SCDCA Warns About Residential Real Estate Fraud Targeting The Lowcountry

The South Carolina Department of Consumer Affairs first warned about Real Estate Fraud last year.

In the past 24 hours we have received numerous phone calls making it apparent that the scam is rearing its ugly head again – and it appears to be targeting real estate agents and consumers in the Lowcountry.

The calls all have this in common:

The property was advertised for sale or for rent on craigslist, a popular website of online communities, featuring free online classified advertisements – with sections devoted to jobs, housing, for rent/sale, etc. The legitimate ads created by real estate agents have been “spoofed” to look identical, but giving fraudulent owner and contact information, along with very attractive pricing. The Department has contacted craigslist to warn them of these spoofed real estate advertisements and has instructed concerned callers to do the same.

Residential real estate scams involve the rental or sale of homes or other properties that the con artist does not own or represent. An unsuspecting tenant pays a security deposit, along with first and last month’s rent. The prospective buyer pays a down payment in a homebuying transaction. Rent is collected by the fraud perpetrator, but when the fraud is discovered, the tenant is evicted, losing his security and rental deposits. Some crooks are so bold that they will rent a piece of property to several different tenants, collecting advance rents and deposits, and then vanish. In the case of a home purchase, the potential homebuyer is out the cash down payment he or she made on the home.

A legitimate landlord, owner or real estate agent is justified in asking applicants for sufficient personal information to enable a credit check to be made, as a prerequisite to approving the application of initiating a homebuying transaction. For the majority of renters or buyers, such information should be protected and is no cause for concern. However, it is a major worry for victims when the fraudster has posted as a landlord/owner/real estate agent and has no legal authority to collect personal information.

Real estate fraud victims can be stung twice in this instance – they not only lose money, but they have to worry about possible misuse of their personal information and will have no idea when or where identity theft and fraud may occur. “Consumers need to be alert and have their antennae up,” said SCDCA Administrator, Brandolyn Thomas Pinkston. “Often their gut instinct is the best indicator that something is wrong.”

The biggest warning sign of potential real estate fraud is the “owner” or “landlord” insisting on rent and security deposit or down payment paid in cash, cashier’s check, or wire transfer. This prevents the applicant from issuing a “Stop Payment”, if the fraud is discovered in time. Other fraud indicators include: an attractive property advertised at well below market price for the area; a landlord/owner who is evasive when asked questions he should  know the answers to and is difficult to contact once he has the victim’s money. Another red flag is when the so-called owner/agent communicates using poor grammar or too-perfect English – an indication that the perpetrator of this hoax may be in another country.

Renters and prospective buyers who have concerns about real estate advertisements that seem too good to be true should take some additional steps:

• Check with building management, building superintendent, resident manager or caretaker, in the case of apartments (emergency contact information is likely posted in the lobby)
• Confirm that the real estate agent is really representing the property
• Ask other tenants who collects their rent
•  Check with city and county offices to confirm ownership of the property in cases where the applicant is looking for a house to rent or buy and compare the ownership name on the file with the information provided by the individual claiming to represent the owner.

Finally, prospective renters or buyers should never pay a deposit, rent, or down payment until a formal lease agreement is signed by tenant and landlord or the formal mortgage transaction is initiated with a commercial lender. Written agreements offer greater protection to tenants and landlords, as well as agents, sellers and buyers.

If you suspect you have been a victim of real estate fraud, contact your local law enforcement agency and the S C Department of Consumer Affairs at  803-734-4200, 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov & click on Live Chat.

Have You Ever Had Your Credit Card Denied?

Have you ever been told you were over your credit card limit, or had your debit card declined, even though you knew you had available credit, or money in your bank account? If this happened shortly after you stayed in a hotel or rented a car, the problem could have been card “blocking.”

What’s blocking?

When you use a credit or debit card to check into a hotel or rent a car, the clerk ususally contacts the company that issued your card to give an estimated total. If the transaction is approved, your available credit (credit card) or the balance in your bank account (debit card) is reduced by this amount. That’s a “block.” Some companies also call this placing a “hold” on those amounts.

Here’s how it works:

Suppose you use a credit or debit card when you check into a $100-a-night hotel for five nights. At least $500 would likely be blocked. In addition, hotels and rental car companies often add anticipated charges for “incidentals” like food, beverages, or gasoline to the blocked amount. These incidental amounts can vary widely among merchants.

If you pay your bill with the same card you used when you checked in, the final charge on your credit card, or final amount on your debit card, probably will replace the block in a day or two. However, if you pay your bill with a different card, or with cash or a check, the company that issued the card you used at check-in might hold the block for up to 15 days after you’ve checked out. That’s because they weren’t notified of the final payment and didn’t know you paid another way.

This general idea isn’t new. Credit card companies have done it for a long time.

Why blocking can be a problem.

Blocking is used to make sure you don’t exceed your credit line (credit card) or overdraw your bank account (debit card) before checking out of a hotel or returning a rental car, leaving the merchant unpaid. Blocking is sometimes also used by restaurants for anticipated sizeable bills (like large groups at dinner or a party), by companies cleaning your home, and other businesses to ensure credit or account money will be available to complete payment.

If you’re nowhere near your credit limit or don’t have a low balance in your bank account, blocking probably won’t be a problem. But, if you’re reaching that point, be careful. Not only can it be embarrassing to have your card declined, it also can be inconvenient, especially if you have an emergency purchase and insufficent credit or money in your bank account, blocking could lead to charges for insufficient funds, on average of $35, while the block remains in place.

Some banks say users of its debit cards won’t experience bounced checks if debit card blocks disappear on the same day as they’re put in place. However, if the block stays on for more than a day, then it becomes a little unclear, though some banks insist insufficient funds fees will be waived.

There are also different policies regarding the availability of the blocked money. In some cases consumers may not be able to withdraw blocked funds at the ATM.

Blocking at the pump

All of this can become especially tricky at the gas pump, where many consumers are unaware a block is put in place on their debit card. If you use your debit card at a gas pump that does not require a PIN, your bank regularly will block out an amount – often $50 or $75 – on your card. That amount doesn’t “unblock” as you drive away. Instead, the hold remains up to 72 hours, until the station does a “batch” transaction that lets the bank know the actual amount, according to the U.S.Public Interest Research Group. While the length of the hold is up to your bank, the amount of the hold is up to your gasoline retailer.

Each big oil company has a different policy: Shell says it preauthorizes just $1 for gas purchases, for example. Chevron says it has a $1 hold that ensures a card is active. British Petroleum preauthorizes $75 when customers use debit or credit cards, said spokeswoman Sarah Howell. Hess asks for $75 as well.

The reasoning behind this policy is that oil companies don’t know how much gas you’re about to pump – only PIN-based debit transactions are processed immediately – and so they earmark a certain amount of your money.

The pain at the pump can be particularly hard to bare, as the following scenario could easily play out: You use your debit card for gas and it’s blocked $75 and you only have $75 in the account. You then go inside for a drink, maybe next door for some fast food, and before you know it a few small purchases have overdrawn on the account with the chance for a penalty on each transaction.

To avoid the aggravation that blocking can cause, follow these tips:

When you check into a hotel or rent a car – or if a restaurant or other business asks for your card in advance of service – ask if the company is “blocking,” how much will be blocked, how the amount is determined, and how long the block remains in place.

Consider paying hotel, motel, rental car, or other “blocked” bills with the same credit or debit card you used in the beginning of the transaction. Ask the clerk when the prior block will be removed.

If you pay with a different card, by cash, or by check, remind the clerk you’re using a different form of payment and ask them to remove the prior block promptly.

Ask your current debit card issuer if they permit block, for how long, and from what types of merchants. If they do, you may want to consider getting an overdraft line of credit from your bank. Ask about a plan that always automatically covers the overdraft and does not involve a separate bank decision on whether or not to pay it each time.

Although you might incur some interest on this plan if you don’t pay off the amount fairly quickly, you would not have an overdraft that is not paid.

In addition, if you are considering a credit or debit card, shop around. When comparing credit and debit card offers, ask issuers if they permit block, for how long, and from what types of merchants. You may want to consider an issuer that uses shorter blocks.

Use gas pumps that ask for a PIN number, to avoid blocks on gas purchases.

For more information, contact the Public Information Divison at (803) 734-4190, or 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov & click on Live Chat.

Consumer Affairs Reminds South Carolinians To Prepare For Hurricane Season

Hurricane Season 2009 began on June 1, 2009 and Palmetto State residents know they live in a hurricane-prone area. Anyone remembering 1989’s Hurricane Hugo knows that more than coastal areas are at risk. The South Carolina Department of Consumer Affairs offers residents these tips to prepare:

• Set up a disaster kit for your home. Stock up on non-perishable food and bottled water to help you and your family for up to 72 hours. Make sure you have important papers, first aid supplies, prescription medicines, and anything else you need on a daily basis is in your kit.
• Make a similar kit for your car, in case you need to evacuate.
• Don’t forget your pets’ needs! Pack what they need as well.
• Create an emergency plan. Know what to do if you have to evacuate. Make sure you know how to contact members of your family and have emergency contact information for someone living out of state who knows where you are in the event of an emergency.
• Make sure your pets are included in this plan.
• Offer assistance to an elderly or disabled family member or neighbor who may be alone and may need help during an emergency.
• Be informed. Know evacuation routes and listen to local authorities when asked to evacuate. Keep a weather radio, batteries, cell phone and charger handy!
• Know your risks. Whether you live in a coastal community or inland, review your insurance policies. Flooding can happen in any area after a natural disaster and most homeowners insurance does not cover flood damage.

The South Carolina Department of Consumer Affairs has recently updated its Hurricane Preparedness Guide. Consumers wanting more information may call the public information division at (803) 734-4296 or 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov & click on Live Chat.

S C Supreme Court Rules In Favor Of Consumer Affairs

In an opinion delivered Tuesday, May 12, 2009, the South Carolina Supreme Court unanimously agreed with the South Carolina Department of Consumer Affairs (SCDCA). The Department appealed a decision by the Administrative Law Court regarding Lexington Law Firm based in Salt Lake City, Utah. The South Carolina Supreme Court stepped in to handle the appeal and found that the organization cannot continue to offer credit counseling services to South Carolina citizens without receiving a license from SCDCA.

The decision provided by the Court upholds the Department’s authority to enforce and administer its statues and regulations. “The Court recognized that the licensure of individuals and organizations offering credit counseling services is central to the Consumer Credit Counseling Act. The Act itself was drafted because of abuses against consumers by some unscrupulous companines in the credit counseling/debt management industry. It’s really nice to see the Supreme court recognize not only the importance of the Act and the licensing SCDCA provides, but also the protection consumers deserve,” said Carri Grube Lybarker, who argued the case for the Department.

Futhermore, the decision clarifies a gray area regarding who is exempt from being licensed as a credit counselor. The Consumer Credit Counseling Act does provide licensing exemptions for attorneys, banks, mortgage brokers, accountants, and certain others who offer credit counseling services during their “regular course of business.”

Lexington Law Firm argued this exemption applied to them as attorneys at law. The Supreme Court disagreed holding the General Assembly intended to limit the “attorneys at law” exemption to attorneys authorized to practice law in this State when the attorney is “acting in the regular course” of his or her profession as an attorney. The Utah organization did not meet either of these requirements. The decision will be helpful as a model to other states agencies in South Carolina and across the nation, many of whom are facing the same issues.

The Consumer Credit Counseling Act, passed in 2005 by the General Assembly, is one of the strongest of its kind nationwide. Not only does it require those who offer credit counseling services to be licensed by the Department, but the Act caps the fees counselors can charge to consumers, most of whom are looking for help during a financial hardship.

The Department plans to pursue the case and recover refunds for South Carolina consumers. It is unclear at this point how many consumers will receive refunds. Under the Consumer Credit Counseling Act, SCDCA has recovered more than $1.4 million for roughly 1500 consumers from July 1, 2006 through June 30, 2008.

For more information on Credit Counseling or other consumer issues, contact the Public Information Division at SCDCA at (803) 734-4190, 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov & click on Live Chat.

Protecting Tenants In Foreclosure

On May 20, 2009, provisions immediately went into effect which protect tenants living in foreclosed buildings. These provisions are “self-executing” however, no federal agency is responsible for making them work. The South Carolina Department of Consumer Affairs wants to protect any Palmetto State consumer impacted by this law and is urging advocates to become involved.

“We need to ensure that tenants, landlords, public housing authorities, courts, the legal community and others involved in the foreclosure process are aware of these new rights for tenants,” said SCDCA Administrator Brandolyn Thomas Pinkston.

The law, Protecting Tenants in Foreclosure Act, applies to all federally – realted mortgage loans or any dwelling or residential real property – in effect, it applies to all State foreclosure cases. The most important component of the law, according to SCDCA Attorney Lil Ann Gray: All tenants must get a 90 day notice prior to eviction due to foreclosure – at a minimum.

The act also has another important protection. It requires that a new owner who took title to residential rental property through foreclosure must honor existing leases until the end of the lease term. Gray points out that there are three exceptions to this rule:

1. If there is an existing term lease and the new owner wants to occupy the foreclosed property as personal residence before the end of the lease term.
2. If there is an existing term lease with less than 90 days to the end.
3. If the existing lease is a month-to-month tenancy or a tenancy at will.

The law also applies to Section 8 tenants. Housing Assistance Payments (HAP) contracts must be honored with the same provisions and exceptions.

The National Housing Law Project (NHLP) has prepared materials that will help landlords, tenants, and other foreclosure key players understand the provisions. More important, it will help tenants who are victims of circumstances exercise their new rights under this law. NHLP’s materials include sample letters that tenants can use to inform their landlords, as well as sample letters advocates can use to inform the courts and public housing authorities. All of this information can be found on the National Low Income Housing Coalition’s website: www.nlihc.org. The Coalition, based in Washington, DC, can also be contacted by telephone during normal business hours: (202) 662-1530. Consumers can also contact SCDCA Attorney Lil Ann Gray, (803) 734-4272.

For more information on protecting tenants in foreclosure or other consumer issues, please contact the S C Department of Consumer Affairs at (803) 734-4200, or 1-800-922-1594 (toll-free in SC) or on our website at www.scconsumer.gov & click on Live Chat.

Alert: Former Members of The Factory

The South Carolina Department of Consumer Affairs is informing consumers who joined The Factory, a physical fitness facility, which closed suddenly, of their rights.

If you are a former member of The Factory, 1644 Main Street, Columbia, SC 29201, please be advised of the following:

Consumers who joined The Factory and signed an agreement for either an installment or pre-paid membership may be entitled to a refund.

If your contract has an automatic draft provision, you bank or credit union should be notified immediately to stop the draft. Consumer who paid in full and are unable to obtain a refund of the unearned pre-paid amount should file a complaint with the S C Department of Consumer Affairs. Consumers can file online @ www.scconsumer.gov & click on Complaint Services and then, Online Complaint Form. Fill that out and hit submit. It will come to our Consumer Services Division; or, you can call (803) 734-4200, or 1-800-922-1594 (toll-free in SC) and ask for a complaint form to be mailed to you, if necessary. In addition, written documentation of the membership, including a contract and/or proof of payment in the form of a cancelled check or credit card statement should be submitted to the Department for verification.

For more information, contact the Public Information Divison at (803) 734-4190,  1-800-922-1594 (toll-free in SC), or online www.scconsumer.gov & click on Live Chat.

Homeownership Tent Event To Kick Off National Homeownership Month

WHO:      Representatives of Public and Private Sector Agencies and Businesses Offering Help for Potential Homebuyers and Congressman Joe Wilson

WHAT:   Information and Resources for the American Dream of Homeownership

WHEN:    Tuesday, June 2, 2009 from 10:00 a.m. – 2:00 p.m.

WHERE:   Home Depot parking lot, 5600 Sunset Blvd. (Hwy 378), Lexington, S C

This event is sponsored by USDA-Rural Housing, SC State Housing Authority, HUD, the Affordable Housing Coalition of SC, Home Builders Association, S C Realtors, Central S C Habitat for Humanity, and the South Carolina Department of Consumer Affairs.

All Media outlets will receive equal access and opportunity.

For more information, contact Marlous Black @ (803) 253-3725 or marlous.black@sc.usda.gov or Alice Brooks (803) 734-4190, (803) 237-4963, or abrooks@scconsumer.gov .

SCDCA Warns That Car Warranty Scams Have Not Stopped – And The Economy Makes It Worse

The South Carolina Department of Consumer Affairs (SCDCA) first warned consumers last August, 2008 to be wary of mail or pre-recorded messages about car warranties expiring. These post card and telephone warnings directing consumers to call a toll-free number were scams. Consumers who called these numbers were often asked for a “down payment” before they could even get information about the warranty. In many cases, the automobile was 10 – 15 years old or even older. The Department was made aware of these scams by the S C Automobile Dealers Association, as well as South Carolina consumers.

Now the scam has taken a treacherous turn. Con artists are attempting to align the scam with the economic downturn – something that is in the news daily. An alert Midlands consumer contacted the Department when she received a telephone call, supposedly from a marketing firm representing “the Big Three Insurance companies for car warranties,” warning that her Chrysler warranty would not be honored once Chrysler is in bankruptcy. The caller used high pressure tactics and told the consumer that she needed to purchase a new warranty. The red flag for this consumer? The car she currently owns is not a Chrysler.

The danger in this particular twist is that well known car manufacturers are in the news daily, because of the economy. Consumers shouldn’t be alarmed or pressured into purchasing an expensive “new” warranty that they may not want or need or a phony warranty that may not even exist. Consumers who have questions about their warranty should look in the owner’s manual or better yet, call their Dealer.

 Here are some red flags that consumers should watch for in car warranty scams:

• Mailings that appear to come from your automobile manufacturer offering extended warranty coverage.
• Pre-recorded phone calls. Telemarketers are not suppose to use pre-recorded messages unless a live person first asks you if you want to listen to the recording.
• A live caller who insists that your warranty is in peril because of the economic downturn.
• Never give out your personal financail or other sensitive information; like your bank account number or Social Security number, or even your Driver’s License number.
• If your car is older and the warranty expired years ago, the warning is bogus anyway.
• Always get information in writing before you agree to sign up or pay any money.

For more information on car warranty scams or other consumer issues, contact the South Carolina Department of Consumer Affairs at (803) 734-4200, 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov and click on Live Chat.

Department Of Consumer Affairs Warns About Growing Secret Shopper Scams Plaguing The Palmetto State

The South Carolina Department of Consumer Affairs is responding to a flood of phone calls and e-mails regarding secret shopper scams. Consumers looking for legitimate work-at-home opportunities are asking questions ; that’s the good news. Asking questions is one of the best methods for uncovering a phony deal. Unfortunately, consumers must carefully sift through a myriad of offers – an average of 55, according to experts – before they find one legitimate opportunity to bring in a little extra cash; that’s the bad news.

Consumers across the state have been receiving offers for good pay and free products in return for sending in customer satisfaction surveys for various retail locations. Unfortunately, employers for these secret shopper positions require money upfront and never make good on their end of the bargain. Consumers are often provided a check in the mail to help them with their initial purchases. The majority of the money, however, is requested back in the form of a money order or wire transfer – which can’t be traced, once the consumer realizes the original check was fake.

Consumers are sought out by these so-called “mystery shopping” organizations or companies. Consumers who may or may not be looking for work are likely to be intrigued with the offer when it appears in their mailbox. Letters even state a consumer has been pre-approved prior to any communication from the consumer, which only furthers many consumers’ desire to respond quickly.

The Department strongly advises consumers to keep the following tips in mind regarding secret or mystery shopping opportunities:

• Legitimate companies will not solicit you. You should solicit them.
• Legitimate companies will not pay you upfront. You  must pay a membership fee.
• Legitimate companies will not pre-approve you. You must qualify on your own.
• Legitimate companies will not operate through wire transfers or money orders. These are virtually untraceable forms of exchanging funds.

The South Carolina Department of Consumer Affairs continues to educate and warn consumers about this scam and others penetrating the state.

Investigations regarding national and international crimes such as these are handled primarily by federal scams to the Federal Trade Commission at (877) 382-4357.

For more information on secret shopper scams or other consumer issues, please contact the South Carolina Department of Consumer Affairs, Public Information Division at (803) 734-4190, 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov & click on Live Chat.

South Carolina Department Of Consumer Affairs Reminds Consumers To Check The Domain Name Before Filing Complaints Online

The South Carolina Department of Consumer Affairs reminds consumers to be sure they are using the SCDCA’s official website when filing a complaint online.

Recently, several consumers notified the Department that they had mistakenly filed their complaint with an organization whose domain name closely resembled the Department’s. Consumers should file their online complaints at www.scconsumer.gov . The other site handles complaints in a different manner than the Department. “When consumers call the Department to inquire about the status of their complaint, only to find that it was never received, they are understandably upset. Our staff responds to every complaint received, and we just want to clear up any confusion,” SCDCA Administrator, Brandolyn Thomas Pinkson, said.

While the Department handles consumer complaints against businesses, it also facilitates dialogue between the consumer and businesses in hopes of reaching a mutually agreed upon resolution. Businesses that refuse to respond to a complaint filed by a consumer with the Department may be placed on our Buyer Beware List.

In 2008 the Department returned an excess of $2.3 million to South Carolina consumers and is on pace to surpass that amount this year.

For more information, contact the Public Information Division at (803) 734-4190, 1-800-922-1594 (toll-free in SC), or online at www.scconsumer.gov & click on Live Chat.