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					  Consumer BeWare
                            Telemarketing scam
 Watch
                                                                  Telephone
  out!     cramming

                                                                  Telephone
Cramming   slamming




 Fraud
                                                Identity Theft




Rip-offs



                Job Scam

 Scams          Business Opportunities and Franchise

                Credit/Credit Card Marketing Scams



Schemes




                                                 Internet Fraud
Slamming
                                 Table of Contents

Unit One: What is a Scam

           What is a scam?
           Avenues of Scams
           General Ways to Identify a Scam



Unit Two: Identity Theft

           What Is Identity Theft
           Precautions for Preventing Identity Theft
           What Should You Do If Your Identity Is Stolen
           Consequences of Identity Theft




Unit Three: Telephone Scams

           Telemarketing
           Telephone Slamming
           Telephone Cramming
           900 Numbers



Unit Four: Door-to-Door and Job Scams

           Door-to-Door Scams
           Job Scams
           Types of Employment Service Firms
           Work-at-Home Scams
           Protecting Yourself


Unit Five: Credit Card Marketing Scams

           Advertising
           How to Avoid Credit Card Scams

Unit Six: Predatory Lending

           What is it?
           Kinds of Predatory Lending Practices
        Important Tips for Borrowers




         Purpose of EL/Civics: Consumer Beware



     To enable the students to identify scams and
predatory lending practices and the ways to avoid and
  protect them from scam consequences. To further
 help students identify the process and prevention of
                    identity theft.
                                 EL/Civics: Buyer Beware
                                           Unit 1 – What is a Scam

GOAL: to inform students about scams and how they originate.




EFF Standard(s) Used in
this Learning Plan                                          √ 9. cooperate with others
                                                            √10. advocate and influence
 √ 1. Reading with understanding                             11. resolve conflict and
 √ 2. Convey ideas in writing                                    negotiate
 √ 3. Speak so others can                                   √12. guide others
      understand                                            √13. take responsibility for
 √ 4. listen actively                                            learning
  5. observe critically                                     14. reflect and evaluate
   6. use math in problem                                   √15. learn through research
      solving and communication                              16. use information and
 7. solving problems and make decisions                         communications technology
   8. plan




  Ice Breaker – Using handout, Culture Clips, Handout #3, Partner Workout for “Consumer
                    Scams”, have students break into pairs and ask each other the 5 questions on the handout.
                    Regroup and share answers.


Introductory Activities

         A. Show the video, Culture Clips #5, Consumer Scams.

             1. Students will determine the 2 scams in the video and discuss the characteristics of each scam.
                by completing handout, Culture Clips – Consumer Scams. Following completion of
                this handout, review answers with the class.
             2. Distribute and Complete Culture Clips, Handout #1, Vocabulary for “Consumer
               Scams”. Student may work individually , in pairs, or in groups to complete these handouts.
               Following completion of this handout, review answers with the class.

             3. Further discussion could center on personal experience that students may have had with scams.

         B. Review, as a class, additional vocabulary on handouts, Culture Clips -
             Handout#1A, Vocabulary and Handout #2, Idioms.
I. What is a scam?

       A. Read and discuss handout, “If you have to pay to get your prize, then it’s a scam”,
          Dayton Daily News.
       B. Have students define “scam”. Write answers on the board.
       C. Clarify the definition of scam - Scam is a dishonest plan, usually to get money without receiving
           anything in return.
       D. Every scam starts the same way.
          1. The scam artist gathers some public information on a person.
          2. He gets your name and address out of the phone book.
          3. He checks the county records to see who owns the house where the person lives.
          4. Then he tries to trick the person into buying some unnecessary product.


II. Avenues for scams. Discuss each.
       A. telephone: someone calls, wanting you to donate money to a charity that doesn’t exist or wanting
                      you to buy a product which you’ll never get
       B. Internet: online shopping, , investment, bogus Web sites, e-mail business
                      Read and discuss handout, eBay, eScams explored, Dayton Daily News
                                        Handout, Safety precautions for Shopping On,ine
       C. Mail:       prize awards, charity donations
       D. classified ads: job ads, chain letters
       E. door-to-door sales: selling a products which don’t exist


III. General ways to identify a scam. Ask yourself:

       A.   What is the first thing they say about themselves?
       B.   Do they talk about the product or the service they offer?
       C.    If the first thing you read is all about the money to be made, watch out.
       D.   Do they have a real product?
       E.   If there is no real product and if it is just passing money from the one below to the ones above, it is
            illegal.


       Student Activities:
       Have students complete Culture Clips handout #5: Consumer Scams”

               Have students break into groups and complete handout, Culture Clips,
                Handout #5, Individual Activity for “Consumer Scams”. Each group should arrive
                at solutions to each of the scams and be prepared to share their conclusions with
                the class. Allow 10 minutes for brain storming and conclusions.

               Have the students break into groups. Distribute a written scam to each group.
                Students are to read the scam and identify the characteristics that make it a scam.
                Have each group record their observations. Allow 15 minutes for this group
                activity. Conclude this activity by having a group representative from each group
                read the scam and share the group’s observations to the entire class.

IV. Check students comprehension of scams
             A. Distribute handout, Culture Clips: Consumer Scams Review and students complete.
             B. Review answers and collect for students’ portfolios.
Name _________________________________   Date________________________




                           Culture Clip – Consumer Scams




Complete the following exercise.



A. List 2 scams that you saw in the video.

     1. _________________________________________________

     2. _________________________________________________




B. Choose one of these 2 scams. What made you think it was a scam?

     ___________________________________________________

     ___________________________________________________

     ___________________________________________________

     ___________________________________________________

     __________________________________________________________________
Name_________________________________             Date______________________



               Culture Clips: Consumer Scams Review




Match a word from Column 2 with a word in Column 1


1. _____ incredible                     a) type of betting


2. _____big winner                      b) money paid to enter a
                                           contest


3. _____valuable prizes                 c) person from the
                                           sweepstakes company


4. _____compete                         d) have a chance to win
                                           something


5. _____national sweepstakes            e) get a prize


6. _____lucky day                       f) something worth a lot
                                           of money and given to
                                           you in a contest


7. _____sweepstakes                     g) money paid to enter a
                                           contest


8. _____entry fee                       h) very hard to believe


9. _____sweepstakes representative      i) try to win something
Name_________________________________                    Date______________________



               Culture Clips: Consumer Scams Review
                                        Answer Key



Match a word from Column 2 with a word in Column 1

1. __h___ incredible                           a) type of betting


2. __e__ big winner                            b) money paid to enter a
                                                  contest


3. __f   _ valuable prizes                     c) person from the
                                                  sweepstakes company


4. __i__ compete                               d) have a chance to win
                                                  something


5. __g __ national sweepstakes                 e) get a prize


6. __d__ lucky day                             f) something worth a lot
                                                  of money and given to
                                                  you in a contest


7. __a__ sweepstakes                           g) sweepstakes that are only in the
                                                  within a country


8. __b___ entry fee                            h) very hard to believe


9. __c__ sweepstakes representative            i) try to win something
 Safety Precautions for Shopping
             Online


 Check that the site is secure. There will be a padlock at
  the bottom of the page in the right hand corner.

 Address starts with https://   Not http://

 Always use a credit card. You are protected with a
  credit card to a loss limit of $50

 Use the same credit card for shopping on the web.

 Never use a debit card on the Internet. When you use
  a debit card, you are giving direct access to your
  account.

 Never give your credit card number to any caller on the
  telephone unless you have placed the call yourself.

 Many sites have an 800 number you can call to finalize
  your order.
                                  EL/Civics: Buyer Beware
                                           Unit 2 – Identity Theft

GOAL: to help students identify the process of identity theft and what to do if
       they become victims.




EFF Standard(s) Used in
this Learning Plan                                          √ 9. cooperate with others
                                                            √10. advocate and influence
 √ 1. Reading with understanding                             11. resolve conflict and
 √ 2. Convey ideas in writing                                      negotiate
 √ 3. Speak so others can                                   √12. guide others
      understand                                            √13. take responsibility for
 √ 4. listen actively                                             learning
   5. observe critically                                     14. reflect and evaluate
   6. use math in problem                                    15. learn through research
      solving and communication                              16. use information and
 7. solving problems and make decisions                           communications technology
  8. plan




Introductory Activity

       Review vocabulary: Place words on the board and define.


              identity theft           fraud       credit bureau         fake ID          fraud alert

              affidavits               documents   consequences          password




I. What is identity theft?

   A. Discuss each point on handout, How Identify Theft Occurs.
   B. Reinforce the following points –

       1.Read and discuss handout, How Identity Thieves Use Your Personal Information
       2.Criminals take your name, Social Security number, and good credit rating.
       3.They use them to fraudulently purchase thousands of dollars’ work of merchandise.
       4.They obtain instant credit and credit cards, buy merchandise, write checks, rent apartments, and
              buy cars, all as if they were you.
       5. Using sophisticated equipment and software, criminals can print perfect-looking driver’s
              licenses with whatever photo and signature they choose, and do it all in minutes in a van.
              Then they drop someone off at a store with the fake ID, go from store to store, and load up
              the van.
       6. Many credit granters give credit based on your Social Security number and don’t check it
              against your name.

       Student Activity: Have students share any identity theft experiences they or someone
                                  they know have had.

II. Precautions for preventing ID Theft

   A. Distribute handouts, ID /Theft – How to Guard Against It
                              Strategies for Stopping Identity Thieves,      Real Simple magazine

   B. Reinforce the following points

       1. Don’t give out personal information on the phone, through the mail, or over the Internet.

                a. Identity thieves will say they are from banks, Internet service providers or government
                    agencies.
                b. They will ask you for you’re SSN, mother’s maiden name, account numbers and other
                    identifying information.
                c. Before you share any personal information, confirm that you are dealing with a
                     legitimate organization.
                      call the customer service department of credit companies that you use, using the
                         number listed on your account statement or in the telephone book.
                      Check the credit organization’s website, since many companies post scams
                         alerts when your name is used improperly.
       2.   Never leave your mail in your mailbox for long periods of time.
                a. If you are planning to be away from home for vacation or an extended period of time,
                   call the U.S. Postal Service at 1-800-275-8777 to request a vacation hold application form.
                b. Your mail will be held at the post office until you can pick it up or return home to
                   receive it.
       3.   Pay attention to your billing cycles. Follow up with creditors if your bills don’t arrive on time.
       4.   Be wary of promotional scams. Identity thieves may use phony offers to get you to give them
            your personal information.
       5.   If you receive pre-screened credit card offers in the mail, tear or shred them if you decide not
            to accept the offer.
       6.   When you use a credit card, don’t leave the receipt behind, because some stores leave the full
            credit card number, name, and expiration date of the card on the receipt.
       7. Don’t carry your Social Security card. If you driver’s license has your Social Security number
           on it, have a new driver’s license made with out. Ohio doesn’t require a Social Security to be
           on a river’s license.
       8. Stop the credit bureau from selling your name to credit card companies, by calling
                                1-888-567-8688.
       9. Tear up all pre-approved credit card offers that you receive in the mail.
               a. Identity thieves can take pre-approved credit card offers in your name and apply for the card
                  and change the address.
               b. They get a card with your name on it mailed to their address.
       10. Shred credit card receipts and other documents before throwing them away.
       11. Place passwords on your credit cards, bank and phone accounts.
       12. If you have been a victim of identity theft, call the FTC’s Identity Theft Hotline at 1-877-438-4338


III. What should you do if your identity is stolen?

       A. Once a year, get a copy of all three of your credit reports and check to see if anything looks
          wrong. You can obtains a credit report from:
                  Equifax (1-800-525-6285) or www.equifax.com
                  Experian (1-800-301.7195) or www.experian.com
                  TransUnion (1-800-680-7289) or www.transunion.com

       B. Get a police report from your local police department.
              1. Get a copy of the police report in case the bank, credit card company or others need proof of
                  the crime.
              2. Under the federal Identity Fraud and Assumption Deterrence Act of 1998,
                  the police must provide police reports for identity fraud.
              3. Be persistent if the police are reluctant to provide police reports for identity fraud.
              4. If you’re told that identity theft is not a crime under your state law, ask to file a
                  Miscellaneous Incident Report instead.
              5. Ask your police department to search the FTC’s Consumer Sentinel database for other
                  complaints in your community.
       C. Contact all three credit bureaus (see A) and have a fraud alert added to your credit report.

       D. Close the accounts that you know or believer have been tampered with or opened fraudulently.
              1. Credit Accounts which include all accounts with banks, credit card companies and lenders,
                  phone companies, utilities, and other service providers.
              2. Use new PINs and passwords when you open new accounts.

       E. If your credit card has been lost or stolen, cancel the card as soon as you can. Get a new card
          with a new PIN.

       G. Contact each store or company that issued credit or accepted a check in your name, and fill out
          affidavits of fraud.

       H. If checks have been stolen or misused, stop payment ASAP and ask your bank to place a fraud alert
           on it or notify the check verification service.
               To find out if the identity thief has been passing bad checks in your name call:
                                SCAN: 1-800-262-07771
       I. Report lost or stolen ATM and debit cards immediately.
              1. If you report cards lost or stolen within 2 business days, your losses are limited to $50.
              2. If you report cards lost or stolen within 2 business days, but within 60 days after a statement
                  showing an unauthorized electronic fund transfer, you can be liable for up to $500.
              3. If you wait more than 60 days, you could lose all the money that was taken from your
                   account.

       J. Keep these affidavits and police report forever.

       K. The following website will take you step by step through the process of cleaning up your
          reputation – www.privacyrights.org

               Student Activity – Have students go into website, www.privacyrights.org, and review
               the process of regaining their identity. This activity will give students experience of using
               the website and the process of searching for information on the Internet.

       L.   Identity Theft Assistance Center helps people combat identity theft.
               Review handout, Program to Fight Identity Theft, Dayton Daily News

       M. Review overhead, Identity Theft Resources, Smart Money by FDIC


IV. Consequences of Identity Theft

     A. It will be very difficult for you to buy a car or a house, because you credit scores and checking
          account are going to look bad.
      B. It will take about 2 years to get your credit rating back.
     C. Could be convicted of a criminal offense if your identity is used in writing bad check. which is
        criminal offense.


V. Review of Unit One and Two

       A. Review highlights of Units One and Two.
       B. Allow for questions and answers.
       C. Distribute handout, Matching for Unit 2.
              Collect, check, and copy for student portfolios.
              Return handout and review with students.



       Student Activities –

       1. Handout, Scenarios for Identity Theft
       Break-out: Students are placed in groups of 2 or more and assigned a Identity Theft
       scenario to discuss. Allow 10-15 minutes. Have students record their discussion on
       handout. Regroup as a class and have each group share with the class its scenario and
       its solution. Collect handout for student portfolio.

       2. Invite a guest speaker from Consumer Fraud Department (#225-4747) to address
       identity theft and scams. Have students prepare questions in advance and allow time
       following the guest speaker’s presentation for Q. and A.
           How Identity Theft Occurs

 Thieves steal wallets and purses containing your identification and credit and
  bank cards

 Thieves steal your mail, including your bank and credit card statements, pre-
  approved credit offers, telephone calling cards and tax information.

 Thieves complete a “change of address form” to divert your mail to another
  location.

 Thieves rummage through your trash, or the trash of businesses, for personal
  data in a practice known as “dumpster diving”

 They fraudulently obtain your credit report by posing as a landlord, employer
  or someone else who may have a legitimate need for the information.

 They get your business or personnel records at work.

 They find personal information in your home.

 They use personal information you share on the Internet.
     How Identity Thieves Use Your
        Personal Information?

 They call your credit card issuer and, pretending to be you, ask to
  change the mailing address on your credit card account. The
  imposter then runs up charges on your account. Because your bills
  are being sent to the new address, it may take some time before you
  realize there’s a problem.

 They open a new credit card account, using your name, date of birth,
  and SSN. When they use the credit card and don’t pay the bills, the
  delinquent account is reported on your credit report.

 They establish phone or wireless service in your name.

 They open a bank account in your name and write bad checks on that
  account.

 They file for bankruptcy under your name to avoid paying debts
  they’ve incurred under your name.

 They counterfeit checks or debit cards, and drain your bank account.

 They buy cars by taking out auto loans in your name.
                  Identity Theft
            The act of stealing your good name to commit fraud




How to guard against it:

  Before giving personal identifying information, find out:
          how it will be used
          if it will be shared with others

  Check your billing cycles.

  Give your Social Security number only when necessary. Use other type
    of identification if possible.

  Only carry the identification and credit cards that you actually need.

  Order a copy of your credit report from the three credit reporting
    agencies every year.

          Make sure it’s accurate
          Includes only those activities you have authorized.

  Keep items with personal information in a safe place
      o Tear them up why your don’t need them anymore
      o Make sure charge receipts, copies of credit applications,
         insurance forms, bank checks and statements, expired charge
         cards, and credit offers you get in the mail are shredded.
                    Scenarios for Identity Theft




1. Your purse or wallet was stolen. What should you do?




2. Your friend lost her purse. What should she do?




3. You have received no mail for 5 days. You went to the post office to
   check on your mail. You find out that a change of address form has
   been filled-out in your name and your mail is now being sent to the new
   address. You did not fill out the change of address form. What would
   you do?




4. You received a credit card bill for a credit card that you do not have.
   Your name and address are on the bill. Since you do not have a
   credit card, you do not want to pay the bill. What should you do?




5. You get a bill from a cell phone company. You do not have a cell phone
   and don’t know why the company sent you a bill. Your name and
   address are on the bill. What should you do?
Name_________________________________         Date____________________



                               Matching: Unit 2




Match a word from Column 2 with a word in Column 1


1. _____identity theft             a) organization that checks
                                   people’s credit rating

2. _____fraud                      b) a piece of paper with official
                                   information on it


3. _____fake ID                    c) when someone uses
                                   your personal information to commit fraud


4. _____credit bureau              d) false ID


5. _____affidavits                 e) secret word that your must
                                    use before being allowed to
                                    enter an account.


6. _____password                   f) written statement about
                                   something that you swear is
                                   true and can be used in court.


7. _____documents                  g) when someone pretends to
                                   be someone else to get money



8. _____consequences               h) something that happens as
                                   a result of a certain action
Name_________________________________          Date____________________



                               Matching: Unit 2
                                        Answer Key




Match a word from Column 2 with a word in Column 1


1. __c__   identity theft          a) organization that checks
                                   people’s credit rating

2. __g__    fraud                  b) a piece of paper with official
                                   information on it


3. __d__    fake ID                  c) when someone uses
                                   your personal information to commit fraud


4. __a__ credit bureau             d) false ID


5. __f   __ affidavits             e) secret word that your must
                                    use before being allowed to
                                    enter an account.


6. __e___ password                 f) written statement about
                                   something that you swear is
                                   true and can be used in court.


7. __b__ documents                 g) when someone pretends to
                                   be someone else to get money



8. __h___ consequences             h) something that happens as
                                   a result of a certain action
                    Scenarios for Identity Theft




1. Your purse or wallet was stolen. What should you do?




2. Your friend lost her purse. What should she do?




3. You have received no mail for 5 days. You went to the post office to
   check on your mail. You find out that a change of address form has
   been filled-out in your name and your mail is now being sent to the new
   address. You did not fill out the change of address form. What would
   you do?




4. You received a credit card bill for a credit card that you do not have.
   Your name and address are on the bill. Since you do not have a
   credit card, you do not want to pay the bill. What should you do?




5. You get a bill from a cell phone company. You do not have a cell phone
   and don’t know why the company sent you a bill. Your name and
   address are on the bill. What should you do?
                                  EL/Civics: Buyer Beware
                                            Unit 3 – Telephone Scams

GOAL: To inform the students of the scams which are conducted by telephone
and ways to avoid and protect themselves from scam consequences.




EFF Standard(s) Used in                                       √ 9. cooperate with others
this Learning Plan                                            √10. advocate and influence
                                                                11. resolve conflict and
 √ 1. Reading with understanding                                     negotiate
   2. Convey ideas in writing                                 √12. guide others
 √ 3. Speak so others can                                     √ 13. take responsibility for
      understand                                                    learning
 √ 4. listen actively                                           14. reflect and evaluate
   5. observe critically                                        15. learn through research
   6. use math in problem                                     16. use information and
      solving and communication                                      communications technology
  √7. solving problems and make decisions
   8. plan

Introductory Activity

       Review vocabulary: Place words on the board and define.

              telemarketing                    pressure                     fine print
              pay to play                      do not call list             freeze
              phony                            telephone slamming           telephone cramming


       Have students complete handout, Matching: Unit 3

I. Telemarketing
       A. What is it?
          1. Using the telephone to sell a product which the consumer never receives.
          2. Using the telephone to collect money for a phony charity.
          3. Pay-to-Play requires you to buy something or pay a fee in order to win or claim a prize.
          4. Nigerian Scam:
              A stranger who has found a wealth of money in Nigeria wants to deposit millions of dollars into
              your bank account for safe keeping. They will give you a lot of money for your help. They ask
              you for your name, bank, account number, social security number, and other personal
              information. The scam is that they use your personal information to withdraw large sums of
              money from you bank account. Important point – If a stranger wants to deposit millions of
              dollars into your bank account, it’s almost certainly a scam.
                Ask students if they have received any telemarketing calls. Have them
                share their experiences
      B. Tips for Telemarketing Scams
             1. Guard personal information -
                i.e., social security number, bank account number, credit card number
              2. Resist pressure
              3. It’s probably a scam if the marketer demands that you act NOW or won’t take “NO” for an
                   answer.
             4. Register with the National Do Not Call Registry.
                    a. Student could be given opportunity to register -
                     www.donotcall.gov//register/reg.aspn
                 b. If students have limited computer skills, teacher may need to assist them through the
                     on-line registration process.
             5. Read and discuss handout #10-D, Watch Out for Telephone Scams! p. 1

             Student Activity – 15 minutes
               Use handout #10-D, Watch Out for Telephone Scams! - Role Play, P. 2
               Group students in pairs. Scramble the “Watch Out for Telephone Scam”
               cards and place face down in a pile. Take turns. One student will pick a
               card and role play the situation with partner. Continue role playing as
               many scenarios as time allows.

II. Telephone Slamming

      A. What is it?
           1. Your telephone service is switched from your current company to another company without
                your permission.
           2. Long distance service is the most common type of slamming.

      B. How to protect against slamming
           1. Read fine print.
                     a. contest entry forms, coupons, etc. might include agreement to switch phone service.
                     b. Federal Law states that a written agreement to change phone service must be a
                         separate document.
                     c. If company offers a check to get you to switch, check must state on front, back and
                         in the signature area that you agree to the change in service.
           2. Switch phone service over phone or electronically.
               Company must verify the transaction via a tool-free number or connect you to a number.
           3. Do NOT return calls to numbers on your pager or voice mail that you don’t recognize.
                     a. Slammers may use Automatic Number Identification (ANI) to see the number that
                         you are dialing from.
                     b. Then the slammer will process an unauthorized switch of service.
           4. Check phone bill.
                     a. If you notice a new company’s name on your bill, call the number on the bill and
                         ask for an explanation.
                     b. If you’ve been slammed, tell the company that you didn’t agree to their service.
                     c. Contact you former telephone company and reinstate your old calling plan.
           5. Federal Law states:
                     a. you can switch back to old telephone company for free.
                     b. you don’t have to pay for the first 30 days of service of slammer
           6. Put “freeze” on telephone service. Ask your local phone company to notify you before your
               service can be change.
III. Telephone Cramming

      A. What is it?
           1. Cramming is charges for services which you never agreed to buy, but appeared on your
                telephone bill.
           2. Examples of cramming charges are call waiting, voice mail, paging, Internet access.
           3. While cramming charges usually appear on local telephone bills, they can also be found on
                bills for cell phones, beepers, and pager services.

      B. What to do?
           1. Read the fine print of any promotional materials and understand the details.
           2. Ask your local phone company about “bill blocking” which keeps other phone companies
                from adding extra charges on your phone bill without your confirmation.
           3. Follow tips for telemarketing and slamming scams
           4. How to protect against cramming - refer to part B under telephone slamming

IV. 900 numbers

      A. What are these services?
           1. 900 numbers are Pay-Per-Call services.
           2. Pay-Per-Call provides live/recorded information and entertainment.
           3. Charges for these services will appear on the phone bill even if you didn’t understand that
               there was a cost. If you made a 900 call, you pay for it.
           Ask students to share their experiences or experiences of family/friends with 900 numbers.

      B. Know What to Do
            1. Know the cost of dialing
                     a. Services provided through 900 numbers must state the cost in ads.
                     b. If the cost is more than $2.00, it must be disclosed at the start of the call.
            2. Not all 800 numbers are free. If there is a charge for an 800 number you must be told in
            advance:
                     a. how much the call(s) will cost
                     b. agree to have the charges billed your phone number.
            3. Check you phone bill carefully. If you are unsure about charges, call the phone number listed
                   on the page.
            4. Ask your local phone company about blocking.
                     a. Blocking is a service the phone company provides, disabling the use of 900
                          numbers from your phone.
                     b. You can also block calls to specific countries.



      Student Activities – 15 -20 minutes each

      1. Group identification of scams -
         o Divide students into groups of 2-4.
         o Assign each group a different Scam Scenario, using handout, Scam Scenarios
                 Student are to read and discuss the scenarios.
                 One member of the group could be the spokesperson who will report to the class a
                   summary of the group’s discussion.
      2. Internet research -
          Using the website, http://fraud.org, have students research information on:
                o Telemarketing
                o Telephone slamming and cramming
                o Pay-Per-Call numbers

             Students will look for ways in which they can avoid these scams and identify their rights as
              scam victims.


V. Review of Unit 3

      A .Review highlights of Unit 3.

      B. Allow for questions and answers.

      C. Distribute handout, Matching for Unit 3.
            1. Collect, check, and copy for student portfolios.
            2. Return handout and review with students.
         Comparing Telephone Scams




 Telemarketing            Telephone           Telephone              900-
                          Slamming            Cramming            Telephone
                                                                   Numbers


Using telephone to      Switching           Charging for        Pay-Per-Call
sell a product          telephone service   services not        services
                        without your        requested
                        permission

Using telephone to      Example is          Example of          Charges for these
collect money for a     switching long      services:           calls will appear
false charity           distance service    Call waiting,       on telephone bill
                                            caller ID, voice    even if you did
                                            mail, Internet      not know that
                                            services            there was a cost

Pay-to-play – pay a     Can put a           Can request “bill   Can request
fee to win or claim a   “freeze” on         blocking” from      “blocking” to
prize                   phone service       your telephone      stop the use of
                                            company             900 telephone
                                                                numbers on your
                                                                telephone

Can put your
telephone number
on the National Do
Not Call Registry
Handout 10-D
Role-Play

Read and discuss these tips for talking to telephone salespeople.




                   Watch Out For Telephone Scams!



       Tips for buying anything over the phone:

          1. Salespeople must tell you their company’s
             name and what they are selling.

          2. It’s illegal to call before 8:00 AM or after
             9:00PM.

          3. Telemarketers can’t call you repeatedly or
             threaten you.

          4. Companies must take you off their lists if
             you ask them to do so.

          5. If you win a contest, it’s illegal to ask you
             to pay for the prize.

          6. Companies must tell you if there are no
             refunds.

          7. Never give your bank account number to
             anyone.

          8. You can’t be required to pay shipping
             charges for prizes you win in a contest.
Name _______________________             Date__________________


                             Matching: Unit 3

Match a word from Column 2 with a word in Column 1


1. _____telephone slamming         a) when a telephone company charges
                                      you on your telephone bill for extra
                                      services that you never agreed to buy.


2. _____phony                      b) to stop telephone service




3. _____fine print                 c) part of a contract that has information,
                                      often written in small print



4. _____telemarketing              d) Your telephone service is changed
                                      from your present company to another
                                      company without your permission.


5. _____freeze                     e) stops you from getting telemarketing




6. _____do not call list           f) to pay money (fee) to win or claim a
                                      prize



7. _____pressure                   g) false or not real




8. _____pay to play                h) try to make someone do something by
                                      using force or influence


9. _____telephone cramming         i) people call to sell you a product or
                                      collect money for a charity that is not
                                      real
Name_________________________________           Date____________________


                               Matching: Unit 3
                                        Answer key

Match a word from Column 2 with a word in Column 1


1. __d__ telephone slamming              a) when a telephone company charges
                                            you on your telephone bill for extra
                                            services that you never agreed to buy.


2. __g__ phony                           b) to stop telephone service




3. __c__ fine print                      c) part of a contract that has information,
                                            often written in small print



4. __i__ telemarketing                   d) Your telephone service is changed
                                            from your present company to another
                                            company without your permission.


5. __b__ freeze                          e) stops you from getting telemarketing




6. __e__ do not call list                f) to pay money (fee) to win or claim a
                                            prize



7. __h__ pressure                        g) false or not real




8. __f__ pay to play                     h) try to make someone do something by
                                            using force or influence


9. __a__ telephone cramming              i) people call to sell you a product or
                                            collect money for a charity that is not
                                            real
                                  EL/Civics: Buyer Beware
                              Unit 4 – Door-to-Door and Job Scams

GOAL: To introduce students to door-to-door sales scams and work-at-home job scams which
appear in the newspaper, on the Internet, and in flyers and to assist them in recognizing the
deception in these ads.




EFF Standard(s) Used in                                      √ 9. cooperate with others
this Learning Plan                                            10. advocate and influence
                                                              11. resolve conflict and
 √ 1. Reading with understanding                                   negotiate
 √ 2. Convey ideas in writing                                 12. guide others
 √ 3. Speak so others can                                   √ 13. take responsibility for
      understand                                                   learning
 √ 4. listen actively                                       14. reflect and evaluate
   5. observe critically                                    √ 15. learn through research
   6. use math in problem                                    16. use information and
      solving and communication                                    communications technology
   7. solving problems and make decisions
   8. plan




Introductory Activity

       Review vocabulary: Place words on the board and define.


        door-to-door              scam artist                down-payment                      work-at-home
        medical billing           envelope stuffing          license                           certificate
        references                refund policy              contract                          household
        reputation                advertising                complaints




I. Door-to-door Scams – re-show the Culture Clip video #5, Consumer Scams, with attention to the
                         door-to-door segment. Have students identify salesman’s techniques and the
                         customer’s reaction.

        A. How does the scam work
           1. Scam artist goes to houses or apartments, selling products or services.
               a. Product can be household cleaner, laundry products, or health and beauty aids.
               b. Services can be house cleaning, lawn care, roof, driveway, or sidewalk repair.
           2. Scam artists will want a down-payment on the product or service with delivery at a later date.
          3. Scam artist does not return and you have no product or service and no money. You also have no
             way to contact him/her.

              Student Discussion:

               Ask: Have you ever had a door-to-door salesperson come to your house or apartment?
                    Have student share experience. Write sales technique and students’ response on the
                    board.

       B. What to do?
          1. Contact police about the scam.
             a. It is a crime to take money for product or service that is not received.
             b. Complete a police report with physical description of the scam artist and complete details of
                  the scam.
          2. Contact the BBB and alert them to scam.
          3. Recovery of money is unlikely.
             a. Keep all paperwork, if given.
             b. If scam artist is arrested, may recover money, but not likely.


II. Job Scams – What are they?

       A. Advertised promise to help you get a good-paying job.

       B. Promise that you can be your own boss and make big money

       C. Say that you can make money with little or no effort.

       D. Require fees for their service which job search services promises to refund if dissatisfied. No
          reimbursement is given.

       E. Promises job interviews, but no interviews are schedules.

              Student Activities:
              1. Using the classified ads in the newspaper, have students find ads that
              could be job scams. Have them identify why they think the ads are scams.

              2. Using the handout, Position Available, have students, either individually or
              in pairs, read and complete the handout. Share answers with class. Collect
              handout for student portfolio.

       F. Emails offering business opportunities, many of which are fraud

       G. Require you to buy books and/or software to conduct business.

       H. Work-at-home schemes:
            Read and discuss handout, Better Business Bureau brochure, Work-as-Home Schemes,
            “A Modern Twist to Old Scams” and “Common Scams and Schemes”
             1. Medical Billing – the facts
                   a. Read and discuss handout, Better Business Bureau brochure, Work-as-Home
                       Schemes, “Processing Medical Insurance Claims”
                   b. electronic claim processing which is frequently used at doctor’s offices
                   c. doctor’s offices want to outsource billing
                   d. scams advertise that many at-home jobs, earning substantial money, require no
                       experience

             2. Envelope stuffing -
                    a. Read and discuss handout, Better Business Bureau brochure,
                            Work-as-Home Schemes, “Envelop Stuffing”
                    b. usually involve a fee
                    c. scam – for your money you will receive a letter telling you to:
                       place the same “envelope stuffing” ad in the newspaper or magazine
                       or send the ad to friends/family
                       the only way you earn money is if people respond to your ad.


III. Types of Employment Service Firms

      A. public employment services:
         1. known as “job services”
         2. services are free
         3. provides Internet access to America’s Job Bank
         4. has links to employment and training programs in each state
         5. email – www.ajb.dni.us

      B. employment agencies:
         1. work to fill specific positions within companies
         2. charges the hiring company for the placement fee.

      C. Executive Search Services (headhunters)
         1. hired by businesses to find future employees.
         2. charges the hiring company for the placement fee.

      D. Temporary Help Services
         1. are paid by business which hires temporary services employees.
         2. pay their employees directly
         3. examples: Manpower, Kelly Services, Snelling, Olstem Staffing

      E. Executive Counseling Service
         1. helps job seekers with career direction and decisions
         2. charge a fee
         3. do not guarantee job placement

      F. Job Listing Services
         1. sell information about getting jobs
         2. require upfront fee
IV. Be informed about work-at-home schemes
      A. Examine the offer
          1. Read and discuss handout, Better Business Bureau brochure Work-as-Home Schemes,
              “Avoiding Fraud”
          2. Some omit that-
              a. there are many working hours without pay
              b. all costs are to you, such as, to place an ad, photocopy, office supplies/equipment
              c. instructional software is required and paid for by you

       B. Know who you are dealing with.
          1. Employment-service company may be only selling you training and materials.
          2. And not helping you find a job.

       C. Get all the details before you pay.
          1. Information about exactly what you will get.
          2. Get information in writing:
              a. What’s involved in the program?
              b. What tasks will you have to perform?
              c. How will you be paid?
              d. What is the pay schedule?
              e. What is the total cost, including supplies?
       D. Find out if there is a market for your work.
          1. If an employment-service company states that it has customers waiting, ask who they are and
              contact them.
          2. Ask potential local customers if they employ people to do work from home.

       E. Get references from others who are doing the work for the employment-service company.

       F. Be aware of legal requirements.
          1. licensure or certification
          2. code requirements for operating business out of home

       G. Know the refund policy on equipment and supplies

       H. Check out the employment-service company’s reputation with the BBB.
          1. Read and discuss handout Better Business Bureau brochure Work-as-Home Schemes,
             “What to Do”

              Student Activities:
              1. Either individually or in pairs have students research one the following
              information on the websites listed on the back of the Better Business Bureau
              brochure:
                  Assembly work at home
                  Chain letters
                  Envelope stuffing
                  Multi-level marketing
                  online hone business
                  processing medical insurance claims.

       Have students report their findings to the class.
V. Protecting yourself – before you spend any money responding to job ads or completing job placement
   contracts, the FTC suggests that you:

       A. Be suspicious of promises to get you a job.

       B. Be skeptical of upfront fees and guarantee of refunds to dissatisfied customers.

       C. Don’t give our your credit card or bank account information on the phone.
          1. Anyone who has you account information can use it to take money from you accounts.
          2. This rule holds true for all situations that involve giving financial information via the phone.

       D. Review the firm’s contract before paying any money.
          1. Understand the terms and conditions of the firm’s refund policy.
          2. If oral promises are made that don’t also appear in the contract, it could be a scam.

       E. If an employment service is advertising a job for a company, contact the corporate offices of the
          company to find out if they are really hiring.

       F. Check with local consumer protection agencies to see if any complaints have been filed about the
          employment service.


              Student Activities:
              1. Research job scam information on the Internet, using www.ftc.gov
                    A. Divide students into pairs.
                    B. Under this website, search: job scams.
                    C. Assign one of the following topics to each pair of students:
                          1. Making A Buck – employment scams
                                    work at home schemes
                                    net based business opportunities: Are Some Flop-
                                      opportunities
                                    Media Resources – Medical Billing Opportunities
                          2. Federal/Postal Job Scams
                          3. Magazine Subscription Scams
                          4. Holiday Magic
                    D. Have students write a short summary about their research findings.

              2. Invite a guest speaker from the Better Business Bureau
                 (Dayton, OH area call 222-5825) to address door-to-door and job scams.
                    A. Have students prepare questions ahead of time to ask the speaker.
                    B. Have students write a summary of speaker’s presentation.

VI. Review of Unit 4

       A .Review highlights of Unit 4.
       B. Allow for questions and answers.
       D. Distribute handout, Matching and Fill-In the Blank for Unit 4.
              1. Collect, check, and copy for student portfolios.
              2. Return handout and review with students.
Name________________________                               Date_______________

                                 Position Available


                              POSITIONS AVAILABLE

                                   Corporate Finance
                                   Corporate Trading
                                   Investment Banking
                              Now accepting resumes
                              Bilingual speaking a plus
                                      1-800-000-0000
                                    Fax 1-800-000-0000




I saw this ad in the newspaper for jobs in corporate finance. I faxed my resume to the
800-number listed and got a call from a woman who said her company works with
businesses to find employees to fill their positions. She said the service would cost me
$495, but the fee was fully refundable if I was dissatisfied or found a job on my own.
She guaranteed me interview opportunities and told me that if I found a job through her
company, there was a good chance my new employer would reimburse me for the fee.

I never got any interviews, let alone a refund, and now I can’t even get the company to
return my calls.


Questions:

1. What are some concerns about this ad?




______________________________________________________________________


2. What should this person have done differently?




_____________________________________________________________________________
Answer key
Name________________________                                     Date_____________

                                 Position Available


                                POSITIONS AVAILABLE

                                     Corporate Finance
                                     Corporate Trading
                                     Investment Banking
                                Now accepting resumes
                                Bilingual speaking a plus
                                        1-800-000-0000
                                      Fax 1-800-000-0000




I saw this ad in the newspaper for jobs in corporate finance. I faxed my resume to the
800-number listed and got a call from a woman who said her company works with
businesses to find employees to fill their positions. She said the service would cost me
$495, but the fee was fully refundable if I was dissatisfied or found a job on my own.
She guaranteed me interview opportunities and told me that if I found a job through her
company, there was a good chance my new employer would reimburse me for the fee.

I never got any interviews, let alone a refund, and now I can’t even get the company to
return my calls.

Questions:

1. What are some concerns about this ad?
         No employment service name
         No job description
         Up-front cost of $495 to be sent without personal contact with company
           representative
         Verbal guarantee only; nothing in writing

2. What should this person have done differently?
         Asked for the name of the employment service
         Check out the service with BBB
         Asked for names of companies to which this ad applies
         Checked with these specific companies to see if they are hiring
         Ask for a written contract before paying the $495
Name_________________________________         Date____________________



                               Matching: Unit 4

Match a word from Column 2 with a word in Column 1


1. _____household                  a) person who tries to swindle you out of money



2. _____advertising                b) job that can be done in your home




3. _____scam artist                c) money paid before item is received



4. _____contract                   d) document that allows you to do a certain job



5. _____complaint                  e) give back money that was paid for a
                                      product or service



6. _____work at Home               f) legal, written agreement between a person and a
                                       company



7. _____ refund                    g) words or pictures in the newspaper or magazine
                                      that give information about a product or service




8. _____down-payment               h) all people who live together in one house
Name_________________________________           Date____________________



                               Matching: Unit 4
                                        Answer key



Match a word from Column 2 with a word in Column 1


1. __h__ household                 a) person who tries to swindle you out of money



2. __g__ advertising               b) job that can be done in your home




3. __a__ scam artist               c) money paid before item is received



4. __f__ contract                  d) document that allows you to do a certain job



5. __d__ license                   e) give back money that was paid for a
                                      product or service



6. __b__ work-at-Home              f) legal, written agreement between a person and a
                                       company



7. ___e__ refund                   g) words or pictures in the newspaper or magazine
                                      that give information about a product or service




8. __c__ down-payment              h) all people who live together in one house
Name_________________________________              Date____________________



                              Fill in the Blank: Unit 4



Choose from the words below to fill in the blanks in each sentence.


                 classified ads              complaint

                 reputation                  medical billing

                 references                  door-to-door salesman




1. If a person is a scam artist, he/she has a bad _______________________.



2. Before you buy something from a door-to-door salesman, you should ask to see

    his/her __________________________.



3. A person who goes from house to house selling things or services is a

    ________________________.



4. If you are not satisfied with something, you can write a ___________________.



5. You can look for jobs in this part of the newspaper ____________________.



6. An example of a work-at-home scam is ____________________.
Name_________________________________              Date____________________



                              Fill in the Blank: Unit 4
                                          Answer key


Choose from the words below to fill in the blanks in each sentence.


                 classified ads              complaint

                 reputation                  medical billing

                 references                  door-to-door salesman




1. If a person is a scam artist, he/she has a bad reputation.



2. Before you buy something from a door-to-door salesman, you should ask to see

    his/her references.



3. A person who goes from house to house selling things or services is a

    door-to-door salesman.



4. If you are not satisfied with something, you can write a complaint.



5. You can look for jobs in this part of the newspaper classified ads.



6. An example of a work-at-home scam is medical billing.
                                 EL/Civics: Buyer Beware
                             Unit 5 – Credit Card Marketing Scams
GOAL: To introduce students to deceptive ads and scams for credit cards and how to avoid being
victimized.




EFF Standard(s) Used in                                      √ 9. cooperate with others
this Learning Plan                                            10. advocate and influence
                                                              11. resolve conflict and
√ 1. Reading with understanding                                    negotiate
√ 2. Convey ideas in writing                                  12. guide others
√ 3. Speak so others can                                    √ 13. take responsibility for
     understand                                                    learning
√ 4. listen actively                                        14. reflect and evaluate
  5. observe critically                                     √ 15. learn through research
√ 6. use math in problem                                     16. use information and
     solving and communication                                     communications technology
  7. solving problems and make decisions
  8. plan

Introductory Activity

      Review vocabulary: Place words on the board and define.


         advertising                       credit bureau              eligibility
         annual fee                        credit history             processing fee
         credit Card                       credit repair              legitimate
         credit report                     credit scores              security deposit


I. Introduce students to credit card scams by using handout, Credit Card Scam.
        A. Read and discuss handout
        B. Ask students to share personal experience regarding credit card scams.

II. Advertising
       A. Get credit card by calling a certain number.
               1. When you call the local number you are referred to a ‘900’ number.
               2. ‘900’ numbers can cost $2.00 per minute.

                          Student Activity:
                           What would it cost if you call a ‘900’ number at $2 a minute and you
                           were on the line for 15 minutes? ($30)

       B. Credit card may require a security deposit, application and processing fee.
       C. May require an annual fee.
       D. May have high unpaid balance in interest rates.
III. How to avoid credit card scams

       A. Look for the following:
          1.Offers easy credit
             a. Legitimate credit card providers will examine your credit report or history.
             b. Credit scores of 300-850 or higher are more credit worthy.

                       Student Activity:
                       Using handout, Sample Credit File, review the information that is
                       contained in a credit file.

              3. Uses ‘900’ number for a credit card.
              4. Credit cards offered by “credit repair”.
                      a. Company will offer to clean-up your credit history for a fee.
                      b. You can contact credit bureaus directly and clean-up your credit history.
                      c. If you are unsure of credit card issuer, call Better Business Bureau.
                      d. Time and good credit history will restore your credit.

              5. Make sure credit card issuer reports to credit bureau where your credit history is maintained.

                       Student Activity:

                       1. Have students break-out in to pairs and research credit counseling
                          services in your community on the Internet or in the yellow pages of
                          the telephone book. Report to the class their findings on one of the
                          services.

                       2. Invite a guest speaker from the local consumer credit counseling
                          service (Dayton: 937- 643-2227) and address credit history and
                          credit reports. Have students prepare questions in advance and
                          allow time following the speaker’s presentation for questions and
                          answers.


IV. Review of Unit 5

       A. Share the following information on credit counseling:
                  In the Dayton area, the Consumer Credit Counseling, 3131 S. Dixie, is available for
                     individual credit history.
                  Call (937) 643-2227 or go online at www.consumercreditcounseling.com.
                  There is no cost for report findings.

       B. Review highlights of Unit 3.

       C. Allow for questions and answers

       D. Distribute handout, Matching and Fill-In the Blank for Unit 5.
                 1. Collect, check, and copy for student portfolios.
                 2. Return handout and review with students.
Name_________________________________          Date____________________



                               Matching: Unit 5



Match a word from Column 2 with a word in Column 1



1. _____credit bureau              a) money paid once a year for using a credit card



2. _____annual fee                 b) written description of people’s use of credit



3. _____credit scores              c) legal



4. _____processing fee             d) able to get credit



5. ______eligibility               e) money charged for updating a person’s credit
                                      card account

6. ______legitimate                f) agency that keeps records on people’s credit
                                       rating



7. ______credit report                   g) indicate if you are credit worthy
Name_________________________________           Date____________________



                               Matching: Unit 5
                                        Answer key



Match a word from Column 2 with a word in Column 1



1. __f___credit bureau             a) money paid once a year for using a credit card



2. __a___annual fee                b) written description of people’s use of credit



3. __g___credit scores              c) legal



4. __e___processing fee            d) able to get credit



5. __d___eligibility               e) money charged for updating a person’s credit
                                      card account


6. ___c___legitimate               f) agency that keeps records on people’s credit
                                       rating



7. ___b__ credit report                  g) indicate if you are credit worthy
Name_________________________________              Date____________________



                             Fill in the Blank: Unit 4



Choose from the words below to fill in the blanks in each sentence.


                 advertising                 credit history
                 credit card                 security deposit
                 deposit                     credit repair


1. Announcements in the newspaper about VISA, MasterCharge, Discover credit cards

    are a way of _______________________.



2. VISA, MasterCharge, and Discover are type of __________________________.



3. A credit bureau has information on your past and present use of credit from your

    bank, credit union, mortgage company, and credit cards. This information is called

    ________________________.



4. Before a credit card provider will issue you a credit card, you first might have to

   give them an amount of money that could be returned to you later. This money is

   a ___________________.



5. _____________ is when your credit history is clean-up.
Name_________________________________              Date____________________



                             Fill in the Blank: Unit 4
                                          Answer key


Choose from the words below to fill in the blanks in each sentence.

                 advertising                 credit history
                 credit card                 security deposit
                 deposit                     credit repair


1. Announcements in the newspaper about VISA, MasterCharge, Discover credit cards

    are a way of advertising.



2. VISA, MasterCharge, and Discover are type of credit cards.



3. A credit bureau has information on your past and present use of credit from your

    bank, credit union, mortgage company, and credit cards. This information is called

    credit history.



4. Before a credit card provider will issue you a credit card, you first might have to

   give them an amount of money that could be returned to you later. This money is

   a security deposit.



5. Credit repair is when your credit history is clean-up.
                                 EL/Civics: Buyer Beware
                                      Unit 6 – Predatory Lending
GOAL: To introduce students to predatory lending practices.




EFF Standard(s) Used in                                     √ 9. cooperate with others
this Learning Plan                                            10. advocate and influence
                                                              11. resolve conflict and
√ 1. Reading with understanding                                    negotiate
√ 2. Convey ideas in writing                                  12. guide others
√ 3. Speak so others can                                    √ 13. take responsibility for
     understand                                                    learning
√ 4. listen actively                                        14. reflect and evaluate
  5. observe critically                                       15. learn through research
√ 6. use math in problem                                      16. use information and
     solving and communication                                     communications technology
  7. solving problems and make decisions
  8. plan



Introductory Activity

      Review vocabulary: Place words on the board and define.


         prime loans                       foreclosure     home improvement
         subprime loans                    appraise        contractor
         default                           homeowner


I. What is predatory lending?

       A. Read and discuss, handout, Predatory Lending: Banks Trick Poor into Expansive
          Loans and answer questions 1 – 4.

       B. Predatory lending is the practice of targeting homeowners for high-cost sub-prime loans., for
           example, second mortgages or home improvement loans.
              1. Sub-prime loans carry high interest rates and fees.
              2. Sub-prime loans may add unnecessary costs, such as, prepaid life insurance.

       C. The target is low and moderate income homeowners and minorities.

       D. Predatory lenders advertise via TV, mail, telephone, door-to-door sales and flyers in mailboxes.

       E. Even borrowers with perfect credit are charged interest rates of 10% - 11% interest.
      F. These loans have default and foreclosure rated between 5 to 10 times higher than prime loans.

      G. May appraise a house higher than it’s worth.
           1. Do not sign a loan application if a house is appraised too high.
           2. City or county auditor’s office can give you the current appraised value.
           3. In the end the true value of home will be revealed and homeowner is responsible for high
               fees.


II. Kinds of Predatory Lending Practices
         A. Charging excessive fees for loans – handout, “Beware” Practice used by Predatory
                                                                          Lenders
             1. Borrowers often are charged fees for originating the loans.
             2. Fees charged are usually 8% of the loan amount. Banks frequently charge 1% - 2%.
             3. Borrowers frequently loose $10,000 - $15,000 in home equity.

       B. Charging higher interest rates to borrowers with good credit rating.
           1. Usually charged 3 – 6 points higher that usual bank rate.
                   Ex. 10% - 11% vs. 4% -5%
           2. For borrowers with poor credit rating, the interest is higher.

       C. Making loans without regards to borrow’s ability to pay.
           1. make loans on homeowner’s equity only.
           2. If homeowner is not able to afford payments, the lender will foreclose on the house which is
               resold for profit.

       D. Payment Penalties
            1. Borrower is penalized when pays off loan early.
            2. This penalty remains in place up to 5 years.
                   Ex. $10, 000 loan at 11% interest for 5 years = $5,5000
            4. This penalty becomes an added fee on the loan.

             Student Activity:

             Have students calculate the following scenarios:

                    1. Which loan would you choose: $20,000 loan with fees equaling
                       8% of total loan amount from a predatory lender or $20,000 loan
                       with fees equaling 2% from a bank? Calculate and explain your
                       reason for your choice.
                         (Predatory Lender: $20,000 x 8% = $1,600
                           Bank: $20,000 x 2% = $400)

                    2. If a predatory lender loaned you $15,000 with an 11% penalty for
                       paying off 5 years early, how much would the penalty add to your
                       loan? What would be your total loan amount?
                              ( $15,000 x 11% x 5 years = $8,250)
                              ($15,000 + $8,250 = $13,250)
        E. Predatory lenders want you to refinance your loan to lower your monthly payments and add any
           unpaid payment to new loan amount. Due to fees and interest rates, it will cost more money over
           time.

        F. Home improvement is common for predatory lending.
           Either of the following handouts could be used to reinforce home improvement and predatory
           lending:

                       Predatory Lending: Tricks of the Trade & How to Recognize Them
                       Predatory Lenders Target Uninformed

              1. Read and discuss one or both the above handouts.

              2. Local home improvement companies will solicit homeowners for home improvement work.

              3. The home improvement company may originate a mortgage loan to finance the home
                 improvement.

                       a. Later will sell mortgage to a predatory mortgage lender for financing of the home
                       improvements.
                       b. The home improvements are often overprices and the work is bad and incomplete.
                       c. Sometimes the contractor fails to obtain required permits, as a way of making sure the
                           work is not inspected for compliance with local codes.


III. Important Tips for Borrower

       A. Don’ts: handout, Your Rights as a Borrower – Important Tips
             1. Don’t sign documents with blank lines.
             2. Don’t be rushed into signing a loan.
             3. Don’t pay up-front fees without explanation.
             4. Don’t do business with lenders that you haven’t checked out

       B. Do’s: handout, Your Rights as a Borrower – Important Tips
             1. Be careful of door-to-door lenders
             2. Have all fees and terms explained.
             3. Know total cost of your monthly payments
             4. Review all documents or have someone review them with you
             5. You have 3 days to cancel loans signed at home
             6. Know what a balloon loan is and understand all the terms

IV. Review of Unit 5

       A. Review highlights of Unit 3.
               Student Activity – Handout, Predatory Lending Scenarios
                    Students break into group and determine which scenario matches the
                    predatory lending practice. Regroup and share results.
       B. Allow for questions and answers
       C. Distribute handout, Matching and Fill-In the Blank for Unit 6.
                  1. Collect, check, and copy for student portfolios.
                  2. Return handout and review with students.
      Predatory Lending: Banks Trick Poor into Expensive Loans
                                        Answer Key




Comprehension and Discussion Questions: accept answers with similar meanings to the
following answers. Write answers on the board.




1. What does a “predator” mean?

      Someone who takes advantage of someone else’s weakness, such as giving
      subprime loans to people in financial need.


2. From the above reading and your familiarity with the word “predator”, how would
    you define predatory lending?

      A lending company that takes advantage of homwowners who need money for
      home improvement and bill by loaning them money at high interest and high fees.


3. What is a home equity loan?

      Money loaned based on value of a house after you take away the money still owed
      on the house.


4. What are some things you might do to avoid being in the same situation?

     Ask questions
     Have the loan person explain terms, fees, and other costs
     Review all documents
     Don’t be rushed into signing documents
     Check with Better Business Bureau about lender’s reputation
          Predatory Lending Scenarios




1. A couple who spoke on a little English was talked into refinancing their
present mortgage of $123,738 and take a cash-out of around $9,500. A cash-
out is extra money which can be used to buy other things. With this
refinancing there were $10,368 in lender fees and $927 in third party fees
which made their new loan $145,533. They are now struggling to make their
monthly payments, which do not include taxes and insurance.



2. A husband and wife were talked into refinancing their loan. Over $14,000 in
fees and a $5,271 insurance policy were included in their loan which they were
locked into by a five-year prepayment penalty for $10,000. This prepayment
penalty meant that if they paid off their loan early, they would also pay the
extra $10,000. Also even though they had a very good credit rating, their
interest rate on their new load was 13%.



3. A homeowner took out a second mortgage to consolidated his debt. The
new loan had a 13.4% interest and monthly payment of $612, leaving him with
a total monthly payment for both mortgages of $1257.00 ($612 for second
mortgage + $654 for first mortgage). His monthly income from his job was
$1600.00. He has behind on both of his payment and could loose his house.



4. A couple got a phone call from a construction company asking if they
needed any work one on their house. The couple did need hone repairs, but
they didn’t have the money to pay for it. The man from the construction
company told them that he could arrange for them to get the financing to pay
for the repairs and also to pay off other bills. He picked them up and drove
them to fill out a loan application with a loan officer he know at a local lender.
The contractor began the work, but as soon as the check was ready from the
lender, the contractor picked it up and never came back to finish the work. The
Couple still had to pay the loan back at 12.9% interest.
                       Credit Card Scam




A person calls you and says he is from the Security and Fraud Department
of your credit card company. Your card has been flagged to an unusual
purchase pattern and he is calling to verify. He will ask you if you
purchased an item (he will name item) for a certain amount. When you
say no, the caller says that a credit will be issued to your account for this
item. Caller says your address and you are to verify. Caller says that they
are starting a fraud investigation and gives you a control number which you
should use when you call the 800 number on the back of your credit card.
Here is the IMPORTANT part of how the scam works. The caller needs to
verify that you are in possession of your card. They ask you to find the 7
numbers on your card – the first 4 are four are your card number, and the
next 3 are the Security Numbers that verify you are in possession of the
card. The caller ask you to read to him the 3 numbers so he can verify that
you still have your card.

People who have had this scam happen to them, quickly called their credit
card company to verify what they were told by the former caller. They
were told that the phone call was a scam and purchases were charged to
their credit card within the last 15 minutes.
If you get this call, do not give out your card numbers; instead tell the
caller you’ll call your credit card company directly.




Name_________________________________    Date____________________
                               Matching: Unit 6



Match a word from Column 2 with a word in Column 1




1. _____ predatory lending         a) person or company that does work for other
                                         companies



2. _____ sub-prime loans           b) to fix a house better then what it was before.



3. _____    default                c) person who owns the house



4. __ ___   foreclosure            d) loans with high interest rates and high fees and
                                      are given to people who have bad credit,
                                      bankruptcy, and late payments.


5. ______ appraise                 e) failure to pay monthly loan payment



6. ______ homeowner                f) take away someone’s property because they can’t
                                      pay back the money that was borrowed



7. ______ home improvement         g) to officially give value to a property



8. ______ contractor               h) targeting homeowners for high cost sub-prime
                                      loans



Name_________________________________          Date____________________
                              Matching: Unit 6
                                    Answer Key



Match a word from Column 2 with a word in Column 1




1. ___h__ predatory lending     a) person or company that does work for other
                                      companies



2. __d___ sub-prime loans       b) to fix a house better then what it was before.



3. ___e__ default               c) person who owns the house



4. __ _f__ foreclosure          d) loans with high interest rates and high fees and
                                   are given to people who have bad credit,
                                   bankruptcy, and late payments.


5. ___g___ appraise             e) failure to pay monthly loan payment



6. ___c___homeowner             f) take away someone’s property because they can’t
                                   pay back the money that was borrowed



7. ___b___home improvement      g) to officially give value to a property



8. ___a___ contractor           h) targeting homeowners for high cost sub-prime
                                   loans
Name_________________________________              Date____________________



                             Fill in the Blank: Unit 6
Choose from the words below to fill in the blanks in each sentence.
                finance                              limited-time offer
                credit                               penalty
                loan                                 limited time offer
                Better Business Bureau               hotline
                fees                                 credit rating



1. An arrangement that allows you to buy something and pay for it later is

    _______________________.

2. Amount of money you pay for a service is a __________________________.

3. When you borrow money from a bank or credit union, you must take out a

    ________________________.

4. A limited amount of time to get a special buy is called a      ___________________.


5. Extra money that must be paid when a loan application is made is_____________ .


6. ______________is a telephone number that people can call for quick help with

   questions or problems.


7. When a person is judged by how likely he or she will pay debts is called a

   __________________

8. An organization that will help you if you have a problem with a company or

    business is the _____________________________________.


9. ________________ is how a person saves or spends money.


10. A punishment for paying-off a loan early is called a _____________________.

Name_________________________________              Date____________________
                                      Answer Key
                             Fill in the Blank: Unit 6
Choose from the words below to fill in the blanks in each sentence.
                finance                              limited-time offer
                credit                               penalty
                loan                                 limited time offer
                Better Business Bureau               hotline
                fees                                 credit rating



1. An arrangement that allows you to buy something and pay for it later is

    credit.

2. Amount of money you pay for a service is a        fee.

3. When you borrow money from a bank or credit union, you must take out a

    loan.

4. A limited amount of time to get a special buy is called a      limited time offer.


5. Extra money that must be paid when a loan application is made is up-front offer.


6. Hotline is a telephone number that people can call for quick help with

   questions or problems.


7. When a person is judged by how likely he or she will pay debts is called a
   credit rating


8. An organization that will help you if you have a problem with a company or

    business is the   Better Business Bureau.


9. Finance    is how a person saves or spends money.


10. A punishment for paying-off a loan early is called a      penalty.

				
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