While you are required to report whether or not you have health care coverage on your tax return, the majority of filers will not have an issue here. It has been estimated that only four million of the estimated 30 million uninsured will have to pay the Shared Responsibility Provision in 2016. But here is where fraudsters see their honey pot, using complexity to fleece honest taxpaying citizens while exposing them to penalties when the IRS circles back to get money that was stolen from them.

Are you off the hook for paying the penalty? Here’s the list of exemptions to see if they might apply to you (consult your tax preparer as this column is not meant to serve as a substitute for professional tax advice):

  • There were no “affordable” options for you, because available annual premiums were in excess of 8% your household income.
  • You had a gap in coverage less than three consecutive months.
  • Your household income was below the return-filing threshold ($10,150 for an individual on a 2014 tax return).
  • You are not a U.S. citizen, a U.S. national, nor an alien lawfully present in the United States.
  • You belong to a health care sharing ministry.
  • You belong to a federally-recognized Native American tribe.
  • You are in a jail, prison or another qualifying institution — such as a psychiatric hospital, etc.
  • You belong to a qualifying religion existing prior to December 31, 1950, recognized by the Social Security Administration (SSA).
  • You qualify for a hardship exemption.

Hopefully it’s not news that you need to choose a tax preparer wisely. There are many fly-by-night operations that are literally gone in the blink of an eye the minute April 16th rolls around.

That said, most tax preparers work hard to get you the best possible refund (or the lowest possible amount due) while remaining scrupulous and sticking to the letter of the law—and that is no easy task given the complexity of the Internal Revenue Code of 1986. If you are unsure about a tax preparer, you should ask for references or, even better, consult the IRS’s searchable database of tax preparers that are recognized by the agency.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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MONEY Scams

IRS Agent or Scammer? 5 Signs You’re Being Conned

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A nasty con is on the rise involving fake IRS agents who call up potential victims and demand payment for back taxes.

Scammers who pretend to be IRS agents and harass unsuspecting citizens into paying debts they don’t owe have been quite busy over the last two years. According to the Associated Press, some version of this scam has resulted in victims being conned out of $15.5 million since 2013.

Only a small percentage of people who are targeted actually fall for the ruse, which in the past has involved criminals claiming to be federal agents named, rather uncreatively, Steve Martin or Jack Dawson—the actor-comedian and Leonardo DiCaprio character in Titanic, respectively. Roughly 3,000 have given money over to the con artists, out of more than 366,000 that have been contacted via phone over the past two years. But some of those who are victimized have been bilked out of big money—to the tune of more than $500,000 in one instance.

In order to avoid being victimized yourself, bear in mind a few key points:

Don’t trust caller ID. As the FTC noted last summer, scammers have ways of “spoofing” caller ID to make it look as if the call is originating from a government agency.

The IRS doesn’t call people up out of the blue. The IRS almost always contacts people about unpaid taxes first by mail, not by phone. So if someone claims to be a government agent and says that you owe money, or perhaps that you’re eligible for a refund or some prize, look up the agency’s official number and dial it up to check if what you’re hearing is legitimate. Most likely, it isn’t.

Don’t give out or confirm info over the phone. Fake agents may have some of your personal info—even the last four digits of your social security number. Don’t help out the imposter by confirming this info or giving out any other information over the phone.

IRS agents won’t ask for a specific form of payment. Scammers usually want payments made via prepaid debit cards or wire transfers because they’re difficult to trace. A genuine IRS agent never asks for immediate payment over the phone, never requests payment information over the phone, and never specifies a certain form of payment for unpaid taxes.

The IRS won’t threaten you with arrest or deportation. Or losing your driver’s license, your job, or your business. Scammers have made all of these threats and more in order to get victims to pay up swiftly. But again, if you truly owe the IRS money, you will first be notified by mail, not with a phone call. And certainly not with a harassing phone call.

As Timothy Camus, a Treasury deputy inspector general for tax administration, explained to the AP, “If someone calls unexpectedly claiming to be from the IRS with aggressive threats if you do not pay immediately, it is a scam artist calling.”

If you do get a call that you suspect to be a scam, hang up the phone right away, and then report the incident at the taxpayer administration hotline (800-366-4484). File a complaint with the FTC as well.

MONEY TV

Here’s Everything That’s Wrong With Cable and Satellite TV Bills

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Getty Images

A new complaint filed by the FTC alleging deceptive advertising by DirecTV is a case study in everything that customers hate about how pay TV providers do business.

This week, the Federal Trade Commission filed a complaint against the satellite pay TV provider DirecTV, alleging deceptive advertising. The FTC charges that DirecTV violated the FTC Act in many instances by failing to clearly and prominently disclose various “gotchas” in subscriber contracts, including that customers are locked into services for two years, and that an extra fee for premium channels kicks in automatically unless subscribers proactively cancel the option.

A federal court in San Francisco will decide if DirecTV is guilty as charged, and if so how much the company will owe in fines and payments to customers. Regardless of the outcome, however, the complaint exposes pretty much everything that’s misleading, hated, and just plain wrong with the way pay TV providers—DirecTV as well as Comcast, Time Warner Cable, and the rest—reel in subscribers in and then get them on the hook for a lot more money than they’d anticipated.

Specifically, the case calls attention to the following annoying and atrocious practices routinely employed by virtually all pay TV providers.

Loads of fine print. “It’s a bedrock principle that the key terms of an offer to a consumer must be clear and conspicuous, not hidden in fine print,” FTC Chairwoman Edith Ramirez said in the press release announcing the complaint against DirecTV. Yet to this day, details regarding DirecTV’s plans, including a requirement to keep the service for 24 months or face a cancellation fee up to $480, are explained in typeface that’s minuscule compared with the $19.99 monthly rate. It’s also confusing that while it’s necessary to subscribe for 24 months, the $19.99 rate is only valid for half that time. What happens after the first 12 months have ended?

Exploding bills. “DIRECTV does not clearly disclose that the cost of the package will increase by up to $45 more per month in the second year,” the FTC complaint states. This strategy—drawing in subscribers with a cheap rate, then jacking it up as soon as possible—is the consensus business model of all the major pay TV providers. What this commonplace tactic shows is that these companies value new subscribers over older, more loyal ones. It essentially punishes loyal customers who accept the bill hikes without complaint, while giving price breaks to newcomers and people who threaten to jump ship to a competitor. Assuming that’s a possibility, of course.

Difficult to change or cancel. DirecTV hits subscribers with a big fee if they try to drop the service before the allotted two-year introductory period has ended. The widespread use of “retention specialists” whose job is to stop customers from canceling or downsizing plans, as well as various cancellation or change fees, plus the fact that most Americans only have one or two pay TV options where they live all help to conspire to keep subscribers paying whichever provider they currently have.

Surprise fees. The cancellation fee cited by the FTC is only one of many charges that drive pay TV subscribers crazy. The others include a dizzying roster of taxes and fees for things like modems or some vague “Voice/data Equipment.”

Overall deception and opaque pricing. How much will your total monthly bill come to after all taxes and fees? What’s the exact breakdown on fees? When will introductory prices rise, and what rate will they rise to? For that matter, what’s the full price for various package plans in your neck of the woods? Good luck finding answers to any of these spelled out clearly and prominently on a pay TV provider ad or website.

The providers prefer to keep customers in the dark, and you can see why: If people knew how much their bill would actually be, and how quickly and significantly the monthly rate will soar, they’d be a lot less likely to sign up in the first place.

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