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ACTIVISM & VISION

AlterNet / By Lauren Kelley

The 5 Most Outrageous Examples of Hidden Charges Companies Pass Off on Consumers -- And How to Fight Back

Americans pay hundreds of dollars each year in hidden fees. Here are the most egregious examples that every consumer should be aware of, plus ideas for fighting back.

January 15, 2012 |

Photo Credit: meddygarnet on Flickr

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It seems like consumers are being squeezed from every angle these days. Our grocery bills are getting larger and other expenses going through the roof at the same time that many of us are losing jobs and having to downsize.

The Occupy Wall Street movement has helped spur a national dialogue about the financial sector’s role in the erosion of the U.S. middle class. But Wall Street mega banks aren’t the only corporations that have swindled American citizens; many of the companies we rely on for our food, transportation, and communication needs are also treating consumers unfairly by saddling them with a plethora of hidden fees and surcharges.

The average U.S. adult pays at least $942 each year in hidden fees, according to research conducted by the Ponemon Institute in 2006. Six years later, it’s unlikely that this number has gone down. If anything, industries that took a financial hit during the recession are passing more fees onto consumers than ever, regardless of whether they’ve recovered.

A comprehensive list of the sneaky fees companies palm off on consumers could go on forever, but here are five particularly egregious examples that every consumer should be aware of – followed by a list of ideas for fighting back.

1. Banks and credit card companies

The financial industry is infamous for its shady fees, and with good reason. You’re probably familiar with many of the charges banks and credit card companies impose, for things like account overdrafts, cash advances, stop-payment services, balance transfers, purchases made outside the U.S., late payments, payments made over the phone, lost card replacements, account minimums, and even the “privilege” of speaking to a bank teller.

Credit card and bank fees have become both more common and more expensive in recent years, even as new regulations have sought to keep institutions from taking advantage of consumers. In fact, some of the newest – and sneakiest – charges are in direct response to government regulation. For instance, after rules were passed in 2010 limiting banks’ use of overdraft fees, banks responded by quietly increasing maintenance, wire transfer, and other fees and implementing new charges on services like mobile phone deposits. Banks have responded to consumer outrage in a similar fashion; after consumers revolted against Bank of America’s plan to introduce a $5 monthly charge for some debit card users (a plan other big banks intended to implement as well), the banks instead turned to ATM surcharge increases to pad their bottom lines.

The fees are bad, but even worse is the fact that many of the charges are not disclosed to consumers. According to a recent report from the Pew Charitable Trusts’ Safe Checking in the Electronic Age project, the ten biggest banks disclose an average of 49 fees on their websites – but there are many fees that are hidden, most commonly regarding account overdrafts. The report recommends that the new Consumer Financial Protection Bureau require banks to offer customers a one-page fee disclose box, as credit card companies are now required to do. (Although it is an imperfect system, it's at least a start.)

2. Cell phone companies

According to one estimate, most American pay $300 a year more than they should for cell phone service. For anyone with a cell phone, that is not hard to believe. In recent years, carriers have greatly increased charges for directory assistance, text message overages, Internet access, and “early termination” of one’s contract, especially for smartphones and other hot devices.

Consumer Reports says that one of the biggest ways cell phone companies rip consumers off is by encouraging them to sign up for plans that leave them with large quantities of unused minutes.

Cell phone companies have also been known to charge customers for services that they do not yet offer and allow third-party companies to attach mystery costs to customers’ bills – a practice called “cramming” that has cost consumers at least $2 billion since the 1990s, according to a 2011 investigation by the Senate Commerce Committee. An accompanying report concluded that often “customers do not know these [third-party] services have been set up for them and mobile providers are reluctant to clarify the process because they make money from the extra charges.”

3. The “grocery shrink ray”

If you have the vague sense that you’re paying more but getting less at the grocery store these days, you aren’t imagining things. The Consumerist, a watchdog blog published by Consumer Reports, has been keeping an eye on the so-called “grocery shrink ray” effect since 2008. On the site, you can find page after page of blog posts documenting products that corporate food companies have quietly shrunk in size while charging consumers the same amount. Salad dressing, laundry detergent, breakfast cereal, shaving cream – it seems that no product has been spared from the shady shrink ray effect.

At the beginning of last year, Consumer Reports magazine took an in-depth look at this trend and found that companies have reduced package sizes by as much as 20 percent. (Ivory dish detergent, which used to come in a 30-ouce bottle, now comes in a 24-ounce size; Haagen Dazs ice cream containers used to hold 16 ounces, but now hold 14.) The magazine noted that most consumers are not aware of these tricks. “Manufactures make subtle changes to the packages but generally keep the price the same because when prices rise, buyers often seek cheaper alternatives,” noted a blog post discussing the findings. “And the bottom line is that consumers are more attuned to changes in price than packaging.” The magazine’s advice? Pay attention to the per-unit price, and buy in bulk whenever possible.

4. Cable companies

If you’re anything like me, you have a pretty dysfunctional relationship with your cable subscription. It costs a ton, and you don’t really understand what you’re paying for, but every time you think about sticking it to the evil cable company and quitting, the conversation comes back to “...but Mad Men comes back on in just a few months.” Netflix and Hulu are great, but for many of us they haven’t been able to replace that infuriatingly pricey cable box in our living rooms.

Why the fury? Because the whole cable (and satellite) TV enterprise is just so darn anti-consumer. There are the awful cable plans, which force customers to pay for a-million-and-one channels they don’t care about in order to watch the three they actually want. And in many markets, such companies are near monopolies, allowing them to pack customers’ bills full of hidden charges for cable boxes, DVR services, early termination, and repair services, even if the company’s products are to blame. Often companies will lure customers in with proclamations like, “Pay only $20!” Of course, they hide the real details of the deal ($20 a month for the first three months, then $80 a month, with fees X, Y, and Z) in the small print.

5. Airlines

I saved the big daddy of hidden fees for last. Perhaps you’ve seen the commercials on TV lately that promise “perks” like a free checked bag if you sign up for a pricey membership club. The airlines are trying to pass off free checked bags – something that was a basic service just a few short years ago – as an exclusive “deal” that customers should feel lucky to get.

Hidden airline fees were always obnoxious, but airlines became much more flagrant about them after the recent financial crisis wreaked havoc on the industry. Fees for things like rebooking a flight have gone up, and it’s become more common not only to charge for checked bags but also for in-flight snacks. (As anyone who’s flown in recent years knows, long gone are the days on in-flight meals, except on the longest excursions.)

However, there is some good news to report on this front: it was just announced that the government is forcing airlines to disclose more of the taxes and fees that go along with each ticket, so customers will get a clearly idea upfront of what they’ll have to pay to fly.

Now that your blood is probably boiling over all these fees, here are a few practical ways that consumers can fight back.

1. Lobby for more consumer-friendly legislation. Anytime you hear about policy groups that are pushing legislation to hold companies accountable and protect consumers, call or write your local and federal lawmakers and support that legislation. Without strong regulation, corporations will continue to do what they want – and what they want to do is make money, consumers be damned.

2. Start a petition. I’m of the mind that to see real progress, we have to push for system-wide change. But sometimes, a petition targeting one bad practice at one company can be extremely effective. Take for instance the Change.org petition that recent college graduate Molly Katchpole launched this past fall targeting Bank of America’s proposed $5 monthly debit card fee. The petition garnered more than 300,000 signatures in mere weeks, and the effort is widely cited as having influenced Bank of America’s decision to drop the fee. (Full disclosure: this author is a former freelance writer for Change.org.)

3. Harness the power of user-review websites. The rise of user-review websites like Yelp has been great for consumers, because such sites democratize consumer information. Maybe you noticed that the value of your favorite local service has gone down the toilet; you can now let others in your community know, and find out similar information yourself. A business’s marketing strategy can only take it so far if it has a one-star Yelp rating, so companies have more of an incentive now to do right by customers.

4. Join a protest. If you haven’t already, consider lending your voice to the Occupy Wall Street movement, which has sparked an invaluable national dialogue on corporate greed and the rights of the 99%. Help that conversation continue to grow.

Lauren Kelley is an associate editor at AlterNet and a freelance writer and editor who has contributed to Change.org, The L Magazine and Time Out New York. She lives in Brooklyn. Follow her on Twitter here.

Report: Massive Movement Needed to Fix 'Perverse Concentration of Wealth'

Published on Friday, January 13, 2012 by CommonDreams.org

Report: Massive Movement Needed to Fix 'Perverse Concentration of Wealth'

Honoring Martin Luther King Jr. while perpetuating the racial divide

-CommonDreams staff

Martin Luther King's dream of racial equality is far from reality.

Census Bureau figures show the U.S. on track to be a majority minority nation by 2042. But if the trends of the last 30 years continue, according to a new report, the economic racial divide is set to increase.

The non-partisan group United for a Fair Economy's (UFE) ninth annual MLK Day report, State of the Dream 2012: The Emerging Majority finds that racial economic divide will remain "disastrously large and will threaten the stability of the entire economy."

While the numbers of people of color in the nation surge, this fact alone is not enough to change the economic reality. From the report:

In the age of mass media and Citizens United, money buys influence, and the national income and wealth will remain over-whelmingly in the hands of Whites – a small group of Whites at that.

"The early 1980s marked a turning point in U.S. politics. Reagan sparked a 'me-first' ideological revolution in Washington, D.C. and beyond," says Brian Miller, Executive Director of UFE and a co-author of the report. "The policies since have done little for economic progress for people of color, which should raise great concern as these demographic shifts occur. Without a sea-change in public policy, racial inequality will devastate our economy as people of color become the population majority."

"Income and wealth inequality lend to a host of other social inequalities that keep people of color locked into cycles of hardship and poverty," says Wanjiku Mwangi director of UFE’s Racial Wealth Divide program. "If we do not change course, our economy will not be able to provide for the swelling numbers of Blacks and Latinos out of work, in poverty and in prison."

"As a nation, we honor Martin Luther King Jr. with a holiday, but we tolerate the perpetuation of racial inequality that he dedicated his life to fighting," says co-author Tim Sullivan. "The growing share of the non-White population presents an opportunity for Blacks and Latinos to build political power. In this era of extraordinary economic inequality, the fate of the vast majority of the White population is more connected with the economic interests of Blacks and Latinos than with the ruling political elite."

From the report's key findings:

• Disparities in income perpetuate poverty in communities of color and will continue to do so unless change is made.
• Increasing wealth inequality entrenches the racial economic divide.
• Education is one of the most important tools we have for increasing social mobility, yet dramatic disparities in education perpetuate inequality.
• The mass incarceration of people of color is historically unprecedented.

Democracy Now! also remarked this morning on the mass incarceration:

Today there are more African Americans under correctional control, whether in prison or jail, on probation or on parole, than there were enslaved in 1850. And more African-American men are disenfranchised now because of felon disenfranchisement laws than in 1870.

In order to abolish this inequality, the group contends, a massive movement is necessary:

Eliminating racial inequality will require a powerful and sustained political movement, aligned not just along the lines of race, but also by economic interests. The renewed national debate about who benefits from the economic system, who doesn’t, and why–a debate inspired in large part by Occupy Wall Street–presents an opportunity to build such a movement. The perverse concentration of wealth and power in the U.S. is central to both Occupy Wall Street and efforts to close the racial economic divide.

Published on Friday, January 13, 2012 by CommonDreams.org

Report: Massive Movement Needed to Fix 'Perverse Concentration of Wealth'

Honoring Martin Luther King Jr. while perpetuating the racial divide

-CommonDreams staff

Martin Luther King's dream of racial equality is far from reality.

Census Bureau figures show the U.S. on track to be a majority minority nation by 2042. But if the trends of the last 30 years continue, according to a new report, the economic racial divide is set to increase.

The non-partisan group United for a Fair Economy's (UFE) ninth annual MLK Day report, State of the Dream 2012: The Emerging Majority finds that racial economic divide will remain "disastrously large and will threaten the stability of the entire economy."

While the numbers of people of color in the nation surge, this fact alone is not enough to change the economic reality. From the report:

In the age of mass media and Citizens United, money buys influence, and the national income and wealth will remain over-whelmingly in the hands of Whites – a small group of Whites at that.

"The early 1980s marked a turning point in U.S. politics. Reagan sparked a 'me-first' ideological revolution in Washington, D.C. and beyond," says Brian Miller, Executive Director of UFE and a co-author of the report. "The policies since have done little for economic progress for people of color, which should raise great concern as these demographic shifts occur. Without a sea-change in public policy, racial inequality will devastate our economy as people of color become the population majority."

"Income and wealth inequality lend to a host of other social inequalities that keep people of color locked into cycles of hardship and poverty," says Wanjiku Mwangi director of UFE’s Racial Wealth Divide program. "If we do not change course, our economy will not be able to provide for the swelling numbers of Blacks and Latinos out of work, in poverty and in prison."

"As a nation, we honor Martin Luther King Jr. with a holiday, but we tolerate the perpetuation of racial inequality that he dedicated his life to fighting," says co-author Tim Sullivan. "The growing share of the non-White population presents an opportunity for Blacks and Latinos to build political power. In this era of extraordinary economic inequality, the fate of the vast majority of the White population is more connected with the economic interests of Blacks and Latinos than with the ruling political elite."

From the report's key findings:

• Disparities in income perpetuate poverty in communities of color and will continue to do so unless change is made.
• Increasing wealth inequality entrenches the racial economic divide.
• Education is one of the most important tools we have for increasing social mobility, yet dramatic disparities in education perpetuate inequality.
• The mass incarceration of people of color is historically unprecedented.

Democracy Now! also remarked this morning on the mass incarceration:

Today there are more African Americans under correctional control, whether in prison or jail, on probation or on parole, than there were enslaved in 1850. And more African-American men are disenfranchised now because of felon disenfranchisement laws than in 1870.

In order to abolish this inequality, the group contends, a massive movement is necessary:

Eliminating racial inequality will require a powerful and sustained political movement, aligned not just along the lines of race, but also by economic interests. The renewed national debate about who benefits from the economic system, who doesn’t, and why–a debate inspired in large part by Occupy Wall Street–presents an opportunity to build such a movement. The perverse concentration of wealth and power in the U.S. is central to both Occupy Wall Street and efforts to close the racial economic divide.

August 25, 2011 at 10:22:40

TREASURY DIRECT HOME LOANS - FIRE THE FED - update

By Kent Welton (about the author)

8-25-2011

Updated from my original OpEdNews.com article of October 28, 2008 -- Kent Welton

"I don't rule anything out from the Federal Chairman proposing, this Friday, a nationwide refinancing option for all agency Government Sponsored Entities (GSE) mortgages. The "white elephant in the room" is the reason home valuations continue to drop. If homeowners are underwater on their mortgage by an increasing amount, there is an increased rationale for the homeowner to walk away from the mortgage. Providing a Federal nationwide refinancing option would address the increasing number of GSE mortgages which are under water. Who wants to buy a home when they read headlines that 2nd quarter home values dropped by 5.9%? Potential Federal refinancing programs could include the following aspects: An easy to obtain restructured GSE mortgage. Interest rates could be capped at 2-3%. A plan to revise the home GSE mortgage loan to current market values. This would reduce the number of "mail in my keys" and walk away from the house and mortgage."
Todd Johnson, SeekingAlpha.com, August 25, 201 1

TREASURY DIRECT HOME LOANS - FIRE THE FED

"To suggest that there's a large place for private financing in the future of housing finance is unrealistic. Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won't work."
Bill Gross, Pacific Investment Management

Recently, Bill Gross, who runs the world's biggest bond fund, said the U.S. should consider "full nationalization' of the mortgage-finance system. Clearly more people are realizing the predatory idiocy of "our" housing finance system cannot go on if we are to have a stable and fair consumer-based economy.

With our home loans there is no reason why we, the people, exercising the very purse power of our Constitution, cannot get home loans direct from our own Treasury. In doing so we can agree to establish stable low or no-interest home loan programs. In this way we provide reasonable mortgage vehicles not subject to the predation, interest rate and terms changes, and other disruptions of the private market. The private home lending market has proved itself an utter disaster, a predatory and even criminal enterprise, one we have seen over and over again lead to incredible chaos, pain and suffering - and all this with the very asset that is the foundation of our lives, family, and society.

Given a non debt-money based lending direct from our own Treasury, provided via existing banks and credit unions whether public or private, we can once and for all escape the banksters system that has destroyed so many lives and the economy as a whole. The carnage in peoples lives resulting from the Wall Street home loan system is beyond description

With new legal tender laws to escape the "Federal Reserve" money and credit creation monopoly we avoid all the secondary market chaos and Wall Street criminality we see today and which has cost taxpayers billions in bail-outs to bankers - i.e., the very ones who abused and raped the system. With private debt-money, the social harm and costs spread to other markets and mean more banker bail-outs with yet more money which must be borrowed at interest from a private cartel that creates it out of thin air. Were a public home loan bank system in place, all the chaos could have been and will, in the future, be prevented with a stable low or no interest system of Treasury-direct home loans.

In practice a treasury direct system is simply a friendly local community bank writ large, and one funded not by debt-money but stable treasury direct, non debt-money, financing for the most important asset in our lives. It will be funded and managed thru local banks with greater penalties for fraud and abuse. Forget the taxpayer guarantees for a predatory, private, debt-money, home loan system. We have already seen how this approach has cost us trillions in debt and ruined lives.

If, for example, we adopted a regime of three percent fixed home loans - all funded thru local banks, savings and loans, and credit unions we could then have stable, low-interest, home loans with one big difference -- i.e., the source of funds.

Not only would we not be paying this low interest to and thru the debt-money bond dealers who own the Federal Reserve but the interest, if any, would be paid directly into our public Treasury. Such funds could then be used to make new loans or go to reduce our taxes or fund infrastructure -- all without debt-money chicanery and slavery to a private cartel.

Our problem to date is that we are not likely to hear of any such options because the corporate "free press" and our corporate-financed, bankster-driven, politicians dare not speak of such "radical" proposals or any such freedom from the iron grip of the "Fed" cartel - and this despite the clear constitutional "purse power" directive handed down to We, The People. These lackeys would cry "socialism" in order to keep you tied to the very banksters our Founding fathers fought to escape and keep future generations from becoming their victims. It is privatization that is bankrupting us and stealing our assets and even our ability to work as a truly free community, state, and nation.

Today's situation of forced free trade, forced globalization, and ruin of the middle class and First World Standards creating the very chaos from which we can gain the courage to begin to reclaim the "Fed" stock and completely revise our home finance system, not to mention our government debt-money bond system. With all the government guarantees in place in the mortgage market, we already have partially nationalized home finance. With the removal of these guarantees homes loand will become increasingly expensive and hard to obtain. We will remain at the mercy of Wall Street and private bankers instead of establishing a simple treasury-direct system home loan system.

Nothing is more indicative of the stone cold oligarchy within which we are trapped then the absence of any discussion of exactly such a program. Must we wait until the system collapses under the weight of forced debt-money, and the fascist parade beings in earnest, to hear a discussion of Treasury-direct home loans, nationalization, state banks, or a public central bank in this "free country" of ours? Must we eternally bow down before the money God, Goldman Sachs, a promethean too-big-to-fail entity wherein our Treasury Department appears be be nothing more than an in-house subsidiary?

Real home loan reform is not only possible today but absolutely necessary. First, however, something other than complete private bankster control must be broached and freely debated not only in Congress but in a media free of corporate control (see EditorFreedom.com). This is a tall order at present as the "weapons of mass distraction" are currently out of our hands -- despite the fact the public owns the airwaves we still have no say in editorship.

Clearly, the family home is the very building block of society -- our society. We should then be able to decide (easy with a National Initiative process) that we are going to act like any small community and help our neighbors build their homes and minimize the cost -- just like a nation-wide "barn raising." Or, do we want to screw our kids with endless debt-money interest, non-portable equity buildup, and recourse loans only for the little guy?

We can decide we are not going to place our families at the mercy of amoral, far-flung, investors who could care less that we lost our job to "free trade" with China or that we now face losing our home, our life savings, our health, and facing divorce over money matters. The landscape is now littered with debt-beaten and broken families for these very reasons, and mortgages idiotically bought and sold into pieces.

Indeed, the incredible social chaos and completely unnecessary costs that arise with debt-money-driven financial failures and home foreclosures are truly immense. Why do you think the ruling banking elite are scrambling so hard to look like they are relieving the burden of the millions already foreclosed and the millions more awaiting foreclosure? They seek to prevent and real reform and prevent what the people really want and need - a stable, non-predatory, home loan system financed by their own public treasury.

We are being screwed more ways than you can count today and thing promise to get worse with a "New Democrat" in the White House serving corporate interests.

In any case the home lending disaster all stems from a corrupt "independent" private central bank system. Independent of whom you ask? Why, the people, of course, but not the banking cartel owners of the "Fed." The founders knew what they were doing when they placed the "purse powers" in Congress -- i.e., the most representative body of the people. Unfortunately, they did not leave us with the initiative power to override a corrupt and bought-off Congress which has saddled us not only with a private central bank scheme but also a corporate-run WTO/GATT/NAFTA forced-trade regime.

In any event we do not need to dismantle the "Fed" to accomplish this end. We simply need, by Congressional action, to move the home-loan funding power to the Treasury exclusively. Commercial lending can remain under the present regime, although a recapture of the central bank by the people would be preferable.

Consider that, with current interest rates over time, you must pay for your house 2-3 times over. Does this make sense? Exactly what time-value do the people as a whole wish to place on their money and home loans to their neighbors? At present, we are not allowed to make this determination, or even to set our own rates and terms.

In our consumer-driven economy we now take immense amounts of mortgage interest money spending power out of consumer's hands and feed it into a small wealthy elite's hands, and to foreign bond holders? Talk about non-economic nonsense and drastically lowering the velocity of money! This crushing of consumer demand via private central bank interest thievery makes no sense even in conventional economic terms. It has to go.

The profiteering in our home loan system is immoral, immense, and inexcusable. The system must be changed, and the people must regain control over their home loan apparatus, or we face recurrent tragedies and ever greater debt, dislocation, and taxation until it all implodes and we are forced to pay the ultimate price.

Kent Welton,

PublicCentralBank.com

www.KentWelton.com

Author, Exec. Dir. The Center For Balance.org - Websites: PanditPress.com, OligarchyUSA.com, PublicCentralBank.com, EditorFreedom.com, FascismUSA.com & more

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Debt Elimination & the Conspiracy Theory Mindset

The ZipDebt Blog

Straight Talk by Charles Phelan on Debt Settlement & Other Debt Reduction Strategies

Debt Elimination & the Conspiracy Theory Mindset

If you read this blog on a regular basis, you know that I frequently write about the debt elimination scam. I’m usually coming at it from the angle that companies offering these services are fraudulent. The owners know they are ripping people off by selling a system that simply doesn’t work. But every once in a while I hear from someone who’s not trying to sell debt elimination as a service. They write as individuals, true believers in what I call the “conspiracy theory of global finance.”

The tendency to believe in conspiracies is rampant in our society. The Kennedy assassination, fluoridated water, UFO phenomena, the 9/11 attacks—these subjects have all been the focus of conspiracy-minded individuals, some of whom are obvious candidates for the “tin-foil hat” award. (I guess aluminum foil is supposed to be pretty effective at blocking alien mind-control signals.)

One of the most popular areas for conspiracy-mongering has been the global financial system. Some of the theories are overtly anti-Semitic, blaming the Jews for all the financial evils in the world, while other are more subtle in their rhetoric. The bizarre legal and financial theories behind the debt elimination movement are in the latter category. It’s all about the secret wheeling and dealing that happened in the early decades of the 20th century and resulted in the establishment of the Federal Reserve system and fractional reserve banking in general. Once you believe that the core financial system of world commerce is an insidious scam—you know, the system that has helped lift the living standard of billions of human beings around the world—then all remaining logic and critical thinking goes right out the window.

What follows is a classic example, starting with an opening email salvo from my new cyber pen-pal (name changed for privacy):

“Hello,

I came across your website and found it interesting, however it is grossly misinformed. I have personally discharged over $40,000 worth of unsecured debt using the exact methods you claim to be fraudulent.

I did this using the FDCPA regulations, a couple of simple letters, and information found in the book “Modern Money Mechanics.” Banks actually commit fraud when “loaning” money in several ways. One way is that a bank leads people to believe there is an actual loan made in acquiring a credit card or student “loan”, when in fact the money is created out of thin air by making an entry into a computer. Furthermore, the money that is created is entered as a CREDIT in the person’s name.. which is in capital letters. This is known in Black’s Law Dictionary as the Strawman.

The fact of the matter is that the entire credit industry IS operating fraudulently. When you research it as I have over the past three years, just HOW fraudulent is absolutely mind boggling. I realize as I write this that you have a vested interest in NOT telling people the truth, or perhaps even wanting to know it yourself because it would effectively put you out of business. However the fact remains that you are telling people blatant lies out of ignorance.

Were you to do some research and discover the truth for yourself, you might then work for real justice in the world, and perhaps change your product and service to something which is based in Truth rather than that which is perpetuating a myth and which is harming everyone.

In the meantime, you might find a couple of movies intersting (sic) :
“The Money Masters” – available on YouTube or DVD.
“Money As Debt” – Available on YouTube also.
If you would like copies of the actual letters I used please let me know and I will be happy to forward them to you.

Sincerely,

Allen”

OK, so in his very first email message to me this tactful fellow accuses me of being grossly misinformed, having a vested interest in deceiving the public, and telling blatant lies out of ignorance. Nice way to start off a dialogue with a total stranger, right?

Now, I have a confession to make. I actually enjoy sparring with these folks. It’s pretty sick, I admit it, but it’s a form of amusement and entertainment for me, so what can I say. My first reaction was to launch into invective mode, but I figured I would give this guy the benefit of the doubt first. Here’s my reply:

“Allen,

You are “grossly misinformed” about my supposed lack of knowledge of the system you are such a fan of, but I don’t have time to debate with you. I’m too busy helping people who have been ripped off by “crusaders for justice” like yourself, who told them they could legally walk away from their debt obligations with no consequences, only to find
that they got laughed out of court, lost their cases, and started seeing wage garnishments.

Extraordinary claims require extraordinary proof. Please tell me the name/county of the court where your cases were heard, along with the civil case docket numbers. Don’t send me any documents directly, please. Only documents that I can retrieve directly from the court will meet the standard of evidence required here. Let’s have the case citation(s) where a judge ruled in your favor on the basis of the “no money lent” argument.

Sincerely,

Charles J. Phelan
President/Founder
Manchester Publishing Company, Inc.”

This is my standard technique for dealing with “experts” who write to me, tell me how full of baloney I am on this particular subject, and then claim they were successful using the techniques I warn consumers against. My first response is always the same. “Prove it.” Give me the documents, the *court* documents where a real-life judge pounded the gavel and agreed with your cockamamie legal theory that “no money was lent” by the creditors. I’ve been asking for proof for nearly a decade. I’m still waiting.

So how did he reply? By backing up his mental dumpster and unloading it in my email inbox:

“Actually I’m not a fan of a fraudulent system that takes advantage of others, which is why I work to bring it down rather than to support it by buying into the lies.

I didn’t go to court on any of the cards that I got charged off.. which was every one of them. Contrary to what most people believe, it’s actually quite easy to do because the banks don’t WANT to go to court, or their little scam would be revealed and a finding against them would set a legal precedent that bring the whole house of cards down around the world.

All I did to accomplish that was exactly as I said in the earlier email. I challenged the banks for fraud on the contract and fraudulent conveyence (sic) and the debts were charged off for the following reasons:

1. There is NO legal and binding contract.. only a promisory (sic) note which creates the funds to discharge.

2. There is NO disclosure of the actual accounting procedures. If there were the banks would be forced to tell people that the monies created were created as a CREDIT to the account of the Strawman, and NOT a debit. This means that the individual has legal right to the monies from the start and is under no obligation to pay them back.

They entire system is a scam that originally began in 1913 and was subsequently pushed through Congress a few years later. When done correctly the FDCPA, and the FCRA can easily be used to get an unsecured line of “credit” charged off. It is also possible to obtain the remainder of the monies in a given account in cash. As I said, the money was assigned as a credit and not a debit to the individual and is therefore legally ours to begin with.

As I said earlier, if you want to know more, watch “The Money Masters”, “Money as Debt”, and read “The Creature From Jeckyl (sic) Island”. That will bring you up to speed on what the World Bank and the Federal Reserve is REALLY up to.

In closing, I’m sure there are idiots out there who scam people. In fact I recently read about one in Florida who took thousands and never did the work promised. But that there are idiots in every walk of life, and a few bad seeds don’t change the fact that what I am saying is true. If you want, I’ve given you enough information that you can find out for yourself. And as I said, once you do, I can provide you with the necessary tools if you decide you want to alter your course a little.. and I won’t charge you a penny.”

OK, so where do I start? This is so wrong on so many levels that it’s difficult to know where to begin. But let’s begin with the obvious. No legal paperwork. All this person accomplished was to get their debts charged off. Um, hello? That happens automatically! Don’t pay a credit card bill for six months, and voila, charge-off time. A charge-off just means the creditor records the loss on their books. It doesn’t mean they will stop trying to collect afterwards.

Anyway, I was getting a bit annoyed with this chap’s self-satisfied smug tone, so I decided to let him have it with both barrels.

“Allen,

Listen carefully, please. Both your emails were very insulting in tone and approach. You’re writing to a professional, not some clueless newbie. I do this for a living. I’ve seen it all, every trick in the book. I have been aware of everything you are describing for a decade or more and know a hell of a lot more about it than you apparently do. You’re just another in a long line of people who thinks he has discovered some big conspiracy, and can’t resist emailing me to tell me how wrong I am. What a laugh. I read Jekyll Island years ago. It’s complete crap from start to finish. Griffin is a John Birch whack-job, and his book was thoroughly debunked by legitimate scholars long ago. That’s as deep as your “research” went? Griffin? LOL.

If you don’t have court cases ruling in your favor, then all you did was temporarily chase away some collection agencies via the various documents utilized by the monetary protest crowd. Creditors drop cases all the time, or choose not to sue, for a variety of reasons that have absolutely nothing to do with what you think it does. You, like everyone else tilting at windmills out there, are completely clueless about what a pile of bulls**t you have chosen to put your faith in. You apparently don’t even understand what a charge-off is! You didn’t “get” your creditors to record charge-offs. That happens automatically. You’ll get sued sooner or later by a debt purchaser, or two, or three. If you enjoy the legal fight, bully for you. But 99% of consumers don’t want to go that route.

Did you, or did you not, purchase goods and services to the tune of $40,000 via the credit cards? Are you saying you received NO value whatsoever from the purchases made with the credit you claim was illegal? If you had not had those credit cards, how would you have obtained those $40k worth of goods or services? Don’t you understand what “consideration” means in the context of a business transaction? From my perspective, all you did was stiff your creditors to the tune of $40k. But that apparently does not conflict in any way with your values or ethics. Sorry. Call me old-fashioned, but I’ll side with the OCC, FTC, and every single state AG out there, and continue to advise consumers to steer clear of conspiracy-theory-based techniques that simply do not work for the vast majority of people who attempt to implement them. I’ll continue to do what I know DOES work — good faith negotiation and settlement. If you want to preach otherwise, get your own website.

Sincerely,

Charles J. Phelan
President/Founder
Manchester Publishing Company, Inc.”

A little harsh, perhaps, but hey, he started it, right? (You have to give as good as you get sometimes with people who are a bit thick in the skull.) His response?

“My apologies if I was coming off like I was being condescending.. I wasn’t. As with you, I am a professional and hold two degrees.. one in Electrical Engineering and a Doctorate in Philosophy.. so obviously I didn’t just fall off the potato truck.

My only intent from the start was to inform you of the truth, not to try and make you believe it. I’ve researched this for over three years, and the information I have portrayed /is/ accurate. However, you are certainly entitled to believe that Jeckyl (sic) Island isn’t true, or that the system we are living with is ethical and in integrity. The choice is entirely yours.

Please don’t bother responding, no further dialog on the subject is necessary or desired.
The best,
Allen”

Translation: “Gosh, you hurt my feelings. I don’t want to play anymore.” So there ends the exchange, which is too bad, because I was having so much fun. You’ll notice, however, that he failed to answer a single relevant question that I raised. “I know I’m right, and you can’t confuse me with facts to the contrary.” That was the essence of his defense. Our monetary system is a scam, therefore I never spent any real money, blah, blah, blah.

The core point I was trying to get across to this person was the concept of business “consideration.” I focused on that because someone who has two college degrees really should know better (not to mention they should also be able to spell better). How can you study Philosophy, obtain a PhD, and not understand basic logic? The debt elimination promoters often rely on the assertion that no consideration was received by the debtor because the creditor was not out any of their own actual money. Baloney! You can read the linked Wikipedia entry on consideration for further detail, but the core idea is that in a business contractual situation, consideration must be involved for it to be a valid contract, where consideration is defined as value paid in exchange for a promise. Simple enough.

By arguing that no value is received by the debtor because the bank is extending credit and not loaning money directly, the true believer in debt elimination is overlooking basic reality. When you use a credit card to purchase goods or services at a retailer or other business, the mere fact that you had the convenience of using credit constitutes consideration. Look at it this way. If you did NOT have a credit card, you’d have to write a physical check or pay in full with cash, right? Because the creditor extended you a credit facility in the form of that little piece of plastic, you didn’t need to pony up money out of your bank account to pay for the item. That fact alone means you were extended consideration in the transaction, because otherwise you would not have been able to conclude the transaction under such convenient terms and would have had to directly negotiate credit terms with the merchant. So this blows away any and all objections by the debt eliminator that no consideration is involved. Crash. Down comes the whole kooky house of cards.

Anyway, all this person accomplished was to rip off his creditors for $40,000, *temporarily*. Since he never resolved anything, and thinks that the process stops with charge-offs (which is actually when the collection process just starts kicking into a high gear that can last for *years* to come), he will be exposed to multiple lawsuits in the coming months and years. This is my beef with all such mumbo-jumbo “magic bullet” techniques. They never result in any of the debts actually getting resolved in a final manner. A debt settlement letter accomplishes that resolution. You pay X dollars by such-and-such a date, and you’re done, period. And you have it IN WRITING FROM THE CREDITOR. Game over. On to the next debt, etc.

I doubt the above will convince a true believer. But I figured I would go ahead and post this exchange for its educational value. If I can spare one consumer from falling into the insidious trap set by the scam artists who sell these bogus “programs” for thousands of dollars, then I’m happy to keep sparring with true believers in the conspiracy theory of global finance. Anybody else out there want to take a shot at convincing me I’m wrong on this subject?

This entry was written by Charles, posted on November 14, 2008 at 12:46 pm, and filed under Debt & Credit.

« How Will the Financial Crisis Affect Debt Settlement?

Consumer Debt to Income Ratio and Tips to Reduce Debt Ratio

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money

Consumer Debt to Income Ratio

Charlena Fuqua

Charlena Fuqua has eight years of experience in the newspaper industry and began writing in 2008. Her articles appear on Web sites such as eHow. Fuqua has a Bachelor of Science in criminal justice from American Intercontinental University.

By Charlena Fuqua, eHow Contributor

A consumer's debt to income ratio can affect many factors.

The Federal Reserve Board refers to the consumer debt to income ratio as household debt service and financial obligations ratios. A consumer's debt to income ratio can play a role in a number of financial events including auto loans, mortgage approvals and credit card rates.

1. Factors

   • The consumer debt to income ratio is determined by two factors: monthly debt payment obligations and the amount of personal disposable income a family or household has. The income used is a person's income before tax, while both mortgage and consumer debt such as credit cards or automobile loans are considered consumer debt. Additional examples of consumer debt may include home equity loan payments, student loans, alimony and any other loan product the consumer is obligated to repay.

   Importance

   • A number of financial institutions consider a consumer's debt to income ratio when determining whether or not to grant a credit product to an applicant. The debt to income ratio is also a factor for homeowners who are attempting to modify their mortgage payments. Financial institutions will examine an applicant's debt to income ratio to determine the likelihood that he would default on a credit product if finances got out of hand. A potential employer may also examine a debt to income ratio when doing a background check on an applicant.

   Suggested Ratios

   • Although each financial institution has different lending standards, a debt to income ratio of 36 percent or less is a preferred industry standard. Institutions granting mortgages prefer that a mortgage payment take up no more than 28 to 31 percent of an applicant's income each month.

   Lowering Debt to Income Ratio

   • For consumers with debt to income ratios above the suggested amount, lowering the percentage can increase the likelihood of obtaining a credit product in the future. To lower debt to income ratios, consumers may choose to pay a larger amount each month to their credit accounts, decreasing the total amount owed. A consumer may also choose to take on an extra job or additional hours in order to increase the income side of the ratio.

References

• Federal Reserve Board: Household Debt Service and Financial Obligations Ratios
• MSN Money: Evaluate Your Debt
• Bank of America: Keeping Your Debt Load Manageable

• Photo Credit heavy purse image by Julia Britvich from Fotolia.com

Tips to Reduce Debt Ratio

When examining an application for credit, many lenders look at the consumer's debt-to-income ratio as one of the deciding factors in approving an application. The debt-to-income ratio gives lenders a glimpse into the financial picture of a consumer and helps evaluate his ability to repay additional debts. Often consumers look for ways to decrease their debt-to-income ratios not only to receive new credit accounts but to also get out of debt

1. Increase Income

   • One of the most obvious ways to decrease a debt-to-income ratio is to increase the amount of income that is coming in on a monthly basis. This can be done by obtaining a second job or having a spouse that is currently not working obtain employment. If a consumer works in a job that has available overtime, taking additional hours is another way to increase income. Consumers may also think about doing freelance work or starting a side business to bring in additional funds. Increasing income can also provide additional funds to pay down debts.

   Pay Down Debt

   • When trying to reduce a debt-to-income ratio, many consumers may consider increasing the rate at which debts are repaid. This can be done by putting the increase in income directly toward debt repayment or by simply paying more on monthly payments. One recommended option is to pay additional principal payments on any debt to reduce the overall amount owed. This will also cut down on the amount of interest that is added to the account. Some consumers choose to use the snowball method of paying down debt by paying all their extra funds towards one debt until it is paid off and then snowballing that payment into the next debt.

   Pay Cash for Purchases

   • After establishing a debt reduction plan to reduce a debt-to-income ratio, it is important to pay for subsequent purchases with cash, checks and/or debit cards. Consumers should also postpone any large purchases until they have the savings to pay in cash or have the option to make a larger down payment to decrease the amount of credit needed to complete the purchase. This will reduce the likelihood of the consumer taking on any more debt before the ratio is reduced.

References

• Bank of America: Keeping your debt load manageable
• BCSAlliance.com: Get out of Debt by Reducing Monthly Expenses

Read Next: How to To Calculate Debt-To-Income Ratio And Reduce Debt : Free Knowledge

ehow

The Role of Debt

Marquis Codjia

Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.

View my portfolio

By Marquis Codjia, eHow Contributor

Debt helps a company secure financing to fund operations and long-term investments.

Debt plays a significant role in modern economies. All institutions, including philanthropic organizations and government entities, may rely on debt to fund operations in the short term and long term.

1. Definition

   • A debt is either a liability that a borrower must repay when due. It also may be a monetary obligation that a company must honor on time. A debt may relate to a short-term or long-term agreement.

   Economic Role

   • Debt plays an important role in the economy. Businesses usually need short-term or long-term financing because internal funds are insufficient to cover operating needs. Additionally, customers may not pay for goods on delivery.

   Short-Term Debt

   • A short-term debt is a loan that a borrower must repay within 12 months. Examples include accounts payable, taxes due and short-term loans. Short-term debt affects a firm's working capital. Working capital, a measure of short-term cash availability, equals current assets minus current liabilities.

   Long-Term Debt

   • A long-term debt is a loan or financial guarantee that a borrower must repay after a year or more. Examples include corporate bonds, long-term loans, overdraft arrangements, lines of credits and convertible bonds.

   Accounting for Debt

   • Generally accepted accounting principles and international financial reporting standards require a borrower to record debt at market value. To record a new loan, an accountant debits the cash account and credits the debt payable account. In accounting terminology, debiting an asset, such as cash, means increasing its balance.

References

• Government of Canada: Depository Services Program: The Role of Debt and Equity Finance over the Business Cycle

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The Role of Debt in the Economic System

Andrew Schrader

Andrew Schrader has been a professional writer and filmmaker since 2004. He works as a film producer, writer and editor, holding a Bachelor of Arts in film and media studies from UC Santa Barbara. He specializes in articles on video software and file conversions.

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By Andrew Schrader, eHow Contributor

Debt in our current economic system is necessary for growth.

The American economic paradigm is based almost exclusively on debt-based financing--whether it be a person using a credit card that carries interest, a corporation borrowing money or capital, or the government borrowing money from the banking industry. Interest plays a major role in the debt-based economy, as do several factors that determine how debt and money are distributed, like fiat currency and the standards of a fractional reserve banking system. Debt is responsible for economic growth--if there were no debt, there would be no growth.

1. Fiat Currency

   • Until the 1970s, the world was still officially on the gold standard, meaning that money circulated was redeemable in a certain amount of gold. Once taken off the gold standard, the dollar became backed only by peoples' faith in the currency. A fiat system--where money is not backed by any physical commodity--allows for the infinite creation of money (in the United States and other countries this is determined usually by a central bank, like the Federal Reserve). This increases public and private debt as more money is printed.

   Fractional Reserve Banking

   • For every dollar a bank accounts for, it is able to loan out $0.90 on additional loans. (Banks must hold 10 percent of money accrued, leaving 90 percent to loan out.) If a bank loans out $0.90, for instance, and that money is put into another account, the bank can then claim an additional $0.90 in their books, and loan out 90 percent at interest. This process can continue into infinity, creating economic expansion at the expense of creating more debt.

   The Federal Reserve

   • The Federal Reserve (or Fed), created in 1913, loans money to banks and the U.S. government at interest to maintain a stable economic system. It regulates the reserve requirements of the banking industry, determining the percentage of money banks must hold to make loans on. The Fed prints money as needed to promote liquidity and economic expansion; however, in creating more money, it creates more debt (at interest). The Fed is the chief supplier of money and debt in the current economic system.

   Interest

   • When loans are made--either by the Fed to banks or by banks to consumers--there is an attached interest rate. The interest demanded on loans increases the amount of economic debt, as well as the overall money supply. In other words, the interest on loans creates more money out of money that was originally created without the backing of any physical commodity. Interest, along with fiat currency and fractional reserve banking, creates money out of nothing.

   Warning

   • Inflation is the chief concern among those who worry about the state of debt in the economic system. Critics of the economic system, like Congressman Ron Paul, state that inflation is a hidden tax on the public, as it corrodes the value of money. Essentially, when money is printed at will, it lessens the value of money already in circulation--causing price increases on consumer goods and "bubbles" in markets (where commodity prices are overvalued). Inflationary pressures also cause the Federal Reserve to heighten interest rates to curb demand for loans; this, in turn, causes declines in economic growth.

References

• Kwaves: Overview of Fiat Money
• Lew Rockwell: Fractional Reserve Banking
• "Secrets of the Temple: How the Federal Reserve Runs the Country"; William Greider; 1987

Read more: The Role of Debt in the Economic System | eHow.com http://www.ehow.com/about_6590147_role-debt-economic-system.html#ixzz1izdYN5BC