Community Ladders will have a table at the Terp Marketplace in Van Munching Hall from 11 – 2 on Tuesday, September 20th, at the University of Maryland, College Park.
Please stop by if you’re in the area!
Ralph Nader recently used some of his consumer advocacy experience for his own benefit, winning a cash refund from US Airways on an unused ticket. He attributed his success to three little words – small claims court. “I read a lot of consumer books, and almost all of them completely ignore small claims court,” Mr. Nader told the New York Times. “Few people know how simple the forms are, how accommodating the judges are. A lot of them are even open at night.” (via The Consumerist).
Small claims courts usually have simplified procedures and lower filing fees to make it easier for people to represent themselves in court for cases that don’t have a lot of money at stake. In DC, MD and VA a case can be brought in the small claims court if the amount in controversy is less than $5,000.
Benefits of Small Claims Court
- Simplified Pleadings
Many states provide simple forms for filing a complaint in small claims court. You fill out the name and address of the plaintiff and the defendant, explain in plain English what the dispute is about, and what amount of money you’re claiming the defendant owes you. - Lower Filing Fees
You have to pay an administrative “filing fee” in order to file a lawsuit. The fee for a small claims case is usually much cheaper than in other courts. - Speedy Trials
Cases in small claims courts usually move more quickly than a traditional lawsuit, and can be resolved in a few months. One reason for this is that small claims courts usually limit what motions parties can file and what discovery can be done. The idea is that the parties need to have their own evidence, and a lot of the issues can be worked out at trial. - Informal Proceedings
Hearings and trials in small claims court can usually be conducted informally (more Judge Judy than Law and Order). This makes it easier for a pro se litigant to present the facts of his or her case to the judge, without worrying too much about technical rules of evidence.
Disadvantages of Small Claims Court
Small claims court can be a great place for an individual to represent themselves on small disputes with companies or individuals. However, there are also some real downsides. The limited discovery means that you don’t get a chance to find out what evidence the other side is presenting, to talk to their witnesses before the trial, or to find out if they are hiding anything from you. The lack of motions means that you often have to be prepared for an entire trial without having resolved many issues ahead of time. As one judge once told me, small claims was “trial by ambush.”
Conclusion
Any legal case can be complicated, especially if the other side is represented by an attorney. If you have questions, you should consult an attorney for advice or talk to courthouse staff about what resources there might be to help you file or defend a small claims action. For instance, D.C. has a Landlord-Tenant Clinic and Consumer Law Helpdesk at the courthouse where volunteer lawyers help explain law and procedure if you’re representing yourself.
More Resources
As our members know, at Community Ladders we tend to be obsessive about certain things – like saving and preserving every last dollar. We are also obsessed with information security, which is why I wanted to take a moment to talk about how we protect our members’ information.
First off, we take in very little information. This is certainly by design. We know that almost all electronic and physical information can be stolen by a motivated criminal, so the less information we retain the better. We only ask members for their contact information (e-mail and phone), month and year of birth (not the day), their account balances, and (at their option) a unique, shared password to a Mint.com account. We never have access to other passwords or any account numbers, even through Mint.com’s read-only service. Even payments are handled exclusively through PayPal, so we never store your payment information.
[Those that have their taxes prepared by Community Ladders, however, do submit a social security number and other vital information. We do not disclose publicly our security measures for protecting this information; our approach is only shared directly with those tax clients.]
Secondly, we try to make it difficult for would-be thieves to steal information. I usually explain this with an analogy to The Club® used on car steering wheels. The Club® will not defeat a motivated thief, but the trick is to make your car look more challenging than the one next to it. Criminals, it turns out, tend to be lazy and go for the easier score.
Here are some of our security measures designed to deter information thieves:
- We use only password-encrypted (WPA2/AES) Internet connections, including a dedicated account for our members to use during their meetings with us
- We use a tunneling VPN for communications when traveling
- We shred, and dispose of off-site, any financial information retained – and no longer needed – on our members (though we seldom keep financial paperwork, like account statements, from our members in the first place)
- Our building has controlled access and a front desk attendant 24-7.
When it comes down to it, the security of our members’ information is a partnership. Only if our members take similar precautions on their end (especially encrypted Internet), can we encourage information thieves to move on to other, less vigilant, targets.
We’ve all heard horror stories about people who have had bank accounts hacked, credit cards stolen, or credit ruined by identity theft. Here are 5 ways to protect yourself from identity theft:
- Use secure passwords and PIN numbers
One way to keep your information safe is to use a secure password manager, such as 1Password, to generate strong passwords and keep track of them. We all know that we’re supposed to use complicated passwords for our online accounts, but it is still tempting to just use one or two passwords we can actually remember. Passwords should have a mixture of numbers, letters and symbols and should not use words in the dictionary or easily available information (e.g. mother’s maiden name or your birthday). A somewhat counter-intuitive, but arguably stronger and easier-to-remember approach, is to use passphrases.
- Buy a shredder (and use it)
Identity thieves can glean important personal information from that mountain of credit offers, bank statements and insurance correspondence you get in the mail. Invest in a good cross-cut shredder and use it to dispose of any mail that has your financial or personal information on it (including your address or birthday). For disposing old credit cards, checks, and such without access to a shredder, our founder (Bill) recommends throwing away different parts of the cut up card in different waste streams (e.g. different fast food restaurants – no one wants to look through that garbage!).
- Beware of Phishing Emails and Phone Calls
Phishing” emails are spam that mimic messages from your bank or some other trusted source in an attempt to glean your password information. Frequently, these emails ask you to click on a link to login to your account. The link will take you a website that looks like your trusted source, but you’re really giving your password information to thieves. Modern web browsers try to alert you to such attacks, but be on guard. Check the http address carefully (a recent phishing attack directed me to www.ltwitter.com instead twitter.com). You can also manually enter the company’s address into the browser instead of clicking the link. This advice holds true for giving out “account verification” information when you receive a phone call from your bank. It is safest to politely hang up and call the bank’s main number yourself.
- Monitor your Credit Report
In our last newsletter (and in the related August blog post), we talked about how you can get your free credit report through AnnualCreditReport.com. Checking your credit report regularly will help you catch suspicious accounts early so that you can fix the problems before they get out of hand. In addition to accounts you haven’t opened, be on the lookout for addresses where you never lived – one common identity theft tactic is to change your address with the banks so that you don’t see statements with fraudulent transactions. Our members will recall that watching your credit report over the year is the reason we often request that you use annualcreditreport.com during your first, third, and ninth month of membership.
- File an Initial Fraud Alert the Moment You Suspect Something
If you suspect your data has been compromised, you can file an initial fraud alert by contacting the fraud departments of each of the big three Credit Bureaus (Experian, Equifax, Transunion). See our adjacent blog entry (“Help! My Evil Twin Stole my Identity!”) for more information. A fraud alert is basically a note attached to your credit file that encourages (word choice here is on purpose – an alert is not a permanent solution, nor does it always work) creditors to contact you to confirm your identity before opening a new credit account. An alert lasts for 90 days, after which you have to call the Bureaus again to renew it. In serious situations, you can request a freeze on your credit report. This means that the Bureaus will not release your credit report until they have confirmed your identity and gotten authorization over the phone. Credit freezes are not without their drawbacks, so we only advise members to use it in certain cases based on an evaluation of their individual circumstances.
Evil twins make for great television, but terrible credit scores. As many as 9 million Americans are victims of identity theft each year, and many more have their personal information compromised. Identity thieves are frequently professional criminals who get your personal information from the trash, skimming credit card information (through portable card copiers), your personnel records at work, and online “phishing” attacks. It’s important to keep an eye on your credit report both to protect against errors and to make sure no one is using your good name for their own benefit. Below we discuss some steps you can take if your information has been compromised or your identity stolen. For more in-depth coverage, we recommend the Federal Trade Commission’s identity theft site where you can find templates for the letters we discuss below.
- If you’re the victim of identity theft or simply had your personal information compromised, your first step is to close any fraudulent or compromised accounts by calling security or fraud departments at the accounts you are aware of. Most financial firms have 24-7 fraud alert lines. Make sure you are being routed to the fraud department and not just a general customer service representative.
- The next step is to place an initial, 90-day fraud alert on your credit file with each of the Credit Bureaus (Equifax, Experian, and Transunion). Technically you are only supposed to have to file a fraud alert with one bureau and they alert the rest, but at a minimum you should check back after 48 hours with the other two bureaus to be sure they’ve instituted the alert. Initial alerts can usually be filed online, and the links to the bureaus’ main sites are found at the bottom of this blog post. Each bureau will send you a confirmation letter that a fraud alert has been placed on your file. This alert will make it more difficult for impersonators to open new accounts in your name (by prompting additional steps to verify your identity when your social security number is used to apply for credit). You can also request a credit freeze, which effectively blocks access to your credit report to all potential creditors. Whether or not a credit freeze makes sense depends on one’s individual circumstances. Therefore, we won’t discuss it further here.If you can prove that your information was stolen (i.e. you filed a police report), an extended fraud alert and credit freeze will often be free of charge. If you cannot, you can still add an extended alert and credit freeze on your account (it usually costs around $10 for each of the three bureaus).
- Once you’ve placed the fraud alert, request an up-to-date report from each bureau. The fraud alert entitles you to a free report from each bureau separate from your annual freebie (see our previous, August blog post for more on free reports). Review each report and make a list of all incorrect or suspicious entries.
- The next step is to file an Identity Theft Report (ITR) by filing a complaint with the Federal Trade Commission (FTC) and making a police report (if you haven’t already done so). You can file the FTC report online or by calling 1.877.ID.THEFT. Then call the local police non-emergency number and file your identity theft complaint. Some jurisdictions allow you to make reports over the phone (D.C.) or online (Arlington County). If you have to go to the police station, bring a printed copy of your FTC complaint, this cover letter (PDF)explaining the ITR, and your supporting documentation. Ask the officer to attach or incorporate the ID Theft Complaint into their police report.You need a copy of the Identity Theft Report – and the police report with your ID Theft Complaint attached or incorporated – to dispute the fraudulent accounts and debts created by the identity thief. If you can’t get an official copy of the report, ask the officer to sign your FTC complaint and put the report number into the “Law Enforcement Reports” section of the complaint.
- Once you’ve completed the Identity Theft Report, you should send a follow-up letter – by certified mail – along with copies of the Identity Theft Report and any supporting documents (e.g. police report) to each of the Credit Bureaus.
Disputing Fraudulent Charges/Accounts
You can dispute fraudulent information by sending each Credit Bureau (CB) a copy of your ITR along with a cover letter explaining what information is fraudulent and that the information does not relate to any transaction you made or authorized. You’ll also need to provide proof of identity, such as social security number, name, address and other information they request (they will have specific requirements listed). The CB has four days to block the information from your account.
You should also dispute these items directly with the creditor. For fraudulent charges on an existing account, ask the company’s fraud division to send you their fraud dispute forms and confirm the proper address for “billing inquiries” with the company (not where your payments are sent). For a fraudulently opened account, send a copy of your identity theft report by certified mail along with a cover letter explaining that the account was opened fraudulently. Request written confirmation that the company has closed the disputed account and discharged the debt.
Credit Bureau Contact Information
TransUnion
Fraud Victim Assistance Division
P.O. Box 6790Fullerton, CA 92834
1-800-680-7289
Equifax
P.O. Box 740241Atlanta, GA 30374
1-800-525-6285
Experian
P.O. Box 9554Allen, TX 75013
1-888-397-3742
Our team wanted a new way for our friends and family to get to know Community Ladders, so we’ve cooked up this great deal – one-time advising sessions for individuals ($50 for 90 minutes) and couples ($75 for 120 minutes). Offer ends Sept 7, 2011. Appointments are available through Sept. 21. If you decide to become a member, your session payment is fully credited toward monthly dues.
At Community Ladders, we firmly believe in our long-term, interactive planning model. We are not offering these one-time sessions to supplant or replace that. Rather, our team wanted to give their friends and family a chance to sample what we’re about (financial planning quite literally around a kitchen table), and see for themselves if it’s a good fit. We are a new concept in personal financial planning (both in our social mission and our approach), and we understand that people will want to kick the tires before going for a drive.
Go ahead! Take a bite!
C-L Launches Group Planning Seminars
Community Ladders just launched group planning seminars, a very effective and affordable way to get exposure to great financial advice in a community setting. Gather your friends, colleagues, or family together for a 2-hour session for $10 per person. Since the session contains only general advice, there is absolutely no need to share any personal information!
Group general sessions are $50 for groups of 5 or less, and $10 per person for groups of 6 or more.
At Community Ladders, we firmly believe in our long-term, interactive planning model. We are not offering these general planning sessions to supplant or replace it. Rather, our team wants to give people a chance to hear great financial advice along with members of their community, however defined. We are a new concept in personal financial planning (both in our social mission and our approach), and we understand that people may like to hear our planning concepts and learn and receive great advice, but who aren’t ready to have someone work with them on their finances one-on-one.
There is one site that is sanctioned by the U.S. government to provide a free copy of your credit report from each of the three bureaus, once a year. Mind you, this is just your credit report, and doesn’t include your score (that costs money). At Community Ladders, we don’t pay much attention to scores, because everything we do is designed to boost one’s score going forward. Getting a score – in most cases – is just a cause for anxiety. That said, if people are anticipating needing credit in 6 to 12 months (say, for a car or home), we engage in a myriad of tactics to boost credit scores in the short term.
Getting copies of your credit reports, on the other hand, is something everyone should do. At Community Ladders we ask members to pull their free file for their first session, then around month 3, and then in month 9. On their membership anniversary, we start the process again. This cycle gives us a chance of spotting credit fraud (i.e. new accounts that you don’t recognize). That said, there is nothing wrong with getting them all at once. For members with particularly complicated credit histories, I will often ask them for all three so I know exactly the work we have to do to repair his or her credit.
When you go through annualcreditreport.com (or call 877-322-8228), you will choose one credit bureau at a time to request your report. Two things to keep in mind: 1) Most of the time you have the option to mask your whole social security number from the online output. – DO THIS!, and 2) You are often given a summary first (from 1 to 5 pages) – this is NOT your report. Look for a button that says ‘Print Report’ or ‘Print Full Report.’ Click this and save the resulting file (which can be anywhere from 8 to 45 pages) as a PDF or the like. Keep the file in a safe place, and print a hardcopy if you’d like.
If you are e-mailing or putting it in your shared Dropbox folder to share with your Community Ladders advisor, be sure it does not have your social security number in it and use a passworded/encrypted internet connection that you trust.
What to Look For: Your credit report will have three major sections: personal information, accounts with negative information, and other accounts. Review each of these sections thoroughly to make sure that there aren’t any errors. Check that your names and addresses listed are accurate, you recognize all of the accounts (whether negative or positive), and that the payment history, balance, and account statuses are correct.
How to Fix Credit Report Errors
A purported 80% of credit reports contain errors, ranging from missing accounts to fraudulent ones. Even scarier, an estimated 25% of reports have errors that can result in denial of credit. This post describes how to fix errors and omissions.
First off, disputing information on your credit report is free, unless you enlist someone to help you with it.
The easiest first step for fixing biographical problems and missing accounts, is to contact the three bureaus (Equifax, TransUnion, and Experian) directly. This page contains links to online dispute submission forms for all three bureaus. You must file a dispute with each bureau in which the erroneous information is found.
If you are disputing a specific missed payment, the terms of a given account, or payment history, the best first step is to contact the lender directly. If the lender agrees that it’s an error or they’ll remove it as a courtesy, ask them to direct the changes to ALL 3 credit bureaus.
If you can’t get resolution directly from the lender, you can try the online dispute page listed earlier.
If this still doesn’t work, it’s time to kick it up a notch. You can send a letter by certified mail to the bureau listing each error, the reason for your dispute, and asking that the credit bureau to remove or correct the information. Include copies of any supporting documents with the letter. If you are in a dispute about an amount owed to a lender, never admit in writing that the debt is valid.
The bureaus are required to investigate your dispute within 30 days and notify the creditor of your dispute. The creditor must investigate and review the information you provided and report back to the bureau. The bureau will give you a written report of the investigation (and a free credit report if any information changed). If the investigation doesn’t resolve your problem, you can request that the bureau include a statement of the dispute in your file for future reports. A dispute letter, in practice, isn’t very helpful. Most creditors I’ve talked to personally have said that lenders typically only look at the credit score and don’t bother reading any letters attached to the credit file.
If all else fails and you still feel like you were wronged, you might consider going to a lawyer with your case. But, most of the time, the above will work sufficiently. In other words, it almost always works, but is almost always an unpleasant hassle.
For Community Ladders’ members, we’ve so far been able to address and correct credit reports without formal legal action.
FICO® is the only judge in the credit beauty pageant. Your credit history, kept with the three credit bureaus, is fed into FICO®’s proprietary (read: secret) equation and out spits your credit score. Much like cattle, you don’t have a choice in whether or how you’re branded. Yet, on this score you will be judged by banks, landlords, and employers.
A credit or “FICO” score is a number (inexplicably between 300 and 850) that evaluates your past use of credit. The Fair Isaac Corporation (hence the term “FICO”), created and modifies the formula used to determine credit scores. You have a separate score with each credit bureau, using the data that they have gathered. While these bureaus will give you your credit score (for a price), this may not be the number they report to banks. They frequently use a more sophisticated algorithm for your “real” credit score than for the one they sell you.
Generally, your FICO score is based on payment history (35%), amount of outstanding debt (30%), and the types of credit you currently have, the number of inquiries on your credit, and the length of time you’ve had credit.
Here are a few things you can do to improve your credit score:
- Always pay your bills on-time
Late payments can substantially drop your score and may stick around for a bit over seven years. Plus, credit card companies will charge you a hefty late fee AND may raise your interest rate to a “penalty” amount of, say, 24%. If you are late with a payment, call your creditor as soon as possible and explain the situation. They will frequently waive the late fee and you can ask them not to report the payment as late. - Pay down your revolving debt (i.e. credit cards)
You want to have your ratio of available credit to outstanding debt of less than 30%. For example, if you’ve got a total of $10,000 in available credit, you shouldn’t owe more than $3000 on those cards. Installment loans (car loans, mortgage, student loans) will also affect your score, but not as much as revolving debt if you consistently make on-time payments. - Establish a solid credit history
Not having enough of a credit history (called a “thin file”) can hurt your credit score. You want your credit report to reflect a proven track record of taking out credit and paying it back on time. Unfortunately, paying off student loans and using your debit card generally will not be sufficient for building a credit score. If you’ve managed to swear off debt, you should still keep a couple of credit cards (preferably your older accounts). Build (or maintain) your credit history by using the cards once or twice and paying off the balance off each month.