Personal finance tips: Beware of 'zombie' bills, and more

Three top pieces of financial advice — from how to research a financial broker to understanding the new rules for prepaid cards

Financial broker
(Image credit: (iStock))

How to research a financial broker

If you're hiring a broker, do your homework, said Liz Moyer at The Wall Street Journal. Troubled brokers often "cluster in communities with lots of elderly investors," but "bad apples can be found anywhere." To check the background of a potential broker, investors can use the Financial Industry Regulatory Authority (FINRA)'s BrokerCheck tool, which provides a broker's license status, history, and any black marks against him or her — including "regulatory proceedings, customer disputes, and settlements." Individual states also have their own regulatory bodies with online databases, which investors can use to check whether any additional investor complaints have been lodged.

Beware of 'zombie' bills

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When it comes to consumer debt, watch out for so-called zombies: "bills that cannot be killed even by declaring personal bankruptcy," said Jessica Silver-Greenberg at The New York Times. Federal authorities say some of the nation's biggest banks are ignoring bankruptcy court debt discharges and "forcing borrowers to make payments on bills that they do not legally owe." The Justice Department is investigating banks, including JPMorgan Chase and Bank of America, for failing to update data for credit reports, a tactic that essentially compels borrowers to clear purged debts, since their still-tarnished credit reports prevent them from getting loans, houses, and even jobs. Banks have defended their practices in court, but the Justice Department could extract steep penalties if it determines that the institutions have violated bankruptcy law.

New rules for prepaid cards

Prepaid cards aren't as safe as other plastic, but regulators hope to change that, said Kara Brandeisky at Time. The cards have become increasingly popular among consumers — 12 percent of U.S. households have used them, including more than 25 percent of people ages 25 to 34 in the last year — but the Consumer Financial Protection Bureau believes many people don't realize how risky the cards can be. The regulator last week proposed new rules that would require prepaid cards to carry fraud and lost-card protections similar to those of credit cards, including limiting a user's liability for fraudulent charges on a lost card to just $50. Prepaid card issuers would also be required to send "statements about your balance, offer you opportunities to resolve errors like double charges, and disclose more information about fees."

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Sergio Hernandez is business editor of The Week's print edition. He has previously worked for The DailyProPublica, the Village Voice, and Gawker.