Volume 2, Number 27, July 4, 2005
On July 4, 1776, as a nation, the United States claimed our independence from Britain and democracy was born. Every day thousands leave their homes to come to the “land of the free and the home of the brave” so they too have the opportunity to seize the American Dream.
Many of us are with family and friends today to celebrate our great country and the freedoms that we cherish and have long fought to protect.
Today offers us a special opportunity to recognize and reflect on the generations of men and women who for more than two centuries have fought to protect our country and have given their lives to defend our freedoms. Their love of country and devotion to duty is an inspiration.
As an army veteran, I am proud to have served my country.
Amidst the celebration, let’s pause for a moment and pray for our troops who are bravely fighting for us to maintain our independence. We also acknowledge the families and loved ones who support our troops and remember the service of our veterans.
Enjoy yourself this Independence Day and please celebrate safely.
-- Tom Gallagher **CONSUMER ALERT** Florida’s Chief Financial Officer Tom Gallagher cautioned Floridians to be on the lookout for con artists who claim to be members of the same religious or community-based group and use that affiliation to defraud group members. Gallagher said “affinity” fraud includes a variety of Ponzi schemes in which affiliation is used to gain trust. Before investing any money, call the Department of Financial Services to find out if they are registered to do business in your state. Ask if the investment is allowed to be sold. If one or the other is not registered, inquire further or walk away.
Florida’s Chief Financial Officer Tom Gallagher cautioned Floridians to be on the lookout for con artists who claim to be members of the same religious or community-based group and use that affiliation to defraud group members. Gallagher said “affinity” fraud includes a variety of Ponzi schemes in which affiliation is used to gain trust.
Before investing any money, call the Department of Financial Services to find out if they are registered to do business in your state. Ask if the investment is allowed to be sold. If one or the other is not registered, inquire further or walk away.
BEWARE OF PAYDAY LOANS
In need of a quick fix to a cash flow shortage, people may decide to take out a “payday loan.” But Florida’s Chief Financial Officer Tom Gallagher urges consumers to beware - this type of borrowing can become very expensive, and for some customers, impossible to pay off.
Predatory lenders often seem legitimate. However, they target people who can least afford to lose money, namely seniors who are property-rich but cash-poor, inexperienced young borrowers and consumers in dire financial straights. Junior enlisted service personnel are prime targets in military towns.
“Our service men and women are experiencing the extraordinary pressure of family separation and deployments, and these kinds of loans may seem like an easy option to help with emergency needs. Military personnel are more susceptible to the pitches of the loan companies in times of stress,” Gallagher said.
The lenders also know service men and women are getting a steady paycheck – which minimizes the lender’s risk. Lenders also know these men and women are eager to keep their finances in order, which creates an incentive for quick fixes if finances are slipping. Payday lenders are lined up outside the military bases, as proximity means access. Many have names like Armed Forces Loans or Loans for Military which make them sound legitimate.
Payday loans are usually small, short-term, and carry a high interest rate. They are called by a variety of names, including cash advance loans, check advance loans, post-dated check loans, and deferred deposit check loans. Money transmitters, doing business as deferred presentment providers, can offer these loans to people who need quick cash, but in Florida, these companies must be registered with the Department of Financial Services, which licenses companies and investigates complaints.
Deferred presentment providers can accept personal checks from customers for the amount they want to borrow, plus 10 percent of the amount loaned and a $5 verification fee. These are the maximum charges permitted under Florida law. The payday lender holds the check for no less than seven days, but not more than thirty-one days. The borrower can redeem the check with cash at any time during that period.
In addition, recent legislation prohibits borrowers from taking out more than one payday loan at a time, limits payday loans to $500, and requires a 24-hour period between the termination of one loan and the extension of the next. The “roll-over” of payday loans is no longer permitted, and payday lenders must now allow 60-day grace periods to consumers who can’t pay at the end of their deferment without imposing any additional charges on the borrowers. To qualify for the grace period, the borrower must make an appointment with a consumer credit counseling agency within seven days of the loan coming due, and must complete the counseling by the end of the grace period. Both the borrower and the payday lender must agree on the payment plan set up by the consumer credit counseling agency, and the payday lender can not deposit the borrower’s check during the grace period.
Before taking out a payday loan, call the Department of Financial Services helpline at 1-800-342-2762 to see if the company is licensed in Florida and if any complaints have been filed.
STATEMENT FROM FLORIDA’S CHIEF FINANCIAL OFFICER TOM GALLAGHER ON ALLSTATE FLORIDIAN
“The agreement reached by Allstate Floridian Insurance Company and Insurance Commissioner Kevin McCarty doesn’t offer any real relief to policyholders. This is just a smokescreen by Allstate to delay an outrageous rate hike without scrutiny by regulators.
“On top of that, the agreement only calls for one public hearing. That’s ridiculous considering Allstate Floridian has 640,000 policyholders. More public hearings must be held so policyholders have the opportunity to ask the company questions and to voice their concerns.
“We need to re-evaluate the practice of ‘use and file’ in Florida. Every rate request should be reviewed and approved by the insurance commissioner before Floridians get the bill.”
FATHER, SON CHARGED WITH WORKERS’ COMPENSATION FRAUD
A father and his son are facing workers’ compensation fraud charges for allegedly not having the required workers’ compensation coverage for employees, resulting in more than $1 million in evaded premiums. The arrests on Wednesday were the result of an investigation by the Department of Financial Services (DFS), Bureau of Workers’ Compensation Fraud.
John J. Reaves, Jr., 63, allegedly knew that his son, Shawn, 32, operator of O’Hara Supplies, did not have workers’ compensation coverage for his employees, who provided labor for two companies owned by the elder Reaves, Southeast Enterprise Group and JR Deck Systems. FCCI insured SE Enterprise Group and JR Deck Systems Inc., but incurred losses attributable to employees of O’Hara Supplies.
FCCI learned about O’Hara Supplies through audits and forwarded the information to DFS, alleging that Reaves’ company owes them $1,000,036 for premiums that have not been paid.
The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers’ compensation insurance. Anyone with information about this case or another possible fraud scheme should call the Department’s Fraud Hotline at 1-800-378-0445. A reward of up to $25,000 may be offered for information leading to a conviction.