Do you change your own oil? Most of us are capable of performing this simple maintenance on our vehicles, but we choose not to. After all, it is messy work, requires a few specialized tools, and disposing of used oil can be a hassle. To boot, the cost of an oil change at the local service station, specialty stores like Direct Tire or Pep Boys and even the dealerships is relatively modest.
So what’s the connection with identity theft? Identity theft is a big problem that is affecting more and more people each year. At a minimum, the problem creates a great deal of aggravation and considerable worry. At worst, it can cause debilitating harm to your credit, making it difficult or impossible to buy a car, rent an apartment, refinance your home or even get a job.
To combat this problem, many companies such as LifeLock, TrustedID, IdentityGuard, ID Watchdog and others offer services that they claim are designed to help you prevent, identify and correct any problems that may arise due to identity theft. They claim to do this through a multi-faceted approach that includes removing your name from pre-approved credit card mailing lists, providing annual copies of your credit reports and searching the web for potential indicators that your identity has been compromised. And then when a problem occurs, they provide counseling and guidance on how to repair the damage.
Until recently I was not very much in favor of identity theft protection services. After all, many of the features offered by these services are items that anyone can easily accomplish on their own, just like changing your oil. For instance, under federal law, consumers are entitled to receive a copy of their credit report from each of the three major credit bureaus once each year. Likewise, anyone can sign up at www.optoutprescreen.com to limit unwanted credit and insurance offers. And much of the information needed to repair credit damage is readily available on line (The FTC has extensive information available here). So why then should anyone pay on the order of $100 or so each year when they can do this all for free?
The reality is that we are busy people. Or we’re not perfectly organized. Or we just don’t trust that we are going to dot all the i’s and cross all the t’s. Just as with the convenience of the oil change services, there is clearly a place for these identity protection companies even if all they are doing is something that we can do ourselves.
However, before engaging in such a service, be certain that you know exactly what you are getting and what you are not. For instance, many people may mistakenly think that the “million dollar” guarantees offered by these services will pay them money to cover substantial loss of income or provide other compensation if they are forced to pay higher interest rates on mortgages or car loans due to damaged credit. Read the fine print very carefully – in many cases, they do not make any direct payments to the consumers except possibly to reimburse certain limited expenses. To the extent that any significant money might be paid, it is primarily for lawyers and other professionals who they hire to clear your name. Lost income, if it is covered, is very limited (i.e. only for the time off work spent fixing your identity).
More important, the insurance may not even be available unless you can show that your loss was due to a failure of the service and not some other cause. Identity theft is tricky business and there are many ways that thieves can get hold of your information. The protection services cannot possibly stop all of the leaks, so unless it is their fault that you have a problem, their insurance may not be available to help you fix the problem.
What are you doing to protect your identity? Have you used one of these services? Has it been of any value? Do you have questions about identity theft? Please fill out a comment or send me a note.
There are many ways in which landlords can cross the line and get into 
serious trouble with their tenants, but perhaps the easiest is by misappropriating their security deposit. The security deposit belongs to the tenant, not the landlord. Period. End of story.
Yes, the landlord may be entitled to retain the security deposit at a later time, but only after jumping through several very important technical hurdles. Until then, hands off!
The Massachusetts statute governing residential security deposits is chapter 186, section 15B. It is long and confusing. Nevertheless, the statute carries heavy penalties. A landlord who mishandles a tenant’s deposit, even by mistake, may be obligated to reimburse the tenant for three times the deposit, plus attorney’s fees, plus any court costs incurred.
The basic principal is to avoid any co-mingling of the security deposit with other money. The trouble often begins when the landlord first receives the deposit. In essence, the landlord becomes a trustee of the tenant’s money. Since the deposit must be kept separate from other money, the tenant should not give a single check that combines the security deposit with any other payments. The security deposit should be paid with a separate check or money order. Payment should be made directly to the security deposit account and not to the landlord. Accepting cash for the security deposit is ill-advised since there is no way to distinguish between cash belonging to the landlord and that of the tenant. It doesn’t matter that the cash is later deposited in a separate account – the violation has already occurred.
Once accepted, the money must be placed in a separate bank account that is properly labeled as a security deposit account. In the event that the landlord becomes subject to claims of creditors, the tenants’ money must be held in an account that is clearly identified as escrow funds that do not belong to the landlord. The money may be placed in an account with other security deposits as long as the account is properly labeled and contains none of the landlord’s money.
Another common mistake by landlords is keeping any last month’s rent in the same account as the security deposit. Unlike the security deposit, last month’s rent is money that does belong to the landlord – it is simply rent that was paid in advance. So putting it in the same account with the security deposit would result in co-mingling and would be a violation of the statute.
The security deposit needs to stay in the account until the end of the tenancy. The only exception is if the tenant does not pay the rent. Here is another trap for the unwary landlord. The landlord may not deduct rent from the security deposit if the tenant has withheld paying rent for a valid reason. However, tenants often do not tell the landlord immediately why they are withholding their rent. So a landlord who is quick to withdraw funds from the account without verifying the reason for the lack of payment may be in for a nasty surprise later.
Of course, the primary purpose of the deposit is to protect the landlord in case of unpaid rent or damage beyond reasonable wear and tear. In order for the landlord to apply the security deposit, he or she must have taken several other important steps designed to protect the tenants before the deposit can be applied. These include providing a statutory “Statement of Condition” and detailed receipt at the outset of the tenancy, notification of the bank account where the money is held, paying annual interest, and providing a sworn statement itemizing any damages that are being claimed, together with evidence of the repair or cleaning costs.
The bottom line for any residential landlord is to consult an attorney to be certain you understand your rights and obligations before accepting a security deposit. The modest cost for this advice will pale in comparison to the penalties that may be faced after the damage is done.
Are you a landlord or tenant? Do you have questions about housing or real estate investment? I would love to hear from you. Please click below to let me know any comments or concerns.
Do you change your own oil? Most of us are capable of performing this simple maintenance on our vehicles, but we choose not to. After all, it is messy work, requires a few specialized tools, and disposing of used oil can be a hassle. To boot, the cost of an oil change at the local service station, specialty stores like Direct Tire or Pep Boys and even the dealerships is relatively modest.
