Grow your money by avoiding financial leakages

by D. Murali

Be it buying a car or settling a hospital bill, booking an airline ticket or shopping online, you, as a customer, run a ripe chance of getting ripped off. A simple insurance against such risks can be David Bach’s ‘Fight for Your Money’ (www.landmarkonthenet.com). The great truth about money is that in order to keep it and grow it, you have to fight for it, he says in the intro.

“It doesn’t matter what you earn, it is what you keep that determines whether you will be financially free. Yet each year our money has become harder and harder to keep… Until you fight for your money, you will overpay for almost everything you buy.”

The book cites, for instance, a 2007 study conducted by Bankrate.com which found the average service fee charged by an Internet bank in the US to be roughly a quarter of what a traditional bank charged, while interest rates were more than eight times higher than what you get from brick-and-mortar banks.

The author’s advice, therefore, is to switch to a bank that allows you to monitor your account balances online and through ATMs. “Some banks also allow consumers to sign up for alerts by email or text messages on their mobile phones to let them know if their account balance drops below a certain level.”

However, his counsel is that you shouldn’t depend entirely on your computer. “Record all cheque and electronic transactions when you make them, and as boring as it may be, reconcile your chequebook with your monthly statements. Review those statements carefully, and notify your bank immediately if you see a transaction you did not authorise.”

A chapter on ‘identity theft’ – the number one consumer complaint – debunks a popular myth about cyberspace as the culprit. Contrary to popular belief, in cases where victims knew how their data was stolen, online identity-theft methods (like phishing, hacking, and spyware) only represented 12 per cent of fraud cases, reads a finding of Javelin Strategy & Research’s 2008 study.

“The report goes on to say that a huge 79 per cent of known identity-theft cases occur through traditional methods when a criminal makes direct contact with the consumer’s personal identification – including stolen or lost wallets, chequebooks, or credit cards, ‘shoulder surfing’ (when someone looks over your shoulder at the ATM or cash register), and stolen mail from unlocked mailboxes. And still another 17 per cent report ‘friendly theft’ – when friends, family, or in-home employees steal your personal data.”

While there is a general awareness about online ‘phishing’ scams – where a fraudulent email asking you to resolve an account problem will redirect you to a bogus web site – a scam dubbed ‘vishing’ has increased from 3 per cent of identity theft in 2006 to 40 per cent in 2007, reports Bach.

How does it work? “In one version, you get an email that appears to be from your bank, like a traditional phishing scam. Instead of being directed to a fake web site, you are given a number to call where you’ll then be asked or prompted for your personal information. In a second variation, you are contacted over the phone, either by a real person or a recorded message requesting that you solve a problem with your account.”

Vishers often use VoIP (Voice over Internet Protocol) to autodial credit card or bank customers with a security warning about possible fraudulent activity on your accounts, the author cautions. “Customers are asked to call ‘the bank’ back, and when you do, you’re told to input your account numbers and other private information.”

In the ‘shopping’ chapter, there are valuable tips on making online purchases. Look for the ‘Buy Safe’ seal, Bach instructs. “Buy Safe (www.buysafe.com) is an independent company that certifies online merchants as being trustworthy and reliable.” Another guidance is on ensuring that the ecommerce site uses encryption technology, which scrambles sensitive information such as your credit card number to keep computer hackers from stealing it.

“It’s easy to tell whether or not a site is encrypted. Just look at the web address in your browser display. If it begins with ‘https’ instead of ‘http,’ the site is encrypted. In addition, your browser will display a small icon of a closed padlock or unbroken key. Most reputable e-commerce sites also display the words ‘Secure Sockets Layer (SSL)’ or a pop-up box that says you are entering a secure area. The most secure sites will display something called Extended Validation (EV) SSL Certificates.”

On rebates that you get when shopping, the author warns customers about the ‘cheque-card’ scam, where instead of receiving a cheque for the rebate, you get a card ‘that has all kinds of ridiculous rules about when it can and can’t be used.’ Don’t be surprised if a company like AT&T, as in an example cited in the book, sends you one such card, which you find impossible to activate and use.

“If that’s not bad enough, many of the companies that do pay their rebates by cheque use cheques that expire in 90 days or less. So if you’re lucky enough to actually get a rebate cheque, make sure you deposit or cash it before it expires.”

A ready takeaway in the ‘travel’ chapter is that it is cheaper to buy one ticket at a time. The author mentions, as example, how the American Airlines web site quoted a fare of $619 when searching for four tickets for a July 2008 trip from Los Angeles to New York. “When I searched for just one, the price for the same flight came up at only $344.”

Most likely, there won’t be enough cheap seats available to fill your whole order, he reasons. “But instead of selling you as many cheap seats as they have and then charging you more for the rest, most airline reservation systems will simply kick your booking up to the next price level and charge you a higher fare for all your tickets.”

To ensure you make the right choice of seat, the author recommends checking with www.seatguru.com, which provides seat maps for 300 different aircraft on 45 different airlines, along with expert commentary on which seats are best and which you should definitely avoid. “It’s a great resource for any air traveller who needs extra legroom or has vowed never to get seated next to a restroom ever again.

source; The Hindu