Assignment 7- Predatory Lending and Scams

1) According to the “Common Scams and Frauds” website found in the information section of the
learning module, what are two ways identity thieves use to steal your information?
Describe each way in at least two complete sentences.

a. One way identity thieves can steal your information is through telephone scams. Scammers may
threaten you with facing jail time or lawsuits if you do not pay them.

b. Census-related fraud is another way identity thieves use to steal your information. This type of
scam can happen when someone pretends to work for the Census Bureau in order to steal your
personal information.

2) Before answering this question, watch this short video: https://www.youtube.com/watch?

v=QnuUttChby8.
Describe two different ways that you can protect yourself from identity theft.
Describe each way in at least one complete sentence.

a. One way you can protect yourself from identity theft is to destroy private records and statements.
b. A second way to protect yourself from identity theft is to always safeguard your social security
number.

3) How would you advise Burt to handle the following situation?

● Burt and Connie started dating in high school, a couple of years ago, but because of the
“Stay at Home” requirements, they have only been able to communicate by email, phone
calls and texts.
● Burt received an email from Connie. In the email Connie stated that she suddenly left
Albuquerque to help her older brother with his 2 children since their mother (Connie’s
sister-in-law) is sick from the COVID-19 virus. Connie’s older brother lives in Montana.
● Connie asked Burt to send her a $1,000 Walmart gift card today because her brother lost his
job at a meat packing plant. They have medical expenses, and need money for food, rent
and her cell phone. Connie promises to repay Burt after she returns home.
● Connie explains in her email that she is unable to call or text Burt because she cannot afford
to pay her cell phone bill anymore and must give it up.
● Connie asks Burt to send her only Walmart gift cards because she lives within walking
distance of a Walmart and cannot get to a bank.
● She provides a P.O. (Post Office) Box address, with the Zip Code of 79905.

a. Explain what Burt should do regarding the email from Connie in at least two complete sentences.

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 What Burt should do in regards to the email he received from Connie is to call at least one of her
family members to make sure that she is with her brother. He should also check if Connie's email
address is correct.

b. In your opinion, could this email be a scam? Explain why or why not in at least two complete
sentences.

In my opinion, I believe this email could be a scam since she is asking for money to help pay for
food, rent, and her cellphone. However, you cannot use a Walmart gift card to pay for rent.
Another reason for why I think this is a scam is because Montana does not have any Zip Codes
with the number of 79905.

c. If the email were a scam, provide two different warning signs from the scenario. Explain in at
least two complete sentences.

The two different warning signs from the scenario is when Connie is asking for ONLY Walmart gift
cards when she could use other forms of payment to help her brother. The second warning sign is the
Zip Code number.

4) How would you handle the following situation?

● You need money to pay your rent. You have asked family and friends, but no one will loan you
the money! You need $500 by the end of the week.
● You go to FAST CASH, a neighborhood payday lender to get a loan. The $500 loan plus interest
totals $700 and must be paid back in two weeks.
● The FAST CASH payday lender tells you to write a check to FAST CASH for a total of $1,000.
● The payday lender lets you know that if the $700 loan is not paid in full in two weeks, the
company will cash your check for the full amount of $1,000 to cover additional fees.

a. Is this a predatory payday loan? Explain why or why not in at least two complete sentences.

Yes this a predatory payday loan because as soon as your next paycheck comes in, the company can
automatically take back what they are owed. The lender will also charge a roll over fee if you cannot pay
back the loan in two weeks.

b. Do you borrow the money? Explain why or why not in at least two complete sentences.

No you do not borrow the money because when you cannot pay it back, you will have to pay the original
loan amount and finance charge, plus an additional fee charge. Also when you cannot pay it back in two
weeks, your interest rate soars and continues to rise every time you don’t repay the debt.

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c. What other option(s) do you have instead of taking a payday loan from FAST CASH? Answer must be
at least two complete sentences.

There are other options you can take instead of taking a payday loan such as asking for a payday advance.
This allows companies to offer their employees to receive the money they earned before their paycheck is
due. You can also look into debt management plans that can help to reduce interest rates on credit cards,
which can free up money to pay for things like rent, utilities, etc.

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