Office of Consumer Affairs Financial Awareness Survey Finds Broad Gaps in Knowledge
Bay State residents risking ID theft, credit scores and bank accounts
BOSTON, July 25, 2012 - The Patrick-Murray Administration’s Office of Consumer Affairs and Business Regulation today released a survey of 500 Massachusetts residents that found while almost all Massachusetts consumers believe they are hands-on in managing their finances, many do not take basic steps to do so.
The telephone poll, focused on consumer financial knowledge, found that while the vast majority of Massachusetts residents (91 percent) believe they actively manage their finances, only about half (52 percent) even look at their credit reports once a year. The Office of Consumer Affairs will use the results of the survey to identify areas where further consumer education is needed, and focus programming and information into those areas.
The survey found the average Massachusetts consumer lacks necessary knowledge in:
- His or her own credit ratings
- Debit card liability
- Identity theft
- Banking products
- Online shopping risks
- Consumer protection resources.
The survey also found that younger and less affluent residents are the least aware of their financial options, rights and alternatives. In fact, 60 percent of respondents under age 30 acknowledged they managed their personal finances: not at all (13 percent), not too carefully (10 percent), or somewhat carefully (37 percent).
"While Massachusetts residents are known for being financially savvy, some of our findings reveal a significant need for education and improvement," said Undersecretary Barbara Anthony of the Office of Consumer Affairs and Business Regulation. "We urge that consumers learn more about their own finances and how to protect themselves while conducting their personal business. The Internet age requires us to be more engaged in our economic footprint, or risk harm or even disaster."
Almost half of Massachusetts residents incorrectly believe they would not be liable for any fraudulent purchases made with their debit cards if they notified their banks between two and 60 days after the crime. Under federal regulation, an account holder could be liable for up to $500 in that circumstance. The federal regulation, however, is superseded by state law if the state law provides less liability. In Massachusetts, consumers are only liable for fraudulent purchases up to $50.
"We recommend bank customers carefully review their account statements and verify each transaction with the purchase receipt," said Commissioner David Cotney of the Massachusetts Division of Banks. "This small investment of time could save account holders hundreds of dollars and hours of headaches."
Overall, senior citizens scored the highest on the financial survey, but nearly a third were unfamiliar with reverse mortgages and just 60 percent had knowledge of low-cost banking options. Sixty-five percent of seniors earning less than $25,000 a year were either not too familiar (11 percent) or not at all familiar (54 percent) with reverse mortgages.
Richard Walker, Senior Vice President of Regional and Community Outreach for the Federal Reserve Bank of Boston, said it is crucial to keep consumers informed about the financial options available to them.
"It's especially important that we keep our senior citizen population up to date on potential financial risks and money-saving options," Walker said. "Seniors who live their day to day lives on a tight budget depend on that kind of information."
Massachusetts residents in every demographic group fail to monitor their credit often enough, the survey found. Overall, 34 percent of consumers never check their credit reports, even though 76 percent knew they could receive a free report annually. In fact, about half of those earning less than $75,000 said they review their credit reports less than once a year or never.
"Everyone should get a copy of their credit report at least once a year," said Rod Griffin, Director of Public Education for Experian. "It’s free, it’s easy and it’s crucial to your financial well being. Reviewing your credit report annually enables you to play an active role in ensuring information is reported accurately and in responding to information that that could signal you are a victim of fraud or identity theft."
Carefully managing personal finances is another good method to prevent becoming a victim of identity theft, or at least mitigating its harmful effects on credit scores and savings. Steps consumers should take include reviewing bank and credit card statements, reviewing credit reports, and shredding old bills and documents that contain personal information.
"Identify theft is a crime, in our electronic age, that has the potential to victimize anyone. There are basic steps that consumers should take to protect themselves, and urge people to familiarize themselves with, and practice, those steps. And of course, anyone who is a victim of identity theft should contact police immediately," said Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police.
The survey found Massachusetts consumers need to better protect themselves when shopping online. While consumers face little risk at reputable websites, con artists often try to lure shoppers with too-good-to-be-true offers that result in identity theft. Just 36 percent of consumers always research an unfamiliar online business before conducting a financial transaction.
"The Better Business Bureau encourages Massachusetts consumers to research a business before making a financial transaction,’ said Paula Fleming, Vice President, Communications Marketing, Better Business Bureau. "It is imperative to manage your money efficiently and use resources available such as our website, bbb.org, to help guide you."
Massachusetts consumers have a litany of resources available to help them navigate the marketplace and difficult financial decisions. Just over half of respondents were aware of the Massachusetts Office of Consumer Affairs and Business Regulation, with younger and less affluent consumers the least aware of the Office. The Office of Consumer Affairs and its agencies offer information and help about a wide range of consumer issues including credit and debit issues, identity theft, credit card rights and responsibilities, health and auto insurance issues, internet shopping, lemon law rights and numerous other areas.
"From our hotline staffed by knowledgeable consumer associates to assistance with insurance and banking issues, the Office and our agencies are invaluable resources for anyone who needs help, free of charge," Undersecretary Anthony said. "Consumers don’t have to go it alone."
The Patrick-Murray Administration’s Office of Consumer Affairs and Business Regulation is committed to protecting consumers through consumer advocacy and education, and also works to ensure that the businesses its agencies regulate treat all Massachusetts consumers fairly. Follow the Office at its Facebook page and on Twitter, @Mass_Consumer.