AFI Training Toolkit for Money Smart Module #6: Keep It Safe

The AFI Resource Center has developed this series of training toolkits to supplement the FDIC’s Money Smart curriculum. The kits provide additional lessons on key asset building topics, and they are designed for use with participants in Individual Development Account (IDA) programs. The tools in this toolkit supplement FDIC’s Module #6: Keep It Safe, which helps participants learn about laws and regulations that help keep consumers and their financial resources safe. The AFI toolkit before you, which is available for download, includes:

• An overview of how Money Smart Module #6 is organized. 

• AFI Training Tools that can be used to teach Money Smart #6 to different Target Audiences (e.g., people without formal banking relationships, people with existing banking relationships, young people).

To get the most benefit from this Toolkit:

• Order a complimentary copy of the FDIC Money Smart Curriculum and become familiar with its contents. 
• See the key terms and definitions used in the AFI Training Toolkits. 
• Access the Training Techniques and Terminology used in the AFI Training Toolkits.

Overview of the Money Smart Module #6: Keep It Safe

The objectives for this module are that at the end of the module, participants will be able to:

• Identify laws and regulations that protect their deposits.
• Identify laws and regulations that protect them when applying for a loan.
• Guard against predatory lending practices and identify theft.
• Describe how to be financial prepared for disasters.

The delivery time for this module is 120 minutes.

Step-by-Step Overview of the Module¹

The module begins by providing an overview of the module objectives (listed above) and referring participants to the Participant Guide. Participants are asked to complete the “Before-the-Training” column of the “What Do You Know?” form found at the end of the Participant’s Guide.

The module continues with facilitator’s explaining that the information in the session is general information only and that detailed information or places to go for more information can be found in the Participant Guide.   The session continues with brief overview of several consumer protection laws:

• Truth in Savings Act

• Electronic Funds Transfer Act

• Expedited Funds Availability Act

• FDIC Deposit Insurance Regulations

The session continues with scenarios involving bank customers. Participants are asked to determine on which consumer protection law the person in the scenario relied.

The difference between deposits protected by FDIC insurance and those non-deposit investment products such as mutual funds, annuities, stock, and bonds that are not protected by FDIC insurance is discussed. The instructor reviews tips on how to protect oneself when investing in non-deposit products.

Next, the facilitator presents lending laws that protect consumers when applying for a loan or credit. These include:

• Equal Credit Opportunity Act
• Truth in Lending Act
• Fair Credit Reporting Act
• Fair Debt Collection Practices Act
• Fair Credit Billing Act

The session continues with the review of a scenario followed by questions about the lending laws that might apply. 

The Truth in Lending Act disclosures are covered next with a focus on finance charge and annual percentage rate or APR. Both terms are explained with an example. After laws that protect rights during the loan application process are covered, the instructor covers:

• What happens if a consumer is denied a loan.
• Rights after loan is accepted by the consumer.

Next, the facilitator explains the Equal Credit Opportunity Act (ECOA) by examining another brief scenario. Participants are asked to brainstorm a list of prohibited topics (things lenders by law may not ask about) during the loan application process. Next, the facilitator reviews the list of prohibited items  covered in the ECOA including: race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, or exercise of rights under the Consumer Credit Protection Act. 

The facilitator then explains the difference between illegal discrimination and legal discrimination, legal discrimination is the fact that someone can be denied a loan if they don’t have enough income to repay the loan or are not old enough to legally sign a contract.

The facilitator explains that in the case of loan denial, a summary of notifications required by the Fair Credit Reporting Act is provided. The facilitator then explains through use of a scenario continued from earlier the steps consumer should take if they believe they have been denied a loan based on prohibited bases.

The Fair Debt Collections Practices Act (FDCPA) and the Fair Credit Billing Act are summarized, and the section concludes with a review of the complaint letter found and the check list for resolving complaints by writing regulators found in the Participant Guide.

The session continues with a review of additional lending laws that may provide additional protection, including: Servicemembers’ Civil Relief Act, Real Estate Settlement Procedures Act, Fair Housing Act, and Consumer Leasing Act.

Next, the facilitator introduces the requirements for financial institution to protect financial information and “privacy notices,” including the contents and types of privacy notices. The facilitator also explains the concept of “opting out” or limiting the promotions a consumer might receive.

The module then continues with a discussion of subprime and predatory lending. Participants are asked to generate a list as a large group of ways to avoid predatory loans. The Participant Guide has a complete list for additional tips that the facilitator is instructed to cover if not mentioned by the participants. Participants are then asked to determine “what is wrong with this offer” by reviewing a sample predatory loan offer found as a handout supplement to the Instructor’s Guide.

The module concludes with a discussion of protecting identity. It covers:

• What to do if your wallet or purse is stolen,
• What to do if your identity is stolen, and
• Ways to avoid identity theft.

Participants are then asked to complete the “After-the-Training” column of the “What Do You Know?” form found at the end of the participant’s guide and the evaluation also found at the end of the Participant Guide.

AFI Training Tools for Money Smart Module #6: Keep It Safe

The following training tools supplement FDIC’s Money Smart Module #6: Keep It and may be used for different target audiences of IDA participants including people without formal banking relationships, people with existing banking relationships, young people, and new Americans (immigrant, refugees, and asylees). 

• 6.1 The Reason for Consumer Protection Laws – Explains the rationale for consumer protection laws and describes who is responsible for ensuring that consumer rights have not been violated. This exercise, comprised of small group brainstorming and reporting back to the larger group, supplements the Money Smart module’s discussion of consumer protection laws. Target audience: people without formal banking relationships, people with existing banking relationships, young people, and new Americans.
• 6.2 Current Depository Protection Limits – Explains depository product protection limits, what is protected and what elements are not protected, and which agencies enforce protection laws. Using a large group task followed by a presentation, this exercise supplements the first segment of Money Smart Module #6.    Target audience: people with existing banking relationships and new Americans.
• 6.3 Regulator Soup – Describes the regulatory agencies tasked with ensuring the safety and soundness of the financial services industry. Using a participatory game, this exercise reinforces the purpose of various consumer protection laws and the agencies responsible for enforcing them.   Target audience: people with existing banking relationships and new Americans.
• 6.4 Recognizing Predatory Banking Practices – Provides an overview of various predatory banking practices and financial services and tips for avoiding these. Using a participatory role play followed by facilitated discussion, this exercise supplements the Money Smart Module’s discussion of predatory practices.   Target audience: people without formal banking relationships, people with existing banking relationships, young people and new Americans.
• 6.5 Credit Card Act—Provides an overview of changes in credit card company practices as required by the Credit CARD Act of 2009. This presentation and facilitated discussion supplements the Money Smart Module’s discussion of credit cards with updated information about the new Credit CARD Act. Target audience: people without formal banking relationships, people with existing banking relationships, young people and new Americans. Feel free to adapt these materials for your IDA participants. The AFI Resource Center welcomes feedback on the content or quality of these supplemental materials and exercises.

Purpose: To provide context for consumer protection laws for AFI participants.

Objectives: By the end of this session, participants will be able to:

• Explain the reason for consumer protection laws.
• List resources for more information about consumer protection laws.

Time Needed: 20 minutes.

Materials Needed: Flip chart or white board for facilitator; markers; flip chart for small groups; markers for small groups; tape.

Process: Facilitated Discussion (Part I); Small Group Brainstorming (Part II); Small Group Cumulative Reports to the Large Group (Part III).

Part I: Facilitated Discussion

Ask: How many of you have every heard the term “consumer protection laws”?

• For those that raise their hands, ask them to share which laws they have heard about.
• Write them down on a flip chart.

Ask: What does the term consumer mean?

• Write down responses on the flip chart.

Possible responses include:

• People who buy or use products.
• People in the economy.
• People who use things up.
• Citizens in the U.S.

Explain:

• Given the complexity of the economy in the U.S. there are many areas in which consumers need to be protected.
• Consumer laws are designed to protect consumers.
• Conversely, consumers must be responsible for themselves in the market place, too.

Ask: How are consumers expected to be “responsible” in the market place or the economy? OR What does it mean for a consumer to be “responsible”?

• Write down responses on the flip chart.

Explain:

• There are many examples such as:
  • Read agreements (i.e., credit card agreements or service contracts).
  • Keep records for appliances, etc.
  • Have insurance (renters if you are renting or homeowners if you own a home).
  • Buyer beware.

Explain:

• Consumer protection laws try to balance responsibility and protection. There is an expectation for consumers to behave responsibly but recognition that laws can help all parties better understand complex matters dealing with money and saving. In addition, some individuals and businesses may not always act in the best interests of consumers. Thus, there are laws in place to protect consumers.

Part II: Small Group Brainstorming

Instruct participants to get into small groups.

In small groups, ask them to think about their financial lives.

On a flip chart with a line drawn down the middle, have them brainstorm a list of what they think are some of the core responsibilities of consumers.

On the other side of the line, have them brainstorm a list of what they think are some consumer protection laws that are in place to protect their financial lives.

Give them 7 minutes to complete the process.

Part III: Small Group Cumulative Reports to the Large Group

Bring everyone back together as a large group. Have each small group report back on their brainstorming, including (1) what they define as responsibilities of consumers and (2) what consumer protection laws they know about. Groups should report back “cumulatively,” which means: no group repeats what has been previously contributed during a report out but, rather, focuses on adding new information and perspectives.

As each group reports, highlight (on the flip charts of the small groups) the consumer protections that will be covered in this module, which include:

• Truth in Savings Act
• Electronic Funds Transfer Act
• Expedited Funds Availability Act
• FDIC Deposit Insurance Regulations

Transition by explaining that the rest of the module will focus on understanding these laws or regulations as well as the counterbalancing responsibilities expected of consumers.

6.2 Current Depository Protection Limits

Purpose: To provide participants with current information (2009) about protected deposits.

Objectives: By the end of this session, participants will be able to:

• Name the agencies that protect deposits.
• Explain the current deposit protection limits.
• List the places to go for more information on these protections.

Time Needed: 15 minutes.

Materials Needed: Flip Chart or White Board and Markers; Handout Entitled “Deposit Protection Worksheet.”

Process: Large Group Exercise Using Nominal Group Process (Part I); Presentation or Facilitated Discussion (Part II).

Part I: Large Group Exercise Using Nominal Group Process

Write the following terms on a white board or a flip chart (2 flip chart sheets hung side by side to accommodate all of the self-adhesive notes):

• Savings Account.
• Certificate of Deposit.
• Checking Account.
• Money Market Deposit Account.
• Money Market Mutual Fund.
• Mutual Fund.
• Stocks.

Give participants small self-adhesive notes.

Ask: Go to the board and place one note next to each listed savings or investment vehicle that you know is without risk and is completely safe.

Explain:

• After participants sit down, comment on the distribution of the answers they gave (e.g., most common, least common).
• Actually all of the investment vehicles have some risk.
• While some are safer than others, there are limits to understand. 
• So, none of the savings or investment vehicles are without risk or completely safe.

Part II: Presentation or Facilitated Discussion

Distribute handout Deposit Protection Worksheet.

Ask or Explain:

Option 1: Explain: Review each savings or investment vehicle on the worksheet and explain where there is some risk and how deposits are protected. Use information from the below facilitator guide. [Note: This table is NOT intended for distribution to participants; only as a reference for facilitators.]

Option 2: Ask: Instead of just presenting the information, consider asking questions:

• Can anyone explain what a CD is?
• Can someone explain some of the risks that you may experience with money in a CD?

Saving and Investment Protections (Facilitator Guide)

	Definition	Risk	Protection	Agency Providing Protections
Savings Account	A deposit account at a financial institution (bank or credit union). Generally deposits earn interest. Money cannot be accessed by customer by writing a check. These are often called Share Accounts in credit inions.	Inflation Risk—rate of inflation may exceed returns on money. Fees can consume interest gains or principal depending on terms of the account.	Deposits up to $250,000 per type of account per individual until 1/1/14—then it will return to the $100,000 limit. NOTE: The $250,000 limit is permanent for some retirement accounts including IRAs.	FDIC for Banks as long as Bank is a member; look for the FDIC logo on bank information. NCUA/NCUSIF for Credit Unions as long as the Credit Union is a member; look for the NCUA/NCUSIF logo on credit union information.
Certificate of Deposit	Money deposited for an agreed upon length of time for a specific rate of return. Money withdrawn prior to end of term is subject to early withdrawal penalties.	Inflation Risk—rate of inflation may exceed returns on money. Liquidity Risk—the money is needed before the CD has matured. Interest Rate Risk—if rates increase, money will be locked at rate agreed upon in terms.	Deposits up to $250,000 per type of account per individual until 1/1/14—then it will return to the $100,000 limit. NOTE: The $250,000 limit is permanent for some retirement accounts including IRAs.	FDIC for Banks as long as Bank is a member; look for the FDIC logo on bank information. NCUA/NCUSIF for Credit Unions as long as the Credit Union is a member; look for the NCUA/NCUSIF logo on credit union information.
Checking Account	A deposit account at a financial institution (bank or credit union) that allows the owner to write checks against deposited funds. Sometimes deposits earn interest depending on balance or frequency of checks. These are often called Negotiable Order of Withdrawal Accounts or NOW accounts.	Inflation Risk—rate of inflation may exceed returns on money Fees can consume interest gains or principal depending on terms of the account.	Deposits up to $250,000 per type of account per individual until 1/1/14—then it will return to the $100,000 limit. NOTE: The $250,000 limit is permanent for some retirement accounts including IRAs.	FDIC for Banks as long as Bank is a member; look for the FDIC logo on bank information. NCUA/NCUSIF for Credit Unions as long as the Credit Union is a member; look for the NCUA/NCUSIF logo on credit union information.
Money Market Deposit Account	Deposit accounts that generally offer higher yields than other deposit accounts because of: Higher minimum balance requirements Limited number of monthly transactions Often used as a temporary holding place for funds awaiting permanent investment (down payment for a home, for example.)	Inflation Risk—rate of inflation mayexceed returns on money. Fees can consume interest gains or principal if balance falls below minimum required	Deposits up to $250,000 per type of account per individual until 1/1/14—then it will return to the $100,000 limit. NOTE: The $250,000 limit is permanent for some retirement accounts including IRAs.	FDIC for Banks as long as Bank is a member; look for the FDIC logo on bank information. NCUA/NCUSIF for Credit Unions as long as the Credit Union is a member; look for the NCUA/NCUSIF logo on credit union information.
Money Market Mutual Fund	Short term debt securities (those that mature in under 13 months); the average maturity of the investments in a fund must be fewer than 90 days. The Securities and Exchange Commission (SEC) provides oversight on the securities mix in these funds.	Generally these have been considered very low risk even though they have market risk exposure. However, in 2008, the share price fell below $1 (broke the buck). This was unprecedented.	From the fall of 2008 until September 18, 2009, these were guaranteed by the U.S. Treasury. This program ended, so while still generally considered safe, they no longer have the protection of the U.S. Treasury.	SEC (Securities and Exchange Commission); regulatory oversight on mix of securities in these funds.
Mutual Fund	A portfolio (collection) of stocks or bonds that is managed by a firm; the managing firm sells shares in the portfolio.	Market risk, which means the return will vary based upon changes in the investment market.	Only protects investors up to certain limits ($500,000 with $100,000 for cash) in the case of firm fraud.	SIPC (Securities Investor Protection Corporation), if the company (brokerage firm) is a member. SEC (Securities and Exchange Commission) –regulatory oversight to ensure no fraud, etc.