Friday Financial Five – February 28th, 2014

Friday, February 28, 2014

Dan Forbes, GoLocalWorcester MINDSETTER™

Finding savings in health care

A few years ago, the thought of saving on health care expenses did not seem feasible. Now, with a little bit of digging, consumers might be able to actually reduce health related costs from one year to the next. There is a shift to higher deductible plans, including pre-tax contributions to Health Savings Accounts, and lower monthly premium payments. On top of this, the Wall Street Journal has an excellent piece on the push for price transparency for health services provided. Consumers now shoulder more of a responsibility for the cost of their treatment. As with any type of shopping, the buyer needs price transparency in order to make an informed decision. Consumers shopping around can help create competition and push down the price of goods and services. Lower premiums coupled with downward pressure on the cost of services can then lead to yearly savings.

Delays in 401(k) contributions

Companies are attempting to reduce expense by moving 401(k) matching contributions to one time payments and away from coinciding with periodic payroll. This change may cause the employee to miss market growth or miss the match altogether if he or she is not with the company at year end. Employees may be unaware of deferral deadlines, simply expecting that contributions will be deposited within a reasonable time frame. The Department of Labor standard for companies is the 15^th business day following the month the money was withheld, though Safe Harbor plans or the company plan documents may have a different standard. As for company matches, the company can wait until filing the corporate tax return. Missing these deadlines may put the 401(k) plan itself at risk.

A government option in reverse mortgages

Mention a reverse mortgage to a senior and you’ll more than likely get some form of the evil eye. The product has long been considered expensive and difficult to fully comprehend. While there are private companies that provide them, there is also a government option through FHA lenders called the Home Equity Conversion Mortgage. For those over the age of 62 with the bulk of their net worth tied up in home equity, the option at least merits consideration, especially for those that would like to continue living in the house.

FDIC insured banks net over $150 billion in 2013

U.S. financial institutions continue to gain strength, according to a recent release from the Federal Deposit Insurance Corporation (FDIC). Last year, income topped $150 billion, including a $40 billion fourth quarter. Overall, loan loss provisions dropped by just over $8 billion as the housing market showed continued strength. There was also a sizeable drop in banks that were unprofitable, continuing the trend of improvement since 2009.

Bitcoin survives a rough week

Things are not exactly going smoothly in the world of Bitcoin. The Mt. Gox Bitcoin exchange in Tokyo collapsed this week, taking an estimated six percent of the virtual currency with it. The reaction so far has been mixed. There are those that see this as a cautionary tale of dabbling in a lightly regulated virtual currency, despite the value holding this week. Others, including some high profile investors, came out publicly saying this is simply the evolution of the trading environment. Meanwhile, regulators from across the globe will attempt to put policies in place to prevent an exchange collapse from happening again.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected] .

Related Slideshow: 10 Big Companies with Recent Major Security Breaches

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Epsilon

March 2011

Tens of millions affected

In March 2011, Epsilon, the world's largest permission-based email marketing service, announced that the names and email addresses of customers of Citigroup, TiVo, and many other U.S. companies, were exposed in a huge data breach. The hack affected names and email addresses stored in over 108 retail stores, major financial firms and non-profit organizations like College Board. At the time of the incident, Epsilon had more than 2,500 clients sending 40 billion emails annually.

Result: Epsilon notified clients of the breach on April 1. Epsilon's clients then notified their customers of the hack. Epsilon has stated that 50 clients were affected, but the exact number of names and email addresses has not been released. Computerworld.com estimated that "tens of millions" of people were affected.

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Sony

April 2011

77 million customers affected

In the spring of 2011, Sony was hacked through its through its PlayStation Network twice. The first security breach exposed customers' personal information to hackers, but not their credit card information. The second hack, disclosed in late April, did result in customers' credit card information being stolen. The pair of hacks affected 77 million people.

Result: Two weeks after the breach, Sony released a PlayStation 3 firmware update as a security patch. The firmware required users to change their password.

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Global Payment Systems

March 2012

7 million customers affected

In the spring of 2012, the credit card processor service Global Payment Systems discovered that 1.5 million credit card records had been stolen from its system. Additionally, roughly 5.5 million consumer records were compromised, bringing the total to 7 million.

Result: As a result of the breach, Global Payments was delisted until it could prove it was in compliance with security standards. In April 2013, the payment card networks returned Global Payments its client list after it proved it was compliant with security standards.

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Zappos

January 2012

24 million customers affected

In early 2012, the online retail store Zappos announced that it had been hacked, exposing the names, addresses, phone numbers, partial credit card numbers, and email addresses of 24 million customers.

Result: One day following the cyberattack, Zappos sent emails to all customers directing them to change their passwords.

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Adobe Systems

October 2013

152 million customers affected

In October, the computer software company Adobe disclosed that hackers obtained personal data for almost 38 million of its customers, including names, credit and debit card numbers, and expiration dates. In November, it was discovered that the hackers had posted the personal data of more than 150 million Adobe users.

Adobe Call Center: 1-800-833-6687

For more information, MA residents may contact the Consumer Protection Division at the Office of Attorney General at 617-727-8400 or by email at [email protected].

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Target

December 2013

110 million customers affected

In December, Target announced that 40 million customer accounts were hacked stealing encrypted PIN numbers, credit and debit card numbers, card expiration dates, and the embedded code on the magnetic strip on the back of cars. Additionally, 70 million customers' personal information was compromised.

Target Call Center: 1-800-440-0680

For more information, MA residents may contact the Consumer Protection Division at the Office of Attorney General at 617-727-8400 or by email at [email protected].

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Neiman Marcus

January 2014

1.1 million customers affected

In January, high-end retailer Neiman Marcus revealed more than 1.1 million customers were affected in hack. Between July 2013 and October 2013, customer payment cards could have been potentially visible to hackers. Additionally, 2,400 unique customer payment cards used at Neiman Marcus stores were subsequently used fraudulently.

Neiman Marcus Call Center: 1-888-888-4757

For more information, MA residents may contact the Consumer Protection Division at the Office of Attorney General at 617-727-8400 or by email at [email protected].

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Yahoo

January 2014

Up to 81 million U.S. users

Late last month, Yahoo disclosed that Yahoo's email customers may have had their passwords compromised through a third-party application. The web company recently identified a coordinated effort to gain unauthorized access to Yahoo Mail accounts, and notified RI Attorney General Peter Kilmartin. Upon discovery, the Company took action, urging users to reset passwords on impacted accounts.

Yahoo Call Center: 1-800-318-0612

For more information, MA residents may contact the Consumer Protection Division at the Office of Attorney General at 617-727-8400 or by email at [email protected].

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Michaels Stores

January 2014

Number of affected customers yet to be determined

In January, Michaels Stores announced that it is investigating a possible data security breach that may have led to customers' debit and credit card information being compromised. Michaels has more than 1,250 locations in the United States, including 29 in Massachusetts.

Michaels Stores Call Center: 1-800-642-4235

For more information, MA residents may contact the Consumer Protection Division at the Office of Attorney General at 617-727-8400 or by email at [email protected].

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White Lodging - Marriott, Hilton, Sheraton, Westin

February 2014

Number of affected customers yet to be determined  

This week, the hospitality company White Lodging Services announced that a data breach occurred at 14 of its properties including Marriott, Radisson, Renaissance, Sheraton, Westin and Holiday Inn franchises around the country. Compromised information may have included names printed on credit or debit cards, the actual numbers, the security codes and expiration dates.  

White Lodging Call Center: 219-472-2900.

For more information, MA residents may contact the Consumer Protection Division at the Office of Attorney General at 617-727-8400 or by email at [email protected].