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CFPB advisory offers consumer tips in wake of data breaches

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WASHINGTON (1/28/14)--There is a new advisory from the Consumer Financial Protection Bureau (CFPB) to help consumers protect themselves in the wake of recent financial data breaches. The advisory also contains information on where to get help if consumers suspect their information has been compromised.

In recent months alone, data breaches have exposed millions of payment card accounts to potential fraud. In addition, millions of consumers' names, phone numbers, emails, and addresses also appear to have been stolen separately from card information.
 
Payment cards, such as credit, debit and prepaid cards, are among the most commonly used consumer financial products. Over 70% of Americans have at least one credit card, and debit cards are now used for more consumer purchases than credit cards. The use of prepaid cards is continuing to grow.
 
The CFPB consumer advisory suggests these steps:
  • Monitor your accounts for unauthorized charges or debits. Consumers should regularly review their accounts online if possible, and at a minimum examine their monthly statements closely. Consumers should report even small problems immediately as some thieves may process a small charge or debit just to see if the account is live, or whether the consumer notices. Fraudulent charges may occur many months after information is stolen. Even if consumers think the PIN on their debit card was not stolen, they should consider changing the PIN in order to be on the safe side.
  • Alert card provider immediately if fraud is suspected. Consumers should alert their card provider immediately if they suspect an unauthorized debit or charge. If fraudulent charges appear, the consumer should ask the card provider to close access to the account and issue a new card before more transactions come through. Under federal law and other applicable rules, consumers are generally not responsible for unauthorized debits or charges to credit or debit card accounts, as long as they report them quickly to their bank or card providers.
  • Follow up and maintain records. If consumers find a fraudulent transaction, they should call the financial institution or card provider's toll-free customer service number immediately, and also ask how they can follow up with a written communication. When consumers communicate in writing, they should be sure to keep a copy for their own records. Consumers should write down the dates on which they make follow-up calls and keep this information together in a file.
  • Avoid scams that ask for personal information over email or by phone. A common scheme, known as "phishing," involves a scammer contacting a consumer over email or phone and asking to verify account information. Banks and credit unions never ask for account information through email. If consumers receive this type of email, they should immediately contact their card provider and report it. If consumers receive this type of phone call, they can ask for a call-back number to verify the requestor is actually their financial institution.
If consumers are unsatisfied with how their bank or card provider responds to a report of fraudulent charges, they can submit a complaint to the CFPB. Card providers should investigate charges and respond quickly.

Consumers have a right to see the results of the bank's or card company's investigations.

The CFPB accepts consumer complaints on payment cards and other financial products and services. Consumers can submit a complaint by:
  • Going online at www.consumerfinance.gov/complaint;
     
  • Calling the toll-free phone number at (855) 411-CFPB (2372) or TTY/TDD phone number at (855) 729-CFPB (2372);
     
  • Faxing the CFPB at (855) 237-2392: and
     
  • Mailing a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244.

Be careful about security breach emails

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ATLANTA (1/28/14)--At least one major retailer has sent emails to millions of customers potentially affected by the recent mega security breaches. Be on the lookout for scammers who mimic them (CNN Money Jan. 20).
 
Homeland security investigators have warned several large retailers about sophisticated malware that has potential to compromise customers' credit card numbers and other personal information on an unprecedented scale. Target alone has as many as 110 million affected customers.
 
While the hacking is under investigation, if you receive email from a retailer regarding a security breach, here's what to do:
 
Don't automatically open the email: First go to the retailer's website or call to make sure the information online matches the email you received. One adviser, Adam Levin of Credit.com, cautions that even opening a fraudulent email could allow malware to be installed on your computer.
 
If you've already opened the email: Don't click on any links until you verify the information with the retailer by going online or calling.
 
If you've already clicked a link to an external website and entered personal information: Verify the information in the email with the retailer at its website. If the information in the email doesn't match the retailer's information, take action quickly:

  • If the retailer is offering free fraud-monitoring, take advantage of it. Your credit union also might offer a fraud-monitoring service or recommend an affordable and reliable outside service.
     
  • Check and confirm your debit and credit card transactions every day via your financial institution's online platform.
     
  • Alert your financial institution, the credit card company, and call the "big three" credit reporting agencies--Equifax, TransUnion, and Experian--to tell them you clicked through on a bogus ink and shared info you wish you hadn't.
     
  • Ask to have a fraud alert placed on your account. It costs nothing to place a fraud alert on your credit report if your information is compromised, and the alert will remain in place for 90 days.
     
  • Alert the Federal Trade Commission (FTC). Report fraud via FTC.gov or by calling 877-438-4338.
     
  • If you're really worried, request a credit freeze, which prohibits any credit from being extended under your name.
To learn more about protecting your accounts from fraud, talk to the professionals at your credit union. They can recommend steps you can take to keep your information safe.
 
For related information about credit cards, read "How to Tell If Your Identity Has Been Stolen" in the Home & Family Finance Resource Center.

Digital fortunes need estate plans, too

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SAN FRANCISCO (1/21/14)--You might have a will and estate plan, but do you have a plan for your digital assets if you die? On average, Americans value their digital assets at more than $54,000, but few people make plans for these assets once they're gone (MarketWatch.com Jan. 10).
 
Your loved ones will have a hard time accessing your online financial accounts, blogs, social media sites, and the like if you don't have a plan in place. From full-service estate plans for online accounts to password management programs, some services can help get digital affairs in order. But if you use these programs you risk that the company might not be around when you die, or that it might be hacked or compromised.
 
Whether you use an online service or just write your wishes in a notepad, being proactive about your afterlife digital wishes can save loved ones time and frustration:
  • Choose a digital executor--Pick someone you trust to be your digital executor. You can choose your main executor or someone else. In some cases it makes sense to name different executors for different roles. For example, maybe your primary executor doesn't really understand how Facebook works.
  • Create an inventory--Make a list of all online accounts/assets you're allowing the digital executor to access. Give this person permission to manipulate, maintain or delete your digital assets.
  • List detailed wishes--Write down exactly what you'd like to happen with your digital assets. Maybe you want your Facebook page memorialized and your Twitter and LinkedIn accounts deleted. Give instructions about how to get money out of your PayPal account and what to do with emails. There's no guarantee that your wishes will be carried out 100% if they don't mesh with service providers' policies, but being proactive and detailed will increase the chance of things going as you intend.
  • Review details about company estate-management tools--Email service providers and other companies recently have started to change their policies about handling digital assets after an account owner dies. Becoming familiar with each company's policies can help in the long run.
For related information, read "Family Heirlooms, Not Money, Most Important to Heirs" in the Home & Family Finance Resource Center.

Maximize your college savings plans

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ATLANTA (1/14/14)--The new year has many people taking stock of their financial situation and setting goals for the next 12 months. But now is also a good time to look further into the future and begin tackling one of the biggest financial challenges--saving for college. 
 
Since they were created in the '90s, tax-advantaged 529 savings plans--state-sponsored accounts named after the IRS code that created them--have been among the most popular investment vehicles for families saving for college.
 
But during the financial crisis the typical 529 plan for seven- to 12-year-olds lost about 28% of its value, according to the investment research firm Morningstar. Many 529 plans were revealed to have fatal flaws, such as poor management and expensive overhead (CNN, Jan. 7).
 
Many of these plans, however, bounced back during the economic recovery, and now feature lower fees and more investment options. The average fee for 529 funds dropped from 0.84% to 0.72% over the past three years, making them attractive again for families.
 
Here are some strategies to ensure you make the most of your 529 plan investments:
  • Take advantage of tax breaks. The primary benefit of the 529 plan is, as long as you use the money for qualified college expenses, you don't pay taxes on your investment gains. However, 34 states allow you to deduct or receive a credit for 529 contributions to offset your state income taxes, with an average value of $87 for every $1,000 invested.
  • Research your state's plan. You can invest in any state-sponsored plan, regardless of where you live. However, if your state offers a tax break, in most cases you're better off staying in that plan as it takes years of high performance to offset the tax savings. But if your state's plan is expensive, it's worth considering another state's plan, especially if there's no penalty for rolling the balance over.
  • Sign up on the Internet. Enroll in a 529 plan on the provider's website and avoid the commissions and fees charged by brokers and advisers.
  • Ensure the plan has the right mix for you. Most 529 plans offer age-based portfolios managed by a sponsor; these are the most popular and often easiest choice for parents. But within those plans the asset mix can vary greatly. Make sure that as your child gets closer to college age, the portfolio's risk decreases appropriately.
    According to Morningstar, the states with the best overall 529 plans are Utah, Maryland, West Virginia and California.
For related information, listen to "Parental Income Dings a Student's Financial Aid" in the Home & Family Finance Resource Center.

Study Reveals Top 3 Financial Resolutions for 2014

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WASHINGTON (1/7/14)--A record-breaking number of Americans (54%) vowed to make financial resolutions at the start of 2014, with many shifting toward short-term savings goals, according to Fidelity Investments' fifth annual "New Year Financial Resolutions Study" (U.S. News & World Report Dec. 26).
 
The most popular financial resolutions are saving more (54%), paying off debt (24%) and spending less (19%), followed by developing a long-term goal plan (13%), sticking to a budget (12%) and paying down credit card debt (8%).
 
The study also revealed that almost half (49%) feel that economic uncertainty--federal debt ceiling battles and potential changes in interest rates--may prevent them from keeping their financial resolutions in 2014.
 
Still searching for relatively simple yet solid financial resolutions that you won't abandon by February? Try these:
  • Check your credit report regularly. If you're worried that a security breach has put you at risk of identity theft, keep a close eye on your credit reports as well as your statements, watching for unauthorized accounts and charges. Check statements regularly, if not daily.
  • Track your expenses. Take an inventory of where your money goes and decide how much you want to spend on things like cable, cellphones, clothing, and coffee. Calculate how much you'd save by carrying your lunch instead of eating out. Lower-cost substitutes add up to big savings.
  • Automate it. Set up direct deposit to your emergency fund and retirement accounts. Use the New Year as an opportunity to bump up contributions to your employer's 401(k) plan or IRA.
  • Get organized. Set up a recordkeeping system that ensures you won't have to spend valuable time looking through piles and drawers for statements, receipts, policies, and warranties. Back up online files regularly, and keep important documents in a safe deposit box.
  • Live beneath your means. This is good advice for everyone regardless of income level. Establish a cushion to fall back on in case of job loss, medical emergency, or weather-related disaster.
Once you set your financial resolutions, resolve to keep them. Schedule quarterly check-ins. By April 1, what progress have you made? By July 1, are you half-way there? Write progress check-ins on your calendar now, and reward yourself throughout the year. That way, you won't get to December having forgotten your financial resolutions for 2014.
 
For more information, read "Set 2014 Up for Financial Success" in the Home & Family Finance Resource Center.