Retailers welcome debit fee limits; banks still object

About the issue
The U.S. Senate voted this week to allow the Federal Reserve to set limits on debit-card transaction costs — “swipe fees” — that financial institutions charge retailers. Current fees typically are 1-2 percent per purchase, according to the Federal Reserve, though some Springfield merchants say fees sometimes approach 3 percent.
What’s next
The Federal Reserve is expected to issue new rules by July 21.
***
Local retailers say they welcome U.S. Senate action this week to limit fees financial institutions charge merchants for debit-card transactions.
The president of the Community Bankers Association of Illinois, however, said the issue probably will be settled in court.
The Senate vote allows the Federal Reserve to set new rules by July 21.
Springfield retailers said debit-card transaction fees, or “swipe fees,” range from 1 percent to nearly 3 percent per purchase, depending on the issuer and type of transaction.
The Food Mart grocery and deli recently set a $5 minimum purchase on Visa debit-card purchases to help cover transaction costs, said co-owner Tony Pirrera. He added that he is not yet certain the congressional action would provide relief for retailers or consumers.
“They’ve made it so complicated. Who knows what kind of charges they’re going to come out with next?” said Pirrera.
The Federal Reserve proposed last fall a flat, 12-cents-per-transaction limit on major banks, but Community Bankers Association president Robert Wingert said fee limits will hurt smaller banks and consumers.
“A lot of the merchants are dealing with debit cards that come from the big banks,” said Wingert. “If you limit it to 12 cents per transaction, merchants naturally are going to drive debit-card business to the big banks.”
Wingert said it costs financial institutions to issue the cards, and banks are liable for losses resulting from fraud.
“Fraud losses are real, and they are meaningful,” said Wingert, who added that he expects there will be a court challenge once the new rules come out.
The president of Community Bank Service Corp., a state association subsidiary that handles financial services for members, said the group has asked Visa and MasterCard to consider shifting more of the fraud-loss risk to merchants.
“What it (12 cents) covers is processing costs. What it doesn’t cover is the cost of the plastic, the cost of fraud and other costs,” said Mike Kelley.
Community banks will either lose money or be forced to raise other consumer fees to compensate if the new limits are implemented.
“Costs would be shifted elsewhere,” said Kelley.
During an appearance Friday at the Trout Lily Cafe in downtown Springfield, U.S. Sen. Dick Durbin, D-Ill., a leading Senate supporter of the limits, said Chase Bank, Bank of America and Wells Fargo alone make approximately $8 billion a year from debit-card transactions.
He noted that the average U.S. fee of 44 cents for Visa and MasterCard transactions compares with just 9 cents in Europe.
“What we’re doing is calling on the Federal Reserve to issue this rule as quickly as possible, so that businesses across America know what the rules will be from this point forward,” Durbin said.
Cafe owner Kate Hawkes said that, by the time she subtracts transaction fees and other costs, she probably loses money on some debit-card sales.
“We have tourists coming through all the time, and the debit cards are killing us,” said Hawkes. “We have a sign on our cash register sometimes that says cash is cheerfully accepted.”
Motorists may already have benefited from the swipe-card controversy, said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association, which represents the state’s convenience-store industry.
Fleischli said some stations have started giving discounts of 5 cents a gallon when motorists pay cash.
“They are trying to avoid that (fee) cost,” said Fleischli. “It gives the people a savings if they use cash, and it helps the marketers, too.”

Copyright 2011 The State Journal-Register. Some rights reserved

Better Business Bureau Warning: Real Estate Scam That Could Claim Area Renters as Victims

Columbus, GA - June 6, 2011 -A local realtor contacted the owner of an area construction company regarding two properties owned by him on behalf of a client who had seen the following classified ad:


"Stop Renting, AVAILABLE NOW 2-4 Bedroom homes. Take Over Payments. No Money Down, No Credit Check. Call Now."


The properties had been fraudulently listed on a Distressed/Foreclosure list sold to the client for $199.00. The properties should not have appeared on any such list since they had been paid for a number of years ago and have no mortgages associated with them.


The BBB is advising area renters that may have been fooled by this Scam to immediately contact their bank/credit card company to dispute the charges and to also put fraud alerts on those accounts.


OTHER TIPS TO CONSIDER:

• Do not be swayed by "too good to be true" Advertising Claims!
• Deal locally with people that you can meet in person
• Work with a trusted real estate professional
• Distressed Property lists are available locally and are free
• Never give out Social Security numbers, Personal Financial information or send money to people that you do not know
• Check with the BBB for Trustworthy Real Estate Companies

For additional information contact

Leonard CrainPres./CEO BBB Columbus, GA 706-324-0707

Another Advance Fee Scammer Claims Fargo, ND Address

The Better Business Bureau of Minnesota and North Dakota has discovered another advance fee loan company claiming to operate out of Fargo, North Dakota. Last week, our BBB issued an alert on Fraser Brokerage, a company promising consumers advance fee loans over the telephone, a practice which is illegal in the U.S. and Canada.

Earlier this week, Wakefield Financial, another fraudulent online entity offering advance fee loans -- and claiming a Fargo address  -- was brought to our attention. The BBB is confident they are not actually at this address. Two U.S. consumers have fallen victim to this company so far and in each case they wired money to Spain and then did not receive promised loans.

People should be extremely wary of any website that guarantees loans regardless of credit and should also never wire money (or send it via MoneyPak) to anyone they don't know. It is the experience of the BBB that people who pay fees upfront to online entities like this never receive their loans.

Home Buyers, Sellers Tell BBB To Approach Jack Roddy, JMZ And Bagwell Group With Caution

St. Louis, Mo., June 9, 2011 – A St. Louis area real estate investor who buys and “flips” financially troubled property is facing angry criticism from consumers who say he cost them thousands of dollars or severely damaged their credit when home deals went sour.

The Better Business Bureau (BBB) recommends extreme caution when dealing with Jack L. Roddy, JMZ Homes, JMZ Investment Group or Bagwell Group Management Corp. Roddy has an office in New Athens, Ill., but also lists an address in St. Charles, Mo.

A sergeant in the Missouri National Guard who is scheduled to deploy overseas in the next several weeks said Roddy cost his family more than $15,000 and nearly ruined his life when Roddy stopped making mortgage payments on the man’s home in O’Fallon, Mo., and the house slipped toward foreclosure. The guardsman’s wife said the stress “sent me over the edge. I thought we were going to be put out on the street.”

Another consumer, also from O’Fallon, said she stands to lose an $11,000 down payment after a home she was buying from Roddy recently went into foreclosure.

Michelle L. Corey, BBB president and CEO, called the stories from home buyers and home sellers who have dealt with Roddy heart-wrenching. “In many cases, these are people who believed they were making sound investment decisions, only to find their lives turned inside out. It is a real shame.”

Roddy, who said he has been in the real estate business between 15 and 20 years, describes himself on his LinkedIn listing as a multi-millionaire, marketing director of JMZ Investment Corp., CEO of Bagwell Group and a platinum member of the Global Information Network.  The listing describes the Global Information Network as “a private, exclusive, members-only global association of individuals dedicated to achieving financial independence, wealth creation, dynamic health and emotional well-being.”
                                  
In an interview with the BBB from his New Athens office, Roddy blamed his mounting problems on uneducated investors, naïve home sellers and “deadbeats” who stop making home payments.  “I’m tired of babysitting all these deadbeats who don’t pay,” Roddy said.

Other consumers who claim to have had problems with Roddy include:

• Another woman from O’Fallon who says Roddy talked her into transferring ownership of her late father’s home to a trust controlled by JMZ Homes. A lawsuit pending in St. Charles County claims that Roddy and JMZ breached the terms of a contract by refusing to pay the woman $35,000, and failed to pay the debt on the property, “causing the real estate to be subjected to foreclosure procedures.”
• A businesswoman from Arizona who said that a deal with Roddy “took me right to brink of bankruptcy.”  The businesswoman told the BBB she met Roddy at a real estate seminar in Florida. She agreed to invest in a small “fix and flip” house in Pana, Ill.  She said she lost more than $33,000 in the purchase and in an unrelated loan to Roddy. She also said that a family that was involved in a lease-purchase agreement of the home lost $7,000 when water problems made the house uninhabitable.
• A couple who entered into a lease-purchase agreement at the same O’Fallon address where the Army sergeant and his family had once lived.  The couple said they had given Roddy a $12,000 down payment on the house and had put an additional $10,000 of renovation work into the structure earlier this year. Just last week, that family learned that Roddy had missed several mortgage payments on the home and, once again, it was at risk for foreclosure.  “I want to make sure this guy is never able to do anything like this to anybody ever again,” said the husband, who first learned the house was facing foreclosure from a BBB investigator.

Roddy said he ran into financial trouble with the lease-to-purchase homes only after the buyer stopped making payments to him.  But home buyers told the BBB that is not true.  They said they stopped making payments to Roddy only when they learned that Roddy had stopped paying the lenders and the homes were threatened with foreclosure. The national guardsman said he couldn’t justify continuing to invest in a house that he might soon lose to foreclosure.

Two other families – one who transferred ownership of a home directly to Roddy and another who transferred a home to another business that later transferred it to Roddy – said that their credit was damaged when Roddy got behind on mortgages they still held.

Roddy said he could not tell a BBB investigator how many properties he owns and how many are currently in lease-to-buy agreements.

He said he intends to get out of the lease-to-buy business in the near future, but insists he has done nothing wrong. “I didn’t know there were that many people who did not pay their bills,” he said.

Recently, Bagwell group began posting signs reading “Storm Repair Keep Your Deductible” in neighborhoods where homes were damaged in recent storms.
                                                     
The BBB offers the following tips to prospective home owners looking at a lease-to-buy option:

• Determine whether the seller owns the property outright or is making mortgage payments to a lender.
• Beware of deals where the mortgage is not in the name of the seller, but in the name of a third party. If the seller of the property does not own the home outright and somebody else is making payments to a lender, the owner may have nothing to lose by letting the property go into foreclosure.
• Get references.  Contact others who have dealt with the business to determine whether you want to get involved.
• Contact the BBB for a BBB Business Review by going to http://stlouis.bbb.org/ or by calling 314-645-3300.

Contacts: Michelle Corey, President & CEO, 314-645-3300, mcorey@stlouisbbb.org, or Bill Smith, Trade Practice Investigator, 314-645-3300, tpc1@stlouisbbb.org

The BBB is a nonprofit, business-supported organization that sets and upholds high standards for fair and honest business behavior. The BBB provides objective advice, free BBB Business Reviews, dispute resolution service, charity wise-giving reports, alerts and educational information on topics affecting marketplace trust. Please visit www.bbb.org for more information.