Ask Dr. Per Cap

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. Nimiipuu Community Development is happy to share this column as partner with Native Financial Learning Network funded by Northwest Area Foundation.

Jobless Benefits Fraud

Dear Dr. Per Cap:

I received a 1099-G that lists over $3,000 in unemployment benefits paid by the state in 2020.  I didn’t receive any unemployment last year.  What should I do?


Working through the Pandemic

Dear Working,

Report this as fraud through your state unemployment agency website immediately.  There’s been a huge surge in unemployment insurance fraud nationwide.

These scams are connected to increased unemployment benefits that many states paid to workers who were laid off or furloughed during the pandemic.  With lots of stimulus money available and states struggling to process an unprecedented number of claims, due diligence wasn’t always up to speed.  Criminals took advantage and filed for unemployment using stolen identities.  Crooks steal the benefits – victims get stuck with the bills.

In addition to identity theft you could also be on the hook for taxes owed on the amount listed on that 1099-G, the IRS form to report Certain Government Payments; i.e. unemployment insurance.  A lot of folks don’t realize that jobless benefits are usually considered taxable income – even the expanded benefits related to Covid-19.  The good news is that the latest relief bill the President signed in March allows the first $10,200 of unemployment benefits per spouse to be tax exempt for households that made less than $150,000 last year.

However, that doesn’t carry over to all state income taxes only federal.  Currently thirteen states that include Colorado, Idaho, Minnesota, Hawaii, and New York aren’t excluding unemployment compensation from taxes.  So if you live in one of these states pay extra close attention.  

The IRS recommends people do not include income from bogus 1099-G’s on tax returns and to request corrected forms from your state.  Should you actually need to file for unemployment in the future, this issue could come back to haunt you if you don’t have corrected forms.  The federal tax deadline along with most state tax deadlines has been extended to May 17th so you’ve got an extra month this year to get this all squared away.

It is also a good idea to check your credit report, if you haven’t done so recently, for suspicious activity and consider a credit freeze to prevent someone from applying for a loan or credit card in your name.  

Return Fraud

Dear Dr. Per Cap: 

Someone approached me online with an offer to buy my Amazon account.  It seemed kind of sketchy so I didn’t reply.  Why would someone want to buy an account when they can just open their own?


Pueblo Shopkin

Dear Pueblo Shopkin

People buying Amazon accounts is a shady practice linked to a fast growing scam called “return fraud.”  It’s especially targeted to online retailers for whom it’s often cheaper to let customers keep wrong or damaged items than to process a return.  But before I delve into details I need to add a warning label to this column – Don’t try this at home!

For anyone living on another planet we’re in the midst of a giant E-commerce boom.  This past holiday season the postal service and delivery companies handled a record three billion packages, a modern economic phenomenon being dubbed “Shipageddon.”  Well, now that Santa has set sail back to the North Pole a lot of that merchandise is being returned.  Like the size XXL sweatpants he left me under the tree.

Hey Santa – super baggie clothes haven’t been cool since the aughts when Obama wisecracked “Some people don’t want to see your underwear and I’m one of them.”

If you misuse the following information I’ll call the elf cops, for real.  Return fraud can be shockingly easy to get away with.  A person just orders something online then says it never arrived or was defective.  Not a huge stretch considering how much stuff delivery drivers leave on the porch these days.  The scammer pushes for a refund hoping the seller won’t want the goods sent back.  This can happen with merchandise that costs a lot to ship relative to its price or with bulky stuff that’s difficult to ship.

Naturally, businesses are on to this scam.  Moreover, the policy of letting customers keep refunded merchandise, known in the industry as field scrapping, is nothing new.  It’s just a lot more common now with so many more returns.  Amazon uses computer algorithms to detect return fraud which are more likely to flag recently opened accounts.  And there you have it.  There’s a whole secondary market for dishonest folks looking to buy older, well established accounts to run returned merchandise scams.  

You did the right thing by ignoring that solicitation.  Here’s wishing you a safe, happy, and honest New Year!

Short on Change

Dear Dr. Per Cap: 

Is it true the government is going to do away with small coins?  


Thrifty Nickel

Dear Thrifty Nickel

While it might appear that pennies and nickels are more out of date than a Ronald McDonald vs Hamburglar commercial – don’t expect them to disappear any time soon.  In fact one of the less talked about impacts of the global pandemic is a shortage of coins in the U.S.

With limited in person banking and fewer open retail businesses a lot less coins are being recirculated.  That old Maxwell House can full of loose change under the bed isn’t helping matters.  Contrary to all those cool mobile payment apps and contactless debit cards there are still plenty of folks who use coins in Indian Country and beyond.  Think car washes, laundromats, and all those toll roads in Oklahoma.

There are strong arguments both for and against discontinuing small coins.  While it’s well documented that the U.S. Mint spends more to make pennies and nickels than the coins are even worth, the Mint actually makes huge profits on dimes, quarters, and dollar coins which more than offset losses on smaller coins.

Critics aren’t impressed.  They say small coins are more hassle then they’re worth and point to our hockey loving neighbors to the north.  Canada nixed its penny in 2012 and Queen Elizabeth gets along just fine without her mug stamped on copper plated steel.  They round all purchases to the nearest five cents and call it good.

Penny fans fire back with theories like eliminating the coins would set a bad precedent by demonstrating a lack of confidence in the U.S. financial system.

In recent months we’ve seen a big push for people to deposit coins at banks or cash them in at coin kiosks like you see at the grocery store.  Moreover, coin production has ramped up at U.S Mint facilities like Philadelphia and Denver.

When the pandemic finally lets up the coin shortage will probably ease up too.  After that I honestly don’t know what the answer is.  I agree pennies seem like kind of a waste until you learn that Bloomberg reported in 2016 that $62 million dollars in pennies are lost every year in circulation.

If that doesn’t inspire you to ransack the couch cushions I don’t know what will.  And besides who doesn’t love a spiral wishing well coin funnel that supports a good cause?  I’m getting dizzy just thinking about it!

Family Bargain

Dear Dr. Per Cap: 

My sister makes her living as an artist and I buy her paintings for gifts.  However, she always wants to give me a deal which makes things uncomfortable.  I think she’s insulted when I try to pay more.  What’s a respectful way to tell her to charge me full price like any other customer?  I can afford it!


Guilty Conscience

Dear Guilty Conscience,

This is a common issue among Native artists and craftspeople.  Maybe it speaks to the generous and selfless nature of many Native folks.  Maybe it goes back to the old saying “Blood is thicker than water.”

I’ve experienced the family bargain dilemma with artist friends and relatives too.  Fortunately, I’ve found a pretty simple fix – don’t focus on money and don’t haggle over price.  Just buy the painting, jewelry, pottery, beadwork, or other handcrafted item at the “all my relations” price.  However, follow this up with a really nice thank you note and a gift card to the person’s favorite restaurant.  Still feel like you’re making off like a bandit?  Throw in a box of donuts or a plate of homemade cookies.

Trust me – this works like a charm.  The artist won’t feel insulted but they will appreciate your acknowledgment that they hooked you up with a special deal.  For some reason a non cash gift is just a lot easier to accept than the extra money.  And don’t fret if the gift costs less than the discount.  It’s the thought that counts.

By the way this also works great with friends and relatives who repair stuff on the cheap – brake pads for the minivan, backed up sewer line, cattle fence repair.

Keep supporting Native artists and craftspeople!

Gift Card Exchanges

 Dear Dr. Per Cap: 

I got a bunch of gift cards for Christmas.  Some are for stores I don’t shop.  What’s the best way to exchange them?


Too Many Cards

Dear Too Many Cards,

With so many people social distancing and staying away from stores, purchases of gift cards were way up this past holiday.  Plastic or electronic, many people are stuck with gift cards they won’t use.

Fortunately, there are options for unloading unwanted gift cards.  A first step is to check out online gift card exchanges.  Spoiler alert – there are a ton of them so do your homework.  

Most exchanges are third party businesses that take a cut for connecting people looking to buy, trade, or sell gift cards.  Pay close attention to fees and red tape.  Some stores have kiosks where you can exchange gift cards too.  Either way check reviews to make sure you’re dealing with a reputable exchange that doesn’t charge more than 15% of a card’s value to take it off your hands.

Also, steer clear of consumer-to-consumer platforms like eBay and Craigslist.  Both are loaded with gift card listings where buyers and sellers can deal directly.  However, you face a much bigger risk of fraud so I don’t recommend them.

Interestingly, many businesses count on their gift cards to be only partially used or not at all.  In fact it’s estimated annually over $3 billion of unredeemed gift card balances end of booked as revenue by the businesses that issued them.  Gives a whole new meaning to the term “double dipping.”

Don’t let that happen.  If you find yourself with a small balance on a gift card, states such as Montana, California, Oregon, and Washington have “cash back” laws that require stores to pay a card holder for any balance under a certain amount, although it’s usually only between $5 and $10.   But even if your state doesn’t have a cash back law it doesn’t hurt to ask a store for a gift card balance refund anyway.  You might be pleasantly surprised.

Here’s another cool hack.  Amazon lets customers use small balances on competitors’ gift cards to buy their gift cards.  Since digital Amazon gift cards can be purchased in any amount, a few small gift balances applied to an Amazon account can up to a nice sum.

A final little known fact – some states will claim the balances of gift cards that have been lost or sitting around a few years.  They might try to track down consumers or list the funds as unclaimed property.  If you’re bored some evening check out for an interactive map listing every state’s gift card fees and redemption laws.

Geez, I wonder if people that give gift cards realize how much of a hassle they can be.  I think I’ll take up knitting and give socks next Christmas instead of gift cards.