Consumer Action INSIDER - February 2013

 

Table of Contents

 

What people are saying

Your Digital Dollars training gave us a lot of beneficial information for the community we serve. [As soon as we receive your educational material] we’ll start including it in our trainings. — Zoraida Reyes, Collaborative Support Programs of New Jersey

Did you know?

You could get “SLAPP-ed” for posting your opinions or speaking out? SLAPPs (Strategic Lawsuits Against Public Participation) are filed against those who communicate with their peers in public forums or speak out on issues of public interest. SLAPP filers don’t go to court to seek justice, but rather to intimidate those who disagree with them. For more information on SLAPPs, or to support the fight against this anti-consumer tactic, read more here.

New resource sheet addresses needs of servicemembers, vets

As a companion to our 2011 Financial Empowerment Resource Sheet, Consumer Action has compiled a new resource to help military servicemembers, veterans and their families make ends meet and weather a financial crisis. The new 15-page resource guide details government and non-profit programs that provide financial aid, housing assistance, discounts on essential living expenses, financial counseling, legal advice, job training and more. Both resources were created in partnership with Bank of America.

The new resource guide for servicemembers and veterans is available on Consumer Action’s website, where it can be read online or downloaded as a PDF file. It is available in English and, in late February, in Spanish.

Our Financial Empowerment Resource Sheet listed assistance available to the general public. During development, it was peer-reviewed by Feeding America food bank staff across the country. The resulting resource proved so popular that we decided to create a similar resource sheet geared specifically for members of the military, both active-duty and veterans.

“It became clear through our work with many community-based groups that support current and former military men and women that this would be a valuable resource,” said Ken McEldowney, Consumer Action’s executive director. “We’re grateful that Bank of America agreed to partner with us to make this resource possible.”

In the coming months, Consumer Action will promote the new resource sheet to our network of nearly 7,500 community-based organizations nationwide, including many groups that work directly and primarily with servicemembers, veterans and their families.

California Update: Easier to pass pro-consumer bills?

Our California legislative manager, Joe Ridout, tells us that state Democrats have a two-thirds majority in the Assembly and Senate. Since it takes two-thirds of the Legislature to enact important legislation, as well as allowing for veto power over bills signed by the Governor, this puts the Democrats in a potential position to pass pro-consumer bills. No one’s sure how long the Dems can hold on to their supermajority, however, as several seats are expected to open up, triggering special elections that could be won by Republicans, eroding the Dems’ two-thirds advantage.

Ridout says he expects to see important consumer legislation this term on foreclosure prevention, privacy, car title lending, private postsecondary education and insurance products. But at this early date, the details are sparse and many bills have yet to appear.

Consumer Action will monitor key legislation vital to California consumers and post our analysis on our "California Action Center" page.

You can sign up here to receive alerts about California consumer legislation in 2013.

Education on credit card ‘checkout fees’ draws large-scale interest

In December, Consumer Action released a guide to help consumers understand potential new costs when they use a credit card at some retailers. As a result of a settlement between retailers (online and offline) and the payments industry, consumers may see retailer surcharges, or ‘checkout fees,’ when using their credit cards at brick-and-mortar stores or online merchants.

Jan. 27 marked the first day that the settlement allowed retailers to charge additional fees for using a credit card. Leading up to that date, and for days after, Consumer Action fielded dozens of calls from national and state media about the potential change. Our staff has been interviewed by the NBC Nightly News and Fox 5 in DC, by radio programs across the country, including NPR’s Marketplace, and in stories for MSNBC.com, AOL Finance and the Wall Street Journal, among other publications.

“Consumers are incredibly interested in this topic,” said Consumer Action’s Linda Sherry. “On Jan. 24, our website crashed for a short time after more than 60,000 people tried to access our online guide. We got it back up and running quickly, but we continue to monitor avid interest in credit card surcharges that might be levied by online and offline retailers.”

The online guide that explains consumer rights and retailer responsibilities is available on Consumer Action’s Know Your Card website. It explains that credit card surcharges are illegal in 10 states, and offers advice for avoiding the fees where they are legal. Titled “Checkout Fees: Consumer rights and retailer responsibilities,” it was produced in partnership with the Electronic Payments Coalition (EPC), which includes credit unions, community banks and payment card networks.

Policy Buzz: Death of landline phone service?

Consumer Action’s DC office reports on an emerging area for telecommunications policymakers—the eventual, and unavoidable, transition from the legacy copper-based landline system to wireless and Voice over Internet Protocol (VoIP).

Consumers are moving away from landlines to wireless and Voice over Internet Protocol (VoIP) phone service in huge numbers. In 2001, the FCC counted 192 million landlines—by 2011 the number had declined more than 40%, to 112 million. In mid 2011, FCC data showed more than 290 million wireless subscribers and close to 34 million VoIP subscribers nationwide.

As customers abandon the older networks in favor of broadband and mobile alternatives, federal and state regulators grapple with how to reconfigure existing telephone regulation for the broadband era. Large incumbent telecommunications companies are required by law to support the legacy infrastructure, but most cable, wireless, satellite or non-incumbent competitors aren’t, which appears to give them a competitive advantage. Free-market advocates are calling for an end to required investments in obsolete technology while some smaller, rural carriers who are dependent on government landline subsidies, and business-to-business companies that use the networks, oppose IP transition.

What’s at stake? Consumer protections and “affordability” could come under pressure in an unregulated environment. To identify problems in advance, some stakeholders—including AT&T—are calling for regional “test pilots”, or demonstration projects, leading up to a hard date for transition to a wired and wireless IP network. We’ll watch this issue closely and bring our readers updates from time to time.

Hotline Chronicles: Mystery charges on your phone bill

Marnie,* a Nevada woman, contacted Consumer Action’s hotline about a charge on her wireless phone bill for “$9.99 a month for a premium service I never authorized.”

She inquired with her carrier and was told that the charge was for “media services.” We looked up the company and found that it provides “brand new and innovative mobile content, including apps, games, logos and videos.” The $9.99 charge had been added to Marnie’s bill every month since February 2012.

But Marnie told us that she never heard of the company. “This charge is definitely not authorized and never used by me. For me, this is a fraudulent charge.” She said that the carrier’s representative stopped the service, but offered no refunds of past charges. “I find this ridiculous. My phone is always in my pocket and nobody else can make subscriptions or changes to the services. So who did?”

Marnie is a victim of “cramming”—the addition of fees for unwanted and unauthorized services to landline or wireless phone bills. Cramming is illegal. Phone bills contain so much information that consumers often overlook such charges. Unfortunately, reading your phone bill is the No. 1 defense against cramming. If done too late, however, it may be impossible to get your money back.

While crammers often “nickel and dime” victims with small charges of $2-$10 per month, the profits add up to big bucks for scammers. Last month, the Federal Trade Commission filed a complaint against American eVoice, Ltd. and Steven Sann, among other named parties, for cramming unauthorized charges onto consumers’ phone bills. According to the FTC, the Missoula, Montana-area defendants transferred the proceeds from their cramming operation to a “non-profit” organization controlled by Sann.

In this case, hundreds of consumers complained to the FTC about unauthorized monthly charges of $9.95 to $24.95 on their phone bills. Phone companies and third-party “billing aggregators” said that they received online forms indicating that the consumers had authorized the charges. The FTC said that Sann and other named defendants have billed consumers for more than $70 million since the beginning of 2008.

How to complain

  • If you find suspicious charges, call your phone company. It should be able to provide more information about the source of the charge and how to dispute unauthorized charges. Ask the phone company if it will issue a refund.
  • Call the billing party directly to complain and demand a refund. If it gives you trouble, ask for documentation that you authorized the charge.
  • Follow-up with an email or a letter sent by certified mail, and request a return receipt. Keep a copy of your letter, the phone bill and any other documentation you have.
  • File a complaint with the FTC online or by phone at 877-382-4357. Include the name of the company that charged you on your phone bill, as well as your phone company’s name.
  • Send a complaint to your state Attorney General’s office. Visit the National Association of Attorneys General to find your AG’s contact information, or check the government section of your phone book for the number.
  • Also complain to the agency that regulates phone service in your state, often called the state public service commission or public utilities commission. Look up your state regulator on the National Association of Regulatory Utility Commissioners website.

Self-defense

  • Read your phone bill carefully. Keep an eye out for generic services and fees like “Minimum Use Fee,” “Activation,” “Member Fee,” “Voicemail” or “Web Hosting”—they may be services you didn’t order.
  • Pay special attention to sections labeled “Miscellaneous,” and to the long distance, 900-number and “third-party” charge sections on your bill.
  • Don’t enter contests or respond to offers that ask you to include your phone number. This can be a way for crammers to get the information they need to add charges onto your phone service account. Some sign-up forms have fine print you might not notice which gives the company permission to charge you.
  • Don’t dial 900 numbers—you will be charged for the calls.

Have a complaint or need consumer information and advice? You can submit your complaint on Consumer Action’s website or call 415-777-9635 and leave a message. One of our counselors will call you back. We speak English, Spanish and Chinese.

*Not this consumer’s real name

Consumer Action welcomes ‘virtual’ interns

As spring semester begins for Columbia University students, so does Consumer Action’s third year of participation in the university’s Virtual Internship Program.

The program is so named because it gives participating students an opportunity to gain valuable, real-world work experience in their field of interest despite being hundreds or thousands of miles away from the sponsoring company or organization. This year, our interns are widening the distance considerably: One is spending the semester in Paris and the other in London. Thanks to the Internet, email, Skype and other communications technology, geography is not a barrier.

Krishna Hegde, a junior with a double major in economics and philosophy, will be conducting research into consumer pre-purchase tools and resources from the City of Lights. Hegde will investigate government, non-profit and industry tools and resources that provide ratings, reviews, complaint data and other information that enables consumers to make better informed buying decisions. Our findings, including specific data collected, will be highlighted in the summer issue of Consumer Action News, our quarterly consumer newsletter.

Radhe Patel, who expects to receive a bachelor's degree in chemical engineering with minors in political science and environmental engineering in May 2015, is telecommuting from London to help Consumer Action research consumer information resources for class action litigation as well as other ways to identify pending class actions. The goal of the research is to provide detailed information to consumers and potential claimants about pending and settled collective actions. The project findings will be presented in an online consumer class action resource and kept up-to-date by our hotline staff.

“We’re very happy to be welcoming Columbia University interns for the third year,” said Linda Sherry, Consumer Action’s director of national priorities. “These young people bring energy, dedication and a fresh viewpoint to these important projects.”

Roundtable attendees learn and share solutions to financial illiteracy

At the beginning of December, Consumer Action’s Outreach team of Linda Williams and Nelson Santiago led 2012’s final MoneyWi$e Best Practices roundtable in Austin, Texas. It was one of three that Consumer Action and Capital One hosted there in 2012, with other trainings in Virginia and New Jersey.

Williams and Santiago rolled out the first Best Practices training of the year in McLean, Virginia in early 2012. Over 38 advocates from Washington, DC, Maryland, Virginia and New York gathered in a conference room at the Tyson Corner Marriott Hotel to learn strategies for using the renowned MoneyWi$e curriculum. Subjects included adopting the key principles of adult learning, using the newly revised MoneyWi$e ID Theft & Account Fraud module, and finding resources for the MoneyWi$e trainer. (Click here to view all MoneyWi$e modules.)

A session on best practices for helping clients overcome barriers to saving was also featured. Guest speakers Bonnie Tazewell, director of financial stability for the United Way of South Hampton Roads, and Lanette Kelly of the Virginia Cooperative Extension gave the presentation.

Community outreach manager Linda Williams ended the roundtable with a “Community Toolbox” networking activity, where participants broke into teams and used their expertise to solve complex community issues. Each team was assigned the task of identifying two issues plaguing their community, brainstorming possible solutions, and selecting two team ambassadors to go from team to team to find more solutions for the issues identified. The activity created a great deal of excitement and enthusiasm among participants.

The New Jersey Best Practices training was held on Sept. 27 in Jersey City and was attended by nearly 40 advocates from community-based organizations in New Jersey and New York.

Both the Jersey City and Austin roundtables featured interactive learning activities that allowed participants to share their agency’s best practices for delivering financial literacy to diverse communities, including locating a target audience, recruiting clients, measuring the effectiveness of their programming, and ensuring the sustainability of their program model.

The evaluations for each of the three trainings were very positive. When asked if they planned to implement some of the strategies and tools covered at the roundtable, over 80% of participants said yes.

Advocates stung by change to foreclosure review process

Consumer Action and other consumer advocates are deeply disappointed by changes to the Independent Foreclosure Review (IFR) process, which was intended to ensure that homeowners who were victims of botched foreclosures would receive compensation. To make matters worse, banking regulators chose in late December to scrap individual reviews, pointing to delays, poor outreach and a response rate of only 5%. While victims of illegal foreclosures will receive compensation, the method for distributing funds is not yet clear and valuable data from the reviews may not be made public.

Among the damaging aspects of the program’s failure, says Consumer Action’s Ruth Susswein, is that there will be no answer to the question of how many homeowners were harmed. “We’ll continue to urge regulators to ensure that funds are fairly distributed among those who have been harmed,” said Susswein.

The program was implemented two years ago, when the Comptroller of the Currency (OCC) and the Federal Reserve ordered 14 mortgage servicers to hire consultants to review 4.3 million foreclosures for errors, overcharges and bungled loan modifications. If harm were found, servicers would be required to compensate borrowers. Consumer Action and other consumer advocates believed the program held promise for compensating foreclosure victims. More than a dozen organizations, including Consumer Action, met with regulators throughout the process to call for:

  • Increased compensation for errors
  • Increased categories for compensation
  • Transparency in the review process
  • An appeals process for borrowers
  • Fair distribution of funds

In late December, just one week after the consumer coalition sent its latest letter imploring regulators to make positive changes, the OCC and the Fed instead scrapped the review process, citing fatal flaws and a desire to get compensation funds into homeowners’ hands instead of seeing it wasted on hired consultants. A whopping $1.5 billion had already been spent on reviews.

Regulators negotiated an $8.5 billion agreement with 10 large servicers (three more have signed deals as of press time) to replace the IFR process with $3.3 billion in cash to borrowers and $5.2 billion to homeowners in the form of loan modifications. No formal guidelines have been released as to how individual compensation will be awarded. Media reports suggest that payments will be based on the type of harm experienced, such as being denied a loan modification or never having been considered for one.

Every homeowner who received a foreclosure notice in 2009 and 2010 is expected to receive some cash. Payments will range from $200 to $125,000 per borrower, with estimates of less than $2,000 on average. Compensation checks are expected to go out to borrowers by the end of March.

Lawmakers step in

On Jan. 31, Senator Elizabeth Warren (D-MA) and Rep. Elijah E. Cummings (D-MD) sent a letter to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry seeking documents relating to their recent settlement with mortgage servicers that ended the IFR process. Their request included:

  • The results of all IFR performance reviews by the Federal Reserve or the OCC, including all documents reviewing the performance of each of the independent contractors that conducted reviews of borrower files under the terms of the consent orders issued in April 2011;
  • All documents compiled by the Federal Reserve or the OCC indicating the total amount of settlement funds paid to each independent contractor; and
  • The total number of reviews of borrower files initiated by each of the independent contractors, and the number of borrower files in which unsafe or unsound practices were found.

In the letter, Senator Warren and Rep. Cummings said, in part: "We share the desire of the OCC and the Federal Reserve to get more money to more people quickly, and we appreciate the information you have provided to congressional staff on this issue. However, we believe that public confidence in the settlement—the confidence necessary to speed recovery of the housing markets—will exist only if the OCC and the Federal Reserve provide additional transparency into the process used and information gathered during the Independent Foreclosure Review process."

About Consumer Action

Consumer Action is a non-profit 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.

Click here to learn more about our staff.

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