Indiana Department of Financial Institutions

A mini-lesson for:
secondary school teachers
adult and community educators
students and consumers
This mini-lesson includes learning objectives, background information, discussion questions, activities, a
worksheet and sources of additional information.
Learners will:
• define electronic banking.
• describe several electronic fund transfer services.
• compare several types of electronic currency.
• list consumer protections under the lectronic !unds Transfer "ct.
Elecronic B!n"in#
lectronic banking, also known as electronic funds transfer #!T$, is simply the use of electronic means
to transfer funds directly from one account to another, rather than by check or cash. %ou can use
electronic funds transfer to:
• have your paycheck deposited directly into your bank or credit union checking account.
• withdraw money from your checking account from an "T& machine with a personal identification
number #'()$, at your convenience, day or night.
• instruct your bank or credit union to automatically pay certain monthly bills from your account,
such as your auto loan or your mortgage payment.
• have the bank or credit union transfer funds each month from your checking account to your
mutual fund account.
• have your government social security benefits check or your ta* refund deposited directly into
your checking account.
• buy groceries, gasoline and other purchases at the point-of-sale, using a check card rather than
cash, credit or a personal check.
• use a smart card with a prepaid amount of money embedded in it for use instead of cash at a pay
phone, e*pressway road toll, or on college campuses at the library+s photocopy machine or
• use your computer and personal finance software to coordinate your total personal financial
management process, integrating data and activities related to your income, spending, saving,
investing, recordkeeping, bill-paying and ta*es, along with basic financial analysis and decision
Automated Teller Machines (ATMs) also called ,--hour tellers are electronic terminals which give
consumers the opportunity to bank at almost any time. To withdraw cash, make deposits or transfer funds
between accounts, a consumer needs an "T& card and a personal identification number. .ome "T&s
charge a usage fee for this service, with a higher fee for consumers who do not have an account at their
institution. (f a fee is charged, it must be revealed on the terminal screen or on a sign ne*t to the screen.
Direct Deposit and Withdrawal Services allow consumers to authori/e specific deposits, such as
paychecks or social security checks, to their accounts on a regular basis. (t is also possible to authori/e
the bank, for a fee, to withdraw funds from your account to pay your recurring bills, such as mortgage
payment, installment loan payments, insurance premiums and utility bills.
Pay y Phone Systems let consumers phone their financial institutions with instructions to pay certain
bills or to transfer funds between accounts.
Point!of!Sale Transfer Terminals allow consumers to pay for retail purchase with a chec" card, a new
name for debit card. This card looks like a credit card but with a significant difference the money for the
purchase is transferred immediately from your account to the store+s account. %ou no longer have the
benefit of the credit card 0float0, that is the time between the purchase transaction and when you pay the
credit card bill. 1ith immediate transfer of funds at the point-of-sale, it is easy to overdraw your checking
account and incur additional charges unless you keep careful watch on spending.
Personal #omputer $an"in% Services offer consumers the convenience of conducting many banking
transactions electronically using a personal computer. 2onsumers can view their account balances,
request transfers between accounts and pay bills electronically from home.
T$%es of Elecronic C&rrenc$
#hec" #ards, the new name for debit cards, can be used instead of cash, personal checks or credit
cards. "s stated, when you use a check card you transfer funds immediately from your account to the
store+s account. " growing number of consumers use check cards because they eliminate the hassle and
risks of writing checks or carrying large amounts of cash. (mportant facts you need to know are:
• %ou have less bargaining power with a check card than with a credit card. 1ith a credit card you
have the right to refuse to pay for the purchase if you are not satisfied. 1ith a debit card you have
already paid for the product, so you have less bargaining power with the merchant.
• " thief with your check card and '() number can take all the money in your account. The thief
can even make point-of-sale purchases without your '().
• %our liability is limited to 345 if you report the checkcard loss within two days, any longer and your
liability can go to 3455. "fter 65 days, you can be responsible for the entire amount.
&ote: &aster2ard and 7isa have voluntarily capped the loss liability of checkcard holders at 345. 0"s
welcome as these voluntary protections are, they are too important to be left to the kindness of bank
marketing departments,0 writes #onsumer 'eports. The consumer advocacy maga/ine advocates
federal law changes to make consumer liability caps mandatory.
• (n an era of increasing bank fees, consumers can e*pect to pay for the service of using a
• (t is the consumer+s responsibility to keep checkcard receipts and deduct the dollar amounts of
the purchase from your bank balance immediately, in order to avoid overdraft changes.
Smart #ards, sometimes called stored-value cards, have a specific amount of credit embedded
electronically in the card. !or e*ample, a 3855 smart card that you have purchased in advance can be
used to cover e*penses such as pay phone charges, bridge or e*pressway tolls, parking fees or (nternet
purchases. These cards make the transaction fast, easy and convenient.
.mart card technology is in a period of rapid change. 9ltimately consumers should be able to customi/e
their smart cards to suit their financial needs with access from their personal computer or cellular phone.
.ome important consumer issues are:
• .mart cards are the equivalent of cash so must be guarded.
• 'rocedures for recovering the value of a malfunctioning smart card are unclear.
• The computer chip within the card will contain both financial and personal information. 'rivacy
and security issues could be a problem.

Smart cards may not be covered by the lectronic !unds Transfer "ct in case of loss or misuse of the
Di%ital #ash is designed to allow the consumer to pay cash rather than use a credit card to purchase
products on the (nternet. :ne type of digital cash allows consumers to transfer money from a financial
institution or a credit card into an 0electronic purse0. The cash is held in a special bank account that is
linked to your computer. "nother type of digital cash converts money into digital coins that can be placed
on your computer+s hard drive.
Di%ital chec"s allow consumers to use their personal computers to pay recurring bills. 2onsumers can
use computer software provided by a bank, or they can use personal finance software packages such as
;uicken or &icrosoft &oney and subscribe to an electronic bill-paying service.
The technology of paying bills electronically by home computers is advancing rapidly, but relatively few
businesses currently can accept payments made directly by computers. <igital checking is e*pensive.
!ees generally run from 34 to 385 a month for ,5 transactions. 'rivacy and security issues are major
consumer concerns. ncryption technology may lessen privacy concerns in the future.
Cons&mer 'roecion -- Elecronic (&n)s
Tr!nsfer Ac
The 8=>? lectronic !unds Transfer "ct is the governing statute while the !ederal @eserve Aoard+s
@egulation 00 provides guidelines on electronic funds transfer card liability. The regulations require that:
• a valid !T card can be sent only to a consumer who requests it.
• unsolicited cards can be issued only if the card cannot be used until validated.
• the financial institution must inform you of your rights and responsibilities under the law in a
written Disclosure Statement, including the procedure to correct errors in your periodic
• the user is entitled to a written receipt when making deposits or withdrawals from an "T& or using
a point-of-sale terminal to make a purchase. The receipt must show the amount, date and type of
• periodic statements must confirm the amount of all transfers, the dates and types of transfers,
type of accounts to or from which funds were transferred, and the address and phone number to
be used for inquiries regarding the statement.
Prolems and (rrors. %ou have 65 days from the date a problem or error appears on your written
terminal receipt or on your periodic statement to notify your financial institution. (f you fail to notify the
financial institution of the error within 65 days, you may have little recourse. 9nder federal law, the
financial institution has no obligation to conduct an investigation if you have missed the 65-day deadline.
)ost cards. (f you report an "T& or !T card missing before it is used without your permission, the card
issuer cannot hold you responsible for any unauthori/ed withdrawals. (f unauthori/ed use occurs before
you report it, the amount you can be held responsible for depends upon how quickly you report the loss.
(f you report the loss within two business days after you reali/e the card is missing but you do report its
loss within 65 days after your statement is mailed to you, you could lose a much as 3455 because of an
unauthori/ed withdrawal.
(f you do not report an unauthori/ed withdrawal within 65 days after your statement is mailed, you risk
losing all the money in your account plus the unused portion of your ma*imum line of credit established
for overdrafts.
See our We Sites*
#redit + ATM #ards ! What to do if They,re
Automatic Deit Scams"
#redit and ATM #ards"T&.html
#yer Shoppin%
Deit #ards vs- #redit #ards
(lectronic $an"in%
8. List several e*amples of electronic funds transfers and discuss your e*periences with !Ts.
,. <escribe smart cards and give e*amples of what they can do.
D. <escribe check cards and give e*amples of what they can do.
-. 1hat consumer protections apply to lost or stolen !T cards under the federal lectronic !unds
Transfer "ctE
4. 1hat information must be included in periodic !T statements from your financial institution, and why
is it important for consumers to check this information for accuracy as soon as possible after receiptE
8. (nvite a resource person from a local bank or credit union to come to your classroom to e*plain their
!T services. "sk about costs, consumer problems, consumer protections under the law, and the
resource person+s vision of new uses of electronic money in the future.
,. .urvey several friends about their e*periences with electronic money and their greatest concerns.
D. 9sing the !T 2:&'"@(.:) 1:@F.GT #last page$, evaluate the !T services provided by local
financial institutions, including costs, benefits and restrictions. <etermine which services would suit your
financial situation and provide the most convenience and benefits.
Hive students our Arochures.
Banking: There's No Place Like Home by Fathy %akal. Fiplinger+s 'ersonal !inance
&aga/ine, pp. 68-66, #<ecember 8==>$.
Check Cards: Should you replace your ATM card? 2onsumer @eports, pp. 6?-6=, #:ctober
lec!ronic Commerce and The "u!ure o# Money$ Technology and %ou, by Tariq F.
&uhammad, Alack nterprise, pp. ,44-,4=, #Iune 8==>$.
Ho& 'ill 'e Pay (n The )n!erne!? by Iames &c"ndrews, 2onsumers+ @esearch, pp. ,=-DD,
#"pril 8==>$.
Paying Bills By Compu!er$ Time !o s&i!ch !o digi!al checks? 2onsumer @eports, pp. 4--44,
#"ugust 8==>$.
'ha! !o kno& *e#ore you spend cy*erdough, by llen .tart, &oney &aga/ine, pp. DD-D4,
#Ianuary 8==>$.
'ha! &orks and &ha! doesn'! in !he &orld o# +igi!al "inance, by 'eter Feating, &oney
&aga/ine, pp. 8D4-8-D, #Iuly 8==6$.
Lesson 'l!n
Lesson 'lan on lectronic Aanking, available free from:
'ublic (nformation 2enter
!ederal @eserve Aank of 2hicago
'.:. Ao* ?D-
2hicago, (L 656=5-5?D-
Telephone: #D8,$ D,,-4888
"vailable free from:
$oard of .overnors of the Federal 'eserve System
'ublications .ervices
<ivision of .upport .ervices
1ashington, <2 ,5448
Alice in Deitland
#onsumer /andoo" to #redit Protection )aws
A #onsumer,s .uide to Direct Payment
(lectronic $an"in% for Today,s #onsumer
The Story of #hec"s and (lectronic Payments
"vailable free from:
Master#ard International
8-58 ye .treet, )1
1ashington, <2 ,5554
Telephone: #?55$ ===-48D6
The ATM #ash #ard 0ui1
"vailable free from:
Federal Trade #ommission
2onsumer @esponse 2enter
1ashington, <2 ,54?5-5558
Telephone: #,5,$ D,6-D645
#yershoppin%* Protectin% 2ourself When $uyin% 3nline (lectronic
)ost or Stolen* #redit and ATM #ards
"vailable free from:
&ational #onsumers )ea%ue
8>58 F .treet, )1
.uite 8,55
1ashington, <2 ,5556
Telephone: #,5,$ ?D4-DD,D
Deit #ards4 $eyond #ash + #hec"s
"vailable free from
Pulic Information #enter
!ederal @eserve Aank of 2hicago
'.:. Ao* ?D-
2hicago, (L 656=5-5?D-
(lectronic Money
"vailable free from:
St- 5ames#onsumer Information #enter ! 6D
'.:. Ao* 855
'ueblo, 2: ?855,
Shoppin% With 2our ATM #ard
"vailable free from:
#all For Action &etwor" 3ffice
4,>, @iver @oad
.uite JD55
Aethesda, &< ,5?86
Telephone: #?55$ 6->-8>46
A Smart &ew Way to Pay4 What Savvy #onsumers &eed to 7now Aout
Deit #ards
"vailable free from:
Direct Mar"etin% Association
88,5 "venue :f The "mericas
)ew %ork, )% 855D6-6>55
Telephone: #,8,$ >6?->,>>
Tips For #yershoppin%
We/ Sies
Department of the Treasury8 Financial Mana%ement Service
#onsumer Information #enter
A consumer,s .uide To the (9pandin% :ses of ATM cards8 Shoppin% With
2our ATM #ard
Federal Trade #ommission
(lectronic $an"in% (March ;<<6)
(FT Service #ost $enefits 'estrictions
(FT Service #ost $enefits 'estrictions
Fraudulent telemarketers have found yet another way to steal your money, this time from your checking account. Consumers across the country are complaining about unauthorized
debits (withdrawals) from their checking accounts.
Automatic debiting of your checking account can be a legitimate payment method many people pay mortgages or make car payments this way. !ut the system is being abused by
fraudulent telemarketers. "herefore, if a caller asks for your checking account number or other information printed on your check, you should follow the same warning that applies to
your credit card number ## do not give out checking account information over the phone unless you are familiar with the company and agree to pay for something. Remember,
if you give your checking account number over the phone to a stranger for $verification$ or $computer purposes,$ that person could use it to improperly take money from your checking
%ou either get a postcard or a telephone call saying you have won a free prize or can &ualify for a ma'or credit card, regardless of past credit problems. (f you respond to the offer, the
telemarketer often asks you right away, $)o you have a checking account*$ (f you say $yes,$ the telemarketer then goes on to e+plain the offer. ,ften it sounds too good to pass up.
-ear the end of the sales pitch, the telemarketer may ask you to get one of your checks and to read off all of the numbers at the bottom. .ome deceptive tele#marketers may not tell you
why this information is needed. ,ther deceptive telemarketers may tell you the account information will help ensure that you &ualify for the offer. And, in some cases, the legitimate
telemarketer will honestly e+plain that this information will allow them to debit your checking account.
,nce a telemarketer has your checking account information, it is put on a $demand draft,$ which is processed much like a check. "he draft has your name, account number, and states an
amount. /nlike a check, however, the draft does not re&uire your signature. 0hen your bank receives the draft, it takes the amount on the draft from your checking account and pays the
telemarketers1 bank. %ou may not know that your bank has paid the draft until you receive your bank statement.
(t can be difficult to detect an automatic debit scam before you suffer financial losses. (f you do not know who you are talking to, follow these suggestions to help you avoid becoming a
∴ )on1t give out your checking account number over
the phone unless you know the company and
understand why the information is necessary.

∴ (f someone says they are taping your call, ask why.
∴ )on1t be afraid to ask &uestions.

∴ Companies do not ask for your bank account
information unless you have e+pressly agreed to
this payment method.
.ince )ecember 34, 4556, a seller or telemarketer is re&uired by law to obtain your verifiable authorization to obtain payment from your bank account. "hat means whoever takes your
bank account information over the phone must have your e+press permission to debit your account, and must use one of three ways to get it. "he person must tell you that money will be
taken from your bank account. (f you authorize payment of money from your bank account, they must then get your written authorization, tape record your authorization, or send you a
written confirmation before debiting your bank account.
(f they tape record your authorization, they must disclose, and you must receive, the following information2
∴ "he date of the demand draft

∴ the amount of the draft(s)
∴ the payers1 name (who will receive your money)
∴ the number of draft payments (if more than one)

∴ a telephone number that you can call during
normal business hours and

∴ the date that you are giving your oral
(f a seller or telemarketer uses written confirmation to verify your authorization, they must give you all the information re&uired for a tape recorded authorization and tell you in the
confirmation notice the refund procedure you can use to dispute the accuracy of the confirmation and receive a refund.
WHT TO &O *) #O$ RE +*CT*!
(f telemarketers cause money to be taken from your bank account without your knowledge or authorization, they have violated the law. (f you receive a written confirmation notice that
does not accurately represent your understanding of the sale, follow the refund procedures that should have been provided and re&uest a refund of your money. (f you do not receive a
refund, it1s against the law.
(f you believe you have been a victim of fraud, contact your bank immediately. "ell the bank that you did not okay the debit and that you want to prevent further debiting. %ou also
should contact your state Attorney 7eneral. )epending on the timing and the circum#stances, you may be able to get your money back.

!ORE *%)OR!T*O%
"o learn more about your rights under the telemarket#ing .ales 8ule and how to protect yourself from fraudulent telephone sales practices, re&uest a free copy of Straight Talk About
Telemarketing. Contact.
Consumer 8esponse Center
Federal "rade Commission
0ashington )C 9:6;:
(9:9) 39<#9999
"))2 (9:9) 39<#96:9
∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴
∴ ∴
"he (ndiana )epartment of
Financial (nstitutions, )ivision of Consumer
Credit has many other credit related
brochures available, such as2
Answers to Credit =roblems
Applying for Credit
At >ome .hopping 8ights
!ankruptcy Facts
!uried in )ebt
Car Financing .cams
Charge Card Fraud
Choosing A Credit Card
Credit and )ivorce
Credit and ,lder Consumers
)eep in )ebt*
?&ual Credit ,pportunity
Fair Credit 8eporting
Fair )ebt Collection
7old Cards
>ang up on Fraud
>igh 8ate @ortgages
>ome ?&uity Credit Aines
>ow to Avoid !ankruptcy
(ndiana /niform Consumer Credit Code
Aook !efore you Aease
@ortgage Aoans
8everse @ortgage Aoans
8ule of B;s C 0hat is it*
.coring for Credit
.hopping for Credit
/sing Credit Cards
Dariable 8ate Credit
0hat is a !udget*
0hat is the )F(*
Call our toll#free number or write to the
address on the cover for a copy of any of the
brochures listed or for further consumer credit information.
Automatic Debit Scams
&E'RT!E%T O) )*%%C*(
Consumer Credit )ivision
3: .outh @eridian .treet, .uite 3::
(ndianapolis, (ndiana E<9:E

What To &o *f They,re (ost or Stolen
Many people find it easy and convenient to use credit and ATM cards. The Fair Credit Billing Act (FCBA) and the Electronic Funds Transfer Act (EFTA) offer procedures for you and businesses to use if your
cards are lost or stolen.
Limiting Your Financial Loss
Report the loss or theft of your credit and ATM cards to the card issuers as uic!ly as possible. Many co"panies have toll#free nu"bers and $%#hour service to deal &ith such e"ergencies. 't(s a good idea
to follo& up your phone calls &ith a letter. 'nclude your account nu"ber) &hen you noticed your card &as "issing) and the date you first reported the loss.
*ou also "ay &ant to chec! your ho"eo&ner(s insurance policy to see if it covers your liability for card thefts. 'f not) so"e insurance co"panies &ill allo& you to change your policy to include this
Credit Card Loss. 'f you report the loss before the cards are used) the FCBA says the card issuer cannot hold you responsible for any unauthori+ed charges. 'f a thief uses your cards before you report
the" "issing) the "ost you &ill o&e for unauthori+ed charges is ,-. per card. This is true even if a thief uses your credit card at an ATM "achine to access your credit card account.
/o&ever) it(s not enough si"ply to report your credit card loss. After the loss) revie& your billing state"ents carefully. 'f they sho& any unauthori+ed charges) send a letter to the card issuer describing each
uestionable charge. Again) tell the card issuer the date your card &as lost or stolen and &hen you first reported it to the". Be sure to send the letter to the address provided for billing errors. 0o not send it
&ith a pay"ent or to the address &here you send your pay"ents unless you are directed to do so.
ATM Card Loss. 'f you report an ATM card "issing before it(s used &ithout your per"ission) the EFTA says the card issuer cannot hold you responsible for any unauthori+ed &ithdra&als. 'f unauthori+ed
use occurs before you report it) the a"ount you can be held liable for depends upon ho& uic!ly you report the loss. For e1a"ple) if you report the loss &ithin t&o business days after you reali+e your card
is "issing) you &ill not be responsible for "ore than ,-. for unauthori+ed use.
/o&ever) if you don(t report the loss &ithin t&o business days after you discover the loss) you could lose up to ,-.. because of an unauthori+ed &ithdra&al. *ou ris! unli"ited loss if you fail to report an
unauthori+ed transfer or &ithdra&al &ithin 2. days after your ban! state"ent is "ailed to you. That "eans you could lose all the "oney in your ban! account and the unused portion of your line of credit
established for overdrafts.
'f unauthori+ed transactions sho& up on your ban! state"ent) report the" to the card issuer as uic!ly as possible. 3nce you(ve reported the loss of your ATM card) you cannot be held liable for additional
a"ounts) even if "ore unauthori+ed transactions are "ade.
Protecting Your Cards
The best protections against card fraud are to !no& &here your cards are at all ti"es and to !eep the" secure. For ATM card protection) it(s i"portant to !eep your 4ersonal 'dentification 5u"ber (4'5) a
secret. 0on(t use your address) birth date) phone or social security nu"ber. Me"ori+e the nu"ber. 6tatistics sho& that in one#third of ATM card frauds) cardholders &rote their 4'56 on their ATM cards or
on slips of paper !ept &ith their cards.
The follo&ing suggestions "ay help you protect your credit and ATM card accounts.
For Credit Cards:
∴ Be cautious about disclosing your account nu"ber over the phone unless you !no& you are dealing &ith a reputable co"pany.

∴ 5ever put your account nu"ber on the outside of an envelope or on a postcard.
∴ 0ra& a line through blan! spaces on charge slips above the total so the a"ount cannot be changed.
∴ 0on(t sign a blan! charge slip.
∴ Tear up carbons and save your receipts to chec! against your "onthly billing state"ents.
∴ 3pen billing state"ents pro"ptly and co"pare the" &ith your receipts. Report "ista!es or discrepancies as soon as possible to the special address listed on your state"ent for 7billing inuiries.7
8nder the FCBA) the card issuer "ust investigate billing errors reported to the" &ithin 2. days of the date your state"ent &as "ailed to you.
∴ 9eep a record : in a safe place separate fro" your cards : of your account nu"bers) e1piration dates) and the telephone nu"bers of each card issuer so you can report a loss uic!ly.
∴ Carry only those cards that you anticipate you(ll need.
For ATM cards:
∴ 0on(t carry your 4'5 in your &allet or purse or &rite it on your ATM card.
∴ 5ever &rite your 4'5 on the outside of a deposit slip) an envelope) or on a postcard.
∴ Ta!e your ATM receipt after co"pleting a transaction.
∴ Reconcile all ATM receipts &ith ban! state"ents as soon as possible.
Buying a Registration Serice
For an annual fee of ,;. to ,<-) co"panies &ill notify the issuers of your credit and ATM accounts if your card is lost or stolen. This service allo&s you to "a!e only one phone call to report all card losses
rather than calling individual issuers. Most services also &ill reuest replace"ent cards on your behalf.
4urchasing a card registration service "ay be convenient) but it(s not reuired. The FCBA and the EFTA give you the right to contact your card issuers directly in the event of a loss or suspected
unauthori+ed use.
'f you decide to buy a registration service) co"pare offers. Carefully read the contract to deter"ine the co"pany(s obligations and your liability. For e1a"ple) &ill the co"pany rei"burse you if it fails to
notify card issuers pro"ptly once you(ve called in the loss to the service= 'f not) you could be liable for unauthori+ed charges.
∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴ ∴
∴ ∴
The 'ndiana 0epart"ent of Financial 'nstitutions) 0ivision of
Consu"er Credit has "any other credit related brochures
available) such as>
"nswers to 2redit 'roblems
"pplying for 2redit
"t Gome .hopping @ights
Aankruptcy !acts
Auried in <ebt
2ar !inancing .cams
2harge 2ard !raud
2hoosing " 2redit 2ard
2redit and <ivorce
2redit and :lder 2onsumers
<eep in <ebtE
qual 2redit :pportunity
!air 2redit @eporting
!air <ebt 2ollection
Hold 2ards
Gang up on !raud
Gigh @ate &ortgages
Gome quity 2redit Lines
Gow to "void Aankruptcy
(ndiana 9niform 2onsumer 2redit 2ode
Look Aefore you Lease
&ortgage Loans
@everse &ortgage Loans
@ule of >?s K 1hat is itE
.coring for 2redit
.hopping for 2redit
9sing 2redit 2ards
7ariable @ate 2redit
1hat is a AudgetE
1hat is the <!(E
Call our toll#free nu"ber or &rite to the address on the cover for
a copy of any of the brochures listed or for further consu"er
credit infor"ation.
2onsumer 2redit <ivision
D5 .outh &eridian .treet, .uite D55
(ndianapolis, (ndiana -6,5-
PR$T!CT"#% Y$&RS!LF '(!# B&Y"#% $#L"#!
?ith a fe& !ey stro!es and the clic! of a "ouse you can shop at ho"e fro" your co"puter. 6ounds great) right= 5o traffic. 5o par!ing proble"s. 5o lines or cro&ds. 5o hassles &ith the &eather.
3nline shopping can give ne& "eaning to convenience and choice. But before you visit your favorite boutiue on the 5et) ta!e care to "a!e your cyber#shopping e1perience safe.
Thin! security) starting &ith your connection ## the &ay your co"puter connects through telephone &ires to contact the 'nternet ## and your bro&ser ## the soft&are that acts li!e a telephone to receive
infor"ation on the 'nternet.
8nsecured infor"ation sent over the 'nternet can be intercepted. That(s &hy you should consider a secure bro&ser) &hich &ill encrypt or scra"ble purchase infor"ation. 8se a secure bro&ser that
co"plies &ith industry standards) such as 6ecure 6oc!ets @ayer (66@) or 6ecure /yperte1t Transfer 4rotocol (6#/TT4). These often are included &ith 'nternet connection services. The credit and charge
card industry is &or!ing on an enhanced level of security using 6ecured Electronic Transactions (6ET). 6ET protocol provides a highly encrypted co""unication bet&een card issuers) "erchants and card
'f you don(t have encryption soft&are to assure the security of your transaction) consider calling the co"pany(s A.. nu"ber) fa1ing your order) or paying by chec! or "oney order.
6hop &ith co"panies you !no&. 'f you(d li!e to try a ne& "erchant) as! for a paper catalog or brochure to get a better idea of their "erchandise and services. 0eter"ine the co"pany(s refund and return
policies before you place an order.
#eer gie out your "nternet )ass*ord.
Be original &hen creating your pass&ord(s). Consider using a co"bination of nu"bers) letters) and sy"bols) or use a phrase to re"e"ber it. For e1a"ple> 8R$B,%AC ## 7*ou are to give "oney for eight
Avoid using established nu"bers for your pass&ord) such as your house nu"ber) birth date) or a portion of your telephone or 6ocial 6ecurity nu"bers. 't(s a good idea to use different pass&ords to access
specific areas on the 'nternet) such as the ?orld ?ide ?eb.
Be cautious if you(re as!ed to supply personal infor"ation to conduct a transaction) such as your 6ocial 6ecurity nu"ber. 't(s rarely necessary and should raise a red flag. The 'nternet provides a valuable
infor"ation service for consu"ers. But so"e con artists &ho have used tele"ar!eting) info"ercials) ne&spapers) "aga+ines) and the "ail to attract consu"ers are turning to the 'nternet and online
services to pro"ote their sca"s.
4ay close attention to the infor"ation youDre entering &hen you place an order. For e1a"ple) an additional !eystro!e could get you ;. shirts &hen you &anted only one. Chec! to "a!e sure the shipping
charge is acceptable to you and all charges are calculated correctly.
Ma!e a note of the co"pany(s shipping ti"e. 'f you need the "erchandise earlier) as! if your order can be 7e1pressed7 for an additional fee.
The sa"e la&s that protect you &hen you shop by phone or "ail apply &hen you shop in cyberspace> 8nder the la&) a co"pany should ship your order &ithin the ti"e stated in its ads. 'f no ti"e is
pro"ised) the co"pany should ship your order &ithin <. days after receiving it) or give you an 7option notice.7 This notice gives you the choice of agreeing to the delay or canceling your order and receiving
a pro"pt refund.
There is one e1ception to the <.#day rule. 'f a co"pany doesn(t pro"ise a shipping ti"e) and you are applying for credit to pay for your purchase) the co"pany has -. days after receiving your order to
6hould you decide to pay by credit or charge card) your transaction &ill be protected by the Fair Credit Billing Act. 6o"e cards "ay provide additional &arranty or purchase protection benefits. 'f you(re not
co"fortable entering your credit or charge card account nu"ber) call it into the co"pany(s A.. nu"ber) or fa1 it.
4rint out a copy of your order and confir"ation nu"ber for your records.
T+e Fair Credit Billing Act
?hether youDre buying online) by phone) "ail) or in person at a store) using your credit or charge card to pay offers so"e protections.
'f you find a billing error on your "onthly credit or charge card state"ent) you "ay dispute the charge and &ithhold pay"ent in that a"ount &hile the error is in dispute. The error "ight be a charge for the
&rong a"ount) for so"ething you didn(t accept) or for so"ething that &asn(t delivered as agreed.
To Dis)ute a C+arge,
υ?rite to the creditor at the special address indicated on the "onthly state"ent for 7billing inuiries.7 'nclude your na"e) address) and credit or charge card nu"ber) and describe the billing error.

υ6end your letter as soon as possible. 't "ust reach the creditor &ithin 2. days after the first bill containing the error &as "ailed to you.
The creditor "ust ac!no&ledge your co"plaint in &riting &ithin <. days of receiving it) unless the proble" has already been resolved. The creditor "ust resolve the dispute &ithin t&o co"plete billing
cycles ## but not "ore than E. days ## after receiving your letter.
&naut+ori-ed C+arges,
'f your credit or charge card is used &ithout your authori+ation) you can be held liable for up to ,-. per account. 'f you report the loss of your card before it is used) you are not liable for any unauthori+ed
charges. 6ee our Brochure on Fair Credit Billing.
F$R M$R! "#F$RMAT"$#
The Federal Trade Co""ission (FTC) publishes brochures on topics such as> auto"obiles) credit) products and services) and tele"ar!eting. *ou can contact the FTC at> Consu"er Response Center)
Federal Trade
Co""ission) ?ashington) 0.C. $.-A.) $.$#<$2#$$$$ ) T00>
$.$#<$2#$-.$) http>FF&&&

The 'ndiana 0epart"ent of Financial 'nstitutions) 0ivision of
Consu"er Credit has "any other credit related brochures
available) such as>
"nswers to 2redit 'roblems
"pplying for 2redit
"t Gome .hopping @ights
Aankruptcy !acts
Auried in <ebt
2ar !inancing .cams
2harge 2ard !raud
2hoosing " 2redit 2ard
2redit and <ivorce
2redit and :lder 2onsumers
<eep in <ebtE
qual 2redit :pportunity
!air 2redit @eporting
!air <ebt 2ollection
Hold 2ards
Gang up on !raud
Gigh @ate &ortgages
Gome quity 2redit Lines
Gow to "void Aankruptcy
(ndiana 9niform 2onsumer 2redit 2ode
Look Aefore you Lease
&ortgage Loans
@everse &ortgage Loans
@ule of >?s K 1hat is itE
.coring for 2redit
.hopping for 2redit
9sing 2redit 2ards
7ariable @ate 2redit
1hat is a AudgetE
1hat is the <!(E
Call our toll#free nu"ber or &rite to the address on the cover for
a copy of any of the brochures listed or for further consu"er
credit infor"ation.
2onsumer 2redit <ivision
D5 .outh &eridian .treet, .uite D55
(ndianapolis, (ndiana -6,5-
As debit cards become increasingly popular, strains are appearing among customers, merchants, and banks.
"he problems range from difficulties when the cards are lost or stolen to complaints from merchants that the fees to accept these cards are too high.
%ot ll 'lastic is Created E-ual
-ew car rental rules represent the first case in which debit cards cannot be used in the same way as credit cards. "he big car rental companies, including
>ertz and Avis, have recently stopped letting people rent cars using 'ust a Disa Check card or the similar @aster @oney card from @asterCard. "he card
companies, and the banks that issue these cards # known as debit cards # are furious. And so are some customers.
For years, the car rental companies have used possession of a credit card as a crude way to weed out potentially risky renters, 'ust as they have usually
ruled out renters under the age of 96. !ut this test does not work with debit cards because banks will now give them to nearly any one with a bank
Charges on debit cards, which go under many names, come directly out of a consumer1s checking account almost immediately rather than appearing on a
monthly credit card statement. (n contrast to using a credit card, which the debit card physically resembles, no loan is involved in the transaction.
)ebit cards $provide no &ualification of credit#worthiness,$ a >ertz spokesperson said. Car rental companies believe they are entitled to a certain level of
confidence because in car rental, unlike almost any other business, the customer is given total control of a vehicle with an appro+imate value of F9:,:::.
"he rental car companies are re&uiring a customer with only a debit card to follow the same procedures as someone who pays cash to rent a car. "hat
involves making an application several weeks in advance and leaving a substantial deposit.
Higher )ees.
"he new debit cards have become more popular because they are easier to use and more widely accepted than those that re&uire personal identification
numbers. @oreover, for the tens of millions of Americans who do not &ualify for a credit card, the cards are their first opportunity to put a card with a
@asterCard or Disa label in their wallets.
/ntil recently, such cards also provided the easiest way for such individuals, many of whom have had financial troubles, to rent a car or buy merchandise
over the phone.
!anks like the debit cards because transactions on them are less costly to process than paper checks. Also, some banks charge customers a fee for the
cards. And for the @asterCard and Disa versions, banks receive a fee from merchants of about one percent of the purchase price. 8etailers, though, have
become increasingly unhappy about the growth of these debit cards precisely because they do not want to pay the fee.
Confusingly, a single card can have both a Disa or @asterCard logo and the mark of an automated teller machine network like -%C? or @AC. (f a
signature is used, rather than a personal identification number, the fee paid by the merchant is higher.
"he credit card companies say the higher fee is 'ustified because of the greater risk. ?ven though both types of transactions involve electronic verification
of the amount of money in the consumer1s checking account, the card companies say their e+perience has been that the signature method results in more
For consumers, the debit cards also carry a little more risk. (f the card is stolen, a thief can go on a spending spree with the money in the customer1s
checking account.
Federal law limits liability to F6: if the cardholder notifies the bank within two days of discovering the missing card. !ut the bank has up to 9: days to
put the money back into the checking account.
.ee our !rochure on Credit and A"@ Cards.
"he (ndiana )epartment of Financial (nstitutions,
)ivision of Consumer Credit has many other credit
related brochures available, such as2
Answers to Credit =roblems
Applying for Credit
At >ome .hopping 8ights
!ankruptcy Facts
!uried in )ebt
Car Financing .cams
Charge Card Fraud
Choosing A Credit Card
Credit and )ivorce
Credit and ,lder Consumers
)eep in )ebt*
?&ual Credit ,pportunity
Fair Credit 8eporting
Fair )ebt Collection
7old Cards
>ang up on Fraud
>igh 8ate @ortgages
>ome ?&uity Credit Aines
>ow to Avoid !ankruptcy
(ndiana /niform Consumer Credit Code
Aook !efore you Aease
@ortgage Aoans
8everse @ortgage Aoans
8ule of B;s C 0hat is it*
.coring for Credit
.hopping for Credit
/sing Credit Cards
Dariable 8ate Credit
0hat is a !udget*
0hat is the )F(*
Call our toll#free number or write to the address on the
cover for a copy of any of the brochures listed or for
further consumer credit information.
&E'RT!E%T O) )*%%C*( *%ST*T$T*O%S
Consumer Credit )ivision
3: .outh @eridian .treet, .uite 3::
(ndianapolis, (ndiana E<9:E
υ Electronic ban!ing) also !no&n as electronic fund transfer (EFT))
uses co"puter and electronic technology as a substitute for chec!s
and other paper transactions.

υ An access device is a "eans of gaining access to your account)
such as a card or a code) for the purpose of initiating EFTs. Most
institutions use a personal identification nu"ber (4'5) for this

υ Ta!e care of your EFT card. 9no& &here it is at all ti"es and
report its loss as soon as possible.

υ Choose a 4'5 different fro" your address) telephone nu"ber)
social security nu"ber) or birth date.

υ 9eep and co"pare your EFT receipts &ith your periodic
state"ents so that you can find and pro"ptly report errors and
unauthori+ed transfers. 4ro"pt reporting is necessary to li"it your
liability for these proble"s
To "ost of us) electronic ban!ing "eans having $%#hour access to cash through an auto"ated teller "achine (ATM) or having our paychec!s deposited directly into our chec!ing or savings accounts. But electronic ban!ing offers
several other services that you "ay find useful.
This brochure lists types of consu"er transactions that are covered under the federal Electronic Fund Transfer Act (EFT Act)) discusses the infor"ation financial institutions "ust disclose) e1plains &hat you can do if you find
errors on your "onthly state"ents) discusses your liability if your ATM card is lost or stolen) and describes your li"ited stop#pay"ent privileges.
Electronic ban!ing) also !no&n as electronic fund transfer (EFT)) uses co"puter and electronic technology as a substitute for chec!s and other paper transactions. Because EFTs are so convenient) you "ay &ish to !no& the full
range of their services.
Automated Teller Mac+ines or /0.+our Tellers are electronic ter"inals that per"it you to ban! at al"ost any ti"e of the day or night. To &ithdra& cash) "a!e deposits) or transfer funds bet&een accounts) you generally insert
a special ATM card and enter your personal identification nu"ber (4'5).

Direct De)osits or 'it+dra*als allo& you to authori+e specific deposits such as paychec!s and social security chec!s to go directly to your account on a regular basis. *ou also can arrange to have recurring bills) such as
insurance pre"iu"s and utility bills) paid auto"atically. This service applies only if you authori+e transactions in advance. Systems per"it you to telephone your ban! (or other financial institutions) &ith instructions to pay certain bills or to transfer funds bet&een accounts. *ou "ust have an agree"ent in advance &ith the financial
institution to "a!e such transfers.

Point.o1.Sale Trans1ers allo& you to pay for retail purchases &ith an EFT (or 7debit7) card. This is si"ilar to using a credit card) but &ith one i"portant e1ception ## the "oney for the purchase is transferred i""ediately (or soon
thereafter) fro" your ban! account to the store(s account. Both MasterCard and Gisa) a"ong others) offer debit cards that can be used at participating retailers) and an increasing nu"ber of "erchants are accepting this type of
pay"ent. For e1a"ple) these transfers are beco"ing "ore co""on at grocery stores) oil co"panies) and convenience stores. /o&ever) because point of sale transfers are still relatively ne&) they "ight not yet be &idely
available at retailers in your region of the country.
The best &ay to understand your legal rights and responsibilities regarding your EFT account is to read the docu"ents you receive fro" the financial institution that issued you the 7access device.7 An access device is a card)
code) or other "eans of gaining access to your account for the purpose of initiating electronic fund transfers. The "eans "ay vary fro" institution to institution) but "ost use a 4'5 for this purpose. This uniue nu"ber should be
!no&n only to you and to select e"ployees of the financial institution.
Before you contract for EFT services or "a!e your first electronic transfer) the institution is reuired to disclose to you the follo&ing infor"ation in a for" you can !eep.
υ A su""ary of your liability for unauthori+ed transfers.
υ The telephone nu"ber and address of the person to be notified &hen you believe that an unauthori+ed transfer has been or "ay be "ade) along &ith a state"ent of the institution(s 7business days.7 This infor"ation &ill tell
you the nu"ber of days you have to report suspected unauthori+ed transfers.
υ The type of transfers you can "a!e) the a"ount of any charges for transfers) and any li"itations on the freuency and dollar a"ount of transfers.
υ A su""ary of your right to receive docu"entation of transfers) of your right to stop pay"ent on a pre#authori+ed transfer) and the procedures to follo& to stop pay"ent.
υ A notice describing the procedures you "ust follo& to report an error on a receipt for an EFT) ho& to reuest "ore infor"ation about a transfer listed on your state"ent) and the ti"e period in &hich you "ust "a!e your
υ A su""ary of the institution(s liability to you if it fails to "a!e or stop certain transactions.
υ Circu"stances under &hich the institution &ill disclose infor"ation to third parties concerning your account.
'n addition to these disclosures) you &ill receive for "ost transactions t&o other types of i"portant papers ## ter"inal receipts and periodic state"ents. (6eparate rules apply to passboo! accounts fro" &hich pre#authori+ed
transfers are dra&n. *our contract for that account is the best source of infor"ation about those rules.) *ou are entitled to a ter"inal receipt each ti"e you initiate an electronic transfer) &hether you use an ATM or "a!e a point#
of#sale electronic transfer. A"ong other things) the receipt "ust sho& the date and the a"ount of the transfer and the type of the transfer) such as 7transfer fro" savings to chec!ing.7 ?hen you "a!e a point#of#sale transfer) you
probably &ill get your ter"inal receipt fro" the salesperson. 'f you "a!e a &ithdra&al fro" a cash#dispensing "achine that cannot issue receipts) the institution is reuired to "ail you a receipt on the ne1t business day follo&ing
the transfer.
#e* )roisions to t+e !FTA) effective i""ediatelyH co"pliance "andatory as of 3ctober ;) $..;) reuire ATM operators that i"pose a fee for providing electronic fund transfer services to post a notice in a pro"inent and
conspicuous location on or at the ATM. The operator "ust also disclose that a fee &ill be i"posed and the a"ount of the fee) either on the screen of the "achine or on a paper notice) before the consu"er is co""itted to
co"pleting the transaction. 'n addition) &hen the consu"er contracts for an electronic fund transfer service) financial institutions are reuired to provide initial disclosures) including a notice that a fee "ay be i"posed for
electronic fund transfers initiated at an ATM operated by another entity.
*ou also are entitled to a periodic state"ent for each state"ent cycle in &hich an electronic transfer is "ade. This state"ent "ust sho&) a"ong other things) the a"ount of any transfer) the date it &as credited or debited to your
account) the type of transfer and type of account(s) to or fro" &hich funds &ere transferred) and the address and telephone nu"ber to be used for inuiries. *ou are entitled to a uarterly state"ent even if you "ade no
electronic transfers &ithin that uarter.
9eep and co"pare your EFT receipts &ith your periodic state"ents each "onth in the sa"e &ay you co"pare your credit card invoices &ith your "onthly credit card state"ent or your chec!s against your "onthly ban!
state"ents. 0oing so &ill enable you to "a!e the best use of your rights under federal la& to dispute errors and avoid liability for unauthori+ed transfers.
*ou have 2. days fro" the date a proble" or error appears on your periodic state"ents or ter"inal receipt to notify your financial institution. The best &ay to protect yourself in the event of an error (or a lost or stolen ATM or EFT
card) is to notify the issuer by certified letter) return receipt reuested) so you can prove that the institution received your letter. 9eep a copy of the letter you send for your records.
After notification about an error on your state"ent) the institution has ;. business days to investigate and tell you the results. 'f the institution needs "ore ti"e) it "ay ta!e up to %- days to co"plete the investigation ## but only if
the "oney in dispute is returned to your account and you are notified pro"ptly of the credit. At the end of the investigation) if no error is found) the institution "ay ta!e the "oney bac!) if it sends you a &ritten e1planation.
'f you fail to notify the institution of the error &ithin 2. days) you "ay have little recourse. 8nder federal la&) the institution has no obligation to conduct an investigation if you have "issed the 2.#day deadline.
'f your failure to notify the institution &ithin the ti"e periods allo&ed &as due to an e1tenuating circu"stance) such as lengthy travel or illness) the issuer "ust e1tend the ti"e period for notification to &hat is reasonable. Also) if
state la& or your contract i"poses lo&er liability li"its) those lo&er li"its apply instead of the li"its in the federal EFT Act.
After reporting the loss or theft of your ATM card) you are not liable for additional unauthori+ed transfers that "ay be "ade. Because these unauthori+ed transfers "ay appear on your state"ents) ho&ever) you should carefully
revie& each state"ent you receive after you report the loss or theft. 'f the state"ent sho&s transfers that you did not "a!e or that you need "ore infor"ation about) contact the institution i""ediately) using the special
procedures provided for reporting errors.
(*!*TE& STO'/'#!E%T 'R*+*(E0ES
?hen you use an electronic fund transfer) the EFT Act does not give you the right to stop pay"ent. 'f your purchase is defective or if your order is not delivered) it is up to you to resolve the proble" &ith the seller and get your
"oney bac! ## Iust as if you had paid cash.
There is one situation) ho&ever) in &hich you can stop pay"ent. 'f you have arranged regular pay"ents out of your account to third parties) such as life insurance co"panies) you can stop pay"ent if you notify your institution at
least three business days before the scheduled transfer. The notice "ay be oral or &ritten) but the institution "ay reuire a &ritten follo&#up to be "ade &ithin ;% days of the oral notice. *our failure to provide the &ritten follo&#
up ends the institution(s responsibility to stop pay"ent. This right to stop pay"ent does not apply to "ortgage or loan pay"ents you o&e to the institution that issued the EFT access device.
Although federal la& provides only li"ited rights to stop pay"ent) individual financial institutions "ay offer "ore rights or state la&s "ay reuire the". 'f this feature is i"portant to you) you "ay &ant to shop around to be sure
you are getting the best 7stop pay"ent7 ter"s available.
'f you decide to beco"e an EFT user) re"e"ber the follo&ing precautions.
υ Ta!e care of your EFT card. 9no& &here it is at all ti"es and report its loss as soon as possible.

υ Choose a 4'5 different fro" your address) telephone nu"ber) social security nu"ber) or birth date. Choosing a different nu"ber &ill "a!e it "ore difficult for a thief to use your EFT card.

υ 9eep and co"pare your EFT receipts &ith your periodic state"ents so that you can find and pro"ptly report errors and unauthori+ed transfers.
'f you believe the institution that issued your EFT access device has failed to fulfill its responsibilities to you under the EFT Act) in addition to infor"ing the issuer) you "ay &ish to co"plaint to the federal agency that has
enforce"ent Iurisdiction over that issuer
The 'ndiana 0epart"ent of Financial 'nstitutions) 0ivision of Consu"er Credit has "any other credit related brochures available) such as>
"nswers to 2redit 'roblems
"pplying for 2redit
"t Gome .hopping @ights
Aankruptcy !acts
Auried in <ebt
2ar !inancing .cams
2harge 2ard !raud
2hoosing " 2redit 2ard
2redit and <ivorce
2redit and :lder 2onsumers
<eep in <ebtE
qual 2redit :pportunity
!air 2redit @eporting
!air <ebt 2ollection
Hold 2ards
Gang up on !raud
Gigh @ate &ortgages
Gome quity 2redit Lines
Gow to "void Aankruptcy
(ndiana 9niform 2onsumer 2redit 2ode
Look Aefore you Lease
&ortgage Loans
@everse &ortgage Loans
@ule of >?s K 1hat is itE
.coring for 2redit
.hopping for 2redit
9sing 2redit 2ards
7ariable @ate 2redit
1hat is a AudgetE
1hat is the <!(E
2onsumer 2redit <ivision
D5 .outh &eridian .treet, .uite D55
(ndianapolis, (ndiana -6,5-

Cyberspace is a vast ne& territory for unscrupulous "ar!eters. The 5ational Fraud 'nfor"ation Center reports that &hile fraudulent co""ercial activity on the 'nternet is not yet a "aIor proble") as use
e1pands) there is sure to be a "aIor increase in deceptive and "isleading pro"otions.
6&indlers are attracted to the 'nternet because they can reach thousands of consu"ers ine1pensively) uic!ly and anony"ously. Fe& restrictions e1ist on the 'nternet) "a!ing it easy to place deceptive or
"isleading infor"ation online.
Judging the accuracy and reliability of online infor"ation is a "aIor challenge for consu"ers. False or "isleading infor"ation related to personal finance or health issues) for e1a"ple) could lead to serious
conseuences for unsuspecting consu"ers.
)R$& O% THE %ET
The Federal Trade Co""ission began investigating fraud on the 'nternet in ;EE%. They found that the sa"e !inds of fraud that occur in other places also surface on the 5et. Electronic bulletin boards) chat
groups) and e#"ail net&or!s are fertile grounds for old#fashioned sca"s that apply false advertising clai"s and deceptive "ar!eting practices.
!lectronic Bulletin Boards provide ne& sources of infor"ation to 'nternet users telling about products) services) and invest"ent opportunities. At the sa"e ti"e these electronic bulletin boards can carry
false and "isleading ads for products that pro"ise uic! solutions to desirable goals such as &eight loss or easy business success. The plan is to have you use your 4C to "a!e plenty of "oney in a short
period of ti"e.
Discussion grou)s or c+at 1orums often for" on the 'nternet &here interested parties can e1change infor"ation on specific topic areas. These chat roo"s so"eti"es appear to be open discussion &hen
they are sales pitches in disguise. 'n so"e cases) people involved in the discussion "ay have financial ties to businesses that sell products or services related to the topic area. This disguised advertising
"ay not be obvious to the consu"er.
!.mail scams involve individuals or co"panies intentionally "isleading consu"ers or using deceptive "ar!eting practices to gain the consu"er(s interest in their product. For e1a"ple) the use of a
particular product is advertised to cure a specific "edical condition. These are the sa"e health) diet) and fitness sche"es that occur in other "ar!etplace venues) such as "ail#order and tele"ar!eting
sche"es. 3ther types of e#"ail sca"s involve the sale of &orthless products) phony credit repair co"panies) ter" paper peddlers) e1pensive &or!#at#ho"e deals) psychic hotlines) and deceptive pro"ises
related to contests) a&ards) s&eepsta!es) and free gifts.
Pyramid or Pon-i sc+emes and c+ain letters are &ell suited to the 'nternet because they entice investors &ith the pro"ise of uic! profits using a ho"e co"puter. 'nvestors "a!e "oney by recruiting
ne& investors. The proble" is that soon the progra" runs out of ne& investors and "ost players lose the "oney they invested. Chain letter sche"es as! participants to send "oney to the na"es at the top
of a list &ith the pro"ise that they &ill eventually receive thousands of dollars &hen their na"es co"e to the top. 8nsuspecting persons lose "oney every day on this illegal practice.
Ris3.1ree inestment o))ortunities on the 'nternet offer fraudulent technological and e1otic invest"ents such as &ireless cable) bogus securities) or &orthless land. These invest"ents pro"ise to yield
far greater returns than do co""only available invest"ent products. The ter" 7ris!#free7 is highly "isleading. Fe& consu"ers get their "oney bac!) "uch less "a!e a profit.
Pum) and Dum) stoc3 mani)ulations on the 'nternet encourage investors to buy a particular stoc!) &hich is usually little !no&n and lo& cost. The pro"oters "ay even advertise that they have inside
infor"ation. They "a!e their profit &hen consu"ers buy the stoc!) or pu"p up the price and the pro"oters then pro"ptly sell) or du"p their shares and the stoc! prices i""ediately fall. This sche"e can
also &or! in reverseH a short seller "a!es a profit &hen the price of the stoc! goes do&n.
T&o proble"s &ith 'nternet sales transactions are personal data privacy and verification that both buyers and sellers are authentic. Many consu"ers are concerned about the confidentiality of their personal
financial infor"ation on the ?eb) &ith good reason. ?hen you "a!e a purchase on the 'nternet) your credit card nu"ber could fall into the &rong hands. 4ersonal data can be collected and organi+ed into
database files. ?hen you beco"e a part of an on#line service) your personal data can be available to everyone in that syste". ?hile it is unli!ely that reputable "erchants &ould deliberately sell your data
to others) their database "ay be te"pting targets for hac!ers.
Gerification that consu"ers are &ho they say they are can be solved by an electronic euivalent of a signature or a driver(s license. A soft&are product currently used by "erchants) ban!s) and bro!erage
houses tells &ho the user is and &hat privileges he or she has. There is a gro&ing interest in credit card pay"ent syste"s that &ould safeguard credit card purchases on the 5et. Encryption soft&are can
scra"ble your personal infor"ation so that it can be read only by the sender and the receiver. The proble" re"ains that personal data "ight still be available to certain e"ployees or hac!ers.
E1perts urge consu"ers to avoid dealing &ith 'nternet sites they are not fa"iliar &ith. Even &hen dealing &ith a &ell#!no&n business) call the business directly to verify that the site e1ists. 't continues to be
a ris!y business to give personal infor"ation) including address and phone nu"ber) credit card nu"bers) social security nu"bers) and ban! account nu"bers on the 'nternet.
'ROTECT*O% 0*%ST *%TER%ET )R$&
Most people find it hard to believe that they could beco"e victi"s of fraud) but one should never underesti"ate the ingenuity of s&indlers &ho "a!e "oney by "isleading others. 6tate and federal la&s
and agencies have li"ited capacity to protect consu"ers fro" fraud on the 'nternet. The savvy consu"er "ust stay alert to the possibility of fraud. The 5ational Fraud 'nfor"ation Center offers the
follo&ing suggestions for side#stepping fraud on the 'nternet>
5ever reveal chec!ing account nu"bers) credit card nu"bers) or other personal financial data at any ?eb site or online service location ## unless you are sure you !no& &here this infor"ation &ill be

?hen you subscribe to an on#line service you "ay be as!ed for credit card infor"ation. ?hen you enter any interactive service site ho&ever) be&are of con artists &ho "ay as! you to 7confir"7 your
enroll"ent in the service by disclosing pass&ords or the credit card account nu"ber used to subscribe.

8se the sa"e co""on sense you &ould e1ercise &ith any direct or telephone credit card purchase. A flashy professional 'nternet ?eb site does not guarantee that the sponsor is legiti"ate. 9no& the
co"pany &ith &hich you plan to do business.

Report anything you see on the 'nternet that you suspect "ight be fraudulent. The 5ational Fraud 'nfor"ation Center(s toll#free nu"ber is ;#A..#AK2#K.2.. Their "ailing address is 4.3. Bo1 2-A2A)
?ashington) 0.C. $..<-. Their ?eb address is http>FF&&&
*our state 3ffice of the Attorney Beneral is e"po&ered to investigate consu"er co"plaints) including 'nternet co"plaints. They can give you infor"ation about any proble"s or concerns they have
encountered &ith the business.
The Better Business Bureau can tell you if there have been any co"plaints or inuiries about a business and ho& it &as resolved. 6o"e online advertise"ents &ill have a blue#seal that you can clic! on to
connect to the Better Business Bureau for a report on the advertiser(s trac! record. The online ?eb site for the BBB is http>FF&&&
The Federal Trade Co""ission enforces several consu"er protection la&s that are relevant to co"puter transactions) such as false advertising and consu"er credit. 6uspicious actions on the ?eb) &hen
reported to the 5ational Fraud 'nfor"ation Center) are shared &ith the Federal Trade Co""ission and the 5ational Association of Attorneys Beneral. 'n this &ay) consu"ers Ioin &ith state and federal
agencies in actions to curtail fraud on the 'nternet.
Although "any regulations and agencies have been established to protect consu"ers fro" fraud) the principle of let the buyer be&are re"ains the consu"er(s best protection. @egal protections are li"ited)
fraudulent activities flourish) and once "oney is lost in a fraudulent sche"e the chances of getting it bac! are e1tre"ely s"all. A&areness of the possibility of fraud is your first line of defense.
The 'ndiana 0epart"ent of Financial 'nstitutions) 0ivision of Consu"er Credit has "any other credit related brochures available. Call our toll#free nu"ber or &rite to the address on the cover for a copy of any
of our listed or for further consu"er credit infor"ation.
$# T(!
2onsumer 2redit <ivision
D5 .outh &eridian .treet, .uite D55
(ndianapolis, (ndiana -6,5-