Ripoff Report #5 – Child Identity Theft Edition

The Ripoff Report is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Child ID Theft

In last week’s Ripoff Report I talked about adult identity theft and some of the ways you can prevent it from happening to you. This week I want to focus on a topic that some of you may not even know exists: child identity theft.

Here’s a short video that explains what child identity theft is and how it happens. According to AllClearID.com (the people who made this video), children are 35 times more likely to have their identities stolen than are adults. What’s more, about 1 in 10 children have had their identities stolen at least once. As if parents need more to worry about when raising their kids.

As you see in the video, a child’s Social Security number is a blank slate. Criminals can effortlessly open new loans, cell phone accounts, or credit cards using your child’s SSN. Because there’s no system to match names and dates of birth to SSNs to verify identity, companies often only require a cash deposit when opening accounts. What this means is that your child could have a mortgage in his or her name while still in diapers.

Child ID theft normally isn’t detected until the child attempts to apply for student loans or sign an apartment lease as a teenager. To make matters worse, the three credit bureaus aren’t interested in helping to prevent this crime. All they’re interested in is building information on you and selling it – accuracy isn’t their priority.

Until this year, there really wasn’t a way for parents to protect their children against ID theft. AllClearID now offers ChildScan, a free service that detects fraud from many sources and sends you monthly updates via email.

What’s in it for them? This is a “freemium” model, which means they offer a basic level of protection for free alongside a premium version that costs $15 a month. The premium version offers identity repair help and various levels of insurance. The basic free version is probably sufficient for most people.

This service seems to be comprehensive – they search not only credit reports but also employment and medical records and utility accounts for any use of your child’s SSN.

Children are prime targets for ID theft and are more likely than adults to have their identities stolen. Because the credit bureaus and various levels of government don’t care about our children, it’s important to be proactive in protecting them. This new service makes it much easier for parents to protect the identities of their children.

For a real-life child ID theft story, see Michelle’s post over at Making Sense of Cents. She explains how someone bought a house in her name when she was 13. 

Warehouse Clubs: Why They Make Sense for Most People

I want to start by announcing that my wife and I are expecting our first child in November! We’re both beyond excited for the opportunity to be parents. It will truly be an adventure because for one, I’ve never changed a diaper. I also have no idea what it’s like to have to comfort a screaming baby at 3 in the morning. That said, I’m going to approach this new chapter in my life by being humble, learning everything I can and committing to being the best father I can be. 

As a new parent, I realize I’ll be spending a lot of time in Costco. Diapers, formula and baby wipes are just a few of the many things I’ll be buying there. I’ve heard that babies go through about 12 diapers a day when they’re first born. That means over 1,000 diapers in the first three months alone. 

But the truth is, my wife and I have been members of all three national warehouse clubs (Sam’s, BJs and Costco) at some point during our marriage. Some of you might wonder why, as a two-member household, we would pay up to $55 a year for the privilege of shopping somewhere. There are several reasons, which I’ll discuss briefly below. I’ve also included the percent of the yearly membership fee, out of $55, each category would pay for.

  • Prescription glasses. This is probably the best reason I have for why it makes sense to be a member of a warehouse club. Consumer Reports has consistently rated Costco among the best places to buy glasses
    based on price, quality and service. You can get a complete set of glasses for about $150, compared with $200 or even $300 at independent shops. Percent of membership paid: 100%
  • Contact lenses. I wear contacts once a week when playing basketball and usually go through a box of the disposable ones in about a year. While comparison shopping online recently, I found that the lowest price for the contacts I needed was $45 per box. I called Costco and asked for their price: $30 a box. Buying my contacts there instead of from an online seller saved me $15 per box, or $30 total. Percent of membership paid: 55%
  • Low-carb shakes. My wife likes to drink chocolate-flavored shakes for breakfast sometimes because they fill her up and they’re convenient. The cheapest place outside of the warehouse clubs I can find them is Walmart, at $7.00 for a 4-pack. At BJs they were $16 for a 12 pack, saving us $1.66 per 4-pack. Assuming she drinks 120 shakes per year, we save $50. Percent of membership paid: 91%
  • Allergy medication. My wife has minor allergies and normally takes an over-the-counter allergy pill each day. At Sam’s we bought a generic version of Zyrtec, which had a year’s supply of pills for $16. Compare that to drug stores, where you’d pay over $100 for a year’s supply of even the generic version. This one purchase not only pays your annual membership fee but saves you money every month as well. Percent of membership paid: 100%

These are just a few of the ways we’ve saved by having a warehouse club membership. We’ve experienced these savings even though we’re only a two-person family (for now). When the baby comes, we’ll save even more on the things we buy.

Are you a member of a warehouse club? Has your membership paid for itself yet?

Photo by frugalvillage.com

Ripoff Report #4 – Identity Theft Edition

The Ripoff Report is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

ID Theft

According to the FTC, “identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes.” There are a number of things criminals can do once they have this information, but I want to focus on financial fraud.

Financial fraud happens when criminals use your information to open up new credit cards, take out loans, open a utility account, create counterfeit checks, or apply for a job using your Social Security number.

As many as 9 million Americans have their identities stolen each year, with young adults ages 18-29 being the group most targeted by criminals. Young people rarely have bankruptcies or other negative items on their credit reports, so that makes them an easy target. In addition, college students tend to put all their financial papers in the trash without shredding them. This creates a gold mine for criminals looking for sensitive information.

Often, people have no clue that their identity has been stolen until years later when they’re applying for a mortgage or car loan. By then, the damage will be great and it may be extremely difficult to remove the negative items from your credit report.

The best defense against identity theft is to be proactive. Shredding all financial documents or anything with your Social Security number, bank account numbers, address and birth date is one of the best things you can do to prevent ID theft. Monitor your bank statements monthly and check your credit report at least once a year at AnnualCreditReport.com. Don’t carry a checkbook or Social Security card in your purse or wallet.

If you want to check your credit health more often, Credit Karma offers a free credit monitoring service and access to your credit score as often as once a day. They’ll alert you by email to any changes on your credit report including new addresses and new accounts or loans.

Perhaps the best way to prevent identity theft is to freeze your credit files. This locks your files at each of the three credit bureaus and prevents anyone from opening accounts as if they’re you. You’ll get a secret code from each of the three bureaus which you’ll use to thaw your files if you need to apply for any credit. The cost to freeze your credit varies by state from nothing to $10 per bureau.

If you’re a victim of ID theft, there are 5 steps you need to take immediately:

  1. Contact your banks and credit card companies to report the fraud. Close the accounts you believe have been opened fraudulently and have new cards issued.
  2. Put a fraud alert on your 3 credit reports, and check them for any accounts you don’t recognize.
  3. File a police report in the community where the ID theft took place. Get a copy, and keep a log of all conversations you have with authorities.
  4. File a complaint with the Federal Trade Commission at (877) FTC-HELP.
  5. Do not pay any bills which result from ID theft.

Why I Love Yard Sales

I’ve always loved yard sales. As a kid, my mom and I would ride all over town, on the lookout for those cardboard signs that led to mounds of “treasure”. This allowed us to go on bargain hunts and ultimately save money, but it also provided bonding time for my mom and I.

I loved sorting through the boxes and tables together, looking for old Nintendo games and baseball cards, or anything that would catch the eye of a 10 year-old boy.

My bargain-hunting ways have continued into adulthood. I find time and again that yard sales are perfect for finding things I would have otherwise bought new. For example, this past weekend I found a CD case to replace the one in my wife’s car that was falling apart. The price was marked 1 dollar but I was able to negotiate it down to 50 cents. Had I bought this at retail I would’ve paid $15 for it, easily.

I’ve also found yard sales to be a great source for numerous other things including: clothes, kitchen supplies and other household items.

Back in the day we had to depend on the newspaper classifieds to find yard sales. But today there’s a tool called YardSaleTreasureMap.com that makes the process much more interactive. After entering in your zip code you can see the upcoming yard sales in your area on a map. Their database pulls from Craigslist so you don’t have to look up each address individually to see how far away it is. You can then use their route planning feature to make an itinerary.

What I love about this tool is it allows you to see what is available at each yard sale, based on the Craigslist post. So if you’re looking for baby items, you don’t have to drive all over town looking for them. You can simply target the yard sales that have baby stuff available.

Because not all Craigslist listings have an exact address, they’ve included a section where you can browse more listings. Just click the “Other Ads” tab and cycle through. This is an excellent way to find neighborhood sales. They have apps for Android and iPhone as well.

Something I didn’t consider growing up is that yard sales offer more than just bargains. They allow you to:

  • Practice your people skills and the art of negotiation
  • Interact with your neighbors if the yard sale is near your home
  • Get exercise while walking around
  • Enjoy the nice weather during the warm summer months

Yard sales allow you to stretch a buck, but they offer so much more than that. If you haven’t already, plan to go at least once this year.

What do you like most about yard sales? 

Photo by blogs.momaha.com

Ripoff Report #3 – Cell Phone Cramming Edition

The Ripoff Report is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Cramming

According to the FCC, cramming is “the practice of placing unauthorized, misleading or deceptive charges on your telephone bill.” Providers of cell phone service, traditional land line service, and business line service cooperate with third-party marketing organizations to put unauthorized charges on your account.

For individuals the charge typically ranges from $3-$5 a month, and for businesses it’s more like $20-$30 a month. The phone companies are hoping you won’t notice such a small amount. Multiplied over thousands of accounts, this is real money for service providers and third-party marketers, who split the spoils. (Doesn’t this get your blood boiling?)

A little over a year ago as I was going through our family cell phone bill, I noticed a suspicious charge for $10 on my sister’s line. It had a vague description like “membership fee”, so I called them up and asked what it was for. Apparently she had signed up for a monthly ringtone service via text and was being billed $10 a month for it. However, my sister said she hadn’t signed up for anything. So I asked them for a credit on my bill, and I was surprised when they offered to credit the entire total of charges going back 6 months.

Most consumers and small business owners, however, don’t go through their cell phone bills every month to see what they’re being charged for. Be suspicious of items like “monthly usage fee”, “service fee”, or “membership”.

Cramming can occur even if you’ve authorized a service but were misled about how much it would cost. And next time you get a spam text, don’t ignore it because it could be a warning sign that your phone company is about to rip you off.

There’s a federal law that requires phone providers to clearly explain each charge on your monthly bill, but this doesn’t mean they always follow the law. You need to go through your bill each month and check for phony charges. Basically, you should call your provider and question anything that is unclear. In most cases you’ll be offered a 2-month credit on your bill.

Has your phone company tried to rip you off with one of these charges?