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.

SCDCA Cautions Consumers About Searching For Jobs Online

The current economy has not provided much relief for consumers and businesses.

For many, business and income are coming in slowly these days; however, online job search engines are among the few staying quite busy. With millions of consumers looking for employment or supplemental income, these services are in demand more now than ever.

Unfortunately, scammers have not missed a beat and are wreaking havoc through these sites.

Disguised as convenient, well-paying jobs, work-at-home scams are weaving their way through the pages of many reputable and trusted online job search websites. Reports from consumers have described various job offers advertised on sites such as Career Builders, Monster Jobs, Yahoo Hot Jobs and others.

One offer described an available position for a delivery person. The consumer was asked to work out of their home as a third party shipper delivering packages internationally. Other schemes include envelope stuffing jobs or at-home sales opportunities that are nothing more than cleverly disguised pyramid schemes. In most cases, these “scam jobs” are posted directly on the job search website. Some scammers, however, will post listings that direct the consumer to another web page after clicking on a link. The consumer may believe they are still operating within the pages of the search engine when, in fact, they are not.

Experts say work-at-home offers provide a legitimate lead roughly once for every 55 offers. In other words, odds are high that pursuing one of these leads will result in lost dollars or worse. Regardless of how reputable the job search engine may be, scammers have the same access to post jobs as legitimate employers. Consumers should keep in mind that while the search engine may be trustworthy, individual companies and positions should be checked and verified separately. Consumers should also be wary of emails from “employers” that respond to the consumer’s posted resume’ but do hot have a job listed online.

Tips Before Applying Online:

• Verify the company’s history and background separately from the job search site.
• Do not provide financial information.
• Take caution before paying for job search services.
• Do not click on links in emails from job search sites.

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.

Consumers Should Dispute Erroneous Charges

A quarter is a quarter. In a tough economy, however, a quarter is worth a lot more, especially if multiplied millions of times over. Sadly, a group of scammers were quick to act on this fact. Using stolen credit card account numbers, scammers charged 25 cents to the accounts of millions of consumers across the nation. While the charges were erroneous, many consumers ignored the charge despite the fact that the company didn’t even exist. After all, it was only a quarter.

The South Carolina Department of Consumer Affairs (SCDCA) has received a number of similar calls from concerned consumers with inaccurate charges on their credit card or bank account numbers. Charges may be as small as a few dollars; others may be as much or more than $30.00. While invalid charges may be the result of scammers creating spoof companies, some mistaken charges may appear from legitimate companies. Regardless of the amount or the source, consumers should dispute incorrect or unidentified charges.

What Exactly Should You Do?

• Dispute the charge with your credit card company
• File complaints with the following federal agencies:

           1) Federal Trade Commission (FTC) at www.ftc.gov

           2) Internet Crime Complaint Center at www.ic3.gov

           3) Bureau of Justice Assistance

• Monitor your account at least once a week for charges

Consumers are also encouraged to report erroneous charges to the Department of Consumer Affairs to improve education and outreach efforts. 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 and click on Live Chat.

S C Department of Consumer Affairs Issues Tips About Fitness Club Memberships

The New Year offers everyone an opportunity for a fresh start.

 For many consumers, the first step is joining a fitness club to drop those holiday pounds. The convenience, accountability, and resources of fitness clubs is an attractive offer. Unfortunately, the economic climate has caused a number of facilities to close in the last year. The South Carolina Department of Consumer Affairs (SCDCA) works diligently to ensure refunds to consumers in these scenarios.

Consumers can, however, reap all the benefits of a fitness club membership without the worry of lost dollars by asking the following questions before signing on the dotted line.

Does the fitness club have a certificate issued by SCDCA displayed?

Fitness facilities must be licensed by SCDCA and must renew their certificate of authority every year. If the facility does not have a certificate posted or the certificate has an expired date, steer clear.

Does the fitness club have a surety bond or letter of credit?

Ensure the money invested in a long-term contract is backed, should the facility have financial difficulties down the road. Fitness facilities must have a surety bond or letter of credit for contracts that obligate the consumer for longer than three months or greater than $200.

Does your contract include an automatic renewal clause?

Automatic renewal clauses may be included in your contract allowing the fitness club to extend the contract and continue to draft or require payments. By law, the prospective member must sign or initial the automatic renewal clause when finalizing the original contract. The member must sign or initial the clause again 30 days before the original contract expires. Automatic renewal clauses may also be called “tacit renewals” and may be associated with phrases like “continuous,” “at current rates” or “until I cancel.”

Have you read and understood the contract word for word?

Fitness club contracts longer than three months or greater than $200 may only be cancelled in four situations:

1. Three-day right to cancel
2. Relocation at least 50 miles away
3. Permanent disability
4. Death

The club may offer better cancellation provisions in your contract. Ask a representative before signing. Consumers should also keep in mind that items such as aerobic classes or child care may incur extra costs. Make sure you understand the terms and conditions of your contract, including payment method and schedule, as well as cancellation policies.

By keeping these tips in mind, consumers will be on their way to losing pounds and not dollars in 2009.

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.

Got A Life Insurance Policy To Spare? Life Settlements Is An Option, Not Always A Solution

There was a time when the only way to collect money on a life insurance policy wasn’t very appealing.

Today, however, there is a burgeoning market that offers a new way to collect on your life insurance without ending up six feet under.

A life settlement is the purchase of a life insurance policy by a third party. The life settlement industry is expanding rapidly in popularity, but is it a good idea?

Many senior citizens find themselves with policies they either don’t need or can no longer afford. Naturally, this segment of the population is targeted heavily by salespeople marketing life settlements. Consumers will want to shop carefully to avoid potential drawbacks that include high prices and the inability to obtain a new life insurance policy.

The Details of Life Settlements

Until about 20 years ago, if you had a life insurance policy that you no longer wanted or needed, you had two options:

1. Surrender the policy back to the insurance company for its cash value.
2. Let the policy lapse, possibly making all your premium payments worthless.

But now there is a third option: Selling the policy to an entity other than the insurance company that issued the policy in a transaction called a life settlement. The life settlement company continues paying the premiums and receives the death benefit when you die. Life settlements grew out of viatical settlements, which bloomed in the 1980’s as a way for AIDS patients and other terminally ill policyholders to tap into some cash before they died.

Viatical settlements are arranged only for people with life expectancies of fewer than two years.

Life settlements generally cover people 65 and older who have life expectancies of between two and ten years.

Many insurance salespeople express enthusiasm for life settlements, which can offer 10 percent to 50 percent more cash than surrendering policies back to the insurer with payment ranging from 10 percent to 80 percent of the policy’s face value.

Problems with life settlements

Life settlement supporters claim the transaction offers older individuals an alternative to see real value from the money they’ve invested in their policy.

But experts stress that life settlements aren’t for everyone and note that consumers have to be careful not to fall prey to abusive sales practices. Numerous life settlements have ended up in litigation.

Experts caution those choosing to sell their life insurance policy to be sure to understand exactly what they’re giving up in the settlement. It’s only when the insured’s original reason for having the policy no longer exists that he or she should consider selling.

Other mitigating circumstances may render the policy moot, such as policies taken out to cover estate taxes. Estate tax exclusions are rising, such that a couple could leave $4 million tax free to their heirs.

Persons with smaller estates no longer need insurance to cover taxes.

Parents who took out a policy to provide money for children or grandchildren may now find the kids are independently wealthy and no longer need the helping hand.

More practical concerns should also be considered. People with unexpected health expenses also may want life settlements to help pay for their care.

Look out for better deals

Even if you  meet those criterias, keep in mind that in only about 10 percent of cases can consumers obtain more money from life settlements than just surrendering their policies . Life settlement companies generally are only interested in policies with a value of $250,000 or more.

The risks

Experts offer plenty of reasons for caution when transacting life settlements. As the life settlement industry is new and often targets senior citizens in poor health. They can be prone to affressive sales tactics and abuse.

This new field has also spawned a number of scammers, who promise outrageous returns in exchange for money up front or personal information. The scammer then makes off with your money or enough information to steal your identity.

Legitimate life settlement deals can still be very complicated and are best reviewed by an attorney.

Also, keep in mind, your insurance adviser may use a life settlement broker in order to find the best price, which could mean you pay a commission for the adviser and the broker. Fees will generally take 20 to 25 percent off the settlement payment.

The bottom line is when considering a life settlement be very careful, have everything put in writing and thoroughly explained and have a lawyer look over it, before signing the contract. Now that’s a sound policy.

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

Before You Borrow — Know What You're Getting

When you’re swimming in a sea of debt, you’re constantly looking for a lifeline. This is the time to keep a cool head and make sure that whatever you latch on to will buoy you to safety and not tie you down with dead weight.

Just be careful who heeds your SOS. A loan may help get you by, but you’ll want to borrow money at the best rates, according to terms that suit your needs and steer clear of bad deals as well as those that look too good to be true.

When you’re in financial trouble, predators smell opportunity.

Here are two lines to keep in mind:

The smaller the print, the bigger the hint.

Make sure you understand the fine print, because if it’s in small print, it’s probably not good news.

If it’s on the back, it gives you a whack.

The back contains terms and conditions that you really want to pay attention to.

Before you take on new debt, it’s a good idea to take a look at your credit report and make any corrections. This is of particular importance for people already in debt.

The following are the ins-and-outs of certain types of loans.

• Transferring High-Interest Loans

If you go for a credit card offer that promises a low rate for balance transfers, don’t use it for new purchases. Creditors will apply your payments to the amount with the lowest interest rate first. Meanwhile, interest for new purchases will accrue at the higher rate. If you really want to use the transfer to full advantage, continue to pay lower rate tranfer offers against higher rate debt, until you get all your debt at the right price.

• Home Equity Loans

Too many people have borrowed against their homes only to find themselves in a dicey predicament because their home values have since dropped. They owe more than the property is worth. Banks are taking it on the chin because of increased defaults.

The most common problem is that people who draw on their equity to pay off high-interest debt then begin running up credit card debt all over again. The only way to pay down debt is with income and by cutting your spending.

• Borrowing From Family

Your friend or family member is not likely to report late payments to the credit bureaus. They’re also not going to like being taken advantage of, though.  So, if you need money and can keep current on payments, this could be a good quid-pro-quo situation.

Borrowing money from friends and family is very risky, but you can also make it worth their while. Family and friends must be your top priority. Pay them back first, never late.

• Peer-to-Peer Lending

Banks and even credit card companies are tightening their lending standards, so it may be worthwhile to see if you can get better interest rates using peer-to-peer lending sites (also called person-to-person lending) such as Zopa, Prosper or Lending Club. These social networking sites act as middlemen, enabling lenders and borrowers to come together. Some use an online auction system like that of eBay; others offer products with fixed rates for those on both sides of the transaction.

Generally, the middleman gets information from the borrowers, such as debt-to-income ratios, employment histories and credit scores, so that lenders can get an idea of their creditworthiness and likelihood of default. The deals involve fees and varying loan terms. It’s important to understand how the system works before getting involved.

• Raiding Retirement Funds

This is almost always a bad idea, but if you’re facing serious financial difficulties – for example, bankruptcy – it’s nice to have options.

Borrowing from your 401(k) may be the least disruptive way to access money earmarked for retirement, but it will almost certainly impact the amount you will ultimately have at retirement.

It’s true that you pay yourself back with interest, and you benefit from that interest. But, the money that you’ve withdrawn is not compounding or working for you. In addition, many people stop making new contributions to their plans while repaying the loan.

Also, when you pay yourself back, you’ll be using after-tax money. Most 401(k) plans are funded with pre-tax money that gets taxed when you take distributions at retirement. The after-tax money that you repay the loan with gets mixed up with the pre-tax money, and you will have to pay taxes on it again.

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 and click on Live Chat.

FRAUD PROTECTION TIP: Never Pay In Advance!

Never pay for anything in advance for services nor for products sight unseen.

If you do, use your credit card because you may get your money back if you have been scammed.

Also, many scammers do not have credit card accounts.

Credit card companies can do a chargeback to the merchant who processed the charge to your card if it is a fraudulent scam.

Promises of riches, and guarantees to instantly double or triple your money are scams.

Lemon Law: When Your New Vehicle Leaves You With A Sour Taste

If you new car is leaving you with a sour expression, you may have a lemon on your hands in which case the law does offer you some protection.

According to South Carolina’s Lemon Law, a ‘lemon’ is a new private passenger vehicle (car, van, truck, etc.) that has a defect that impairs its use or will lower its market value substantially and which the manufacturer cannot repair in a reasonable time.

A reasonable amount of time is considered by law to be three repair attemps for the same defect or 30 or more days out of service for repairs. The 30 days does not have to be consecutive.

The Lemon Law does not cover the following:

1.)  Defects which do not substantially impair the vehicle’s use, market value or safety.

2.)  Defects caused by owner’s abuse, neglect, or unauthorized alteration of the vehicle.

3.)  Defects that don’t show up within the first 12,000 miles or 12 months, whichever comes first.

It’s also important to remember the Lemon Law only applies to NEW private passenger vehicles, meaning pre-owned or used cars are not covered.

For the Lemon Law to be enacted:

FIRST – You must notify the manufacturer (or its agent) in writing of the defect during the term of the warranty. The manufacturer must make any repair efforts at no cost to the consumer within either three repair attempts or 30 days out of service. The 30 days does not have to be consecutive.

SECOND – If the defect cannot be repaired, the manufacturer has the option of either replacing the vehicle or accepting return of the vehicle and refunding the money. If the manufacturer elects to accept return of the vehicle and refund the money, the refund must be for the full purchase price of the vehicle, less a reasonable allowance for the consumer’s use.

The full purchase price includes:

1.) applicable finance charges and

2.) all governmental fees, including sales tax, license fees, and registration fees.

THIRD – Before you request a refund or replacement vehicle, you must first participate in any arbitration procedure that the manufacturer may have established.

This type of mediation is known as an “informal dispute settlement procedure.” This procedure must set requirements for consumer notification, be free from the manufacturer’s influence, free of charge to the consumer, and generally settle the dispute within 40 days.

Still not satisfied?

 You have some more options. If you are not satisfied with the arbitration,  you may then file suit in court.

If the Lemon Law does not cover the car you have purchased, you may still have recourse under the general sales and warranty laws.

You can also file a complaint with the South Carolina Department of Consumer Affairs.

Remember: Buy vehicles only from reputable dealers and read everything carefully. Save all documentation on the car and any repair work for your records.

AVOIDING A LEMON IN THE FIRST PLACE

• Do your homework on the car and the dealer. Don’t just buy impulsively. Read vehicle reviews online and in magazines to evaluate for the safety and reliability. Ask people who already own the type of vehicle you’re interested in about their experience.
• Used cars should be thoroughly checked out by an independent mechanic first.
• Only buy from a trusted dealer. Consult the Department’s Buyer Beware List (www.scconsumer.gov/buyer_beware.htm ) to see if there are any outstanding complaints against the dealership.

A Hand Out! Not All Charitable Donations Go Where You Think

You may think your charitable monies are being directly transferred to the non-profit organization of your choice. What you may not know is that a number of charities outsource their fundraising activities to other companies. Some are even out-of-state companies.

Non-profit companies may choose to outsource their fundraising in order to more efficiently concentrate on their mission or maximize the skills of fundraising professionals in soliciting contributions. For others, third party companies are a convenient means of delegating the more time-consuming aspects of fundraising.

Nevertheless, some fundraising companies may not be telling you everything you need to know about how your donations are being handled and where exactly the money is going.

Before giving money to one of these “middle-men,” make sure  you identify the facts. And if that’s not enough warning….. consider that it’s happening right here in South Carolina.

 One organization is being fined for deceiving consumers and withholding much needed contributions to some of Columbia’s finest – firefighters. Fireco, LLC must pay $12,000 in fines for violations that occured while solicting funds for the Columbia Firefighter’s Association.

So, what should a solicitor tell you upfront?

The solicitor should tell you right away if they are a “professional” or “paid” solicitor.

They should also tell you the registered name of their organization and the name, location and purpose of the organization that hired them to solicit funds.

What else should you ask?

 If you ask verbal or nonverbal – the solicitor should tell you what percentage of your donation will be used to pay overhead costs and what percentage of your donation will be used to pay overhead costs and what percentage will be given the organization.

Note: The percentage given to the organization may not include money paid from the non-profit organization to the fundraising company. If you ask, the solicitor also has to provide you the chairtable organization’s financial statement within 15 business days and a copy of the current registration cerification. Each violation may be fined up to $2,000.

Make your dollars count for you. Before you generously give to the charitable cause of  your choice, keep in mind the following:

• Give directly to the charity or non-profit organization, when possible.
• Ask how much of your donation will be kept by the fundraising company for overhead costs.
• Research the fundraising company for previous violations and account history.