June 1st begins hurricane season!
A weather emergency can force you to leave your home without money, ID’s, debit or credit cards and other important items, so here are some practical steps to begin your financial recovery.
The Association of Certified Fraud Examiners (ACFE) reports that “a typical organization loses a median of 5% of revenue each year due to fraud.” So, what is Your best protection against scammers? Learn the signs of scams that target businesses!
Here are a few of the scammer’s tactics:
Here’s a list of some common scams that target small business:
How Do You Protect Your Business?
According to Credit Builders Alliance, “consumer protection took a big hit in 2018. With a focus on deregulation, rules to protect consumers have been rolled back or delayed and investigations into financial firm’s anti-consumer practices have been slashed, leaving consumers more susceptible to scams and misleading deals.”
To this end, the Federal Trade Commission reports that scammers pretending to be from the federal government are scaring international students into paying them money. The callers typically know the foreign student’s immigration status and the school or program the student is attending. The pretend government official will say there’s a problem with the student’s immigration documents or visa renewal and then will demand immediate payment, often thousands of dollars, for a fee or bogus immigration bond. These callers make threats, including arrest or deportation, if the students do not pay and ask to be paid in cryptocurrency, like Bitcoin or gift cards, like Google Play or iTunes).
The FTC warns that these are scam calls. The federal government do not make such calls, do not make such threats and do not ask for such payments. If you’re concerned about your visa or immigration documentation, call USCIS’s National Customer Service Center at 800-375-5283 or go to ftc.gov/complaint (http://ftc/complaint) if a scammer has contacted you or someone you know.
Additional Consumer Tips for Immigrants
Safe and affordable savings and checking accounts:
Free Business courses: Available in Spanish, Chinese, Russian, Korean, Haitian Creole, French, Bengali and Arabic through NYC’s Immigrant Business Initiative at https://www.nyc.gov/immigrantbusinesses or call 311 and ask for Business Services for Immigrants.
It’s tax season, folks! You know what that means, right? There have been some significant changes that will affect individuals and businesses beginning after December 31, 2017. This month’s blog will review some of these updates.
"The Tax Cuts & Jobs Act” is the biggest federal tax law change in over 30 years. As a result, people are understandably apprehensive and some of us are even a little confused. Before getting started, let’s review some terms to remember:
AGI = Adjusted Gross Income
AMT = Alternative Minimum Tax
HOH = Head of Household
MFJ = Married Filing Joint
MFS = Married Filing Single
NOLs = Net Operating Losses
PSCs = Personal Service Corporations
QW = Qualified Widower
SMFS = Single or Married Filing Separate
Tax Provisions that were eliminated:
The 2018 standard deduction is:
Tax provisions that were eliminated:
THESE ARE THE FACTS AND FIGURES, PLEASE CONSULT WITH YOUR TAX ATTORNEY OF PREPARER FOR ADVICE REGARDING THE TAX EFFECTS OF THE “TAX CUTS AND JOBS ACT” ON YOUR PERSONAL FINANCIAL PORTFOLIO!
Have you been affected by the U.S. government shutdown? Are you experiencing financial difficulties? If this is your case, then read through the various solutions to manage through this difficult time.
Should you consider accessing funds from your 401(k) plan during a financial emergency through a loan or hardship withdrawal to help solve an immediate need, be aware of consequences that can affect your long-term financial security. Let’s look at a few:
Many plans permit loans that you repay through payroll deductions as long as you remain employed. You’re borrowing your own money. Normally the term of a 401(k) loan is five years unless the money is used for the purchase of a primary residence, then some plans will allow borrowing for a 25 year term.
Advantages and disadvantages of borrowing from your 401(k) account.
The plus side:
The negative side:
The IRS allows withdrawals from the 401(k) for certain financial emergencies. However, it’s up to your employer to determine the specific criteria for a hardship withdrawal. These circumstances are:
You should consider a withdrawal from your 401(k) as a last resort!
Companies often prohibit contributions for at least six months after taking a withdrawal and those hardship distributions permanently reduce your account balance. Please remember that taxes are due on the amount you withdraw and will incur the 10 percent penalty if you’re under age 59 1/2. Additionally your plan administrator may follow up after the withdrawal to verify that the funds were used for the purpose indicated on your application.
Finally, you cannot be forced to use your 401(k) money to pay state and local income taxes, property taxes or other taxes, however, a court may order you to withdraw money from your 401(k) to pay child support, alimony and federal income taxes owed.
State and federal laws differ, so seek legal advice to determine which will apply.
Not everyone who applies for credit, gets credit!
The Equal Credit Opportunity Act (ECOA), enforced by the Federal Trade Commission (FTC), prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age or because a person receives public assistance.
Creditors may ask for most of this information when necessary but they may not use it when setting the terms of credit decisions. Other factors, including income, expenses, debts and credit history are considered by lenders to determine creditworthiness. The ECOA provide protections when dealing with people and organizations like banks, financial companies, retail and department stores, credit card companies and credit unions who regularly extend credit to the public. Everyone involved in making decisions to give credit or in setting the terms of credit MUST comply with the ECOA.
Some basic provisions of The ECOA:
When applying for credit, Creditors may not…
When deciding to grant you credit or when setting the terms of credit, Creditors may not...
When evaluating your income, Creditors may not...
You also have the right to…
A Special Note to Women…
A good credit history is often necessary to get credit. This can hurt many married, separated, divorced or widowed women. There are two common reasons women do not have credit histories in their own names: either they lost their credit histories when they married and change their names, or creditors reported accounts shared by married couples in the husband’s name only.
If married, separated, divorced or widowed, contact the credit reporting agencies to verify that all relevant information in in a file under your own name. Credit reporting companies sell the information in your credit report to creditors, insurers, employers and other businesses who use it to evaluate your applications for credit, insurance, employment or renting a home.
**The Fair Credit Reporting Act (FCRA) requires each of the three credit reporting companies, TransUnion, Experian and Equifax to give you a free copy of your credit report, at your request once every 12 months online via annualcreditreport.com or by phone at 877-322-8228.
If you suspect a Creditor has discriminated against you…
For most of us, we live the first 18-21 years of our lives without worrying about where things come from. From the moment we are born we are provided food, shelter, and love. Soon thereafter, we realize we must work really hard and long hours to cover the basic necessities and to buy the things we really want.
Most people spend 20-30 years working before considering retirement. If we are lucky and smart, we’d have listened to the wise advice of saving for retirement by investing some of that hard-earned money. This article touches on some of the options available to saving for retirement.
Here are some options:
Contributions to a retirement account if you are still working after age 70 can enable a senior to access tax benefits and possibly reduce tax burdens. If still earning income, contributing to a ROTH IRA, 401(k) or 403(b) plan, SEP-IRA or a (HSA) health savings account (if not enrolled in Medicare) are tax-advantaged opportunities.
ROTH IRA: Federal tax law allows you to contribute to a Roth IRA when income limits are met and you have earned compensation whether in a regular paycheck or contract work via a 1099. In 2018, working persons over age 50 can contribute up to $6,500 (this includes a 1,000 catch-up contribution) to a ROTH IRA. You may be able to contribute an additional $6,500 for a non-working spouse if your earned income is greater than $13,000. You can’t contribute more than you earn!
Because ROTH IRA contributions are made with after-tax dollars, the money can be withdrawn tax-free without penalties. Any growth or earnings in the account and distributions made in retirement is free from federal taxes. ROTH IRA’s are not subject to RMD’S (Required Minimum Distributions) after age 70 and a half which means the money can continue to grow in the account, generating tax-free earnings.
Another benefit is tax-free ROTH IRA money for your beneficiaries after you die. Please discuss with an estate-planning professional before making the ROTH IRA part of an estate plan.
401(k) and 403(b): You can continue contributing annually to your employer’s 401(k) plan or 403(b) for as long as you’re employed regardless of your age. For employees over 50, the 2018 contribution limit is $18,500 plus $6,000 in catch-up contributions for a grand total of $24,500. Be mindful that your employer may offer both a traditional and a Roth 401(k), however, a traditional 401(k) offer tax deferral and a Roth 401(k) is similar to a ROTH IRA, in that you contribute after-tax income and won’t owe taxes when making withdrawals from the Roth 401(k).
A ROTH 401(k) is subject to RMD’s (Required Minimum Distributions)! Required Minimum Distributions (RMD’s) on both the traditional and Roth 401(k)s kick in after leaving your employer.
A few things to consider when debating whether to contribute to a Roth 401(k) or a Roth IRA:
SEP IRA (Simplified Employer Pension): A tax-advantaged retirement savings plan for self-employed people and small businesses. You are allowed to contribute after age 70 but must begin taking RMD’s once you attain age 70 and a half. In 2018, the annual contribution limit for a SEP IRA is $55,000 or 25% of eligible income, whichever is less.
HSA (Health Savings Account): Annual pre-tax contributions for qualified medical expenses. However, if you are enrolled in Medicare, you are not eligible to contribute to an HSA. The 2018, you can contribute a maximum of $10,900 to an HSA if age 55 or older unless enrolled in a family plan. If over age 65, all withdrawals from your HSA are penalty free and federally tax-free when used to pay for qualified medical expenses.
Becoming debt-free is a noble financial goal!
There are many options for achieving this financial milestone. There’s the good, the bad and the ugly. You may devise a long-term strategy to eliminate debt by paying cash for all future purchases while making on-time, minimum monthly payments until the debts are paid off.
Here are some actions steps you can take:
A DEBT SETTLEMENT PLAN IS NOT A DEBT MANAGEMENT PLAN!
These plans are usually offered by for-profit companies to people with large amounts of credit card and student loan debts. Here’s the plan: The debt settlement company promises to negotiate with their client’s creditors to pay a “settlement” or a portion of the money owed to the creditors to settle the outstanding balances. This is Part 1 of the plan. Part 2 of the plan states that the client must pay a specific amount monthly into a designated account for paying off the settlement amount. This process is usually lengthy and carries a fair amount of risk.
Should your debt settlement company be unsuccessful in convincing the client’s creditors to accept the settlement, your balances may grow even higher with late fees and finance charges because these programs may encourage you to cease direct payments to your creditors while the negotiations are being worked out. Be aware also that there are dishonest debt settlement companies who make promises they are unable to keep, charge large sums of money and in the end you may be worse off than when you started on the debt settlement path.
Before signing with a debt settlement company, you must have some important facts upfront:
Please get answers to these questions in writing and thoroughly review for understanding before signing!
To know whether you are dealing with a debt settlement scam, here are some red flags:
Check out any debt settlement company you may be considering by contacting your state’s Attorney General’s Office or the local Consumer Protection Agency (in New York, DCA/Department of Consumer Affairs). Also check out what people are saying online about the debt settlement company you may be considering by entering the name of the company into a search engine using the word “complaints”.
As stated at the beginning, debt freedom can be liberating, giving a sense of control over one’s finances and imparting financial confidence. However, due diligence is necessary before choosing this strategy for becoming DEBT-FREE!
NYC Department of Consumer Affairs
Bureau of Consumer Frauds & Protection
In this month's blog, I want to introduce you to the FDIC and its importance for you as a consumer. You've probably seen the initials FDIC at your local financial institutions and on your bank statements. But what does it mean and what is its purpose?
THE FDIC (Federal Deposit Insurance Corporation)
The FDIC is an independent agency of the U.S. government that protects a depositor against the loss of insured deposits if an FDIC-insured bank or savings association fails.
FDIC insurance covers all types of deposits in an insured bank, including checking accounts, NOW (Negotiable Order of Withdrawal) accounts, savings, Money Market Deposit Account (MMDA), Certificate of Deposit (CD) aka Time Deposit and other official items issued by a bank (e.g) bank check (Cashier’s check) or money orders.
FDIC insurance covers depositor’s accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the bank’s failure, up to the insurance limit, currently $250,000 per person, per bank, per ownership category. Money not insured by FDIC are non-deposit investment products like stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, U.S. Treasury securities and other government securities even if these investments are purchased at an insured bank.
These non-deposit investment products may be offered to you at your bank, through the mail, over the phone or the internet and often, the people selling these products are not financial institution employees but employees of a third-party securities broker/dealers or insurance companies. When speaking with a sales representative about non-deposit investment products, you should be informed that the product is NOT insured by the FDIC and subject to investment risk.
To verify whether a bank is FDIC-insured, ask a bank representative, look for the FDIC sign at your bank, call the FDIC at 877-275-3342 or use the FDIC’s BankFind tool.
BankFind allows you to access detailed information about all FDIC-insured institutions, including branch locations, the bank’s official website, current operating status of the bank and the regulator to contact for additional information and help. You can get detailed information about your specific deposit insurance coverage by accessing the FDIC’s Electronic Deposit Insurance Estimator (EDIE) and entering information about your accounts. By calling the FDIC at 877-ASK-FDIC (877-275-3342) to speak with an FDIC deposit insurance specialist, you can get additional information about your FDIC- insured deposit accounts.
OTHER ITEMS NOT INSURED BY THE FDIC:
Safe Deposit Boxes: The contents of a safe deposit box are NOT insured by the FDIC. If you are concerned about the safety of items in your safe deposit box, consider purchasing fire and theft insurance which is usually part of a homeowner’s or tenant’s insurance policy. Consult your insurance agent for details.
Robberies and other Thefts: Stolen funds may be covered by the bank’s blanket bond, which is a multi-purpose insurance policy banks purchase to protect themselves from fire, flood, earthquake, robbery, defalcation, embezzlement and other cases of lost funds. However, unauthorized access to your deposits may be covered by the Electronic Funds Transfer Act and other customer protections.
HOW TO FILE A COMPLAINT:
Should you have a problem or concern with a deposit or investment, seek resolution directly with a bank officer or firm before involving an outside agency. Financial institutions value their customers and will try very hard to be helpful, however, if you’re unable to resolve the issue with the bank or firm, use these guidelines to direct your complaint to the right agency.
For questions, call the FDIC Central Call Center at 877-275-3342. For the hearing impaired, call 800-925-4618 or 703-562-2289.
An eye-popping journey into financial fraud and scams of all kinds!
Fraud is “a representation or concealment of some fact material to a transaction of goods, services or other benefit that is made with knowledge of its falsity, non-existence, or misrepresentation and with the intent to deceive another and that is reasonably relied upon by the other who is injured thereby.”(Excerpted from “Scams, Schemes and Swindles”, a research paper, Financial Fraud Research Center, 2012)
Financial fraud seem to be everywhere in many varieties and across different industries: Cars, Education, Funerals, Money Transfers, Online Dating, Work-at-Home, you name it!
According to the Federal Trade Commission (FTC), “Crooks use clever schemes to defraud millions of people every year. They often combine new technology with old tricks to get people to send money or give out personal information.”
Here are a few known scams:
A scam that seems to be on the rise is Cryptojacking because of scammers promoting quick rich schemes. Let’s explore what this means to you as a consumer.
CRYPTOJACKING: As defined by the FTC, “Scammers use your device’s processing power to “mine” cryptocurrency, which they can convert into cash. They can use malicious code embedded in a website or an ad to infect your device, then help themselves to your device’s processor without your knowledge. Should you make an unlucky visit to a website that uses cryptojacking code, click a link in a phishing e-mail or mistype a web address, any of these can lead to cryptojacking. And while the scammer cashes out, your device may slow down, burn through battery power or crash. To combat this, use antivirus software, set software and apps to update automatically, never install software or apps you don’t trust, don’t click links without knowing where they lead and be careful about visiting unfamiliar sites. It can be difficult to diagnose cryptojacking but one common symptom is poor device performance. So consider closing sites or apps that slow your device or drain your battery.
Some browser extensions and ad blocker tools promise they can help defend against cryptojacking by blocking mining code. Although these may be worth considering, always do the homework by reading reviews and checking trusted sources before installing any online tools. However, some websites may keep you from using their site if you have blocking software installed.”
The New York City Department of Consumer Affairs weighed in on the fraud/scams conversation with some advice to stay one step ahead of the scammers. In its Internet Scam Guide, Web of Lies: How to protect yourself on the Infohighway:
According to the NYC Department of Consumer Affairs, “the Internet is becoming a big part of our everyday lives but there are no gatekeepers on the information superhighway.” New, unregulated technology means new opportunities for consumers, investors, businesses and SCAM ARTISTS. The rise of Internet use brings more deceptive and misleading promotions, bogus travel offers, contests, lotteries and other illegal practices on the Web. The scams are not new, but on the Internet, scams can be more dangerous. Unlike print advertising, impressive-looking Web sites can be designed relatively easily and cheaply. Just because an advertisement on the Internet appears to be professional does not mean it’s legitimate.
The bottom line: don’t believe internet ads. Consumers are just as likely to be scammed online as through more traditional types of advertising.
If you spot a scam, report it at https://ftc.gov/complaint. Your reports help the FTC and other law enforcement agencies to investigate scams and bring crooks to justice.
Denise Garrett is a financial counselor at the LDCENY and has more than 25 years experience in financial counseling and retail banking.