Consumer Action INSIDER - December 2013

 

Table of Contents

 

What people are saying

The trainers [at Consumer Action’s Digital Dollars training] were awesome, they kept me entertained and yearning for more. I thought when it came to banking, I knew just about everything, but I was proved wrong in a great way. — Destiny J. Paul, Volunteers of America, Sacramento, CA

Did you know?

The U.S. Postal Service recently released its year-end financial report showing that postal finances continue to improve dramatically. USPS reported an operating profit of $600 million—its first since 2008. Unfortunately, the unprecedented Congressional mandate to “pre-fund” postal employees' retirement benefits for decades in advance remains a roadblock to the long-term fiscal health of the Postal Service. Read more ...

Shielding ‘dollar signs in uniform’ from exploitation

In November, Consumer Action participated in a workshop focusing on consumer protection for military servicemembers. Hosted by the California Endowment in its office in downtown Los Angeles, the conference brought together the military’s Judge Advocate General’s Corps (JAG), law enforcement officials and consumer advocates to identity and prevent fraud and predatory practices affecting servicemembers and their families. The California Consumer Affairs Association sponsored the event.

Military members and veterans are often the target of financial exploitation because of their military bonuses, steady pay and an obligation to repay debts under the Uniform Code of Military Justice (UCMJ).

Consumer Action’s Joe Ridout reports that a key topic of discussion was the Servicemembers Civil Relief Act (SCRA), the most important consumer protection available to active duty military.

Among other benefits, the SCRA allows an active duty military consumer to defer payments for 180 days on loans such as mortgages, credit cards or car payments. It also allows an individual called up for active duty to terminate property leases, auto leases and mobile phone contracts without penalty.

Ridout points out that the clock starts on protections under SCRA when servicemembers receive orders, not when they ship out.

A lesser-known law, the Military Lending Act, places a 36 percent cap on interest rates charged by predatory lenders (such as payday loan shops or auto title lenders). It also bans the use of mandatory arbitration in such contracts.

Another topic was student abuses by for-profit schools (vocational or “career education” schools) and how they disproportionately affect servicemembers.

For-profit colleges must follow what is called the "90-10 Rule," which means that no more than 90 percent of a for-profit college's revenue can come from Title IV federal student aid. The rule is in place to prevent schools from milking federal school loans without providing a meaningful education experience.

The Department of Veterans Affairs education benefit (GI Bill) helps servicemembers and eligible veterans cover the costs associated with getting an education or job training. However, federal veteran and military benefits are not included in the 90 percent, leading some schools to count GI Bill benefits as part of the 10 percent that should not come from federal funds. Consequently, military students are viewed as “dollar signs in uniform” and are heavily targeted by these often poor-performing schools, because for every servicemember enrolled, the college can take in federal aid from nine other students.

The problems arise when servicemembers (and other students) are not given the support to succeed in their studies, and often end up dropping out, yet still owe the student loans.

“The workshop introduced participants to some of the unique challenges that servicemembers face, and how advocates can work to defend their consumer rights,” said Ridout.

Prepping for success

Kelly Armstrong wants to help change the lives of young inner-city men. Knowing that one in six black males between 15 and 25 are out of school, out of work or incarcerated, Armstrong took these dismal statistics as a challenge when she founded Primed & Prepped, a hospitality management and culinary arts mentoring and job training program at the Bayview YMCA in San Francisco.

Armstrong, a longtime community financial educator who has attended many Consumer Action train-the-trainer events, invited Consumer Action’s Audrey Perrott to present some financial literacy basics to the young participants at Primed & Prepped. Armstrong, director of the program she founded, said Perrott offered “a fantastic presentation on money management for teens. It was insightful and really had the students thinking about money and how they spend it.”

Perrott presented excerpts from the MoneyWi$e Teens & Money module and engaged the students in interactive activities. She discussed wants versus needs, setting and prioritizing financial goals, tracking one’s spending, and the difference between gross and net pay. After introducing the benefits of banks and credit unions, she discussed selecting a financial institution, opening an account and controlling banking costs.

To illustrate these concepts, Perrott posted photos of “wants, needs and alternatives” and invited the students to discuss the images. “I asked them to help determine why I had flagged certain things as "wants” as opposed to needs,” said Perrott.

Exploring more reasonable—or free—alternatives to their “wants,” Perrott asked the students to think outside the box. She suggested free concerts, community movie nights and going to the library to read magazines and check out books, music and movies, etc. The young men suggested bringing one's lunch, walking (or taking public transit) instead of driving and playing sports as a form of entertainment and exercise.

Because most of the students will soon be seeking their first jobs, Perrott led the class through an activity in the Teens & Money module called “Jamal’s First Paycheck”. She followed up with the module’s “Check Writing Activity.” “Most of the students were unbanked,” noted Perrott. “The exercise empowered them for the near future, when they are wage earners and account holders.”

Perrott noted that many of the young men in the program are saving money but do not have an established relationship with a financial institution yet. Using the “Monica and Sara” exercise, she led the group in an examination of the fictional girls’ spending and saving habits. “The exercise was a good way for the kids to consider how extravagant spending can lead to financial ruin.” As the young people joined in the discussion, Perrott rewarded their participation with financial education games designed for teens.

At the end of the training, Perrott held a drawing for a $5 lunch gift card and shared ways for students to manage the costs of eating out by ordering water instead of a soft drink, using a coupon to purchase a meal or ordering the “daily special.”

For more about Primed & Prepped, read Armstrong’s blog. All Consumer Action educational training modules can be found on our Modules page.

Focus is on trade agreement at transatlantic gathering

Consumer Action’s Michelle De Mooy last month traveled to Brussels, the de facto capital of the European Union (EU), to attend the 2013 annual meeting of the Transatlantic Consumer Dialogue (TACD). The TACD, a consortium of consumer groups from the EU and the United States, meets annually in person and regularly by phone to monitor global policy affecting consumers.

This year, the TACD’s working groups are focused on the trade agreement proposed between the EU and the U.S., called the Transatlantic Trade and Investment Partnership (TTIP). The purpose of the trade agreement is to remove regulatory differences between the U.S. and European nations.

Fear anti-consumer policies

TACD members have been monitoring the progress of the trade agreement because of its potential impact on consumers. They fear that anti-consumer policies will be added to the agreement, weakening consumer, health, safety, privacy, environmental and other public interest policies on both sides of the Atlantic. For example, push-back in these areas could loosen safety regulations for food and toys, deregulate medical devices and turn back the clock on privacy—just to name a few of the potential impacts.

One flashpoint for TACD members in the Information Society subcommittee, to which Consumer Action belongs, is efforts by global companies to freely trade consumer data without restriction. The EU and the U.S. have long differed over how to regulate or legislate on data privacy concerns, and the issue remains up in the air in the talks. TACD advocates hold that data protection and privacy rules should be “hands off” during the trade negotiations. Without adequate oversight and transparency, any attempts to include data protections in the transatlantic trade negotiations easily could result in a significant weakening of consumer protections with little or no public input.

“Many companies would love to use the trade agreement as a way to loosen privacy on both sides of the Atlantic,” said De Mooy. “This would be especially harmful in Europe, as the EU is currently undergoing a major revision of its data protection framework. While we would welcome negotiations on common data privacy standards, such negotiations should be outside of the proposed TTIP negotiations. Otherwise, consumers on both sides of the Atlantic could be harmed.

Investor-state enforcement

Another big issue discussed among members of the TACD was the inclusion in TTIP of investor-state dispute resolution, which allows corporations to skirt domestic court systems and directly sue foreign governments for cash damages if they “impede” access to their markets with legislation, regulation or other action. Such provisions are not permitted in disputes with the U.S. and EU, which are governed by the World Trade Organization, but there is pressure to include them. Investor-state claims (or the threat of them) inhibit the ability of governments to protect their citizens.

Consumer Action has been a member of the TACD for more than a decade, attending meetings on both sides of the Atlantic and actively participating in drafting resolutions on consumer financial and privacy matters.

Click here to learn more about the TACD’s recent stakeholder forum to explore the impact of the new EU-US free trade agreement on consumer and other protections.

Momentum builds for expanding Social Security benefits

A growing number of voices are calling for Social Security expansion—and they’re beginning to turn the conversation around. Consumer Action is participating in a campaign with the Progressive Change Campaign Committee (PCCC) to reshape the debate around Social Security. The campaign is pushing back against proposed cuts to the crucial program and working to expand the benefits in coming years with efforts that include “scrapping the cap” on Social Security paycheck deductions above $113,700 in order to make everyone pay the same rate into Social Security.

Excitement at the campaign’s progress mounted on Nov. 18 when progressive leader Senator Liz Warren (D-MA) spoke on the Senate floor. “The absolute last thing we should do in 2013—at the very moment that Social Security has become the principal lifeline for millions of our seniors—is allow the program to begin to be dismantled inch by inch,” said Sen. Warren. “That is why we should be talking about expanding Social Security benefits—not cutting them. Senator Tom Harkin from Iowa, Senator Mark Begich from Alaska, Senator Sanders from Vermont and others have been pushing hard in that direction. Social Security is incredibly effective, it is incredibly popular, and the calls for strengthening it are growing louder every day.”

In July, the PCCC launched the campaign on MSNBC’s Ed Show. On the show, Senators Harkin (D-IA) and Begich (D-AK) discussed their Senate bills that would expand benefits by $452 per year for retirees at age 75 and $807 per year at age 85. The bills also propose using a more accurate cost-of-living adjustment.

By “scrapping the cap” on what higher wage earners pay into Social Security, the Harkin-Begich plan will pay for these benefit increases and leave trillions left over to extend Social Security’s solvency beyond its current $2.7 trillion surplus. Alan Grayson (D-FL), Mike Honda (D-CA) and over 40 members of Congress have co-sponsored House versions of the Harkin-Begich plan.

Over 649,000 progressives, including Consumer Action members, have signed on to the petition calling on Congress to expand Social Security benefits. If you haven’t already, sign the petition.

In November, Sen. Sherrod Brown (D-OH) announced his endorsement of Social Security expansion. On a national call, Sen. Brown said, “If we didn’t have Social Security, Ohio’s poverty rate for seniors would be 48 percent. Because of Social Security, Ohio’s poverty rate for seniors is 8 percent. It’s one of our nation’s best anti-poverty programs and has been for seven decades. It’s not a handout, it’s an insurance mechanism.”

The Washington Post reported that the “push to expand Social Security gains steam,” and Brown’s announcement was the top story on Talking Points Memo. Sen. Brown appeared on MSNBC’s The Rachel Maddow Show to discuss the momentum for Social Security expansion and how progressives are going on offense. Click here to watch.

Hotline Chronicles: Vocational school promises prove empty

Jenji* from Northern California contacted Consumer Action’s hotline to learn if she had any recourse against a vocational school she attended. She graduated in 2006 from a California-based “career education” school and was able to obtain a state Certified Phlebotomy Technician I (CPTI) license. Her education at the school, paid for with student loans the school helped her arrange, cost $16,408.56.

Jenji said her contract stated that any student who earned a perfect grade point average (4.0) would be “guaranteed” job placement. But Jenji never found a full-time, permanent job and has since fallen behind with her student loans. She attempted to remind the school of its commitment but was ignored. But she does hear from the school on a regular basis when they “harass” her about unpaid school loans.

Our hotline counselors advised Jenji to take the contract to an attorney to learn if there is any legal basic for a claim against the school. The National Association of Consumer Advocates (naca.net) is a good place to start. Under Find An Attorney, enter your state and chose Area of Practice: Student Loans. (You can leave the Last Name field blank.)

During the Obama Administration, there has been increased scrutiny and new rules for “for-profit” colleges and vocational schools such as Jenji’s. In an effort to fight the predatory practices of some for-profit colleges, the Department of Education issued “gainful employment” regulations in 2011 that would have cut off federal student aid funding to schools with high debt-to-income ratios and low loan-repayment rates—indicators that matriculation is not tied to job opportunity. However, an association of for-profit colleges filed suit and a federal judge blocked the rule. Advocates say the rule would have made 5 percent of colleges ineligible for federal funds.

All this scrutiny has resulted in lower enrollment rates and industry self-policing. But the fact remains that it is highly unlikely that everyone—or even a large proportion—of people who attend high-priced vocational schools will, as a result of attending, find increased job opportunities. Advertising for vocational and career education schools can be misleading and even deceptive. The Federal Trade Commission (FTC) says that schools may mislead prospective students about their connections to industry, salary potential, job availability, facilities, equipment and staff qualifications.

Instead, look into alternatives, like community colleges. The tuition may be much less than at private schools. Also, some businesses offer education programs through apprenticeships or on-the-job training. You may be able to get emergency personnel training by volunteering with your local fire department.

To learn more, read:

*Not this consumer’s real name.

Coalition Efforts: Concentrating focus on issues of consumer importance

Consumer Action’s advocacy staff often works in coalition with other organizations and advocates so that we can weigh in on important issues and leverage staff time. We are grateful to our coalition partners for the work they do to concentrate the community's focus on a particular problem and create alliances among organizations that might not normally work together.

Here are some of our recent coalition efforts:

Low-income communities at risk in wireless merger. Consumer Action joined Public Knowledge and the Writer’s Guild of America, West in a petition to the Federal Communications Commission (FCC) opposing the proposed acquisition by AT&T of prepaid mobile carrier Leap Wireless. Leap Wireless offers low-cost and prepaid options to millions of wireless subscribers, and the advocates expressed concern that these customers could be left behind by this transaction. Low-income, immigrant and minority communities could be hardest hit.

Click here to read the petition.

Confirm Rep. Mel Watt as director of the Federal Housing Finance Agency (FHFA). Civil, human rights and consumer groups called for the speedy confirmation of Rep. Mel Watt (D-NC) as the head of the FHFA, which oversees Fannie Mae and Freddie Mac. They cite Watt’s extensive qualifications, congressional experience and advocacy for homeowners.

Click here to read the letter.

Is the NSA spying on trade policy advocates? Organizations working to influence U.S. trade policy are seeking assurances that they are not being spied on by the National Security Agency (NSA) or other national security agencies, as indicated in a recent New York Times article. Consumer Action joined advocacy organizations working to influence U.S. trade policy in a letter to NSA Director Keith Alexander and U.S. Trade Representative Michael Froman seeking assurances that “[our] operations are not under surveillance by U.S. government agencies.”

Click here to read the letter.

Wireless cramming fraud costs consumers millions annually. “Cramming” of unauthorized charges on wireless phone bills poses a serious problem for American consumers. Consumer Action has joined the National Consumers League and other organizations to urge the Federal Communications Commission (FCC) to take regulatory action to protect consumers. They state that current anti-fraud measures rely mostly on consumers spotting and reporting suspicious charges on their wireless bills. The FCC was urged to consider and implement sensible regulatory measures to help protect consumers from wireless cramming fraud while protecting legitimate commerce. The advocates’ suggestions include prohibiting wireless carriers from discontinuing service for failure to pay a third-party charge that a subscriber disputes as fraudulent and requiring wireless carriers to, at a minimum, implement the Mobile Marketing Association’s “best practices” guidelines for double opt-in prior to providing third-party billing services to billing aggregators or directly to third-party service providers. This would codify an important industry self-regulatory principle.

Click here to read the petition.

Postal Reform harms consumers, rural customers and small businesses

In a letter to the U.S. Senate Committee on Homeland Security & Governmental Affairs, Consumer Action voiced concerns about the Postal Reform Act (S.1486).

Addressing Committee Chairman Tom Carper (D-DE) and Ranking Member Tom Coburn (R-OK), Consumer Action’s director of national priorities said that the proposed legislation does not consider the average citizen’s needs in terms of a functioning postal service.

Proposed postal hikes, the eventual elimination of Saturday mail delivery and business door delivery, and the phase-out of household door delivery are all measures incorporated in the bill. Consumer Action is on record to preserve six-day delivery. According to the Postal Regulatory Commission (PRC), the savings potential of ending Saturday mail service is far less than projected ($1.7 billion vs. $3.1 billion) and would place undue harm on consumers, rural customers and small businesses. The PRC also has said that ending Saturday mail would result in larger mail-volume losses than the Postal Service predicts.

Consumer Action suggested that the proposal’s plan for Saturday mail delivery be submitted immediately to the PRC for review. “Is this a fair and equitable plan? Will it save money? These are questions that need concrete answers.”

The organization further suggested that other savings options be explored fully before reducing service. “An obvious place to start would be to end the Postal Service’s prefunding obligations for retiree medical costs. The pre-funding obligation puts the Postal Service at great risk. With billions already in the fund, it doesn’t make sense to prefund more. The federal government does not prefund its retiree healthcare liabilities—why should the Postal Service? These payments are driving the Postal Service into the red and, we fear, paving the way to further privatization.”

Click here to read Consumer Action’s letter.

Consumer class action roundup

Consumer Action maintains a listing of consumer class actions we learn about so that interested consumers can join the action, make a claim or just learn more about a certain lawsuit. Soon we will unveil a new design for this resource that will make it even more useful and accessible to consumers.

In a class action settlement, the court does not decide in favor of one side or the other. Instead, both sides agree to settle the case instead of going to trial. The proposed settlements do not necessarily mean that any law was broken or that the defendants did anything wrong. (The defendants deny all legal claims in this case.)

Some of the notable class actions we’ve learned of include:

L’Occitane. California consumers whose personal identification information was requested and recorded by L’Occitane stores during a credit card transaction between Sept. 9, 2011 and Oct. 4, 2013 may be eligible for a merchandise certificate of $12.50. Click here for details and claim form. Deadline is Dec. 17, 2013.

Rawlings Power Balance. Consumers who purchased certain Rawlings Power Balance apparel between March 1, 2010 and Oct. 11, 2013 may be eligible for up to $16.50 per bracelet or a total refund. The products are Rawlings Power Balance bracelets (wristbands) that contain the brand name Rawlings and a Power Balance logo, emblem or hologram; and Rawlings Power Balance non-bracelet products including necklaces, batting gloves, catcher's equipment and other apparel that contain the brand name, logo, emblem or hologram. Click here for details and claim form. Deadline is Jan. 8, 2014.

LG Blue-ray Home Theater Systems. Consumers who purchased an LG LHB975 Network Blue-ray Home Theater System may be eligible for warranty extension and reimbursement for repair expenses. Click here for details and claim form. Deadline is Jan. 2, 2014.

Urban Active gym memberships. Consumers who signed a gym membership or personal training contract at Urban Active gyms from Jan. 1, 2006 to Oct. 26, 2012 may be eligible for up to $30 cash. The company reached a settlement over allegations that it did not disclose all fees and costs and misrepresented its contract terms and conditions. Click here for details and claim form. Deadline is Dec. 30, 2013.

Apple and AT&T 3G iPad unlimited data plan offer. Consumers who purchased or ordered an iPad 3G on or before June 7, 2010 may be eligible for $40 cash per iPad 3G. The lawsuit claimed that these customers were not provided with access to an unlimited data plan as originally advertised by Apple and AT&T. Click here for details and claim form. Deadline is Feb. 3, 2014.

Nasal Ease. Consumers who bought Nasal Ease between April 1, 2010 and Feb. 25, 2014 may be eligible for a refund or up to $15 cash. The suit alleged that Nasal Ease didn’t work as advertised to temporarily relieve allergy symptoms. The company agreed to settle the case. Click here for details and claim form. Deadline is Feb. 25, 2014.

Honda Engine misfire. The lawsuit alleges defects in the 6-cylinder engines with Variable Cylinder Management (VCM) that were part of certain 2008-2013 Honda vehicles. Consumers who purchased or leased these models may be eligible for cash reimbursement for repair expenses and warranty extension. Click here for details and claim form. Deadline is April 10, 2014.

American Express gift cards. Consumers who purchased, received, held or used an American Express gift card between Jan. 1, 2002 and Sept. 21, 2011 may be eligible for up to $40. The lawsuit alleges that American Express gift cards, advertised to work “all over the place,” could only be used at merchants that accept American Express. It also alleged that one could use the card to pay part of a transaction (“split tender”), when this ability is not always available and depends upon merchant policies. The company reached a settlement over the allegations. Click here for details and claim form. Deadline is March 6, 2014.

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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