Category Archives: Financial Scams

Video Resource: What’s The Catch With These Investing Pitches?

Many students, at some point in their lives, will rely on the services of a financial adviser. CFTC.gov has three short videos (2-3 minutes in length) that allow viewers to make decisions on whether or not to invest after hearing a pitch from an investment “pro.”  Ask your students to jot down the key words or phrases used to entice them to invest.  Thanks to WAPO’s Michelle Singletary for highlighting these in recent column.

The Dinner Party:

http://in.fm/embed/MYkjrA?publisherID=57RbmE

The Graduation: Continue reading

Question: What’s The Implied Interest Rate On Rent-To-Own Merchandise?

This Consumer Reports video got me thinking about how this question can be structured as an activity to develop your students’ comparison shopping and Excel skills.  Here’s the video:

First, let’s get the comparison shopping out of the way.  I chose this washer-dryer pair advertised at one of the leading rent-to-own companies:

Screen Shot 2015-07-10 at 3.29.07 PMHow much would the washer-dryer pair cost if you could buy it upfront at this retailer?

Note the everyday low price noted on the top right (or Cash Price at bottom center) of $1,424.98.  I wanted to see how that might compare if you tried to buy the same Maytag Centennial Washer and Dryer at a “big box” retailer.  After a 30 second Google search, I came up with the following costs at one retailer:

Assuming that figures for rent-to-own and “big box” exclude taxes and delivery, the “big box” cash cost of $1,097 is 23% less than the cash cost at the rent to own.  Why is this important?  It shows that the rent-to-own customer is starting out with a handicap as they will be renting an item at an already inflated price.

What is the implied interest rate with the rent-to-own model, using the data for this washer-dryer pair? Continue reading

Activity Idea: What Are You Complaining About?

Screen Shot 2015-05-29 at 4.58.59 PM

I stumbled upon this Complaint Database on the Consumer Financial Protection Board (CFPB) website and thought it would make a great activity for students while also increasing their “street smarts” regarding common complaints with financial service firms.

So, here’s an idea on how to create an activity using this database: Continue reading

Question: Why Do Incentives Matter When It Comes To Financial Products?

Our students need to understand the role of incentives before they purchase any financial product (or any product for that matter).  Whether they are purchasing a new or used car, getting a credit card, opening a checking account, or buying a stock, they need to understand that the person facilitating this transaction may be acting in their own interests rather the interests of the consumer.

As the banking industry has consolidated into a handful of national banks (think Bank of America, Wells Fargo, JP Morgan Chase, U.S. Bank), the promise has always been that these companies can continue to grow by getting their customers to buy additional products or services.  This concept of cross-selling a credit card or mortgage to a checking account customer has become the banking mantra and anyone who has stopped by a branch in the past few years has likely seen this first-hand at the teller window (“Is there anything else that I can help you with today, such as open a wealth management account with us?”).

This 2013 article from the LA Times (and a more recent video about a lawsuit being brought by Los Angeles) provides a rare look inside the sales operations at a bank branch for the one of the largest and most successful banking behemoths:   Continue reading

April 13th Activity of the Day: The Case of the High Senior With a $72 Million Portfolio…

Late in 2014, a story in New York Magazine caught my attention because it seemed too preposterous to be true, Because a Stuyvesant Senior Made Millions Picking Stocks. His Hedge Fund Opens As Soon As He Turns 18.  As I dove into the story further, I thought, what a great way to let students put on their accounting detective hats and figure out if the story was credible.  As they complete the NGPF Case Study, your students will familiarize themselves with investing terms like hedge fund, investments, trading stocks, oil and gold and also learn how to use a rate of return calculator.  Continue reading

Video Montage: 50 Ways To Swipe Your Credit Card (Or Debit Card) Numbers!

With apologies to Paul Simon (for those feeling nostalgic, here’s a Youtube video).  Ok, back to the post. Interesting way to get students to sit up and take notice about the threats of identity theft.  I pulled a sample of 2-3 minute videos from the last month that show how the bad guys operate.  As students watch the videos below, have them jot down the scheme, how they can protect themselves from becoming a victim and what they should do if they are victimized.  Happy viewing!

Continue reading