What's New With Financial Pitfalls? (August 2019)
For College Students
Once students turn eighteen, they are legally adults. Their parents no longer have a say in their health care or legal decisions (or grades—unless you and your student sign a Family Educational Rights and Privacy Act (FERPA) waiver.) So what happens if the student has a medical or financial emergency? An article from Kiplinger has been gaining traction as it advises families to get four legal documents in place when a child turns 18. Many are documents that are associated with wills and estate planning, but they are useful for these “new” adults as well.
1) A Living Will (advanced directive) would keep a parent or health care practitioner from guessing what the young person would want should they fall into a vegetative state.
2) With a HIPAA Authorization Form, a young person can authorize their parents to receive information about their health status, progress and treatment.
3) A Health Care Proxy would be needed for a parent to be able to make decisions for their adult child should he/she be unconscious and unable to make a decision for themselves.
4) A General Durable Power of Attorney allows a parent to handle financial and legal issues on behalf of their adult child, like registering a car or filing taxes.
Here is a scam hitting college students particularly hard. Someone tells them they can make cash quickly, all they need to do is cash a check for this person and give them the cash and they will be able to keep some of it. It is a fraudulent check, and the trouble starts there. It seems to be no big deal, but it is. Don’t ever cash a check for someone else, especially someone you don’t know. (Yellowhammer)
Synthetic fraud is the fastest growing type of fraud today. By 2016, 20% of credit losses were synthetic. What exactly is it? Perpetrators of synthetic fraud use components of peoples’ identities to fabricate a new “synthetic” financial identity. Large data breaches have given these scammers lots of data from which to draw. And because a real person is not impacted, at least not directly, it is much harder to detect. However, institutions are feeling the hit.
Synthetic fraud has really take off, especially since 2011, when the Social Security Administration stopped assigning Social Security Numbers based on geography (they were running out of numbers in highly populated areas.) Instead, social security numbers were assigned randomly. This makes it easier to throw random components together. Who will this hurt, other than institutions? Most likely, it will hit the children born since 2011, but they won’t know it until they apply for their first credit card, car loan or student loan and learn that there is a credit history attached to their social security number. They will have to prove they are the rightful owner of that social security number and that they are the victim of identity theft, and not the one trying to commit the fraud.
You may wonder how this synthetic identity gets established. Actually, the initial application for any type of credit using this synthetic identity automatically generates a new credit profile. Even if this “person’s” application is rejected, the credit profile is there and “legitimizes” the identity.
Given what what just discussed, it might be a good idea to check your children's credit report periodically. Experian offers advice on monitoring a child’s credit report (there shouldn’t be one), and what to do if you find something.
Reducing your chances (or elderly parents’) risk of becoming a target of scammers can be done with a few actions on your part, and a little vigilance. Liz Weston of Nerd Wallet offers these suggestions.
- Put yourself on the federal Do Not Call list.
- Sign up for a telephone call blocking system, such as NoMoRobo, and let unknown callers go to voicemail.
- If you give out personal information, be sure you know who you are giving it to, and why they need it.
- Don't make investment decisions based solely on a phone or email pitch or an ad.
She goes on to suggest that overconfidence can be your downfall, as can loneliness. We have all hear stories of those online romances that end up with a sob story and the person falling for it with an empty bank account. Be wary of those dating apps!
Seniors are particularly vulnerable to fraud and scams. They are usually polite and often trusting. They could be the target of someone trying to get close enough to steal from them. A local Queens (NY) newspaper offers a list of warning signs than an elder family member or friend may be the subject of a scam/abuse.
- unusual or large withdrawals from bank accounts or uncharacteristically large credit card charges;
- checks that are unaccounted for;
- elderly individuals suddenly forming a close relationship with someone, frequently younger persons;
- newly-executed documents, such as a will or power of attorney;
- changes in account beneficiaries;
- a large number of unpaid bills;
- missing property; and
- sudden social isolation.
And then there is the Social Security scam, where you are informed via Robo-call that your Social Security number has been suspended because of suspicious activity, and you are told you have to pay a fee right away or lose your benefits. You can imagine how threatening that would sound to someone relying on those Social Security checks. Just make sure the seniors in your life know that the Social Security Administration will never call them. (WAPO)
Do you know what to do to protect yourself if you think there has been some suspicious activity with your financial business, or just want to be extra cautious? Yahoo Finance posted the steps you take to put a fraud alert on your credit report (see below). This will make it harder for a potential thief to open an account in your name.
- Contact Experian, Equifax or TransUnion (you only need to contact one of the three major credit bureaus).
- Request that the credit bureau place a fraud alert on your reports.
- You can either let the alert remain on your file until it expires or choose to remove it early if needed.
- Once the alert expires, decide whether to renew it or enroll in
Protecting your digital world
Did you realize how much information is connected (publicly) to your cell phone number? It may be safe to use it for two-factor authentication with your bank, but this NYT article will make you think twice before giving it to anyone else. You may even take it off of your business cards, or get a dummy phone number to use (that gets forwarded to your actual phone) to give out to those you don’t trust. And there are often options to using your phone for two-factor authentication as well.
And if we aren’t now paranoid enough, you won’t borrow a phone charger or charge your phone in an airport USB station again!!! (Forbes) Hackers can implant malware in chargers and remotely hack into your phone, stealing all of your information. This is also true for the USB charging stations. Is it widespread? Not yet, but it doesn’t mean you shouldn’t think twice before doing either. Think of your charger as underwear--don’t leave home without it, and don’t think about borrowing it from someone else (unless you know them very well!) Use your own charger and plug it in to the socket, not the USB.
Protecting your home router and security cameras from hackers is important to your overall security. NBC ran a story based on Consumer Reports information with some good, clear steps.
For the router:
- Update firmware
- Turn off features you don’t need
- Change the password (to something strong)
- Set your router’s security settings to WPA3, if available, or WPA2
For the cameras:
- (Check Consumer Reports for highly rated cameras)
- Update Firmware
- Change password and select a strong, unique one
- Use two-factor authentication, if available.
Be safe out there folks!
About the Author
Beth Tallman entered the working world armed with an M.B.A. in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducting student workshops, and developing finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.
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