Sep 142016

One of the great things about buying and selling vintage items for a living is that I get to read all kinds of old magazines and newspapers.  I find it fascinating how much American life has changed, and even more how it’s stayed the same, through the decades.  This evening I came across this fascinating article about credit card fraud in a 1964 issue of the American Legion Magazine.  It’s chock full of intriguing tidbits, IMO.


The American Legion Magazine Volume 76 Number 5 May 1964

Don’t Lose Your Credit Cards! by Robert Angus

When the black market gets its hands on them, guess who’s stuck?

June 29, 1963, was an unlucky day for the nation’s more than 18 million holders of credit cards.  On that day, the New York Supreme Court decided in favor of Texaco, Inc., in a test case against real estate broker Bernhard Goldstein of the Bronx, N.Y.  According to the New York Times of June 19, 1962, Goldstein’s troubles began when he pulled into a gas station in the Bronx and charged a tank of gas.  The station attendant failed to return his credit card.  Some months later, Goldstein received bills run up with the card which ultimatelytotaled $569.88 – a charge he refused to pay.  The court held that Goldstein was liable – because he had failed to notify the company of his loss.  The case is being hailed by oil companies, hotel chains and the credit card industry generally as a precedent for future cases involving card holders whose cards fall into other hands.

In some instances, credit card holders are released from further liability as soon as they drop a letter notifying the issuing company of a card loss into the mail.  In others, liability ends when the company receives the letter.  In still others, it ends five or ten days after receipt of notification.  Conflicting state laws and company policies keep the matter of notification in a somewhat gray area, however – with some states and companies insisting on compliance with the letter of the contract, and others giving the cardholder the benefit of the doubt. So many people’s credit score got hit hard due to this during this time.

Each year, according to American Oil Company’s Central Credit Office manager L.C. Goodlander, some 1 1/2 million Americans report lost or stolen cards.  Of these, some 60,000 fall into the stolen category.  But each stolen card, according to Goodlander and his opposite number at Pure Oil, Robert Walerius, represents an average of $3,500 in charges, some of which are charged back to the legitimate card holder.  So big is the busines in stolen cards that a black market has developed in them.  Comments Walerius, “A pickpocket in New York, rather than using the cards he lifts himself, sells them to a broker (going price: from $10 to $50), who in turn sends them to Chicago, Los Angeles, Miami or elsewhere, where they’re priced at $100 and up, and used.  In Chicago, yet another ring member will begin running up bills or forging checks using a credit card stolen only hours before in New York.  That’s the reason we consider the prompt reporting of lost or stolen cards so important.”

The theory of the underworld seems to be that credit cards are at least as good as money.  One professional bad check casher even had his own plastic embossing kit for counterfeiting credit cards when he was arrested two years ago.  Another man, a convicted forger, bought an American Express credit card in New York’s black market several years ago and proceeded to run up a substantial bill for liquor and clothes before he was arrested.  (But few “cardsharps” have been able to top the four-months-long, $15,000 spree of a 25-year-old Michigan man.  In June of 1963, he was handed six credit cards by a companion who had found them in a purse he picked up on the street.  In spite of the stop orders issued by the card companies, the man managed to run through an average of $200 a day.  He had stayed in the finest hotels, had his car painted four times and had gone on a $125-a-day fishing expedition in Florida.)

Actually, the three principal general-purpose credit card companies – Diner’s Club, American Express and Carte Blanche – and most of the major oil companies spend time and money tracking down credit card frauds and abuses to protect themselves and their card holders.  And, for additional protection, all companies have tightened credit requirements and they keep in closer contact with active card users.  American Express, for example, boasts it can often detect a credit card abuse before the owner reports his card lost.  The general purpose companies today have their own detective bureaus, generally staffed by ex-FBI men.

One protection which many card holders feel they have is their signature on their cards.  Not so, say the issuing companies.  “We can’t ask every gas station attendant, waitress and store clerk to be a handwriting expert,” Goodlander comments.  “The purpose of the signature is mainly to deter amateurs, since professionals generally come up with a pretty acceptable forgery.”

What happens when the credit card company catches a crook?  Until recently, the main aim of every company was to get its card back.  Companies considered themselves lucky if they could obtain reimbursement from the offender,; but rarely did they prosecute.  In the past 12 months, all of this has changed.  Notes one New York hotelman, “Time was when the credit card companies actually supported some clip joints – removing a spot from their listnot after repeated complaints of overcharging, pickpocketing, and so on, but only after customers refused to pay padded bills.  Now they’ll knock a place off the list at the first complaint from members of any management irregularity.  Credit cards have grown up in the past year.”

The companies generally offer a reward of $25 for each stolen card picked up by a waiter, serviceman or store clerk.  “All that this did was to put a floor under the black-market price for stolen cards,” a New York Police Department member grumbles.

When you lose your wallet containing $100 cash, you’ve lost $100, points out Pure Oil’s Walerius.  But if it also contains half a dozen credit cards, you could take years to pay off all the bills that the finder could run up.

What can a card holder do to protect himself?  Walerius offers the following pointers:

1.  When you receive an unsolicited card in the mail, return it or destroy it if you don’t plan to use it.  Retention of the card may imply a contract to honor any charges made with it.

2. Treat your credit cards as you would cash.  Don’t carry them loose in pockets, leave them in car glove compartments and so on.

3. Each time you use your card, be sure you get it back.

4. Don’t lend your card to anybody unless you’re prepared to assume full responsibility for any purchases made while it’s out of your hands.

5. Save your receipts and compare them with your statement at the end of the month.  It’s possible for unscrupulous salespersons to add charges to a sales ticket after the customer has signed it.

6. Report lost or stolen cards immediately – preferably in writing – to the issuing company.

Aug 102008

Last night I stumbled into a conversation with a co-worker (who works for DMP UK) on the real-world effects of inflation and how it effects savings.  We discussed what savings we’ve done over the last several years and I veered into a tangent about why I prefer to immediately invest my savings in precious metals (gold and silver) rather than hang onto individual bills (mattress account), keep the money in the bank, or invest in the stock market.  As often happens when discussing economics I felt like I held my own fairly well, but I still felt seriously lacking in the specific knowledge department.  So, today I devoted a few hours to fact checking my assumptions.

I decided to compare the results of various savings methods on a $100 gift made to me as a newborn in 1969.

  • According to the Federal Reseve Bank had I simply held on to that $100 bill it would now only be worth roughly $17.70.  In other words if a new bicycle cost $17.70 in 1969 that same bicycle would now cost $100.00.  Hmm, that doesn’t sound like a very wise choice.
  • If my $100 was put in a standard passbook savings account, earning 2% interest for the last 39 years, compounded annually, then I’d now have a whopping $216.47.  Makes me glad I cashed out my childhood savings account when I did.
  • If, instead of being given cash, I was given a $100 U.S. Savings bond (which would have only cost the gifter $75) then today I could redeem that bond for $540.04 according to Treasury Direct. Hmmm…  So much for the standard baby gift of years past.
  • According to the Institute For Measuring Wealth if that $100 had been put in play in the stock market (in a DJA Portfolio) it would be worth$1,504.70 today.  Wow, so the market almost tripled the government’s return.  Not too shabby.
  • Based on data from Kitco I could have bought 55 ounces of silver or 2.4 ounces of gold with my $100 bill in 1969 which would now be worth $874 and $2075 respectively today.  I had no idea the growth in gold prices was so much more than the growth in silver prices! If someone can explain (or at least verify) this in the comments I would be most appreciative.
  • Returning to to the Institute For Measuring Wealth I find that if I’d put the $100 in an automatically renewing one-year CD I would now have $2,208.41.  We have a winner!

I must admit that I’m surprised by the results.  I was absolutely positive that gold was going to come out the clear winner (it would have barely passed the CD option when gold was at its highest point ($1011/oz) in March, netting a total of $2426.40) with silver handily grabbing second place.  Instead we end up with the following order-

  1. Certificates of Deposit – $2,208
  2. Gold – $2,075
  3. Stock Market – $1,504
  4. Silver – $874
  5. Savings Bond – $540
  6. Savings Account – $216
  7. Cash – $18

Of course, should the long-predicted complete economic crash rear it ugly head any time in the near future, then precious metals are the only thing that are going to hold their value.  Besides I like the semi-liquidity of actually being able to hold my savings in my hand.  If I drop my savings into a financial institution and it goes under then I end up with nothing.  So, I’ll stick with buying metals for the time being, though I think I’ll try a little harder to focus on gold, rather than silver.

Mar 222006

It’s been a long, hard struggle to get where I am now, and I’m not sure that’s a location to which many would aspire. Ya see, I’m still broke. The difference is that now the path I’ve been struggling along has a little more light shed upon it. This blog is an attempt to examine both the light and the path, primarily to ease my own journey; secondly, to help my daughter, Z, avoid falling as far as I have in my life; and, finally, in hopes that others will gain some benefit from my experiences.

By way of introduction, here’s a brief timeline of my financial life thus far-

1987 – Graduated high school

Top 10% of my class, excellent SAT scores, admitted to all three of my top college choices (USC, Northwestern, Notre Dame). But I chose to postpone college for a year and travel. I never went back…

Credit: $0.00 / Debt: Small personal loans only

1987-1994 – Vagabonding

Wandered through life both figuratively and literally. Worked dozens of crummy jobs, wandered the country, spent months to years at a time homeless.

Credit: $0.00 / Debt: Small personal loans only

1995 – Married

Met a girl, got her pregnant, married her. Settled down, got two “real” jobs, and worked 80+ hours per week in order to support my fledgling family so that my wife, P, could stay home and care for our daughter, Z. The largest (and most frequent) fights that we had centered around money: she wanted to go on welfare and I wanted to work for what little we had.

Credit: $0.00 / Debt: Small personal loans only

1996 – Daughter born / Wife left

My daughter was born in February, my wife left me (taking my daughter) in November. I spiraled downward financially and emotionally until I was again unemployed and homeless.

Credit: $0.00 / Debt: ~$10,000 car loan from family member

1999 – Reunion Attempt

In a well meant, but ill advised attempt to make my daughter’s life better I (legally) kidnapped her from her mother, moved back in with my family, and made a brief attempt at being a father. Started trade school in an attempt to improve my career prospects. Ended up returning my daughter to her mother, quitting trade school, and moving out of my family’s home to return to the streets, unemployed and homeless.

Credit: $0.00 / Debt: ~$12,000 student loans

2001 – The Beginning

After living in cars for several years I had been steadily employed for more than a year and managed to move into the house I now occupy.

Credit: $0.00 / Debt: ~$12,000 student loans

2002 – Backslide

Unable to cope with the retail wage slave that I had become, I quit my job with no prospect of another one.

Credit: $0.00 / Debt: ~$12,000 student loans

2003 – On The Edge

Still unemployed, I started having problems finding roommates to split the rent. Rent debt began increasing exponentially. Child support order kicked in, but I was broke and unemployed, so that just got added to the debt pile.

Credit: $0.00 / Debt: ~$12,000 student loans, $3,000 back rent, $3,000 back child support

2004 – Starting Back Up

In October I managed to get two new jobs (Kelly’s Liquors and Waldenbooks seasonal help). Both child support and student loans started attaching my wages at the temp job but I wasn’t even covering the new interest on the loans.

Credit: $0.00 / Debt: ~$12,000 student loans, $10,000 back rent, $15,000 back child support

2005 – Working Steadily, Life Changing Moment

Still working at Kelly’s, still living in the same place, surviving paycheck-to-paycheck and ignoring my debts. In June, while waiting for a bus, my ex-wife pulls over and I “meet” my 9 year old daughter, Z, with whom I’ve had zero contact since she was three. Right there, on the side of the road, everything changed for me. By the end of the year I was paying both current and back child support, had generated several other revenue streams, to help manage debt, and even got my first ever credit card.

Credit: $200.00 / Debt: ~$12,000 student loans, $10,000 back rent, $21,000 back child support

So, that’s how I got where I am today. Where, exactly, is that? Well, I’ll be posting my first net worth statement to this very blog in the next day or so – then we’ll both know :mrgreen: