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50–365 2010

S. HRG. 110–955 

SHOPPING SMART AND AVOID SCAMS: FINANCIAL 

LITERACY DURING THE HOLIDAY SEASON 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

ON 

STEPS CONSUMERS CAN TAKE TO AVOID FINANCIAL SCAMS, PURCHASES, CHARITABLE GIVING, AND OTHER FINANCIAL DECISIONS 

WITH SPECIAL FOCUS ON THOSE THAT ARE MOST PREVALENT DURING THE HOLIDAY SEASON 

THURSDAY, DECEMBER 13, 2007 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 


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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Pennsylvania 

JON TESTER, Montana 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

WAYNE ALLARD, Colorado 

MICHAEL B. ENZI, Wyoming 

CHUCK HAGEL, Nebraska 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

JOHN E. SUNUNU, New Hampshire 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

SHAWN MAHER, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director and Counsel 

DAWN RATLIFF, Chief Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 


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C O N T E N T S 

THURSDAY, DECEMBER 13, 2007 

Page 

Opening statement of Senator Carper ................................................................... 1 

Opening statements, comments, or prepared statements of: 

Senator Dole ...................................................................................................... 3 

Senator Menendez ............................................................................................ 4 

WITNESSES 

Karen Tyler, Securities Commissioners, State of North Dakota ......................... 7 

Prepared statement .......................................................................................... 27 

Nancy Smith, Chair, Consumer and Livable Communities Committee, AARP 

National Policy Council ....................................................................................... 9 

Prepared statement .......................................................................................... 37 

Julie Cripe, President and CEO, OmniBank, North America ............................. 10 

Prepared statement .......................................................................................... 51 

H. Art Taylor, President and CEO, BBB Wise Giving Alliance .......................... 12 

Prepared statement .......................................................................................... 63 


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SHOPPING SMART AND AVOID SCAMS: FINANCIAL LITERACY DURING THE HOLIDAY SEASON 

THURSDAY, DECEMBER 13, 2007 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10:41 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Thomas R. Carper, presiding. 

OPENING STATEMENT OF SENATOR THOMAS R. CARPER 

Senator CARPER. The hearing will come to order. 

I am delighted to be here with Senator Dole and all of our witnesses and other guests. Thank you for joining us today. 

You and I have sat through a number of hearings together and 

occasionally, and this is going to sound hard for the folks who 

might be here or tuning in around the country, but sometimes we 

sit through hearings and we are not so sure that they matter all 

that much. You may have been through one or two of those. 

But this hearing, as much as any that I can recall in recent 

years, not only is it timely, but it is personally helpful to me and 

I suspect to all of us, our staffs, and anyone who might be within 

the sound of our voice. I appreciate very much the effort that has 

gone into preparing for the hearing, and we appreciate those of you 

who have come to testify today. Some real good will come out of 

this hearing, and we are thankful for that. 

I write a blog, every week or two I write a blog entry. My next 

blog entry, posted over the weekend, will be on this very issue. And 

hopefully of interest to people. 

So this is an issue and a message that has legs, and we are going 

to make sure that it gets to as many—not just legs, but ears and 

minds across the country. But thank you all so much for coming. 

Senators are going to have 5 minutes for their opening statements. We have a number of things going on today, some big stuff 

on the floor, as we know, and a number of hearings that are going 

on. So we will be coming in and out. I will try to be here throughout, but we are grateful for Senator Dole. We have been joined by 

Senator Menendez and others who may come. 

I am going to ask our witnesses to try to stick to about 5 minutes, if you can. We will let you go a little bit beyond that, but we 

will rein you in if you go too far. We appreciate your consideration. 

After our witnesses’ testimony, we are going to have one round— 

as far as I know, probably one round of questions. 


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The purpose of our hearing today is to highlight consumer-friendly tips and advice for this holiday season. This hearing is very 

much timely, as we are still in the midst of holiday shopping. At 

least some people are. 

According to a recent study of our National Association of Retailers, I am told only about 10 percent of all consumers have completed their holiday shopping by this time. I can assure you, I am 

not among the 10 percent. That means roughly 90 percent of Americans still have some shopping yet to do. I am fully in that area. 

Hopefully, we will talk about some tips that consumers can use 

to make our dollars go further and avoid some of the problematic 

scams that are unfortunately prevalent during this time of year, 

and unfortunately through much of the rest of the year, as well. 

Holiday shopping accounts, I am told, for roughly 20 percent of 

all annual consumer spending, 20 percent. This year it is estimated 

that Americans will spend about $500 billion during the holiday 

season. 

Many consumers, during this season, will fall victims to one of 

the many scams that are out there. Some of those scams involve 

fraudulent charities or investments, which are often specifically 

targeted to seniors. Roughly 25 percent of donations to charity organizations are made during the end of the calendar year. 

As I check my mailbox every night when I go home to Delaware, 

they are just crammed with requests for donations, actually largely 

from organizations that I recognize and, frankly, want to help. We 

cannot help them all. My wife sometimes, Elizabeth, says I work 

just so that I can give my money to the folks that are asking for 

donations all the time. I wish we could help them all. 

But Americans will donate some $300 billion to charitable organizations during the course of this year. And I think Americans 

who are that generous have a right to know whether or not a charity is adhering to a reasonable standard. Charities have a right to 

do good and to do well, but consumers need to know whether the 

charity is doing more well than good. 

Also during this time of year, many Americans are making endof-the-year investments. A majority of solicitations are legitimate 

but, as we know, some, unfortunately, are not. We will explore 

some ways today for consumers to make better educated decisions 

in that regard. 

In addition to this being the season of charity, it is also a time 

to give gifts. As people head out to make their purchases, there are 

some tips that can help people save money and avoid some common 

problems, and we will hear about those. For example, gift cards are 

very popular this time of year. Consumers are expected to spend 

almost $25 billion this holiday season just on gift cards. And gift 

cards can be a great present because they allow, as we know, consumers the flexibility to purchase a gift of their choosing. 

Some gift cards come with expiration dates and with certain fees 

that consumers should be aware of when they are deciding whether 

to purchase a card. In addition, many credit cards offer built-in 

warranty protection. Consumers should be aware of these protections when deciding whether or not to purchase additional warranties. 


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Online shopping has become increasingly popular over the years. 

The FTC estimates that online shopping this year will reach about 

$33 billion in sales. I think it is growing by about 20 percent per 

year, too. The Federal Trade Commission and the National Cyber 

Security Alliance recently issued 10 tips for holiday shopping online. These tips urge consumers to use common sense when choosing a seller and deciding how to pay for their purchases. 

I look forward to hearing from our witnesses. I hope we can provide some good information to consumers here today. 

I would ask unanimous consent that all statements be included 

in the record. If there is no objection, that will occur. 

Let me recognize Senator Dole for being here in light of her earlier role. She led a major non-profit, one that I think very highly 

of, the American Red Cross. You could probably sit on either side 

of the dias here today, because you could add a lot, and I am sure 

you will, by your presence here. 

And then, after you have spoken, we will recognize Senator 

Menendez. Thank you, Senator Dole. 

STATEMENT OF SENATOR ELIZABETH DOLE 

Senator DOLE. Thank you very much, Mr. Chairman. It is always 

a joy to partner with you. 

You know, ever since my days as Deputy Special Assistant to the 

President for Consumer Affairs—and this is during the Nixon Administration—and then the 5 years following on the Federal Trade 

Commission, what we are talking about today has been a top priority for me, consumer education, certainly improving financial 

acumen of individuals. 

In fact, Mr. Chairman, back in my days with the White House 

Consumer Office, we prepared a booklet called Consumer Education K through 12. One of my jobs was traveling around the 

country getting the schools to accept this material so that children 

even that young could begin to understand more about financial literacy. 

I see people in the audience that I have worked with and certainly organizations that it has been privilege to be involved with 

for many, many years. And so this is really near and dear to my 

heart, and I am so glad you are here today and look forward to 

working with our witnesses. 

But you know, today there is a particularly pernicious practice 

called identity theft, an all too prevalent problem we must continue 

to deal with. We have dealt with it in this Committee, but there 

is much more to do. 

Identity thieves constantly create new scams to rob hard-working, law-abiding citizens of their good names, their credit, and their 

security. The stakes could not be higher for the families involved. 

As some of you may remember, after last year’s holiday shopping 

season, TJX, the parent company of TJ Maxx and Marshalls, disclosed that it has experienced a massive data breach where the security of its customers’ financial information was compromised. According to a filing with the SEC, beginning in July 2005 and continuing over an 18-month period at least 45.7 million credit cards 

were exposed to possible fraud. Imagine that, 45.7 million. 


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As this example illustrates, identity theft is often cited as one of 

the fastest growing crimes in the Nation. According to a study conducted for the Federal Trade Commission in 2005, approximately 

8.3 million Americans were victims of identity theft, losing an average of $1,882 each. 

Without a doubt, this is an issue that continually needs to be 

front and center on our radar screens. We need to do our part to 

educate people on ways to prevent identity theft and inform them 

of what to do if, heaven forbid, they become a victim. 

With regard to financial literacy, I believe clarification of credit 

card agreements is high on the list to benefit consumers. There are 

many well-intentioned laws that require credit card companies to 

fully disclose their policies, on rates, on payments, on terms of use. 

But unfortunately, the tangible effect of these laws is often multiple pages of single-spaced typing and small font lettering filled 

with sophisticated legal terminology. Who are they trying to fool? 

As I have said before in this Committee, for gosh’s sakes, you 

should not have to have a magnifying glass and a lawyer to understand a credit card user agreement. 

Some lender companies are now providing consumers with a onepage summary of their disclosure information in a format similar 

to the nutrition information displayed on products in your local 

grocery store. This clear, concise presentation is easy to read and 

it is simple to understand. I am going to take you back to my early 

consumer days when clear nutritional labeling and unit pricing 

were our top priorities. 

So we must also continue to require that credit card companies 

provide full disclosure regarding fees, interest rates, minimum payments, and privacy statements. It is imperative that this information be presented in the most consumer friendly manner possible. 

By providing more easily understood applications and monthly 

statements, card issuers can reduce losses due to defaults and also 

lessen the demand for customer service to guide consumers through 

problems. It is a win-win situation. 

As they say, it is a no brainer. 

Again, thank you, Mr. Chairman. It is always a joy to be with 

you, to work with you on so many issues. And I am sorry that other 

commitments are going to require me to leave early, but I look forward to hearing the testimony of each of our witnesses. Thank you 

very much. 

Senator CARPER. Thank you, Senator. 

And I did not know about your other experiences. You really are 

well qualified for this one. Maybe you should—if you come back 

into the hearing, maybe we will put you out there. Thanks very 

much. 

Senator Menendez. 

STATEMENT OF SENATOR ROBERT MENENDEZ 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Mr. Chairman, you started off by citing the statistics of those 

Americans who have either not shopped or still have not fulfilled 

their shopping requirements. I hope that the Senate gets in the 

spirit very soon of understanding that we are in the holiday season 


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and help the economy along the way, and the process. I am definitely in the universe of those who can benefit from today’s panel. 

Let me say that every time, every year around this time, Americans are in the spirit of giving. And as a whole they spend more 

and they give more than any other time of the year. But as they 

open up their hearts and their wallets, they also open themselves 

up to the possibility of falling prey to any number of consumer pitfalls. 

From terms that are hard to understand, print that is difficult 

to read, deals that sound too good to be true, and promises of 

money back that do not always appear, well-intentioned shoppers 

can find themselves confused, mislead, or worse. 

As American consumers continue to spend record amounts of holiday shopping, those trying to make a quick buck will work to stay 

one step ahead. Some schemes have been around for ages. Organizations posing as charities, gift cards that have hidden fees or expiration dates, optional warranties that are unnecessary are all part 

of an old theme. 

But those seeking to prey on unsuspecting consumers are creative and they usually find a way to reel in their victims. So as the 

predators become savvier, so must we. 

The same principle that holds for any financial transaction, 

whether it be buying a car, getting a home loan, or buying your 

loved ones holiday gifts, it pays to be informed. As we know, education is a pivotal piece to overcoming holiday scam tactics. 

But I believe we must also work to stay one step ahead so that 

consumers are not left to fend for themselves. Certainly, there are 

steps we can take so that shoppers are not left to untangle the web 

of scams on their own. I think there is more that we can do. 

For starters, I think we can ensure the terms on rebates are fair 

and reasonable. Consumers should not have to jump through 20 

hoops just to get back $50. Rebates can be done in a fair and open 

manner, but too often they become a black hole where people send 

their forms, their UPC symbol, and their receipt only to wait. 

The FTC has cracked down on the more egregious players, but 

the fine print keeps getting smaller. At a minimum, consumers deserve to have rebates that are fair and reasonable if they are being 

offered in the first place. And I think we need to look at legislation 

that ensure consumers pay the actual post-rebate price at the register. 

I am also concerned, Mr. Chairman, about this new wave of embedded giving, in essence where if you purchase an item, that as 

a result of purchasing that item a certain amount of money will be 

given to a charity along the way. But increasingly—I think there 

were articles today in some of the Nation’s leading papers that 

talked about charities that had no idea that their name was being 

used. 

And so it leads to a whole issue of is the charity the one that 

has to go after the entity to make sure that what was offered to 

the public as an enticement to purchase their product because they 

would be, at the same time, doing a charitable act by having certain amounts of money, for example, go to Make A Wish Foundation or some other entity? Are they the ones who have to do the 


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policing to make sure that those charitable contributions become a 

reality? 

This is an increasingly big part of the universe of giving today 

and I think we need to be looking at that. 

So I look forward to hearing from today’s witnesses on what we 

can do to prevent unsuspecting consumers from being victims, both 

by improving awareness but also by taking preventative steps before consumers have the chance to become victims. 

It is a shopping season in which the time that consumers have 

should be spent on how they can best spend their money on their 

loved ones, not on how to have to avoid the next scam. 

With that, Mr. Chairman, I look forward to the witnesses. 

Senator CARPER. Senator Menendez, thank you very, very much. 

Let me introduce our witnesses and then we will turn it over 

to—Ms. Tyler, you will be our first lead-off witness, but let me just 

introduce all the witnesses and then turn it over to you. 

Karen Tyler, President—that is a nice sounding title—President 

of the North American Securities Administrators Association. I understand you are from North Dakota? Does the wind ever blow in 

North Dakota? 

Ms. TYLER. Occasionally. 

Senator CARPER. Does it get cold? I understand you are from 

North Dakota and the Securities Commissioner there; is that correct? 

Ms. TYLER. Yes. 

Senator CARPER. Appointed by the Governor. Does he pronounce 

his name Hoeven, John Hoeven? 

Ms. TYLER. John Hoeven. 

Senator CARPER. John Hoeven in July of 2001. Ms. Tyler oversees the Enforcement, Registration, Corporation Finance and Education Divisions of the North Dakota Securities Department. Prior 

to her appointment as Securities Commissioner, she served clients 

in the banking and brokerage sectors of the financial services industry for 14 years. 

Nancy Smith, a name that I said, Ms. Smith, a name that has 

been very important to me. My very first campaign treasurer when 

I ran for State Treasurer at the tender age of 29, Nancy Smith. It 

has been a long time since I have seen you, welcome back. Think 

of all that you helped me start all those years ago. 

Seriously, this is not the same Nancy Smith, but you actually do 

look alike. 

This Nancy Smith, though, is an attorney with extensive knowledge of consumer issues. Nancy’s career includes assignments with 

the National Credit Union Administration with the U.S. Department of Agriculture’s National Appeals Division; Federal Crop Insurance Corporation appeals and litigation; and advising association executives on policy, development, and approaches to proposed 

law. 

Next, Ms. Julie Cripe. Ms. Cripe, welcome, President and CEO 

of OmniBank. Is that in Houston, Texas? 

Ms. CRIPE. Yes. 

Senator CARPER. Julie Cripe has been an officer of OmniBank 

since 1979. She is currently Chair—do you call yourself Chairman 

or Chairperson? 


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Ms. CRIPE. Chair, Chairman, Chairperson. I answer to it all. 

Senator CARPER. Currently Chair of the Texas Bankers Education Foundation, past Chairman of the American Bankers Association’s Education Foundation, which she is representing here 

today. Welcome. 

And last but not least, H. Art Taylor. When I first looked at your 

name, I ran the H and the Art together and I named you Hart. Mr. 

Taylor, we are happy you are here. President and CEO of BBB 

Wise Giving Alliance. BBB used to be Better Business Bureau? 

Mr. TAYLOR. Yes. 

Senator CARPER. Mr. Taylor is President and Chief Executive Officer of the BBB Wise Giving Alliance, the organization formed by 

the merger in early 2001 of the National Charities Information Bureau and the Council of Better Business Bureaus Foundations, 

which housed the Philanthropic Advisory Service Program. 

Your entire statements will be made a part of the record and I 

would ask you to—you can give your entire statement if it comes 

in around 5 minutes. If it does not, I would just ask you to summarize it. 

Again, we welcome you and we are happy that you are here for 

what I think is a very important hearing. 

Ms. Tyler. 

STATEMENT OF KAREN TYLER, SECURITIES COMMISSIONER, 

STATE OF NORTH DAKOTA 

Ms. TYLER. Thank you, Chairman Carper, Senator Dole, and 

Senator Menendez. Good morning to you all. 

I am Karen Tyler and I am honored to be here today to assist 

you in alerting consumers to the steps that they can take to avoid 

financial scams this holiday season. As Senator Menendez stated, 

criminals do count on people opening not just their hearts but also 

their wallets during the holidays. And they do aggressively exploit 

this spirit of good will. 

This predatory conduct, combined with a convergence of financial 

challenges, including higher energy prices, a volatile stock market, 

lower housing values, and general economic unrest, may lead investors to make hasty, ill-informed decisions in pursuit of higher returns on their investments. 

NASAA urges investors to be especially vigilant in protecting 

their assets from Internet, telephone and in-person promotions for 

alternative investment products. State securities regulators suggest 

four key defensive actions that investors can use to protect themselves and their money from financial predators this holiday season. 

First, never give a Social Security number, date of birth, or credit 

card number in response to unsolicited e-mail messages or cold 

callers, no matter how good the sales pitch sounds. Financial institutions will never ask their customers for such personal information through e-mail. Anyone who receives an e-mail that appears 

to be from a financial institution asking for account information 

should consider it to be a fraudulent attempt to obtain personal account data for an illegal purpose. 

Second, do not make risky and quick investment decisions based 

upon sales pitches that refer to great deals that will be offered for 


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only a short time, or those that purport to offer year-end tax advantages. The end of the year is a favorite time for criminals to roll 

out various income tax avoidance schemes. 

Third, even though everyone is pressed for time during the holidays, investors should find the time to research any investment solicitation and those who offer them before considering investing 

their hard-earned dollars. Ask for and read the prospectus of any 

investment proposal before deciding to invest. Just because literature is received, do not assume the investment is actually legitimate. And consider whether it is a suitable option, given the investor’s age, tolerance for risk, and overall financial profile. 

And fourth, once a prospectus is read and the investment is independently researched, do contact your State securities regulator to 

check the disciplinary background of the broker or investment advisor suggesting the investment. State securities regulators can also 

verify whether the product being offered is properly registered. 

Investors must also understand that investment professionals 

not only offer different types of services and charge for them differently, they have different legal obligations to their customers. 

For example, investment advisors are subject to a fiduciary duty. 

That means they must put the interests of their investor ahead of 

their own at all times by providing investment advice and recommendations that they view as being in the best interest of their 

customer. 

I would like to turn now to an unfortunate but very real aspect 

of the holiday season. The holidays can be a lonely time for those 

away from their loved ones, especially many of our Nation’s seniors. Unscrupulous sales people may exploit this fact by inviting 

seniors to free lunch or dinner financial seminars, providing them 

with an appealing diversion during a difficult time of year. But instead of unbiased financial education, seminar attendees may be 

fed a hard sales pitch for investment products that are often unsuitable. 

Recently, State securities regulators, the SEC, and FINRA released our findings of a year-long examination of 110 free meal 

seminars. Our exam found that while many of these seminars were 

advertised as educational, all were actually sales presentations. 

Half featured exaggerated or misleading advertising claims, and 25 

percent involved possibly unsuitable recommendations. In many 

cases, the sales person recommends that the senior liquidate their 

existing investments and use the proceeds to purchase equity indexed or variable annuities, products that are often unsuitable for 

seniors and often reward the seller with very high sales commissions. 

To help investors protect themselves this holiday season NASAA 

today has issued an investor alert offering a series of resolutions 

for safe investing. For example, resolve to investigate before you invest. Resolve to make safe investing a family affair. And resolve to 

check out your broker or investment advisor before investing. 

In conclusion, while the holidays can be a perilous time for investors, my office in North Dakota, my colleague in Delaware, Commissioner Jim Ropp, and my colleagues across the country, will 

continue to play an active role in protecting investors throughout 

the year through a nationwide network of highly trained, unbiased, 


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non-commercial experts in financial services, products, and fraud 

avoidance. 

I thank the Chairman and each member of the Committee for allowing me the opportunity to appear today and I look forward to 

answering any questions you may have and providing additional 

assistance to you in the future. 

Thank you. 

Senator CARPER. Ms. Tyler, thank you for excellent testimony. 

Ms. Smith, you are recognized. Thank you again for joining us. 

STATEMENT OF NANCY SMITH, CHAIR, CONSUMER AND LIVABLE COMMUNITIES COMMITTEE, AARP NATIONAL POLICY 

COUNCIL 

Ms. SMITH. Chairman Carper, Senator Dole, Senator Menendez, 

I am Nancy Smith. I am the Chair of the Consumer and Livable 

Communities Committee of AARP’s National Policy Council. 

Thank you for inviting AARP to offer tips on how to shop smart 

and avoid scams during this busy holiday season. 

Fraud, scams, and deceptive practices are crimes that rob victims 

of their assets, their self-esteem, and their economic security. The 

impact of such crimes on older persons can be particularly devastating, both emotionally and financially. 

AARP engages in consumer education and outreach year-round 

to help older consumers protect themselves. But such awareness is 

most important at this time of year. Criminals often see older people as easy marks for charitable giving scams and target them 

based on a perception that they are more vulnerable, as well as 

more generous donors. 

AARP’s website and publications stress the need to protect valuable personal information that can be stolen and misused. We urge 

members to be very careful with their credit card and personal information. Identity thieves look for opportunities to take this information. 

A Federal Trade Commission survey released November 27th 

shows that more than 8 million American adults were victims of 

some form of identity fraud in 2005. Of those victims, 3.2 million 

experienced misuse of their existing credit card accounts, 3.3 million experienced misuse of non-credit cards, and almost 2 million 

people found that new accounts had been opened or other frauds 

committed using their personal identifying information. 

Consumers should protect their credit card information whenever 

they give their card to a store clerk or shop online. Holiday online 

shopping is an attractive option for consumers who may be housebound, have limited transportation options, or simply want to avoid 

large crowds. A well-known marketing research firm reports that 

online shopping has increased this holiday season by 14.5 percent 

over last year. 

Consumers can find tips for online shopping at the AARP 

website. These tips are endorsed by the FTC and other consumer 

groups. They help consumers have a secure online shopping experience and lower their risk of identity theft. Some of the tips are always investigate the seller. Never use part or all of your Social Security number as a password. Pay by credit card. Keep a record of 


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your transaction. Always turn off your computer when you are finished shopping. 

AARP’s website constantly updates consumer tips that can help 

eliminate fraud, scams, and theft during the holidays and yearround. The AARP Foundation administers a grant funded program, 

the Consumer Fraud Protection Project, that uses peer counselors 

to help potential victims identify fraudulent schemes and deceptive 

practices. 

The project is the result of a success of a 2003 AARP Foundation 

study ‘‘Off the Hook.’’ That study found that telemarketing fraud 

is grossly under represented among older victims. But we also 

learned that those who are properly counseled by trained peer volunteers are less likely to fall victim to fraudulent pitches. 

The project involves seven community-based non-profit agencies 

that recruit and train older volunteers to serve as peer counselors. 

Project volunteers contact known and potential fraud victims and 

alert them to the dangers of telemarketing and other fraud. These 

peer conversations are valuable to consumers because they provide 

an information exchange tailored to the consumers’ level of interest 

and understanding. 

Since July 2006, project volunteers have contacted half a million 

older consumers, and over the next 4 years they will contact 2.5 

million more. Ultimately, the goal of AARP telemarketing fraud 

prevention programs is to equip consumers with information, ways 

to identify possible criminal activity, and the ability to avoid becoming a victim. 

In conclusion, Mr. Chairman, AARP commends you for holding 

this hearing. AARP is committed to working with like-minded organizations and Government agencies to deter scam artists and empower consumers, especially during the holidays. Holiday shopping 

should not be a prime holiday for criminals. 

Thank you. 

Senator CARPER. That was great testimony, Ms. Smith. Thank 

you so much. Parts of your testimony, when we come back on the 

Q and A, I think I am just going to ask you almost to reread it 

verbatim. That is just that good. 

Ms. Cripe, you are recognized. Please proceed. Thank you. 

STATEMENT OF JULIE CRIPE, PRESIDENT AND CEO, 

OMNIBANK, NORTH AMERICA 

Ms. CRIPE. Thank you. 

Mr. Chairman, Senators Dole and Menendez, my name is Julie 

Cripe and I am President and CEO of OmniBank in Houston, 

Texas. OmniBank has $360 million in assets and has been in existence for 53 years. 

I am also the immediate past Chairman of the American Bankers 

Association Education Foundation Board and, since 1925, the 

Foundation has supported banker efforts to teach personal finance 

skills in schools and communities across the country. 

The holidays can be a very joyous time. With simple steps to remain financially secure, the joy of the season will be remembered 

long after the bills come due in January. 

This morning, I would like to cover a few tips on good financial 

management and avoiding scams. In my written statement, I inVerDate Nov 24 2008 02:13 Feb 03, 2010 Jkt 050365 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HR\OC\A365.XXX A365

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cluded some tip sheets, four of them. You should feel free to use 

them with your constituents to help them avoid financial frostbite 

when the bills come due in January. 

Senator CARPER. Was that financial frostbite? 

[Laughter.] 

Ms. CRIPE. The five steps are simple. It is following them that 

is the hard part. But small changes in behavior today can lead to 

a lifetime of good money management. 

Step one, develop a budget. And being realistic is the key. Often 

forgotten are the non-gift expenses, and the gifts to ourselves. And 

that consumers one of every $3 we spend during the holidays. 

Step two, make a list and check it twice. Impulse buying has a 

nasty way of ballooning expenditures. Thus, creating a gift list and 

sticking to it can keep spending within the budget. 

Step three, shop for bargains. Being rushed or under pressure 

can lead to over spending. Shop around and return the impulse 

purchases if they break the budget. 

Step four, use credit wisely. The balance on your credit card 

should not be a complete surprise when you open the statement in 

January. It often takes longer than people think to repay holiday 

expenditures, so a good rule of thumb is to charge only what you 

can repay fully in 2 months. 

And step five, plan for next year. I cannot emphasize enough the 

importance of savings, not only for holiday expenditures but for all 

the little curves that life throws at us. Saving even $5 a week can 

pay for a lot of gifts without using your credit card. And it is also 

good discipline for building up a reserve for emergencies. 

Let me suggest a few additional tips. First, as my colleagues 

have said, identity thieves are always looking for ways to steal 

your personal information. For example, we know that fraudsters 

are calling or e-mailing people to say that something has happened 

to their accounts and the funds will not be available unless they 

verify the account information over the phone or on the Internet. 

Because it is the holiday shopping season, people worry about not 

having access to their money and they fall for this scam. The 

fraudsters would then use that account information to move funds 

out of the bank. So never, ever give out personal information online 

or on the phone unless you initiate the contact. 

Also, check your accounts regularly for unauthorized transactions 

and report such charges immediately to the bank or the credit card 

company. 

Second, if someone is having trouble repaying debts, he or she 

should take action immediately and call the bank. Ignoring the 

problem will only make things much worse. Banks are always willing to help people, but waiting too long to begin the conversation 

will limit the options that are available. 

Also, be wary of anyone who claims they can fix your credit for 

you. It is likely a scam. 

Mr. Chairman, there is no better time than during the holidays 

to get back to the basics of good money management. The ABA 

Education Foundation is a great source for financial education materials published in English and Spanish. And because education 

on the use of credit is so important, our foundation has a standalone website called Get Smart About Credit with tips and links to 


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education materials at many of our member banks. Through the efforts of thousands of bankers every year and the work of the ABA 

Education Foundation, we hope to make a difference in helping 

people become more financially secure. 

Together, we can make the holidays even brighter. Thank you, 

and happy holidays. 

Senator CARPER. Thank you, Ms. Cripe. Terrific testimony. 

Thank you. 

Mr. Taylor, Mr. Art Taylor, Mr. H. Art Taylor, you are on, my 

friend. Thank you. 

STATEMENT OF H. ART TAYLOR, PRESIDENT AND CEO, BBB 

WISE GIVING ALLIANCE 

Mr. TAYLOR. Thank you, Senator Carper and Senator Dole and 

Senator Menendez. I appreciate you inviting me to share my remarks with you today. 

I actually represent an organization that is very concerned about 

not only the consumer, but also the donor. On the consumer side, 

the Better Business Bureau system operates 129 affiliates around 

the country that are places where consumers can go to find out information on credible business. There are places where consumers 

can go if they want to know where to go to complain about a particular practice. So we are very happy that we are able to operate 

those things. 

In addition to that, the BBBs work very closely with the FTC. 

We publish joint press releases on various things we find. We police advertising practices through our national advertising review 

programs. We follow things like poor rebate programs and identity 

theft problems that consumers encounter. 

We have a program that deals with online shopping fraud 

through our BBBOnline program. And we are one of the largest institutions that are dealing with problems that people have with 

lemon cars. And so our programs do a lot with that, as well. 

On the charity side, I happen to have the good fortune of being 

CEO of the Wise Giving Alliance, which is very concerned with 

charity issues. And we operate a program that evaluates 1,200 of 

the Nation’s largest charities and the charities that people want to 

know most about. 

I am happy to say that most of those charities meet all of our 

standards. In fact, about 70 percent of the charities meet our 

standards. Unfortunately, and I will say very unfortunately, we 

still find that 30 percent of the organizations that we reach out to 

fail to provide us with information. And we think this is something 

that the Nation needs to know about and the country really needs 

to push charities to participate in self-regulatory programs. 

In fact, the Wall Street Journal reported on December 10th that 

charities should do more to make themselves open to the public. 

There were two individuals quoted in that article that you should 

know about. Diana Aviv, head of Independent Sectors, which is the 

organization that is the trade association for charities, said that if 

charities do not participate in self-regulation programs, essentially 

they are saying that they should behave in any way they want to. 

And Brian Gallagher, Chief Executive Officer of the United Way 

of America said that we get irrational push back from charities 


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that are not concerned about participating in self-regulatory programs. So there is a concern about this issue of self-regulation. 

But people ask me all the time, how can we be better givers? And 

so I thought I would come to you today with a few tips that we can 

offer donors on how to be better givers. First, donors should try to 

avoid giving a gift in response to excessive pressure. One of the 

ways to do that is by planning. We think it is very important for 

people to plan their gifts throughout the year. Develop a budget, 

talk to the family about the issues that are most important to 

them, and then take time to figure out which charities are best 

able to accomplish the goals they have in mind. We think by planning ahead of time, they can avoid being subjected to unscrupulous 

charity behavior. 

We also think that how an individual charity solicits you is an 

important clue to whether that charity is above board or not. We 

find that charities that are above board do not generally use telemarketing as a fund-raising technique because they know telemarketing is a very expensive form of fund-raising and that most 

of that money will end up with the telemarketer. In some cases, 

upwards of 80 to 90 percent of the money you give will remain with 

the telemarketer. 

We also know that good charities do not use spam e-mails on the 

Internet. You are unlikely to get an e-mail from a reputable charity, particularly if you have not had any contact with them. So 

avoid responding to Internet e-mails soliciting funds. 

We also know that people who come to your door asking for your 

dollars are probably not people you should give to. We also know 

that people should be aware that events that charities host, while 

they can be very good in terms of explaining the issues that charities are dealing with, they can be costly and people need to know 

that. 

Someone mentioned earlier today—I think it was you, Senator 

Menendez—that cause-related marketing is increasingly an important issue for donors to pay attention to. We have a standard that 

requires charities to make certain disclosures at the point of sale 

so that people know exactly how much of their purchase price is 

actually going to end up with the charity. We also think it is important that they know how long these campaigns will run, so that 

when they are buying the product they have not purchased it outside of the campaign period and, in fact, none of the money will 

end up with the charity. 

So these are just some of the things that we think people should 

know about. And of course, on our website give.org, there are 

many, many more things that people can do to help police themselves so that they can make their gifts more effectively. 

Thank you. 

Senator CARPER. Well, I cannot remember the last time sitting 

and having a panel of four witnesses come forward and every one 

of them said something that I found was personally helpful, and I 

suspect helpful to everybody in this room and anybody else who 

might be able to follow this hearing. Those were just really exceptional testimonies and we thank you for them all. 

I would like to start, if I could, with Ms. Tyler. NASAA has highlighted problems that are associated with these free lunch semiVerDate Nov 24 2008 02:13 Feb 03, 2010 Jkt 050365 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 E:\HR\OC\A365.XXX A365

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nars that you spoke about. I have seen those. When I get those in 

the mail or I hear about them, I think what do they serve? Should 

I take my wife for a date? Just before the presentation starts 

maybe say where are the restrooms, and we will slip out and go 

see a movie. 

What is being done to address any abusive sales practices involved annuity products that are facilitated by the free meal seminar? Whenever I hear of these free meal seminars, I am reminded 

there is no such thing as a free lunch and maybe it is still true. 

Ms. TYLER. Thank you, Chairman Carper. That is precisely right. 

There is no such thing as a free lunch. Our recent exams with the 

SEC and FINRA did show that all of these events are designed to 

sell product. And very often, the products being sold are complex, 

high fee, high commission paying products such as variable and equity indexed annuities. 

Securities regulators are placing a special emphasis on dealing 

with these seminars through education efforts, through examination of firms that are conducting these types of seminars, and then 

through aggressive enforcement actions when we do find wrongdoing. 

So it is really a three-pronged process: exams, enforcement, and 

education. 

Senator CARPER. Thank you. 

As a regulator, what are you going to help educate investors 

about safe investing? You just talked to us a little bit, but do it 

again. 

Ms. TYLER. Certainly. Almost all state securities regulators do 

have a financial education division within their State agency. 

Those divisions are staffed by education professionals who do develop and disseminate education programs in their jurisdictions. 

All our education programs cover the full range of ages, starting 

with programs for our youngest citizens. We get into the school districts and deliver financial education in partnership with our teachers. 

For example, in North Dakota every year we do a teacher training academy where we bring in 100 teachers and we spend 4 days 

educating them on how to deliver financial education to their students. And we do it in a way that allows them to incorporate financial education into their existing curriculum. We need to make it 

very easy for them to do this. And we think that starting with our 

young people is really an important place to start. 

We also, of course, have programs for our working age constituents and our seniors, as well. So our programs run the full spectrum. 

Just as an example, in the last 12 months, through a little over 

1,000 different education events, we have reached over 180,000 investor constituents in our various jurisdictions. 

Senator CARPER. In Delaware, if someone had a question, wondered about the merits of a particular charity, a group that is 

hosting a luncheon seminar, they can call the Delaware help line. 

There are folks at the other end of the line who answer the phone 

and, through computer-aided prompts and so forth, they can help 

direct an inquirer generally to the right source of information. 


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In a lot of States have folks who do your job, some appointed by 

the Governors, some by secretaries of states, I presume maybe 

some by the legislatures or by cabinet secretaries. I do not know 

if we have any that are independently elected. 

But how would citizens in 50 States be able to find your equivalent in their State? 

Ms. TYLER. It is an excellent question and I am glad you asked. 

The State government website portal would lead you to the State 

securities regulators agency. 

Also, through the NASAA website, NASAA.org—— Senator CARPER. NASAA, not N–A–S–A? 

Ms. TYLER. No, the other NASAA, N–A–S–A–A, NASAA.org will 

lead you to a link to every one of our securities regulatory jurisdictions. 

Senator CARPER. All right, good. 

Tell us what are some of the more prevalent investment schemes 

that are going around today. This will be my last question and 

then I will kick it over to Senator Menendez. 

Ms. TYLER. Thank you. Certainly, the Ponzi scheme perpetually 

recreates itself, whether it is fronted by real estate or oil and gas 

scams or whatever is prevalent in the headlines on any given day. 

The Ponzi scheme structure, whereby you are simply taking money 

from new investors and using it to pay what appears to be a return 

to earlier investors. But most of the money goes into the promoters’ 

pockets and typically offshore. That is a scam that is—we are perpetually dealing with, typically run more so by unregistered individuals. 

In the registered world, we do deal very frequently with unsuitable recommendations being made to our investor constituents. 

Again, the complex, high fee, high commission paying products that 

may be unsuitable for investors with shorter time horizons or limited tolerance for risk. 

Senator CARPER. All right, thanks very much. 

Ms. Smith, we are going to have a second round of questions and 

I will come back and ask a question or two of you, Ms. Cripe, and 

Mr. Taylor. 

But for now, Senator Menendez. Thanks very much. 

Senator MENENDEZ. Thank you, Mr. Chairman. I, too, want to 

thank all of you. You had some pretty good testimony to give insights to people and I appreciate that. 

But I would like to turn, and I will open the question to those 

who might want to answer it. But I want to pursue two lines of 

questioning, some that I raised in my opening statement. One is 

about the rebates. 

It seems to me that we have all heard these stories about these 

consumer rebates. I actually went through one just to see what the 

process was like. After 33 years of public service, being an attorney, I thought this would be relatively easy. And I found hurdle 

after hurdle to try to achieve—the time and effort I put in to get 

the rebate, I am not quite sure is worth the dollar amount. 

But wouldn’t you agree that these rebates are pretty intentionally complex and, in essence, the companies bet on the fact 

that, in percentage terms, most people will not ultimately pursue 

the rebates or succeed at it? Anyone who wants to answer. 


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Mr. TAYLOR. Yes. We find that increasingly companies are offering rebates that they realize consumers will never come back and 

respond to, they will never turn in the rebate card. In some cases, 

they tell the consumer that the rebate is not even available to them 

until they have held on to the product for a certain period of time, 

in which case the consumer actually forgets about the fact that 

they have a rebate and they never get to the point to which they 

actually turn the rebate in for response. 

I think you are absolutely on to something, and clearly I think 

more should be done to try to encourage companies to offer these 

rebates right away or to simply discount the product as they are 

planning to right away, so that the consumers are not left holding 

on to these certificates that they never get anything in return for. 

Senator MENENDEZ. You know, I look at these rebates and if you 

do not have the original copy, if you miss the window of opportunity in which to submit it, if you cut out the wrong number, if 

the date does not match up, you are likely to be out of luck. 

Mr. TAYLOR. That is right. 

Senator MENENDEZ. And I do think that consumer, in part, are 

lured to making a purchase that they might think twice about. But 

if I can get $50 back and that product now seems a lot more either 

within my reach or something that I desire but maybe could not 

quite afford, but the $50 makes all the difference in the world, then 

we are bringing a universe of consumer to purchase a product that 

they might otherwise choose not to. 

Do you think that would be a fair statement? 

Mr. TAYLOR. I do, and I think our advice to consumers would be 

to avoid purchasing products that offer rebates that come down the 

road or that entice you to buy something. I think most consumers 

need to understand that today a rebate does not really amount to 

much, and that you should plan on spending the amount that you 

paid for the item minus the rebate, without ever actually cashing 

in on that rebate. Price it according to what the price says on the 

item and not minus that rebate. 

Senator MENENDEZ. I think we could actually—there is nothing 

wrong with luring a consumer legitimately to a product. But if that 

is your intention, then ultimately why not just then, once you have 

lured them to consider purchasing the product because of a rebate, 

give them the rebate at the counter instead of subsequently. 

Mr. TAYLOR. That is right. 

Senator MENENDEZ. So we will have to look at that. 

The other thing I want to talk about is I saw this New York 

Times article today, and I appreciate, Mr. Taylor, you referred to 

the issue that I talked about, embedded giving. It says charity 

share from shopping raises concern. There is a section here that is 

emblematic of what my concern is. ‘‘Sometimes charities—’’ this is 

quoting from the article ‘‘—do not even know that they are supposed to be receiving donations. For instance, some beneficiaries of 

an embedded giving program in a holiday catalog from Barney’s 

New York found out that they were listed only after they were contacted by The New York Times. The World Wildlife Fund, a major 

charity that works to preserve and protect animals in the environment, was among them. Its Senior Vice President was disconcerted 

to learn that his organization was among a number of charities 


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named as beneficiaries of items bought from Barney’s Have A 

Green Holiday catalog. Unfortunately, just like Barney’s shoppers 

were in the dark as to how or if Barney’s and the manufacturers 

will fulfill their commitment to donate a portion of the proceeds of 

these projects to WWF.’’ 

Now that is not to say Barney’s will not. I do not know that they 

will or not. I am going to subscribe good intentions to them. 

But it seems to me that there should be some standards here, at 

least that—No. 1, that charities should buy into it. These charities, 

whether it be the American Red Cross that our colleague chaired 

for a while, or whether it be the World Wildlife Federation or others, they have good name. They have credibility. They give people 

a sense of all right, this is an entity that does good work. And to 

have their names be used without their permission, at least as a 

minimus of standards, seems to me to be problematic. 

With your experience, how do you feel about that? 

Mr. TAYLOR. I totally agree with you, and that is why we have 

established a standard for how charities should deal with cause 

marketing arrangements with businesses. We say that the charity 

should know right up front how much money it is going to get from 

each purchase and there should be a duration stated so that the 

consumer knows also if they are going to be purchasing a product 

after a certain time if the campaign is still on, and if there is a 

maximum or a minimum that a charity is going to get over the life 

of the campaign. 

But this does not deal with the problem that you are talking 

about which is charities, in many cases, do not even know that a 

company has used their name in a cause-related marketing approach. And if they do not even know, they cannot even go to the 

company and insist that the company operate in accordance with 

the standards that we have asked them to operate with. 

And consumers are sometimes out in the cold because they do 

not know how much will actually go to that particular charity. And 

some businesses like this—I am not going to say Barney’s—but 

some businesses like this, because they can attach their product, 

in some cases their not very good products, not their best products, 

to a name of a charity that is big. 

The Red Cross is one organization that is used a lot in this. I 

can tell you that they have done an enormous amount to clean up 

the activity in their organization with regard to this. They will 

send out cease and desist to businesses and they are an example, 

I think, of what other charities are going to have to begin to do to 

police this. 

Some charities are actually under pressure because they feel that 

they are going to get a little chunk of money from this arrangement. And so they are not as fast to hold the companies to a particular standard. But we think that charities should be pressured 

to do it. And in the end, it is going to be better for all charity endeavor. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

I look forward to pursuing this so that good tidings does not become bah, humbugs. 

[Laughter.] 

Senator CARPER. Well said. 


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Ms. Smith, Ms. Cripe, Mr. Taylor, a question for you, if you can 

help me with this. I am going to go home tonight and I will open 

up my mailbox, or my wife will have already picked up the mail 

and have it inside. And I will look through—not just Christmas 

cards, there will be a lot of those, I suspect. But I will find a whole 

lot of appeals from charities, a number of whom I have supported 

in the past and some of whom I have not. 

What I do is I set them aside and just before Christmas, maybe 

the weekend before Christmas, go through a huge stack and decide 

which ones I have given to before, we have given to before, which 

ones we will be able to support. 

It would be helpful to know for us, and I suspect maybe for other 

families who set their requests aside for end of year giving, to 

know what portion of the money raised for—dollars raised by a 

particular charity, how much actually goes to administration and 

how much actually goes to whatever cause that the charity supports. 

Can you give us some tips on how to make that determination? 

Mr. TAYLOR. I suppose I should try to answer that question for 

you. We have a standard that requires charities to spend no more 

than 35 cents on administration and fund-raising, 35 percent of everything they spend in a particular year. And believe it or not, 

most charities that we evaluate operate within that guideline. 

In fact, what we found is that there are more problems with 

charities that fail to meet other standards. And so the problem is 

not that people are supporting charities that spend too much on 

admin. The problem is that they falsely think that by supporting 

a charity that only spends a little bit on administration, that they 

are actually supporting a good charity. In fact, they may not be. 

And in many cases, they may not be. And so—— 

Senator CARPER. Could you just build on that a little bit? 

Mr. TAYLOR. Sure. An example is that we find that only 12 percent of the charities we evaluate operate outside of our administrative cost standards. But overall, one-third of all of the charities we 

evaluate do not meet standards. So they may not have boards that 

operate. They may have boards that have conflicts of interest. They 

may be paying their board members. They may be lying on their 

solicitations. There could be any number of things that we monitor 

that these charities are doing wrong. 

And yet, if you just follow how much they are spending on administrative costs, you will not know that these are things going 

on inside of these organizations. 

And charities are very good at masking their administrative 

costs, which most people do not know. And the tax returns that 

they file, the 990 tax returns, are not very strong in requiring that 

they disclose exactly how much they are spending on admin. 

So this is one of the biggest areas I think people are getting in 

trouble over when they are dealing with charities. 

Senator CARPER. All right. Thank you for that. Those are some 

good points. 

This will be a question for Ms. Cripe and also for Ms. Smith. I 

noticed that you included in your testimony some brochures or really tip sheets with your testimony. I think, Ms. Smith, I think you 


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had, in your testimony, tips for online shopping that I thought was 

especially helpful. 

I am just going to go back to your testimony on tips for online 

shopping. Just give it again verbatim. I just thought it was just excellent. And then I am going to ask you and Ms. Cripe a related 

question. 

Ms. SMITH. Thank you, Senator. The tips include always investigate the seller. Never use part or all of your Social Security number as a password. Pay by credit card. Keep a record of your transaction. And always turn off your computer when you have finished 

shopping. 

Senator CARPER. Thank you. 

I wish I could get my son to turn off his computer before he goes 

to school or leaves for the day. 

For Ms. Cripe and for you, Ms. Smith, if you have could go back 

to some of the tips that you shared with us, that would be much 

appreciated. 

Ms. CRIPE. Certainly. I think one of the important things this 

time of year are the tips on gift cards, and I will not reiterate them 

all. But be sure that you buy them from a reputable source and you 

look at the fine print to see if there is a penalty for not using that 

card immediately, and to check out the fee structure. 

I think most importantly for me, from an educational foundation 

standpoint, is preparing a holiday budget. And that includes your 

charitable giving. As you said, it is so easy to want to give to everyone that sounds like it is a good cause, but that should be part of 

the family budget for holidays and for all year long. How much of 

our efforts and, in fact, our educational materials that we take into 

the schools include teaching the kids about charitable giving and 

helping them discern what is a good charity and saving a little bit 

of their expenditure always on some charity. So that is a good 

thing. 

Along the lines of preparing that holiday budget, avoiding impulse spending and avoiding those extra costs that we do not think 

about. We think about only gifting during the holiday season. 

And really, the financial safety tips are about awareness and 

being alert. I saw someone yesterday here in Washington give her 

credit card and stick it in her pocket. Well, if I had been a pickpocket, I would have just sidled up to her and taken that right out. 

I found people leaving their credit cards laying around. Many people carry their Social Security numbers or their cards in their wallet or their purse. That is not a good idea, because if your purse 

gets stolen or your wallet gets stolen, the thief has everything they 

need then to steal your identity. 

So it is very important just to stay alert. It is a simple thing. 

Senator CARPER. Say that last couple of sentences again. 

Ms. CRIPE. I think it is very important this time of the year, and 

always, to stay alert. It is very simple to do that. 

Senator CARPER. But go back a couple of sentences before that. 

Ms. CRIPE. Okay, not carrying the Social Security number in 

your wallet or your purse. 

Senator CARPER. That is it. 

Ms. CRIPE. You really do not need to carry it around with you. 

There is very little need for that. If someone were to take your 


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purse or wallet, they have got your Social Security number and 

your credit card numbers and perhaps your drivers license. Then 

they have everything they need to steal your identity, and we do 

not want that to happen. 

Senator CARPER. I see a number of people in the audience nodding their heads. 

Ms. CRIPE. And please, please, do not write your PIN number for 

your debit or ATM card on the little envelope we give to you to 

keep it in. 

Senator CARPER. With respect to debit cards, I understand that 

people are using debit cards in increasing numbers. I have also 

heard—and that is true in our family, as well. I understand actually that debit card purchases may exceed credit card purchases 

today, or at least they are pretty close. 

I have heard recently some concerns about security aspects of 

debit cards. I was told be careful when you use your credit cards 

for purchases. Now you are hearing a similar kind of concern for 

debit cards. Can you comment on that at all? Any tips for us? 

Ms. CRIPE. Yes. Be very careful when you are entering your PIN 

number. You will notice sometimes when you are in a line, if you 

are at a retail store, that people kind of try to inch you along. Just 

put your hand up so they cannot—there are shoulder surfers, if you 

will, that will try to read your number as you punch it in. And I 

could not do it, but they apparently are very good at it. And protect 

that number if you are using your PIN code. 

A signature is safer, too. Do not use it if those two things are 

not required. 

And as Ms. Smith said, when you are shopping on the Internet, 

use a credit card. It is much easier to protect yourself on the Internet using the credit card versus the debit card, and you do not 

have to—on our tip sheet, we have got some ways to tell if a site 

is secure or not. So that is, again, some information that is very 

important. 

And it is really hard to tell sometimes. But if there are 

encodings, if there are passwords that you need to set up, keep 

those in mind when you are shopping on the Internet or using a 

debit card. 

Senator CARPER. Thank you. 

How long have you been doing this, in terms of providing advice 

to folks in these kinds of forums? 

Ms. CRIPE. At least 30 years, ever since I have been in banking 

because that is what we do every day. 

Senator CARPER. All right. This is a question that I am not going 

to ask it yet, but when we get to the end of the hearing—which 

will be fairly soon—the last question I may ask you is just to think 

back on the advice that you have given us here today and, looking 

back over your years of providing useful advice for consumers. And 

I want to ask each of you to give us your single best idea. I am 

not going to ask for your top 10. I am going to ask you for your 

best tip, particularly for this time of year, for consumers. So just 

be thinking about that, if you will. 

Ms. Cripe, looking ahead to the next holiday season, is there anything that you want to—actually, looking forward to the future, is 


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there anything that you might want to stress for consumers to 

plan, not necessarily for this holiday season but for next year? 

Ms. CRIPE. It is never too early to start planning for next year. 

Something that I think is hard for all of us to do is a forced savings 

plan. We have the best of intentions but we all know that that $5 

goes to a cup of coffee versus putting it in the bank to save it for 

the next holiday. Many banks, mine included, believe it or not, still 

have what is called a Christmas club or a holiday club, where the 

consumer gets a coupon book and they make a deposit every week. 

And it’s just a reminder that they need to put that $5, $10, $25 

in so that in November they get a check and they can spend more 

of their money with cash versus credit. 

And really, if they start doing it early, they do not even really 

notice it is missing. It is maybe one—the latte effect, if you will— 

one cup of coffee a day. And it will give them a nice start on the 

next holiday season. 

Senator CARPER. And do folks do that? 

Ms. CRIPE. Yes, they do. 

Senator CARPER. Is it a pretty stable business? Is it growing? Is 

it coming down? 

Ms. CRIPE. It is probably not a growing business because it is 

something that is more known to those of us who have been around 

a long time and we probably need to find a way to reach the kids 

on that kind of program, which is more of a standardized savings 

program for them because it is a great program and it allows people to save money at the holidays. 

The other thing I would add—— 

Senator CARPER. Let me interrupt. I remember, as a kid growing 

up, how my mom would go to the store and buy something on layaway and she would have to make payments on a regular basis 

until finally, just before Christmas, it would be paid off and she 

would pick it up. 

Ms. CRIPE. Right. And this is even better. You are putting your 

money away and then, when you make your list of what you want 

to buy, you have got the money to do it. 

Senator CARPER. Good. All right. 

Mr. Taylor, if I could come back to you, what would you say is 

the most important thing that a consumer can do to avoid being 

taken by questionable appeals during the holidays. 

Mr. TAYLOR. I think it is a mindset, Senator. What we want to 

do is get people to appreciate that they are their best defense 

against an unscrupulous charity. No matter what the IRS does or 

a State charity regulator or watchdog groups can do, we are all 

somewhat limited by what we can do. 

Consumers have to appreciate, donors have to appreciate that 

they would not just go into an automobile storefront and buy a car 

without doing any homework. And you cannot give to a charity 

without doing some investigation. But we do. We get a letter in the 

mail. We like it. And we tend to give right away to that charity. 

But that is, I think, the easiest way for us to be taken by an unscrupulous charity or, not even as bad as that, give to a charity 

that may not be positioned as well to solve the problem that they 

want solved. There may be another charity out there that is better 

able to address the problem that they want to have addressed. 


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So I think it is a mindset. People have to understand that just 

because an organization asks them for money, does not mean they 

should give without doing some investigation up front. 

Senator CARPER. All right. Are there any kinds of charities that 

come to mind for you that maybe are especially in need during the 

holiday season? 

Mr. TAYLOR. Well, this year, interestingly, the food banks are 

charities that are under some stress. They will tell you some of the 

reasons for that. But I am understanding that there is a need for 

Americans to support food banks and that there are overwhelming 

numbers of Americans that are going to bed hungry every night, 

especially children. And so this is something that I do not think 

Americans would be comfortable with if they knew it. And I know 

it is something that the food banks are trying to get more exposure 

about. 

Second, I hear that social service organizations could use help, 

organizations that are in the business of helping people get homes 

and, because of so much going on now with the mortgage industry, 

shelter is going to be an important question for the country to deal 

with. 

Senator CARPER. My staff and I worked at a food bank earlier 

this month and found it very rewarding. We also got colds. It was 

pretty chilly. 

Mr. TAYLOR. Well, I hope you did not find a longer line this year 

than you might normally find at the food bank. 

Senator CARPER. There is a real economy going on here because 

one of the amendments that I am joining with Senator Harkin and 

Senator Murkowski in offering to the farm bill, which is on the 

floor today, is an amendment dealing with school nutrition. They 

are trying to combat youth obesity. On the one hand, we know we 

are a Nation that is out of shape, we are overweight in many cases. 

And yet, we have folks that are still in great need. 

I think part of it is maybe people are just eating the wrong kinds 

of foods, too. 

Ms. CRIPE. I am sure you are aware that many of the food banks 

depend on farm bill food products to carry out their mission. And 

a lot of them are very concerned that if the farm bill does not go 

through in the numbers that they are looking for, that they are 

going to have problems feeding people. 

Senator CARPER. We also, my staff and I, we only have three 

counties in our State. But we volunteer for the Salvation Army kettles. And I must say it is gratifying to see how many people dig 

in. They do not just put in quarters or nickels or dimes. They put 

in real money. And it is very, very gratifying to see that. 

I think what I would like to do is just go back to that last question that I talked about earlier. This is what we call a pitch well 

telegraphed. But I want to come back and ask you to maybe, if you 

would give us your one best tip. If folks do not remember anything 

else walking out of here, if they have been listening or watching 

the hearing, just one great idea for people to keep in mind. 

Ms. Tyler, I am going to ask you to lead us off. 

Ms. TYLER. Thank you, Chairman Carper. 

I would say the single most important thing to do when approached with an investment solicitation is ask for written inforVerDate Nov 24 2008 02:13 Feb 03, 2010 Jkt 050365 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\A365.XXX A365

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mation, research the investment opportunity independently, and 

contact your State securities regulator. That contact literally may 

take mere minutes and it can save the investor a lifetime of financial hardship if they are subject to an investment that is actually 

a fraud and they do lose all their money. 

Their State securities regulator will be able to determine if the 

individual making the solicitation is registered to legally do business in your State. And the securities regulator will be able to determine if the product being offered is appropriately registered to 

be sold. And those are two key factors that an investor should 

know before making that investment decision. 

Senator CARPER. And again, I asked this before, but just to reiterate it, the best way to find out where you are or your counterpart 

is in other States? 

Ms. TYLER. I would highly recommend utilizing the NASAA 

website. 

Senator CARPER. NASAA, and we spell NASAA? 

Ms. TYLER. N–A–S–A–A, NASAA.org. 

Senator CARPER. And that stands for? 

Ms. TYLER. North American Securities Administrators Association. And that will lead you to a link to the securities regulator in 

your jurisdiction. 

Senator CARPER. Good. Thanks very much. 

Nancy Smith. 

Ms. SMITH. AARP would say, for consumers of all ages, the most 

important thing is to know who you are dealing with. That applies 

to online, in person, on the telephone, and certainly applies to everything we have been talking about here today, to purchases, to 

contributions to charities, to investment opportunities. Know who 

you are dealing with and verify. 

Senator CARPER. Good. Thank you. 

Ms. Cripe. 

Ms. CRIPE. I would say that the top thing to do this time of year, 

and probably the hardest, is to stop and take a deep breath before 

you do anything, before you make a purchase, before you use a 

debit or credit card, before you give to a charity. And that will stop 

a lot of scams and frauds and allow you to ask the question, if you 

pause before you buy something or do something. And if anything 

looks questionable, there are websites. Call your local bank and 

they will be happy to tell you if that sounds like a scam or a fraud. 

We, more than anyone, our job is to worry. And we do not want 

that to happen to you or to any consumer. And we do not mind that 

extra phone call. 

Senator CARPER. When folks call the bank, who should they ask 

for? 

Ms. CRIPE. They should be able to talk to anyone, because our 

front line people know as much as the chief executive about these 

things and we hear the stories every day as people come in. So all 

tellers, new accounts people, CSRs, whatever your particular bank 

might call them. 

Senator CARPER. CSRs? 

Ms. CRIPE. Customer service representative, should know how to 

help you or to whom to refer your question. 

Senator CARPER. Thank you. 


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Mr. Taylor, last word. You are batting cleanup here. 

Mr. TAYLOR. I believe—— 

Senator CARPER. I want you to drive this one out of the park. 

[Laughter.] 

Mr. TAYLOR. I think it is important, again, for people to realize 

that they have to defend themselves against charities. And they 

have to be the ones to hold charities accountable. If we continue 

to just give to organizations no matter what information they provide us, they will never improve and they will never get us to a 

point where we can count on all the charities out there to do the 

work that we really need them to do. 

So it is important, not only when you make a dollar contribution, 

it is important when you make a penny contribution, that you do 

some investigation and make sure that you are giving to a legitimate organization that is really trying to accomplish a mission. 

Senator CARPER. All right. Thank you. 

When I was a State Treasurer, I was the State bond issuing officer. And as Governor, I was bond issuing officer for my State, and 

would meet on a fairly regular basis with the major rating agencies, including Moody’s Investors Service, Standard & Poor, Fitch 

and others. 

And we would have to present our financials, where we are raising our money, where it is coming from, how we are spending our 

money, in an effort to try to get a better credit rating. 

I remember when I was elected State Treasurer, and Nancy 

Smith had been my campaign treasurer, Delaware had the worst 

credit rating in the country. We were tied for dead last with Puerto 

Rico. The folks in Puerto Rico were embarrassed with us, to be 

lumped with us. Delaware was the best in 1976, we were the best 

in the country in terms of overestimating revenue and underestimating spending. Nobody was as good as us at that. 

[Laughter.] 

All the way up to having the worst credit rating in the country. 

One of my happiest days as Governor was when we earned AAA 

credit ratings across the board, about 20 years later. 

But we had to make—we were scrutinized very closely by the 

rating agencies, as are others who issue debt. 

I wonder, are there entities out there that look at charities? You 

mentioned the importance of not just looking to see what percentage of a dollar that a charity raises do they actually spend on administration and do they spend on the causes that they are espousing, but what kind of other practices do they follow? Is there some 

entity out there that is doing this? 

It is really hard. I think of my mom, who is now deceased. But 

my mom, living in Florida in her 70’s in her home, and being 

bombarded until we got her on a do not call list down in Florida. 

But there are a lot of people, they are just ill-equipped to be able 

to do as you suggested, to depend on themselves. 

Mr. TAYLOR. That is why we have this service, Senator, that does 

that. We take a lot of the guesswork out of it by evaluating these 

1,200 organizations, the ones that are most in front of us, against 

20 rigid standards. And we tell people right away whether a particular organization meets those standards or not. And you can find 

out in our magazine, because we know a lot of seniors, in parVerDate Nov 24 2008 02:13 Feb 03, 2010 Jkt 050365 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HR\OC\A365.XXX A365

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ticular, do not want to go on the web. So we provide this free magazine to anyone who wants to get it, so that they can see whether 

these organizations meet these standards. 

And we also have our website, give.org—— Senator CARPER. Say that again. 

Mr. TAYLOR. Give, g-i-v-e, give.org, where you can go and get a 

full report on any one of the 1,200 organizations that we evaluate. 

So what you are talking about is happening. And a lot of the local 

Better Business Bureaus around the country do this on a local 

basis. So we are really trying to cover the landscape. 

We are not getting to every charity, of course. But we are getting 

to the ones that people ask us about and we are getting to the ones 

that are most in front of us. And I think that is important. 

Senator CARPER. When someone—what was it, give.org? 

Mr. TAYLOR. Give.org, yes. 

Senator CARPER. When somebody signs on to give.org, do they 

have to provide their Social Security number to get—— 

[Laughter.] 

Senator CARPER [continuing]. The information? 

Mr. TAYLOR. Actually, they do not have to provide any information. And you know, in some cases, we lose out because we would 

like to find out more about who is coming to our website. But we 

have a policy, and I think it is a good policy, that you can just 

come. We do not ask you any questions and you can remain anonymous, and that is good. 

Senator CARPER. All right. 

In closing, we spend a fair amount of attention in Delaware on 

financial literacy. Our State Treasurer, someone who did not succeed me but succeeded my successor, who has done a great job in 

focusing attention in our State. A number of State treasurers have 

taken this on as one of their causes, which is—for which I strongly 

commend them. 

As Governor, I presided over school reform in our State, a reform 

that continues to this day, and have done all 50 States. Among the 

things that we did was we established rigorous academic standards 

of what students should know and be able to do in math and 

science and reading and social studies. We started requiring tests 

be given, objective tests, to measure student progress toward those 

standards. We provided for accountability for students, for schools, 

for educators, even for parents. 

We hear a lot as we prepare here, probably early next year, to 

take up reauthorization of No Child Left Behind, concerns about 

the States where teachers teach to the test. I say that should not 

be a problem or a concern as long as the tests reflect the academic 

standards of what kids are expected to know and be able to do in 

math and science and English and social studies. And as long as 

the tests are reflective of the standards, that is not a bad thing. 

But I think somewhere along the way, as we have put a lot of 

focus on getting ready for the State test in math or science or reading or social studies or some other course, that we do not have the 

opportunity, we have not figured out how to link for our students 

educating them, getting them ready for some of the challenges that 

we were just talking about here, to be smart investors, to be smart 

consumers, to be smart donors. We have got to find a way to marry 


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the two together so that we can make relevant in the world that 

students are going to live in when they graduate how to invest 

wisely, how to handle their money smartly, how to figure out who 

to give their donations to at the end of the year, where to buy a 

gift card in a way that makes sense, whether or not we ought to 

take advantages of these rebates and how to be wise about doing 

that. 

There has got to be a way to marry it all together so that the 

students can still make progress toward meeting their academic 

standards when they take those tests, but at the same time they 

will come away with skills, not the skills and knowledge they need 

to know to pass a test, to do well on a test, but will help them to 

behave in ways throughout their lives that will be to their benefit 

and that of their families. 

Again, I will finish where I started. Sometimes we have hearings 

around here and I leave and I say well, just check that one off. But 

this has been just a really valuable hearing. And personally, I 

speak for myself and for my colleagues who were able to come here, 

and those who could not. There are others who might benefit from 

our publicizing this and putting you in the spotlight today. I am 

just real grateful to have been here and to have heard you. 

I also want to just thank each of you for what you do with your 

lives and for the good that you do with your lives. On behalf of all 

of the people who are going to be helped by your testimony here 

today and by your work who will never have a chance to say thank 

you, I want to say thank you. 

And with that, our hearing is adjourned. 

[Whereupon, at 11:58 a.m., the hearing was adjourned.] 

[Prepared statements supplied for the record follow:] 


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