Released: March 31, 2015
Consumer Action INSIDER - April 2015
Table of Contents
- What people are saying
- Did you know?
- New auto insurance module steers drivers in right direction
- Now we’ll know the story behind the complaint
- Hotline Chronicles: When on-time mortgage payments not good enough
- OneWest merger with CIT is not in the consumer interest
- Free credit reports available without Social Security numbers
- Class Action Database: Smelly laundry action settled
- Weighing in on prepaid card protections
- About Consumer Action
What people are saying
Our girls enjoyed the information that [Consumer Action’s Audrey Perrott] presented to us on money management. I look forward to working with Consumer Action again in helping to develop smart, strong young ladies. — Yvonne Nunn, Girl Scouts, Troop 33184, San Leandro, CA
Did you know?
You can still contribute to an individual retirement account (IRA) for 2014. Contributions must be made by April 15, 2015. Eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2014, the limit is increased to $6,500. Learn more at ConsumerAffairs.com.
New auto insurance module steers drivers in right direction
Consumer Action has just launched a new suite of educational materials designed to encourage drivers to carry adequate auto insurance and help them make wise policy choices. “Auto Insurance: The basics” prepares consumers to determine what types and amounts of coverage they need, shop for insurance, evaluate insurers and quotes, manage their auto insurance costs (including, if necessary, reducing premiums), file a claim, and obtain help if they have trouble getting coverage or are dissatisfied with how their claim is handled.
Despite a slow, slight downward trend in the number of uninsured drivers on the nation’s roads, there are still nearly 30 million vehicle owners who drive without any insurance. In California, one of the states with the biggest uninsured motorist problem, an estimated 4.1 million drivers “go naked”—industry speak for forgoing insurance entirely. Many others drive with inadequate coverage.
According to a report from the Pew Charitable Trusts, the main barrier to auto insurance is cost. For anyone struggling to make ends meet, food and rent will always trump insurance. Yet without insurance, even a relatively minor loss could wipe out a low-income family’s meager savings or leave a household’s breadwinner without transportation to get to work.
“Auto insurance shouldn’t be a luxury, though for many low-income households it is just that,” said Ken McEldowney, Consumer Action’s executive director. “Our new materials not only explain the nuts and bolts of auto insurance, they guide consumers through the steps of shopping around for the best value, comparing quotes and reducing premiums—so that adequate coverage can be within the reach of households who’ve had to do without.”
Included in the materials is information about California’s Low Cost Auto Insurance program, an underutilized state program that enables qualified drivers to obtain the minimum required coverage for a fraction of the cost they would pay on the open market. The timing of this module launch couldn’t be better: With the Jan. 1 implementation of AB60, the state’s undocumented immigrants now have access to the Low Cost Auto Insurance program, which requires applicants to have a valid California driver’s license. (AB60 requires the California Department of Motor Vehicles to issue a driver’s license to applicants who meet all other requirements but are unable to submit proof of legal residency in the U.S.)
The auto insurance module includes a consumer fact sheet, a 30-page backgrounder written in question-and-answer format, and a 16-slide PowerPoint presentation and companion curriculum, including class activities, to be used by community educators. All materials are available for free download, in English, from the Consumer Action website now (click here). The fact sheet is being translated into Spanish, Chinese, Vietnamese and Korean (downloads available in May), and all languages will be available in print this summer.
Funding for this module and trainings comes from a court cy pres grant.
Now we’ll know the story behind the complaint
Consumer Action, along with dozens of consumer, privacy, civil rights, community and fair lending groups, had long pressed the Consumer Financial Protection Bureau (CFPB) to provide public access to the story behind complaints filed by consumers.
Last month advocates received the welcome news that the CFPB has agreed to empower consumers to publicly voice their complaints about financial products and services. “This will turn the complaint system into a highly valuable tool for consumers who want to prevent problems and for advocates who want to identify widespread harmful practices,” said Consumer Action’s Ruth Susswein, who chaired a committee at Americans for Financial Reform pressing for the change. “We applaud the CFPB’s decision.”
The complaint database, which allowed the public to see the types of complaints but not the details, debuted in July 2011 and accepts complaints on many consumer financial products, including credit cards, mortgages, bank accounts, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection and payday loans. As of March 1, the Bureau had handled 558,800 complaints, with mortgages and debt collection being the most frequent topics.
By giving the public access to complaint details, other consumers will be forewarned, understand more thoroughly the issues people complain about and use the information to evaluate marketplace practices. What’s more, consumers who are shopping around will have the ability to learn from the first-hand experiences of others before making a major financial decision.
Now, consumers will be able to learn:
- Specifically what kinds of problems other customers have been experiencing;
- If there is a troubling pattern of complaints from a particular business or industry, or few complaints about others; and
- Whether a company has a good record of resolving complaints.
Susswein gave the following examples of the benefits:
- Consumers can learn whether a billing dispute with a credit card issuer is a problem with a merchant or card company and where the process broke down.
- Those who search the database can discover if foreclosures persist because a mortgage servicer continues to misplace key documents, and identify emerging trends about how lenders treat homeowners with damaged credit when they seek new loans.
- Student borrowers can review and evaluate student loan complaints to learn if a particular servicer or lender has a habit of not resolving borrower concerns.
Consumers must “opt-in,” or affirmatively agree, to share their stories. The CFPB will not publish the complaint narrative unless the consumer checks a consent box.
At this point, demographic data about complainants will not be made public. “While Consumer Action strongly supports robust protection of personal information, we look forward to working with the Bureau to find ways to provide public access to racial, ethnic, age and gender data that can reveal harmful trends in the financial marketplace, including discriminatory treatment that can devastate communities of color and underserved consumers,” said Susswein.
Companies will have the opportunity to respond to consumer complaints by choosing from a list of “structured responses.” Consumer complainants will still privately receive a detailed company response.
To file a complaint with the CFPB, click here.
Hotline Chronicles: When on-time mortgage payments not good enough
Donnie* from Maryland contacted Consumer Action’s hotline last month with a complaint about Green Tree Servicing, a company that services mortgages on behalf of lenders. He told us that although he pays his mortgage on time each month, Green Tree has called his home demanding “the current month’s payment. We have never been delinquent with the monthly payment to Green Tree and we are not inclined to pay two months’ payments to them at one time.”
Donnie, who describes himself as African American, said that he feels Green Tree “has singled us out in some nefarious way” for this treatment.
After some research, we were able to tell Donnie that he was not being singled out—complaints about Green Tree crowd the Internet complaint boards and 5,647 people have filed complaints about the company with the Consumer Financial Protection Bureau (CFPB). While the company’s description of itself is jargon-y—“We provide credit-risk owners with a full-range of innovative, portfolio management solutions that help them maximize the performance of their asset-backed loan portfolios, including fee-for-service, shared risk and owned risk options”—we figured out that this is a servicer assigned to hound people who for whatever reason have been labeled as risky.
As to Donnie, it appears that he paid his mortgage before the 1st of the month and the company applied his payment to principal instead of satisfying the upcoming month’s payment. As of the 1st, the company began to hound him for that month’s payment.
Going forward, we suggested Donnie keep a folder with all company correspondence as well as a log of all phone conversations, including the person’s name, time of call and what was said. We suggested he pay the company from his bank or with a check during the time frame required—not before or after—and that he make sure that his payment is notated with the payment date.
Customers of Green Tree should carefully monitor their accounts. Many people had ended up at Green Tree when their mortgage lender transferred their loans. Based on complaints filed with Consumer Action, posted on the Internet and presented on a Facebook page called Victims of Green Tree Servicing, these are some issues to be aware of:
- The company forces borrowers to use its own insurer, frequently after borrowers’ own proof of insurance is misplaced.
- Tax and insurance escrow accounts are calculated incorrectly, missing money or are not paid on time to the property tax entity or insurer.
- Complainants noted that the company dragged its heels when the borrowers requested mortgage modifications.
- Rudeness and harassment were common aspects of contacting customer service.
- Additional principal payments were instead allocated to interest.
- Calls from Green Tree seeking payment were made before the window for payments without late fees had closed. Typically mortgage payments can be made from the 1st-16th of the month without penalty.
*Not this consumer’s real name.
OneWest merger with CIT is not in the consumer interest
Consumer Action testified at the Federal Reserve in Los Angeles on Feb. 26 about the proposed bank merger between CIT Group and OneWest. The proposed merger was the subject of an intense form-letter campaign organized by OneWest’s chief executive that bombarded the Federal Reserve and the Office of the Comptroller of the Currency with more than 2,000 form letters from supporters. Opponents, on the other hand, collected 15,000+ signatures against the merger.
CIT Group is a major New York commercial lender. OneWest Bank, headquartered in Pasadena, CA is a federal savings bank created in 2009 by investors who purchased the assets of lender Independent National Mortgage Corporation (IndyMac), one of the largest bank failures in American history.
The hearing aired the banks’ performance under the Community Reinvestment Act (CRA) of 1977, which requires banks with government-insured deposits to serve the needs of low- and moderate-income customers. At the hearing, Consumer Action’s Joe Ridout spoke against the merger. Ridout, who also submitted written comment to the Federal Reserve on the merger, outlined some of Consumer Action’s concerns:
- Housing counselors rank OneWest as one of the worst loan servicers to work with, and its own employees have alleged that it was an unwritten rule that they should reject as many mortgage modifications as possible.
- CIT stiffed American taxpayers for the $2.3 billion it received in TARP bailout funds by declaring bankruptcy in 2009.
- OneWest, despite receiving generous public subsidies of its own, has failed to provide a CRA plan that demonstrates its willingness to reinvest in the communities from which it takes its deposits.
- The merger would create another “strategically important” (“too big to fail”) institution, which would incentivize more reckless risk-taking as it has in the past.
It has been alleged that some organizations that spoke in support of the merger were funded by the bank to gain agreement for their support. “Quid pro quo arrangements such as this distort the purpose of public hearings and threaten their integrity,” says Ridout.
The federal government requires that bloggers disclose financial arrangements between companies and reviewers that may influence the review but public testimony is not subject to the same conflict of interest rules. “Regulators must do more to investigate these transactional relationships and keep payola from distorting our public hearing process,” says Ridout.
The Federal Reserve decision about the CIT/OneWest merger is pending.
Free credit reports available without Social Security numbers
A consumer contacted Consumer Action to let us know that although she has used credit in the past and knows she has a credit history, she has never attempted to obtain a copy of her credit report. Her reason? She doesn't have a Social Security number and didn't think she would be able to obtain a credit report, let alone request free copies of her report from the three national credit bureaus. This is not an isolated attitude, said Consumer Action’s Nelson Santiago, who noted that even some credit bureau representatives said, wrongly, that reports are not available for people without Social Security numbers.
Consumer Action serves many community-based organizations that work with immigrants who may not have Social Security numbers. Santiago, a Consumer Action outreach manager, has written past INSIDER articles addressing how immigrants who lack traditional IDs can take steps to become part of the financial mainstream. Such individuals can open checking and savings accounts and obtain credit cards and other types of loans using ITINs (Individual Taxpayer Identification Numbers) as well as other alternative forms of ID.
The three major credit reporting agencies—Experian, TransUnion and Equifax—compile information about consumers’ credit accounts, payment history, outstanding debts and other financial and public records information. This information is compiled whether or not the consumer has a Social Security number. Creditors themselves, known as the "furnishers" of credit information, can and do issue consumer credit without requiring Social Security numbers, and provide data about these borrowers to the credit bureaus.
The question as to whether someone without a Social Security number can get a copy of his or her credit report is answered clearly at AnnualCreditReport.com, the only federally recognized website for obtaining free credit reports. Experian's website also addresses the subject in its Ask Experian blog.
Despite this, consumers who call a credit bureau to ask about obtaining a credit report without a Social Security number might be discouraged if they don't reach the right person. In one of Santiago’s initial attempts to get more information from a bureau, he says a representative suggested he contact the Social Security Administration for assistance. A rep from another bureau told him that a consumer without a Social Security number would not have a credit report, although after he questioned that assertion, the representative went back to the drawing board and provided information on how to order reports without a Social Security number.
One of the frequently asked questions posted at AnnualCreditReport.com explains that an ITIN cannot be used on the website to request a free annual credit report—the site only accepts Social Security numbers. The explanation adds, however, that an ITIN can be used if the report request is submitted to one of the three nationwide credit bureaus by mail. Once the company receives the request, the company will verify the consumer's identity using its own procedures.
An Ask Experian blog post also helps dispel the myth that a Social Security number is needed to have a credit report. The entry states, "...you don’t need an EIN, ITIN or even a Social Security number to have a credit report. A Social Security number is very helpful when compiling your credit history because it is the only identifier uniquely assigned to each U.S. consumer [...] However, if a Social Security number is not reported for you, Experian will rely on other identification elements to compile your credit history."
Consumers without Social Security numbers who want to obtain copies of their credit reports should write directly to the three major credit bureaus at the addresses below. We recommend that consumers indicate they are requesting their free annual reports and include their (1) name, (2) date of birth, (3) current and previous address, and (4) ITIN (particularly if the ITIN has been used to obtain credit).
If consumers experience problems in obtaining their reports, they should file complaints with the Consumer Financial Protection Bureau (click here or call 855-411-CFPB), and share their complaints with Consumer Action via our Help Desk web form (en español) or by phone (415-777-9635).
To request credit reports from the three national credit bureaus, consumers can write to the following addresses:
Equifax Credit Information Services, Inc.
P.O. Box 740241
Atlanta, GA 30374
P.O. Box 2002
Allen, TX 75013
P.O. Box 1000
Chester, PA 19022
Class Action Database: Smelly laundry action settled
Class actions involving alleged violations of the Telephone Consumer Protection Act that were settled by Wells Fargo and Life Time Fitness are among seven new cases added to the Consumer Action Class Action Database during March.
One notable class action is Cobb v. BSH Home Appliances Corporation.
The plaintiffs filed a class action against BSH, claiming that the company’s Bosch and Siemens brand 27-inch front-loading clothes washers were “negligently, deceptively and improperly designed, manufactured, marketed, and sold,” leading mold and/or bacteria to grow inside the washers. It’s charged that the washers did not work as advertised and that clothes cleaned in them gave off unpleasant odors.
BSH denied the allegations but agreed to a settlement to avoid, it said, the burden, expense and risk of continuing the lawsuit.
If you are the original purchaser of the washer, you may be eligible for a $55 cash payment. You are eligible to receive a share of the settlement even if you no longer own your Bosch- or Siemens-brand washer. Claim Deadline is Thursday, May 28, 2015. Click here for more information.
Weighing in on prepaid card protections
Use a credit or debit card to make a purchase and you’ve got strong legal protections if the card is stolen or if an error occurs. Unfortunately, the same doesn’t hold true for prepaid cards, although most companies offer voluntary fraud protections and dispute rights to customers.
As the market for prepaid payments continues to flourish, with a growing number of consumers using prepaid cards as a bank account substitute, the need for systemwide legal consumer protections grows. The Consumer Financial Protection Bureau (CFPB) has proposed rules to ensure that prepaid card balances are safe and account costs and risks are clear.
Recently, Consumer Action submitted comments to the CFPB in support of its proposed prepaid rules. And we added a few additional recommendations, including:
- Consumer protections against loss, unauthorized charges and for error resolution should apply to all prepaid cards and all prepaid mobile payment systems.
- FDIC insurance should cover all prepaid cards.
- Fees should be clear and transparent, and available on the outside of prepaid product packaging.
- Overdraft fees and declined transaction fees, for attempting to use the card when there are insufficient funds available, should be banned.
- Mandatory arbitration clauses and class-action bans should be prohibited.
- Access to account balance information (by phone, online or at an ATM) must be free and unlimited.
Consumer Action also supports the CFPB proposal to consider any form of overdraft on a prepaid card as a line of credit, triggering an issuer requirement to evaluate the customer’s ability to pay. The underwriting for applicants offered a line of credit would be similar to what is required for people who apply for a credit card, overdraft line of credit or other loan. In our comments, we recommended that credit lines be extended on a separate card covered by existing credit card regulations (Regulation Z).
The Bureau’s proposed rules contain a requirement for prepaid cardholders to register their accounts in order to qualify for the right to dispute a charge. This is intended to prevent criminals from defrauding the system.
Consumer Action will report on the final rules when the CFPB makes them available.
To read Consumer Action’s full comments, click here.
Consumer Action also joined over 100 organizations in asking the CFPB to ban mandatory arbitration clauses from consumer credit card, cellphone, car loan, student loan and other financial contracts. The CFPB recently released a study on mandatory arbitration, which revealed what consumer advocates have long been arguing: that forced arbitration requirements and bans on class-action lawsuits are unfair and harmful to consumers.
To see the CFPB’s full report, click here.
Click here to see the group letter requesting a ban on mandatory arbitration clauses.
About Consumer Action
Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.
Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and nine topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.
Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,500 community-based organizations. Outreach services include training and free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.
Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulation and legislation by taking positions on dozens of bills at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.
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