Dec 31, 2017 | Shareholder & Investor Protection
Cryptocurrency & Initial Coin Offerings – SEC Chairman’s “Statement on Cryptocurrencies and Initial Coin Offerings”
On December 11, 2017, SEC Chairman Jay Clayton issued a “Statement on Cryptocurrencies and Initial Coin Offerings.” The statement provided the SEC Chairman’s general views on the cryptocurrency and ICO markets and, among other things, important considerations for “Main Street” investors involved with cryptocurrency- and ICO-related investments.**
Image: Pixabay, Gerd Altmann (geralt), CC0 1.0 Universal
Select Highlights of the SEC Chairman’s Statement Regarding Cryptocurrency and Initial Coin Offerings
The cryptocurrency and Initial Coin Offering markets have grown rapidly. The cryptocurrency and Initial Coin Offering markets are local, national and international and include an ever-broadening range of products and participants. The cryptocurrency and ICO markets also present investors and other market participants with many questions, such as:
- Is the product legal?
- Is it subject to regulation, including rules designed to protect investors?
- Does the product comply with those rules?
- Is the offering legal?
- Are those offering the product licensed to do so?
- Are the trading markets fair?
- Can prices on those markets be manipulated?
- Can I sell when I want to?
- Are there substantial risks of theft or loss, including from hacking?
Cryptocurrency & Initial Coin Offerings – Considerations for “Main Street” Investors
A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.
Investors should understand that, to date, no initial coin offerings have been registered with the SEC. The SEC also has not, to date, approved for listing and trading any exchange-traded products (e.g., ETFs) holding cryptocurrencies or other assets related to cryptocurrencies. If any person today tells you otherwise, be especially wary.
The CFTC has designated bitcoin as a commodity. Fraud and manipulation involving bitcoin traded in interstate commerce are appropriately within the purview of the CFTC, as is the regulation of commodity futures tied directly to bitcoin. That said, products linked to the value of underlying digital assets, including bitcoin and other cryptocurrencies, may be structured as securities products subject to registration under the Securities Act of 1933 or the Investment Company Act of 1940.
Cryptocurrency & Initial Coin Offerings- Investors: Ask Questions & Get Clear Answers!!
Questions for Investors Considering Cryptocurrency or ICO Investments
- Who exactly am I contracting with?
- Who is issuing and sponsoring the product, what are their backgrounds, and have they provided a full and complete description of the product? Do they have a clear written business plan that I understand?
- Who is promoting or marketing the product, what are their backgrounds, and are they licensed to sell the product? Have they been paid to promote the product?
- Where is the enterprise located?
- Where is my money going and what will be it be used for? Is my money going to be used to “cash out” others?
- What specific rights come with my investment?
- Are there financial statements? If so, are they audited, and by whom?
- Is there trading data? If so, is there some way to verify it?
- How, when, and at what cost can I sell my investment? For example, do I have a right to give the token or coin back to the company or to receive a refund? Can I resell the coin or token, and if so, are there any limitations on my ability to resell?
- If a digital wallet is involved, what happens if I lose the key? Will I still have access to my investment?
- If a blockchain is used, is the blockchain open and public? Has the code been published, and has there been an independent cybersecurity audit?
- Has the offering been structured to comply with the securities laws and, if not, what implications will that have for the stability of the enterprise and the value of my investment?
- What legal protections may or may not be available in the event of fraud, a hack, malware, or a downturn in business prospects? Who will be responsible for refunding my investment if something goes wrong?
- If I do have legal rights, can I effectively enforce them and will there be adequate funds to compensate me if my rights are violated?
As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.
Image: Pixabay, Gerd Altmann (geralt), CC0 1.0 Universal
Cryptocurrency & Initial Coin Offerings – Cryptocurrencies, ICOs & Securities Registration
Cryptocurrencies. Cryptocurrencies purport to be items of inherent value (similar, for instance, to cash or gold) that are designed to enable purchases, sales and other financial transactions. They are intended to provide many of the same functions as long-established currencies such as the U.S. dollar, euro or Japanese yen, but do not have the backing of a government or other body.
Although the design and maintenance of cryptocurrencies differ, proponents of cryptocurrencies highlight various potential benefits and features of them, including (1) the ability to make transfers without an intermediary and without geographic limitation, (2) finality of settlement, (3) lower transaction costs compared to other forms of payment and (4) the ability to publicly verify transactions. Other often-touted features of cryptocurrencies include personal anonymity and the absence of government regulation or oversight. Critics of cryptocurrencies note that these features may facilitate illicit trading and financial transactions, and that some of the purported beneficial features may not prove to be available in practice.
It has been asserted that cryptocurrencies are not securities and that the offer and sale of cryptocurrencies are beyond the SEC’s jurisdiction. Whether that assertion proves correct with respect to any digital asset that is labeled as a cryptocurrency will depend on the characteristics and use of that particular asset.
Initial Coin Offerings. Coinciding with the substantial growth in cryptocurrencies, companies and individuals increasingly have been using initial coin offerings to raise capital for their businesses and projects. Typically, these offerings involve the opportunity for individual investors to exchange currency such as U.S. dollars or cryptocurrencies in return for a digital asset labeled as a coin or token.
These offerings can take many different forms, and the rights and interests a coin is purported to provide the holder can vary widely. A key question for all ICO market participants: “Is the coin or token a security?” As securities law practitioners know well, the answer depends on the facts. For example, a token that represents a participation interest in a book-of-the-month club may not implicate our securities laws, and may well be an efficient way for the club’s operators to fund the future acquisition of books and facilitate the distribution of those books to token holders. In contrast, many token offerings appear to have gone beyond this construct and are more analogous to interests in a yet-to-be-built publishing house with the authors, books and distribution networks all to come. It is especially troubling when the promoters of these offerings emphasize the secondary market trading potential of these tokens. Prospective purchasers are being sold on the potential for tokens to increase in value – with the ability to lock in those increases by reselling the tokens on a secondary market – or to otherwise profit from the tokens based on the efforts of others. These are key hallmarks of a security and a securities offering.
By and large, the structures of initial coin offerings that the SEC Chairman has seen promoted involve the offer and sale of securities and directly implicate the securities registration requirements and other investor protection provisions of the U.S. federal securities laws. Generally speaking, these laws provide that investors deserve to know what they are investing in and the relevant risks involved.
It is possible to conduct an ICO without triggering the SEC’s registration requirements. For example, just as with a Regulation D exempt offering to raise capital for the manufacturing of a physical product, an initial coin offering that is a security can be structured so that it qualifies for an applicable exemption from the registration requirements.
Cryptocurrency & Initial Coin Offerings – SEC-Related Alerts, Bulletins & Statements
The SEC has issued the following investor alerts, bulletins, and statements on initial coin offerings and cryptocurrency-related investments, including those related to the marketing of certain offerings and investments by celebrities and others:
Statement on Potentially Unlawful Promotion of Initial Coin Offerings and Other Investments by Celebrities and Others (Nov. 1, 2017), available at https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos
Investor Alert: Public Companies Making ICO-Related Claims (Aug. 28, 2017), available at https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_icorelatedclaims
Investor Bulletin: Initial Coin Offerings (July 25, 2017), available athttps://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings
Investor Alert: Bitcoin and Other Virtual Currency-Related Investments (May 7, 2014), available athttps://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-bitcoin-other-virtual-currency
Investor Alert: Ponzi Schemes Using Virtual Currencies (July 23, 2013), available at https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf.
See also Kehoe Law Firm’s “Initial Coin Offerings – Be Aware of Potential Initial Coin Offering Risks” posting providing information from the SEC’s Office of Investor Education and Advocacy.
Cryptocurrency & Initial Coin Offerings – SEC Enforcement Actions
Press Release, Company Halts ICO After SEC Raises Registration Concerns (Dec. 11, 2017), available at https://www.sec.gov/news/press-release/2017-227
Press Release, SEC Emergency Action Halts ICO Scam (Dec. 4, 2017), available at https://www.sec.gov/news/press-release/2017-219
Press Release, SEC Exposes Two Initial Coin Offerings Purportedly Backed by Real Estate and Diamonds (Sept. 29, 2017), available at https://www.sec.gov/news/press-release/2017-185-0.
**The SEC Chairman’s statement contained a footnote which stated that the information in the SEC Chairman’s statement is his own and does not reflect the views of any other Commissioner or the Commission. Further, the SEC Chairman’s statement is not, and should not be taken as, a definitive discussion of applicable law, all the relevant risks with respect to these products, or a statement of the SEC Chairman’s position on any particular product. Additionally, the SEC Chairman’s statement is not a comment on any particular submission, in the form of a proposed rule change or otherwise, pending before the SEC.
Source: “Statement on Cryptocurrencies and Initial Coin Offerings” (December 11, 2017) by SEC Chairman Jay Clayton, available at https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11#_ftn6 (last accessed 12.31.2017).
Cryptocurrency (“Bitcoin”) & Initial Coin Offering Investors
If you are an investor of cryptocurrency (e.g., Bitcoin) or Initial Coin Offerings and have concerns about your legal rights or potential legal claims and wish to speak privately with a securities attorney, please complete the form above on the right or e-mail [email protected].
Dec 29, 2017 | Shareholder & Investor Protection
Initial Coin Offerings – ICOs
The SEC’s Office of Investor Education and Advocacy has provided the following information to make investors aware of the potential risks of participating in Initial Coin Offerings – ICOs:*
Initial Coin Offerings, also known as ICOs or token sales, are being used to raise capital; however, new technologies and financial products, such as those associated with Initial Coin Offerings, can be used improperly to entice investors with the promise of high returns in a new investment space.
Initial Coin Offerings – Virtual Coins & Tokens – Background
Virtual coins or tokens are created and disseminated using distributed ledger or blockchain technology. Recently, promoters have been selling virtual coins or tokens in Initial Coin Offerings. Purchasers may use fiat currency (e.g., U.S. dollars), or virtual currencies, to buy virtual coins or tokens. Promoters may tell purchasers that the capital raised from the sales will be used to fund development of a digital platform, software, or other projects and that the virtual tokens or coins may be used to access the platform, use the software, or otherwise participate in the project.
Some promoters and initial sellers may lead buyers of the virtual coins or tokens to expect a return on their investment or to participate in a share of the returns provided by the project. After they are issued, the virtual coins or tokens may be resold to others in a secondary market on virtual currency exchanges or other platforms.
Depending on the facts and circumstances of each individual ICO, the virtual coins or tokens that are offered or sold may be securities. If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to the federal securities laws.
SEC’s Investigation of a Virtual Organization – Federal Securities Laws Apply
The SEC’s “Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO” describes an SEC investigation of The DAO, a virtual organization, and its use of distributed ledger or blockchain technology to facilitate the offer and sale of DAO Tokens to raise capital.
The SEC applied existing U.S. federal securities laws to determine that DAO Tokens were securities. The SEC emphasized that those who offer and sell securities in the United States are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.
The SEC investigative report stated that its investigative
. . . [r]eport reiterates these fundamental principles of the U.S. federal securities laws and describes their applicability to a new paradigm—virtual organizations or capital raising entities that use distributed ledger or blockchain technology to facilitate capital raising and/or investment and the related offer and sale of securities. The automation of certain functions through this technology, “smart contracts,”[] or computer code, does not remove conduct from the purview of the U.S. federal securities laws.[] This Report also serves to stress the obligation to comply with the registration provisions of the federal securities laws with respect to products and platforms involving emerging technologies and new investor interfaces. [Emphasis added]
Image: Pixabay, Gerd Altmann (geralt), CC0 1.0 Universal
Initial Coin Offerings & Virtual Currency – Some Concepts to Help Investors Understand a New, Complex Investment Area
Blockchain
A blockchain is an electronic distributed ledger or list of entries – much like a stock ledger – that is maintained by various participants in a network of computers. Blockchains use cryptography to process and verify transactions on the ledger, providing comfort to users and potential users of the blockchain that entries are secure. Examples of blockchain are the Bitcoin and Ethereum blockchains, which are used to create and track transactions in bitcoin and ether, respectively.
Virtual Currency, Token or Coin
A virtual currency is a digital representation of value that can be digitally traded and functions as a medium of exchange, unit of account, or store of value. Virtual tokens or coins may represent other rights as well. Accordingly, in certain cases, the tokens or coins will be securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration.
Virtual Currency Exchange
A virtual currency exchange is a person or entity that exchanges virtual currency for fiat currency, funds, or other forms of virtual currency. Virtual currency exchanges typically charge fees for these services. Secondary market trading of virtual tokens or coins may also occur on an exchange. These exchanges may not be registered securities exchanges or alternative trading systems regulated under the federal securities laws. Accordingly, in purchasing and selling virtual coins and tokens, you may not have the same protections that would apply in the case of stocks listed on an exchange.
Issuance of Virtual Tokens or Coins
Virtual tokens or coins may be issued by a virtual organization or other capital raising entity. A virtual organization is an organization embodied in computer code and executed on a distributed ledger or blockchain. The code, often called a “smart contract,” serves to automate certain functions of the organization, which may include the issuance of certain virtual coins or tokens.
Initial Coin Offerings – Participation in an Initial Coin Offering – Things to Consider
Depending on the facts and circumstances, the offering may involve the offer and sale of securities. If that is the case, the offer and sale of virtual coins or tokens must itself be registered with the SEC, or be performed pursuant to an exemption from registration. Before investing in an ICO, ask whether the virtual tokens or coins are securities, whether the persons selling them registered the offering with the SEC, in addition to keeping the following in mind about registration:
-If an offering is registered, you can find information (e.g., registration statement or “Form S-1”) on SEC.gov through the SEC’s EDGAR.
-If a promoter states that an offering is exempt from registration, and you are not an accredited investor, you should be very careful – most exemptions have net worth or income requirements.
-Although Initial Coin Offerings are sometimes described as crowdfunding contracts, it is possible that they are not being offered and sold in compliance with the requirements of Regulation Crowdfunding or with the federal securities laws generally.
Ask what your money will be used for and what rights the virtual coin or token provides to you. The promoter should have a clear business plan that you can read and that you understand. The rights the token or coin entitles you to should be clearly laid out, often in a white paper or development roadmap. You should specifically ask about how and when you can get your money back in the event you wish to do so. For example, do you have a right to give the token or coin back to the company or to receive a refund? Can you resell the coin or token? Are there any limitations on your ability to resell the coin or token?
If the virtual token or coin is a security, federal and state securities laws require investment professionals and their firms who offer, transact in, or advise on investments to be licensed or registered. At Investor.gov, one can check the registration status and background of these investment professionals.
Ask whether the blockchain is open and public, whether the code has been published, and whether there has been an independent cybersecurity audit.
Fraudsters often use innovations and new technologies to perpetrate fraudulent investment schemes. Fraudsters may entice investors by touting an Initial Coin Offering investment “opportunity” as a way to get into this cutting-edge space, promising or guaranteeing high investment returns. Investors should always be suspicious of jargon-laden pitches, hard sells, and promises of outsized returns. Also, it is relatively easy for anyone to use blockchain technology to create an ICO that looks impressive, even though it might actually be a scam.
Virtual currency exchanges and other entities holding virtual currencies, virtual tokens or coins may be susceptible to fraud, technical glitches, hacks, or malware. Virtual tokens or virtual currency may be stolen by hackers.
Investing in an Initial Coin Offering may limit your recovery in the event of fraud or theft. While you may have rights under the federal securities laws, your ability to recover may be significantly limited.
If fraud or theft results in you or the organization that issued the virtual tokens or coins losing virtual tokens, virtual currency, or fiat currency, you may have limited recovery options. Third-party wallet services, payment processors, and virtual currency exchanges that play important roles in the use of virtual currencies may be located overseas or be operating unlawfully.
Initial Coin Offerings – Law Enforcement Challenges & Possible Limitations on Investor Remedies
Law enforcement officials may face particular challenges when investigating ICOs and, as a result, investor remedies may be limited. Challenges include:
Tracing money. Traditional financial institutions (such as banks) often are not involved with ICOs or virtual currency transactions, making it more difficult to follow the flow of money.
International scope. ICOs and virtual currency transactions and users span the globe. Although the SEC regularly obtains information from abroad (such as through cross-border agreements), there may be restrictions on how the SEC can use the information and it may take more time to get the information. In some cases, the SEC may be unable to obtain information from persons or entities located overseas.
No central authority. As there is no central authority that collects virtual currency user information, the SEC generally must rely on other sources for this type of information.
Freezing or securing virtual currency. Law enforcement officials may have difficulty freezing or securing investor funds that are held in a virtual currency. Virtual currency wallets are encrypted and unlike money held in a bank or brokerage account, virtual currencies may not be held by a third-party custodian.
“Guaranteed” high investment returns. There is no such thing as guaranteed high investment returns. Be wary of anyone who promises that you will receive a high rate of return on your investment, with little or no risk.
Unsolicited offers. An unsolicited sales pitch may be part of a fraudulent investment scheme. Exercise extreme caution if you receive an unsolicited communication—meaning you didn’t ask for it and don’t know the sender—about an investment opportunity.
Sounds too good to be true. If the investment sounds too good to be true, it probably is. Remember that investments providing higher returns typically involve more risk.
Pressure to buy RIGHT NOW. Fraudsters may try to create a false sense of urgency to get in on the investment. Take your time researching an investment opportunity before handing over your money.
Unlicensed sellers. Many fraudulent investment schemes involve unlicensed individuals or unregistered firms. Check license and registration status on Investor.gov.
No net worth or income requirements. The federal securities laws require securities offerings to be registered with the SEC unless an exemption from registration applies. Many registration exemptions require that investors are accredited investors; some others have investment limits. Be highly suspicious of private (i.e., unregistered) investment opportunities that do not ask about your net worth or income or whether investment limits apply.
Pixabay, QuinceMedia, CC0 1.0 Universal
Initial Coin Offering Investors
If you invested in an Initial Coin Offering and wish to speak privately with a securities attorney about your potential legal rights, please complete the form on the right or e-mail [email protected].
*Source: U.S. Securities and Exchange Commission’s “Investor Bulletin: Initial Coin Offerings,” available at Investor.gov.
Dec 14, 2017 | Consumer Protection, Employment & Technology Archive
FTC Consumer Information to Help Individuals After the Equifax Data Breach Decide Whether to Place a Fraud Alert, Credit Freeze or Credit Lock
In light of the Equifax data breach, the FTC provided FAQ guidance to help individuals decide whether to place a fraud alert, credit freeze or credit lock on their credit files to help stop or prevent identity theft.
Fraud Alerts
What is a fraud alert?
A fraud alert requires companies to verify your identity before extending new credit, which usually means calling you to determine if you are really trying to open a new account.
The three national credit reporting companies (Equifax, Experian, TransUnion) keep records of one’s credit history. If someone has misused your personal or financial information, call one of the credit reporting companies (TransUnion 1-800-680-7289; Experian 1-888-397-3742; Equifax 1-800-525-6285) to request an initial fraud alert on your credit report.
If you are concerned about identity theft, but have not yet become a victim, you can also place an initial fraud alert. For example, according to the FTC, you may want to place a fraud alert if your wallet, Social Security card, or other personal, financial or account information are lost or stolen. Additionally, you also may want to place a fraud alert if your personal information was exposed in a data breach.
A fraud alert is free, and the company you call must tell the other companies about your alert.
An initial fraud alert can make it harder for an identity thief to open more accounts in your name. When you have an alert on your report, a business must verify your identity before it issues credit, so it may try to contact you.
How long does a fraud alert last?
An initial fraud alert stays on your report for at least 90 days; allows you to order one free copy of your credit report from each of the three credit reporting companies; and after 90 days, you can renew your alert for additional 90-day periods.
Military service members who deploy can place an active duty alert on their credit reports to help minimize the risk of identity theft. An active duty alert on a credit report means businesses have to take extra steps before granting credit in your name. Active duty alerts last for one year and can be renewed to match the period of deployment. Military service members who deploy can get an active duty alert that lasts one year, renewable for the period of deployment. Identity theft victims (whose information has been misused, not just exposed in a breach) are entitled to an extended fraud alert, which lasts seven years.
If you have created an Identity Theft Report, you can get an extended fraud alert on your credit file. When you place an extended alert, you can get two free credit reports within 12 months from each of the three nationwide credit reporting companies, and the credit reporting companies must take your name off marketing lists for prescreened credit offers for 5 years, unless you ask them to put your name back on the list. The extended alert lasts 7 years.
How much does a fraud alert cost?
Again, fraud alerts are free, and with a fraud alert, you keep access to your credit and federal law protects you. Further, initial fraud alert lasts only 90 days, unless renewed.
Credit Freezes
What is a credit freeze?
A credit freeze limits access to your credit file so no one, not even you, can open new accounts until the credit freeze is lifted.
How does a credit freeze work?
To be fully protected, you must place a credit freeze with each of the three credit reporting agencies. Credit freezes can be placed by telephone or online. You will get a PIN to use each time you freeze or unfreeze, which may take one to three business days.
How long does a credit freeze last?
A credit freeze lasts until you temporarily lift or permanently remove it (except in a few states where credit freezes expire after seven years).
How much does a credit freeze cost?
Fees are set by state law, but, generally, cost $5 to $10 each time you freeze or unfreeze your account with each credit reporting agency. You can get a free credit freeze, if you are an identity theft victim, or, in some states, if you are over age 62.
While Equifax will let you place or lift a credit freeze for free until January 31, 2018, TransUnion and Experian are not offering free credit freezes. And, as of now, Equifax’s offer will end on January 31, 2018. This means that any time you need to get new credit, you will need to remove the credit freeze, then place it again, with each of the three agencies — at a cost of $5 to $10 per agency each time, depending on your state’s law.
Are credit freezes free for identity theft victims, and will I also get free credit freezes from the other two credit reporting agencies? The answer is: No. An identity theft victim is someone whose information has been exposed AND misused. If you are a data breach victim, your information is at greater risk of misuse; unless that happens, you are not an identity theft victim entitled to free credit freezes on that basis.
Many people have had very sensitive personal information exposed in the Equifax data breach, such as Social Security numbers and driver’s license numbers. Equifax is offering free credit freezes until January 31, 2018, and Equifax also will refund fees to anyone who already has paid for credit freezes since the breach was announced on September 7, 2017. If you want a free credit freeze from Equifax, the company can be reached via 1- 800-349-9960 or by visiting freeze.equifax.com.
Should I place a credit freeze?
A credit freeze means that no one (not even you) can access your credit file until you unfreeze it, using a PIN or passphrase, which makes it harder for identity thieves to open new accounts in your name.
To be effective, you must place a credit freeze with all three credit reporting agencies (Equifax, TransUnion, and Experian), because when a criminal attempts to take out new credit, a business can pull your credit report from any of the three agencies. If you have only frozen your Equifax file and the business checks with Experian or TransUnion, your Equifax freeze does not help you.
Credit freezes are generally best for people who do not plan to take out new credit. This, often, includes older adults, people under guardianship, and children. Individuals who want to avoid monthly fees also may prefer credit freezes over credit locks.
Credit Locks
What is a credit lock?
Like a credit freeze, a credit lock limits access to your credit file so no one, not even you, can open new accounts until you unlock your credit file.
How does a credit lock work?
Like a credit freeze, to be fully protected, you must place credit locks with all three credit reporting agencies. With credit locks, however, there is no PIN and, usually, no wait to lock or unlock your credit file (although the current Equifax credit lock can take 24 to 48 hours). You can lock and unlock on a computer or mobile device through an “app” – but not with a telephone call.
How long does a credit lock last?
Credit locks last only as long as you have an ongoing credit lock agreement with each of the credit reporting agencies. In some cases, that means paying monthly fees to maintain your credit lock service.
How much does a credit lock cost?
Credit reporting agencies can set and change credit lock fees at any time. As of today, Equifax offers free credit locks as part of its free post-breach credit monitoring. Experian and TransUnion may charge monthly fees (often about $20).
Do I need a credit lock?
Depending on your particular credit lock agreement, your fees and protections may change over time. So, if you sign up for a credit lock, it is difficult to be sure what your legal protections will be if something later goes wrong. Also, monthly credit lock fees can quickly exceed the cost of credit freezes, especially if the credit lock fees increase over time.
Differences Between Fraud Alerts, Credit Freezes & Credit Locks
Additional FTC Information & Resources
Credit Freeze FAQs
Extended Fraud Alerts and Credit Freezes
Fraud Alert or Credit Freeze – Which is Right for You
Free Freezes from Equifax
FTC’s Resource Page about the Equifax Data Breach
IdentityTheft.gov
FTC’s Equifax Data Breach Resource Page
Source: FTC.gov and related websites.
Dec 13, 2017 | Blog
Overdraft Programs & Overdraft Fees – CFPB’s Overdraft Program Study
“Consumer Voices on Overdraft Programs” – CFPB Overdraft Study – Key Findings
The CFPB reported that it launched a qualitative study to explore consumers’ thoughts, intentions, and expectations about overdraft programs to supplement its quantitative analyses of overdraft programs and their impacts on consumers. This qualitative study consisted of in-depth interviews with consumers who had experience with overdraft programs.
The CFPB’s report detailed the findings from consumer interviews, including how interviewed consumers understood overdraft programs, consumer perceptions of experiences with overdraft, and consumer beliefs about the advantages and drawbacks to alternatives to overdraft.
The CFPB reported the following key findings from consumer interviews:
Consumers in the study noted several benefits to the availability of overdraft as well as drawbacks. Despite recognizing some benefits, however, all participants were concerned about the high cost of overdraft fees.
Participants commonly reported surprise at the overdraft fees they were charged. At the same time, some participants expressed awareness that they risked overdraft fees when transacting.
Participants expressed uncertainty about how their financial institutions make decisions about what to pay into overdraft or how they charge overdraft fees; participants were particularly uncertain about how their financial institution’s overdraft policies differed across types of transactions.
Many participants’ overdraft experiences reflected uncertainty about transaction processing, such as the timing of deposits being credited to their accounts. Participants also commonly forgot about scheduled payments that resulted in overdrawn accounts.
Participants frequently cited friends and family members as resources that could provide an alternative for them to overdraft. Their views on other financial products as alternatives to overdraft such as credit cards or savings diverged widely, with some participants viewing these alternatives as beneficial and others viewing alternatives as risky.
CFPB’s Overdraft Study Highlights Importance of Providing Suggestions & Strategies To Support Consumers
The CFPB report stated that
. . . the range of experiences with overdraft described by consumers participating in the CFPB’s study highlights the importance of providing resources that reflect the diversity in how consumers use and understand overdraft programs. The wide range of preferences and experiences that consumers relayed through the interviews indicates that financial educators may best achieve their goals by designing flexible resources that adapt to individual consumers’ experiences and preferences. Below are some suggestions of strategies . . . to support consumers:
**Remind consumers to consider a bank or credit union’s overdraft practices when selecting a checking account.
**Encourage consumers to investigate all overdraft options offered for their current checking account, including linking an account, in order to select the plan that best fits their needs.
**Help clients develop a system for staying aware of the timing of their scheduled payments. The CFPB’s Your Money Your Goals toolkit includes a spending tracker and a bill calendar that consumers can use to keep track of their cash flow. Those who are interested in the tools can order them for free at consumerfinance.gov/your-money-your-goals/.
**Encourage consumers to check account balances periodically by doing things such as calling their bank, visiting an ATM, signing up for text alerts, viewing accounts online, or using mobile applications before making discretionary purchases.
**Suggest that consumers sign up for low balance alerts to help them avoid unintentional overdraft.
CFPB Educational Resources and Tips for Consumers on Managing Checking Accounts, Including Information on Overdraft-Related Issues
Guides to selecting and managing checking accounts, available at consumerfinance.gov/about-us/blog/guides-to-help-you-open-and-manage-your-checking-account/.
A worksheet to support consumers in managing spending to achieve their financial goals at consumerfinance.gov/about-us/blog/managing-your-spending-achieve-your-goals/.
Explanation of how overdraft programs differ for everyday debit card purchases and ATM withdrawals at consumerfinance.gov/about-us/blog/understanding-overdraft-opt-choice/.
Answers to consumer questions about overdraft and other issues relating to bank accounts and services as part of the Ask CFPB website at consumerfinance.gov/askcfpb.
The CFPB’s report, which shares findings from qualitative interviews the CFPB conducted with consumers about their experiences with overdraft programs, can be viewed by clicking CFPB’s Consumer Voices Report.
Dec 12, 2017 | Blog
**FCC rules limit many types of robocalls, though some calls are permissible if prior consent is given.
**Rules differ between landline and wireless phones; however, calls and text messages have the same protection under FCC rules.
**Wireless and landline home phones are protected against telemarketing robocalls made without prior written consent from the recipient.
**An existing commercial relationship does not constitute permission to be robocalled or texted.
**Consent to be called or texted cannot be a condition of a sale or other commercial transaction.
**Consumers can take back their permission to be called or texted in any reasonable way. A calling company cannot require someone to fill out a form and mail it in as the only way to revoke consent.
**All non-emergency robocalls, both telemarketing and informational, require a consumer’s permission to be made to a wireless phone. These calls can include political, polling, and other non-telemarketing robocalls.
**Telemarketers and robocallers are allowed to call a wrong number only once before updating their lists. This most commonly comes up when someone who consented to be called or texted gave up that number, which was reassigned to someone else. Callers have resources available to them to help them know ahead of time if a number’s “owner” has changed.
**Urgent calls or texts specifically for health or fraud alerts may be allowed without prior consent. They must be free, and consumers can say “stop” at any time.
**Phone companies face no legal barriers to offering consumers the use of technologies that block robocalls to any phone. The FCC encourages companies to offer this resource.
FCC FAQs Regarding Robocalls, Autodialed & Prerecorded Calls
What are the rules for robocalls?
FCC rules require a business to obtain your written consent – on paper or through electronic means, including website forms, a telephone keypress – or a recording of your oral consent before it may make a prerecorded telemarketing call to your residential phone number or make an autodialed or prerecorded telemarketing call or text to your wireless number.
What are the consent requirements for telemarketers calling my landline?
Businesses must have your prior express written consent before making telemarketing robocalls. Telemarketers are no longer able to make telemarketing robocalls to your landline home telephone based solely on an “established business relationship” that you may have established when purchasing something from a business or contacting the business to ask questions.
Are robocalls to wireless phones permissible?
Your written or oral consent is required for ALL autodialed or prerecorded calls or texts made to your wireless number. Telemarketers have never been permitted to make robocalls to your wireless phone based solely on an “established business relationship” with you.
Do all prerecorded autodialed calls to my landline violate FCC rules?
Not always. Informational messages such as school closings or flight information are permissible without prior written consent.
What other autodialed calls are permitted under FCC robocall rules?
Market research or polling calls to residential wireline numbers are not restricted by FCC rules, nor are calls on behalf of tax-exempt non-profit groups. The rules do require all prerecorded calls, including market research or polling calls, to identify the caller at the beginning of the message and include a contact phone number. All autodialed or prerecorded non-emergency calls to wireless phones are prohibited without prior expressed consent, regardless of the call’s content.
Can I opt out of autodialed calls?
FCC rules require telemarketers to allow you to opt out of receiving additional telemarketing robocalls immediately during a prerecorded telemarketing call through an automated menu. The opt-out mechanism must be announced at the outset of the message and must be available throughout the duration of the call.
FCC FAQ’s: Robocalls, Autodialed Calls & Prerecorded Calls
Have You Received Unsolicited or Unwanted Telemarketing Calls, Autodialed Calls, Robocalls or Text Messages?
If you have received unwanted, unsolicited or harassing telemarketing telephone calls, autodial calls (“robocalls”) or text messages and would like to speak privately with an attorney to learn more about your potential legal rights, please complete the form to the right or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected]; John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected]; or send an e-mail to [email protected].
Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, negligence, false claims, deception, data breaches or whose rights to minimum wage and overtime compensation under the federal Fair Labor Standards Act and state wage and hour laws have been violated.
