Download Ways Identity Thieves Illegally Use Personal Information

COURSE:
8726 Personal Finance
UNIT: D
Protecting and Managing Resources
ESSENTIAL
STANDARD:
7.00
B2
18%
Understand ways to protect personal and family
resources.
OBJECTIVE
7.03
B2
4%
Understand ways to avoid identity theft.
Essential Questions:
 What is identity theft?
 How does one protect himself or herself from being a victim of identity theft?
UNPACKED CONTENT
What Is Identity Theft?
 Also known by its true name of fraud
 Illegal use of a consumer’s personal identification, credit, or account information
 Information that thieves steal: Date of birth, bank and investment account numbers, Social
Security number, Internet passwords, credit cards
 Results of identity theft for victims: Financial losses, loss of time and money
Technological Advances Increase Opportunities for Exposure to Identity Theft
 Electronic funds transfers (EFT) enable financial transactions by computer
 Direct deposits and withdrawals
 Pay-by-phone transfers
 Point-of-sale transfers
 Online banking: Account numbers, date of birth
Data Collection and Privacy Issues
 Many businesses have legitimate reasons for obtaining personal information
 Other businesses use personal information, such as your name, address, credit card number,
and information about purchasing preferences and patterns for other purposes
 Some websites use online profiling
 Security of websites
 Cautions about use of the Social Security number
Ways Identity Thieves Obtain Personal Information to Commit Crime and Fraud
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Stealing wallets or purses containing identification information, credit cards, or checkbooks
Stealing mail, which may include bank, credit card, payroll, and tax information
Completing a change of address card to have mail sent to another address
Going through trash from homes/businesses to find identification, bank, or credit information
Obtaining personal information from one’s home
Obtaining personal information submitted on the Internet
Posing as representatives of banks, Internet service providers, or government agencies to get
one to provide personal information on the telephone or by email
 Looking over the shoulder when one is writing checks or using teller machines
 Using technology to capture credit card number from the magnetic strip
 Using card readers to swipe a card and capture the card number
OBJECTIVE:
7.03
B2
4%
Understand ways to avoid identity theft.
UNPACKED CONTENT
Ways Identity Thieves Illegally Use Personal Information
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To sign up for services such as telephone, cellular telephone, or wireless service, and utilities
Open a bank account and write “bad” checks
Write checks on one’s bank account
Rent an apartment
Get a job
Obtain cash with bank cards
Make charges to your accounts and credit cards
Open new credit accounts to make purchases
Steps to Minimize Potential for Identity Theft
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Contact your bank if you are missing ATM cards or checks
If a victim of theft, file a police report
Report missing credit cards and identifying information to three credit-reporting agencies
Report missing Social Security numbers or card to the Social Security Administration
Seek other help from the Federal Trade Commission and the Identity Theft Resource Center
Issue a “stop payment” if checks or credit cards are lost or stolen
When establishing accounts at financial institutions, make sure they are insured by agencies
that protect deposits in case the institution fails
 Federal Deposit Insurance Corporation (FDIC)
 Savings Association Insurance Funds (SAIF)
 National Credit Union Administration (NCUA)
 Make informed choices about sharing personal information---“opt out”
Laws Established to Protect Consumers’ Personal Information
 The Federal Trade Commission oversees compliance with these acts
 Financial Services Modernization Act (1999) requires companies involved in financial
activities to send privacy notices to customers
 Children’s Online Privacy Protection Act (1998)---Requires websites directed to children
under thirteen to post their privacy policy, parental consent and ability to monitor required
What to Do if Identity Theft Occurs
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Respond immediately
Keep a record of phone calls, letters, and Emails
Request a “fraud alert” with three major credit bureaus---Equifax, TransUnion, and Experian
Obtain a credit report from each major credit bureau and check for accuracy
Close all accounts that have been involved in the theft
Open new accounts with new passwords and PIN numbers
File a police report
File a complaint with the FTC
Data and Privacy Issues
 Many businesses have legitimate reasons for obtaining personal information
 Financial institutions
 Health care providers
 Insurance companies
 Other businesses use personal information, such as your name, address, credit card
number, and information about purchasing preferences and patterns for other purposes
 Process orders
 Market goods and services based on preferences
 Sell to other businesses
 Analyze to better understand consumer preferences and purchasing patterns
 Some websites use online profiling
 Companies collect information about the websites a consumer visits
 Information is used to predict what the consumer may buy in the future
 Cookies, or small files stored on a computer, enable a website to “remember”
information about a visitor
 Security of websites
 Be cautious when surfing the Web
 Secure sites use safeguards to protect information from theft during certain types of
transmissions
 Web addresses of secure sites begin with either “shttp://” or “https://”
 Social Security number
 Unique nine-digit number used by Social Security Administration to track one’s
earnings
 An important piece of personal information
 Can be used to access bank and credit card accounts and other personal information
 Avoid carrying number or card in one’s wallet
 Do not print number on checks
 When businesses request Social Security number during routine transactions to
identify you, ask how it will be used and avoid giving out number
Protect Yourself against Identity Theft--Do
Don’t
Order a copy of your credit report from each of the three
Don’t carry your social security card or have the number
credit reporting agencies every 12 months.
printed on your driver’s license.
Carry only the credit cards you really need and use.
Don’t throw away credit card receipts, monthly
statements, or anything else with an account number on
it without first shredding them.
Make photocopies of the front and back of all cards in
Don’t give your social security or bank account numbers
your wallet. This will be helpful in the event that your
to anyone without knowing the information will be
wallet is lost or stolen.
secure and that the request for the information is
necessary and authentic.
Keep a list of your credit cards with account numbers,
Don’t give out personal information over the phone,
expiration dates, and toll-free numbers. You will need
through the mail, or by email, or on the Web unless you
this information in case of loss or theft. This is also true
initiated the contact or are otherwise certain that the
of checking, savings, and investment accounts.
recipient is legitimate.
Handle your mail with care. Deposit outgoing mail in
Don’t share your passwords and don’t write them where
post office boxes or at the post office. Promptly remove
others can see them.
your mail from your mailbox once it is delivered.
Keep items with personal information in a safe place,
such as a locked drawer.
Safeguard sensitive information on your computer or
online with passwords that include both numbers and
letters. Avoid easily guessed combinations, such as your
birthday.
Before sending sensitive information on the Web, be
sure it’s a secure site. Sites that have Web addresses that
begin with either “shttp://” or “https://” are secure.
Ask your home Internet provider about its security
measures. Find out what measures you should take to
protect your computer and its data.
Tear or shred charge receipts, credit applications, and all
financial statements. Cut or shred expired credit cards.
Tips for Protecting Yourself against Identity Theft
The following are tips for protecting your personal information and to protect against identity
theft:
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Order a copy of your credit report from each of the three credit reporting agencies every
12 months to monitor the information.
Carry only the credit cards you really need and use.
Make photocopies of the front and back of all cards in your wallet. This will be helpful
in the event that your wallet is lost or stolen.
Keep a list of your credit cards with account numbers, expiration dates, and toll-free
numbers. You will need this information in case of loss or theft. This is also true of
checking, savings, and investment accounts.
Handle your mail with care. Deposit outgoing mail in post office boxes or at the post
office. Promptly remove your mail from your mailbox once it is delivered.
Keep items with personal information in a safe place, such as a locked drawer. Ask your
home Internet provider about its security measures. Find out what measures you should
take to protect your computer and its data.
Keep a list of your credit cards with account numbers, expiration dates, and toll-free
numbers. You will need this information in case of loss or theft. This is also true of
checking, savings, and investment accounts.
Safeguard sensitive information on your computer or online with passwords that include
both numbers and letters. Avoid easily guessed combinations, such as your birthday.
Don’t share your passwords, and don’t write them down where others can see them.
Keep items with personal information in a safe place, such as a locked drawer.
Before sending sensitive information on the Web, be sure it’s a secure site. Sites that
have Web addresses that begin with either “shttp://” or “https://” are secure.
Ask your home Internet provider about its security measures. Find out what measures
you should take to protect your computer and its data.
Tear or shred charge receipts, credit applications, and all financial statements. Cut or
shred expired credit cards.
Don’t carry your social security card or have the number printed on your driver’s license.
Don’t throw away credit card receipts, monthly statements, or anything else with an
account number on it without first shredding them.
Don’t give your social security or bank account numbers to anyone without knowing the
information will be secure and that the request for the information is necessary and
authentic.
Don’t give out personal information over the phone, through the mail, or by email, or on
the Web unless you initiated the contact or are otherwise certain that the recipient is
legitimate.
Keep copies of the front and backsides of your credit cards. Store copies in a safe place
separate from your cards.
Don’t give your credit card number to just anyone. Know to whom you are giving the
card to and how that the reason is legitimate.
If you give your credit card to someone, make sure to it is returned to you. If possible,
keep sight of it.
Before sending your credit card number over the Internet, make sure you are using a
secure connection.
Tear or shred copies of credit applications or monthly statements before discarding them.
If a card is lost or stolen, contact the credit card company immediately.
Tips for Protecting Yourself against Identity Theft, continued
If you lose your wallet or it is stolen, or suspect you are a victim of identity theft, ACT
QUICKLY to minimize damage.
1. Call credit card companies to report missing cards. Then follow the call with
written confirmation.
2. File a police report.
3. Contact your bank if you are missing ATM cards or checks.
4. Contact the three national credit-reporting agencies to place and ID Theft Alert on
your credit file.
5. Contact the Social Security Administration to report missing Social Security
Number or card.
6. Seek other help and information from agencies such as the Federal Trade
Commission and the Identity Theft Resource Center.
Liability
1. Credit Cards – The Truth in Lending Act limits a person’s liability for unauthorized
credit card charges to $50.00 per card. To take advantage of this law, a person must write
a letter within 60 days of the first bill containing the error. If an individual’s card has
been stolen, it should be reported and canceled immediately.
2. ATM & Debit Cards, Electronic Funds Transfers – The Electronic Funds Transfer
Act provides protection. The amount a person is liable for depends upon how quickly
he/she reports the loss. If a person reports a lost or stolen card within two days, they are
liable for a maximum of $50.00. Within 60 days, a person is liable for up to $500.00. After
60 days, a person may be liable for all of the money. A person should always telephone the
financial institution then follow up in writing to report any losses.
3. Checks – Stop payment immediately and ask the financial institution to notify the check
verification service. Most states hold the financial institution responsible for losses of a
forged check if the person notifies the bank within a reasonable time.
Personal Liability
Credit Cards – The Truth in Lending Act
limits a person’s liability for unauthorized
credit card charges to $50.00 per card. To
take advantage of this law, a person must
write a letter within 60 days of the first bill
containing the error. If an individual’s card
has been stolen, it should be reported and
canceled immediately.
ATM & Debit Cards, Electronic Funds
Transfers – The Electronic Funds Transfer Act
provides protection. The amount a person is
liable for depends upon how quickly he/she
reports the loss. If a person reports a lost or
stolen card within two days, they are liable for a
maximum of $50.00. Within 60 days, a person is
liable for up to $500.00. After 60 days, a person
may be liable for all of the money. A person
should always telephone the financial institution,
then follow up in writing to report any losses.
Checks – Stop payment immediately
and ask the financial institution to
notify the check verification service.
Most states hold the financial
institution responsible for losses of a
forged check if the person notifies the
bank within a reasonable time.
Key Terms: Identity Theft
Term
Explanation
cookies
Small files stored on a computer that enable a Web site to
“remember” information about a visitor
Electronic funds transfer
(EFT)
A part of a system of carrying out financial transactions by computer
rather than using checks or cash
fraud
Deceitful conduct designed to manipulate another person for some
gain
identity theft
The illegal use of an individual’s personal information, such as credit
cards, bank and investment account numbers, social security number,
etc., and using them to commit theft or fraud
online profiling
A practice in which companies collect information about the Web
sites a consumer visits, then use that information to predict what the
consumer may buy in the future
secure site
A website that uses safeguards to protect information from theft
during transmission
Social Security number
The unique nine-digit number used by the Social Security
Administration to keep track of a person’s earnings. It can be used to
access bank and credit card accounts as well as other personal
information
card reader
Machine that captures the card number from the magnetic strip.
COURSE
Personal Finance 8726
UNIT D
Protecting and Managing Resources
ESSENTIAL
STANDARD:
7.00
B2
18%
Understand ways to protect personal and family resources.
OBJECTIVE:
7.04
B2
4%
Exemplify persuasive methods used in advertising and
sales.
ESSENTIAL QUESTIONS:
 What is the role of advertising?
 What methods of persuasion are used in advertising and sales?
UNPACKED CONTENT
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Role of Advertising
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Purpose: To inform consumers about goods and services; to encourage them to purchase
Forms of advertising
 Print ads---newspapers, magazines, telephone directories
 Direct mail advertising---catalogues, flyers, newsletters
 Commercials---radio, television, movies
 Infomercials---30-minute ads with demonstrations
 Pop-up ads---web pages, emails
 Billboards and signs---along the highway, in subways, on buses and trucks
Benefits for consumers
 Helps save money by informing about sales
 Helps save time by preventing unnecessary trips to stores
 Provide information to help make better purchase choices
 Promote health and safety through public service ads
 Helps pay the costs of publishing and broadcasting
Drawbacks for consumers
 Annoying ads, commercials interrupt programs, billboards spoil beautiful view
 Consumers may be influenced to spend money on unneeded items
 Misleading information or statements
Regulation of ads by Federal Trade Commission
 Insures that ads are fair and accurate
 Defines advertising standards for publishers and broadcasters
 Pay special attention to health and safety claims and ads aimed at children
 Monitors national advertising only
 Discontinues false/inaccurate ads; orders that monetary damages be paid to customers
Advertising and Sales Methods
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Incentives and promotions
 Clearance sales---to reduce existing inventories of products
 Seasonal sales---back to school, January white sales
 Going-out-of-business sales---also called liquidation sales
 Holiday and miscellaneous sales---Labor Day, Christmas, Valentine’s Day
 Other price reductions---“special value” and other terms used
OBJECTIVE:
7.04
B2
4%
Exemplify persuasive methods used in advertising and
sales.
UNPACKED CONTENT
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Incentives and promotions, continued
 Coupons---entitles bearer to savings on a product
 Rebates---partial refund of a product’s purchase price
 Sweepstakes and contests
Personal selling
 Sales associates in stores
 Telemarketers
 Door-to-door sales representatives
Store facilities
 Arrangement
 Ambience
Advertising Techniques
 Slogans and jingles
 Logos
 Beauty appeal
 Testimonial
 Endorsement
 Escape
 Lifestyle
 Bandwagon
 Rebel
 Unfinished comparisons
 Group identification
 Trendsetter
 Hidden fears
 Before-and-after comparison
 Traditional values
 Puffery
Deceptive Advertising
 Loss leader
 Price comparison
 Bait and switch
 False promise of free gifts
 Introductory offer
 Deceptive pricing
 Hidden catches
Advertising and Selling Methods
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Incentives and promotions
 Clearance sales---to reduce existing inventories of products
 Seasonal sales---back to school, January white sales
 Going-out-of-business sales---also called liquidation sales
 Holiday and miscellaneous sales---Labor Day, Christmas, Valentine’s Day
 Other price reductions---“special value” and other terms used
 Coupons---entitles bearer to savings on a product
 Found in magazines newspapers flyers, Internet
 Offered by manufacturers to try their product
 Rebates---partial refund of a product’s purchase price
 Must mail in form or proof of purchase to get money returned
 Companies count on customer not taking time to mail in forms
 Sweepstakes and contests
 Promote effective way to grab the consumers attention
 Many are frauds---must pay handling fee
 Spend money to enter---e.g., prize under pop bottle top, Scratch-off cards
Personal selling
 Sales associates in stores
 Answer questions, help locate an item
 Some work on straight salary, others on commission or a combination of
both
 Trading up---convincing customer to buy higher-priced item than intended
 Telemarketers
 Required by law to make it clear they are selling something
 Must tell the name of company and avoid forms of deception
 Limits are set on time of day to call
 Must honor your request to be put on “do not call list”
 Never give out credit card, Social Security number, other personal
information
 Ask for information to be sent in mail
 Door-to-door sales representatives
 Ask for business card for future contact
 FTC allows consumers three business days to cancel purchases of $25 or
more made in their own homes or a location outside seller’s normal place of
business
 Seller must provide customer with a cancellation form
Store facilities
 Arrangement
 Locating frequently purchased items in far corners of store
 High-profit items in prominent positions/checkout areas to encourage
impulse buying
 Ambience
 Store décor to promote an image and attract target customers
 Relaxing music to encourage lingering in the store
Advertising and Selling Methods, continued
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Advertising Techniques
 Slogans and jingles---catchy songs/rhymes to help consumers remember products
 Logos---graphics or symbols that represent a company, used to identify products
 Beauty appeal---product makes you this beautiful, makes you like this person
 Testimonial---positive comments, usually by a famous person, about a product or
service
 Endorsement---statement of support for a product from a person other than the
advertiser
 Escape---associating products with beautiful, adventurous settings to create the
illusion of escape for viewers
 Lifestyle---associating a product with a desirable style of living
 Bandwagon---attempting to sell a product by convincing consumers that everyone is
rushing to use and enjoy this product; peer approval
 Rebel---associating products with behaviors that contradict societal norms
 Unfinished comparisons---claiming a product “works better” --- better than what?
 Group identification---message that, if you use this product, you will fit in with this
group
 Trendsetter---a message that, if you use this product, you will stand out from the
crowd
 Hidden fears---playing on fears of consumers: “Use this shampoo-no embarrassing
dandruff”
 Before-and-after comparison---“before/after” pictures show results of a
product/treatment
 Traditional values---trying to associate with home and family---e.g., sitting with dad
eating peanut butter sandwich the way we always did when we were growing up
 Puffery---exaggerated claims or descriptions intended to increase a product’s
reputation or appeal; e.g., “great tasting”, “great hair” or “blondes have more fun”
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Deceptive Advertising
 Loss leader---item priced below retailer’s costs to attract customers to a store; often
used in food stores
 Price comparison---implying prices are below retail value or lower than at other
stores
 Bait and switch---retailer advertises a product, hoping to persuade customers to come
and buy another product at a higher price; customer is often told the “bait” product is
“sold out”
 False promise of free gifts---customer must buy an item to get the “free” gift
 Introductory offer---new merchandise selling at a price that will increase after the
initial offer
 Deceptive pricing---advertising a “sale” price that is actually no better than everyday
price
 Hidden catches---details not clearly disclosed---extra charges, processing fees,
restrictions
Key Terms: Advertising and Sales Methods
Term
Explanation
Role of Advertising
print ad
An ad in a newspaper, magazine, telephone directory, or other
publication
direct mail advertising
Printed advertising sent by mail to consumers’ homes
commercial
A brief, one minute or less, TV or radio ad used to promote a product
infomercial
A TV or radio ad that promotes a product and lasts 30 minutes or
longer
pop-up ad
An ad that suddenly appears on a web page or in an email message
billboard
An ad posted on a sign along the highway
Federal Trade
Commission (FTC)
An agency that regulates advertising to ensure that ads are fair and
accurate
Advertising and Sales Methods
clearance sale
Sale to reduce existing product inventories
seasonal sale
Sale at particular times of year
going-out-of-business
sale
Sale when a business is being liquidated
holiday sale
Sale during a holiday time
incentive
A reward used to encourage spending
coupon
A small paper clipping that entitles the holder to savings on a
product
rebate
A partial refund of a product’s purchase price
sweepstakes
A drawing to select a winner of money or valuable prizes
commission
A percentage of sales income given to the salesperson
trading up
Convincing customers to buy higher-priced items than they intended
telemarketer
A person who sells a line of products over the telephone
door-to-door
representative
A person who goes house to house selling a line of products
décor
The way in which a store or place of business is decorated
slogan/jingle
Catchy songs, rhymes, phrases used to help consumers remember
products
logo
Graphics or symbols that represent a company, used to identify
products
beauty appeal
Product that makes you this beautiful, makes you like this person
testimonial
A positive statement made by a person who is endorsing a product or
service---usually, a famous person
Advertising and Sales Methods
endorsement
An advertising message that reflects opinions, beliefs, findings, or
experiences of a person or group other than the advertiser
escape
Associating products with beautiful, adventurous settings to create
the illusion of escape for viewers
lifestyle
Associating a product with a desirable style of living
bandwagon
Attempting to convince consumers that everyone is using the product
rebel
Assocating products with behaviors that contradict societal norms
unfinished comparison
Claiming a product “works better”---better than what?
group identification
A message that, if you use this product, you will fit in with this
group
trendsetter
A message that, if you use this product, you will stand out from the
crowd
hidden fears
A strategy of playing on the fears of consumers
before-and-after
comparison
“Before” and “after” pictures show results of a product or treatment
traditional values
Trying to associate with home and family
puffery
Exaggerated claims intended to increase a product’s reputation or
appeal
loss leader
An item priced below the retailer’s costs in order to attract customers
price comparison
Offering products below retail value or implying that the same item
is sold at higher prices at other stores
bait and switch
A retailer advertises a product thtat it has no intention of selling,
hoping to persuade consumers to come and buy a product at a higher
price; customer is often told that the “bait” product is “sold out”
false promise
A promise of a free gift that actually requires that another item be
bought first
introductory offer
Indicates new merchandise selling at a price that will soon increase
deceptive pricing
Advertising a “sale” price that is actually no better than the everyday
price
hidden catch
When details of an offer are not all clearly disclosed---extra charges,
processing fees, other restrictions