Consumer Action INSIDER - January 2016

 

Table of Contents

What people are saying

Your National Consumer Empowerment Conference was exceptional and far exceeded my expectations. — Beth Lenz, Upper Arkansas Area Council of Governments

Did you know?

Due to a loophole in the rules that govern advice given regarding how consumers should invest the money in their employer-sponsored retirement accounts, the financial professionals you turn to for advice are able to portray themselves as trusted advisers even if they are acting as self-interested salespeople. This can cost you a lot, which is why the Department of Labor is trying to update retirement investing rules so that financial professionals have a legal obligation to put your interests first when they offer retirement advice. These rules haven’t been changed in 40 years. Learn more and get involved at Save Our Retirement.

Attendees rave about Consumer Empowerment Conference

Attendees are raving about Consumer Action’s National Consumer Empowerment Conference, held in November near Chicago. Each year the conference convenes Consumer Action’s most active community group partners along with consumer education experts and advocates, legislative, regulatory and industry representatives, and other key stakeholders to address critical issues and share best practices in community-based consumer education and empowerment.

“Our annual conference is a huge event for us, and we’re proud to provide the community-based organizations we work with the rare opportunity to speak with and learn from the country’s top community educators and subject matter experts,” said Ruth Susswein, Consumer Action’s deputy director of national priorities.

This year’s invitation-only, multi-day conference welcomed guests on the first evening at a dinner and networking event. Attendees participated in a lively group trivia game to test their knowledge about consumer marketplace and financial issues.

Attendees woke up on day two to a full breakfast and a full schedule as they prepared to hear from leading consumer advocates—experts like Michelle De Mooy of the Center for Democracy & Technology, Aracely Panameño of the Center for Responsible Lending, John Breyault of the National Consumers League and Micah Hauptman of the Consumer Federation of America. Zixta Martinez, associate director of the Consumer Financial Protection Bureau’s Division of External Affairs, also spoke at the event, giving attendees a detailed update on the critically important federal bureau’s ongoing work to protect consumers across the country.

The sessions held throughout the day and into the next addressed topics including advances in fair lending and fair housing; the fiduciary responsibilities of financial advisers to their clients; privacy and data security in the digital age; how to obtain and maintain good credit; and the dangers of subprime car loans.

Presenters such as Kevin Stein, associate director of the California Reinvestment Coalition, delved deep into their topics to offer attendees knowledge they need to return to their communities and empower consumers. Stein discussed the Community Reinvestment and Home Mortgage Disclosure Acts at length. The former has increased lending opportunities for all consumers, including historically underserved groups. The latter has provided critical data that helps the federal government identify impediments to home ownership. Stein also described how disparate lending and redlining have negatively impacted low-income communities and people of color, and gave examples of how advocates have effectively combatted these discriminatory and illegal practices.

Many of the sessions combined a panel of experts from several consumer groups and financial organizations to provide a comprehensive exploration of a critical issue impacting consumers. A session on credit scores, credit reports and alternative data featured Jim Wehmann, executive vice president at credit-scoring firm Fair Isaac; National Consumer Law Center staff attorney Chi Chi Wu; and Dara Duguay, the executive director of the Credit Builder’s Alliance, which helps hundreds of non-profits collaborate with credit reporting agencies on behalf of their clients.

Each panelist was able to offer his or her unique expertise on the subject of consumer credit. Duguay explained how to use credit building techniques like rent reporting (combined with financial coaching and asset building programs) to establish a baseline credit history and move consumers out of poverty. Wu spoke about the perils that erroneous data pose to consumers’ credit history, and existing regulations governing credit scores (including the Fair Credit Reporting and the Equal Credit Opportunity Acts). Wehmann gave attendees an overview of how Fair Isaac’s FICO score assesses consumer creditworthiness, described new consumer-friendly developments in the organization’s scoring model and explained how consumers can utilize FICO’s recently launched updated website to get a comprehensive picture of their credit.

Many participants raved about how well organized and informative the conference was. “I learned a lot and made some great connections,” said attendee Melissa Gopnik of the non-profit Doorways to Dreams (D2D) Fund. “I was particularly impressed by how smoothly everything went and how the facilities and food were excellent. I know how much planning it takes to make things look seamless, so a huge round of applause to Consumer Action.”

“This year’s conference was a smashing success,” added Susswein. “And it would not have been possible without our speakers, who so generously lent their time and expertise to educate and empower others.”

The 2015 National Consumer Empowerment Conference was underwritten by Citi, JPMorgan Chase, TracFone Wireless and VISA Inc. To view a complete list of sponsors and find a link to the 2015 conference program book, click here.

New resource guides consumers ‘when a collector calls’

Every year, millions of consumers receive calls and letters from debt collectors. Relatively recently, scam artists have begun posing as debt collectors to get consumers to send them money by taking advantage of their fears of and inexperience with the collection process. Consumers who don’t know their rights may find it difficult to tell the difference between a real collector and an imposter.

Consumer Action’s newest publication, “When a collector calls: An insider’s guide to responding to debt collectors,” aims to help recipients of fraudulent calls avoid becoming victims while helping recipients of legitimate collection calls and letters understand how to communicate with a collector while preserving their rights.

According to a Consumer Financial Protection Bureau (CFPB) report published in December 2014, nearly one-third of the 220 million consumers with a credit report have at least one account in collections. Scammers have used this to their advantage by making bogus collection calls and coercing consumers into either paying them or revealing bank account or other sensitive information.

“When a collector calls” gives consumers specific signs to look for—the use of profanity, a request for their full Social Security number, or an unwillingness to substantiate the debt in writing or provide specific information about who is calling, for example—that will help them determine whether a collection call is genuine or not. It also provides next steps, depending on that assessment. For collection calls and letters that are legitimate, the guide offers tips to help consumers understand their rights and deal with the debt proactively.

Consumer Action created “When a collector calls” in partnership with the Consumer Relations Consortium (CRC), a debt collection industry association, making it a true “insider’s” guide. While one of Consumer Action’s goals in creating the publication was to help consumers avoid being victimized by collection agency imposters, the CRC had the complementary goal of empowering consumers to distinguish between legitimate and fraudulent callers so that they don’t disregard all collections-related communications or send their payments to the wrong place.

The publication covers:

  • What to do if you suspect the caller is a crook;
  • Your right to request verification (proof) of the debt;
  • Where to learn more about debtors’ rights, including the right to limit how and when a collector contacts you and the right to dispute a debt;
  • The existence of state statutes of limitations and where to learn more about time-barred debts; and
  • Where to file a complaint against a collector.

The fact sheet was published as the Federal Trade Commission (FTC) held the third of three free, public “Debt Collection Dialogues,” in which the CRC was a participant. At each event, the FTC and its state and federal law enforcement partners discussed recent enforcement actions, consumer complaints about debt collection practices and compliance issues.

Linda Sherry, Consumer Action’s director of national priorities, noted that Consumer Action “often partners on educational projects with compatible corporations and industry associations. Our collaboration with CRC has resulted in a publication that reflects the perspective of industry professionals, and that can be a benefit for consumers.” The English version of the three-page "When a collector calls" is available now for free download on the Consumer Action website. It soon will also be translated into Spanish. Related publications on debtors’ rights and the Fair Debt Collection Practices Act are also available.

Hotline Chronicles: No love for Match dating site

Javier* from Florida contacted our hotline to complain about the online dating service Match.com and its failure to stop an automatic renewal of his subscription despite numerous advance notices on his part that he no longer wanted the service. Javier told us, “According to company policy, they don’t issue refunds. Very convenient!”

Double take! Could it be true that there is a company with such an inflexible policy, especially when it has made a mistake? But Javier is correct. The website says:

You may change or cancel your membership at any time, for any reason, by following the instructions [...] However, in no event will you be eligible for a refund of any portion of the subscription fees paid for the then-current subscription commitment. If you paid for your subscription using a multi-payment option, you must make all payments even if you cancel your subscription prior to the end of your then existing subscription commitment period.

Javier says that in advance of the expiration date he “did whatever possible to ensure that my subscription would not be extended. I turned off the auto-renewal feature on their website, and I sent them a written message requesting the termination of my subscription as of October 1st. In spite of my actions, the company renewed my subscription for another term at a cost of over $70.”

Bad enough, right? It turns out that subscribing to Match could lead to other unrelated privacy issues, as detailed in the fine print:

Canceling a subscription does not automatically cancel your membership. If you are a subscriber and you cancel your subscription but not your membership, unless you elect to hide your profile, you will continue to be a Member in the Service and others may view your profile...

Like a bad ex, Match just doesn’t want to let you go. We advised Javier to contact his credit card company and dispute the renewal. We hope the card issuer will help him, but we don’t hold out a lot of hope based on statements from other disgruntled consumers online. We also hope he can effectively delete or “hide” his profile.

To top it all off, the Match website states that the “exclusive means of resolving any dispute or claim [....] shall be BINDING ARBITRATION administered by the American Arbitration Association.” You can click here to learn more about how forced binding arbitration hurts consumers. In its largesse, Match offers “one exception to the exclusivity of arbitration,” which is that you “have the right to bring an individual claim ... in a small-claims court of competent jurisdiction.” Forget about a class action, as the terms specifically ban customers from joining any collective legal proceeding.

If you’ve received a Match free trial offer (good for seven days), you should note that it requires you to provide payment information in advance. “When you receive a free trial offer in your off-site email, the message will include instructions for redeeming it,” states the site. “You'll be asked to choose a paid subscription package and to provide payment information so you can automatically keep your subscriber benefits after your trial is over.”

Consumer Action attempted to learn the eventual cost of subscriptions but gave up after finding that a login account was required before pricing information could be accessed.

Based on 1,749 reviews on ConsumerAffairs.com, a complaint site, Match has an overall satisfaction rating of one star out of a possible five. On another complaint site, SiteJabber.com, 285 consumers gave it the lowest rating of one star.

No matter how much you’d like to meet that perfect someone, given this lineup, you might want to carefully consider starting a relationship with this dating site.

*Not this consumer’s real name

Florida workshops on new phone network, Internet safety

Residents, community organization staff and volunteers in South Florida's West Delray Beach area learned how phone technology is evolving and how to stay safe on the Internet during a series of presentations and trainings Consumer Action held in October and December. The trainings are part of the campaign to educate consumers about the transition from traditional to wireless and Internet protocol-based phone networks (known as the IP transition) through Consumer Action and AT&T’s New Phone Network Project.

The workshops educated participants on the advantages of IP service and offered answers to the questions that consumers are most likely to ask in order to ensure a smooth transition before switching to the new phone network. The Internet safety portion of the trainings focused on the prevention of identity theft by securing home networks and by taking precautions on public Wi-Fi networks. The trainings also offered ways to protect mobile devices, as well as consumer safety tips for online and mobile banking, social networking and avoiding Internet scams.

The Federal Communications Commission (FCC) requested that communications companies submit proposals to conduct trials in which IP and wireless services will be rolled out to replace traditional landline service in selected communities across the U.S. One of AT&T’s two trial areas is West Delray Beach. Information from the trials will be used as a model for achieving a smooth migration to IP-based service in other regions.

Consumer Action trainers Linda Williams and Nelson Santiago reached a diverse group of consumers in West Delray Beach and nearby communities, including seniors; recent immigrants from Cuba, Haiti and other countries; low-income housing residents; people with developmental disabilities or who are blind or have low vision; and staff and volunteers working in faith-based community education programs.

Consumer Action's workshops were provided in English, Spanish and, with the assistance of workshop hosts, Haitian Creole. The need for materials in Haitian Creole was identified during an earlier outreach trip and, by the time of the December trainings, the Haitian Creole brochure was made available.

During his IP transition session, Santiago addressed questions about whether consumers would be required to own a computer in order to have phone service and about whether they would be able to keep their landlines. He explained that a computer is not and will not be a requirement for people to switch to IP-based phone services. He also explained that most consumers have already decided to make that transition on their own. However, at some point in the future telephone companies will transition the remaining people with traditional phone service to either Internet-based or wireless phones. To protect consumers, this process is controlled by state and federal regulations.

Santiago also discussed with participants the importance of asking IP phone service providers about battery back-up options to help ensure phone service during power outages.

Williams also taught a group of Haitian children, five rules for online safety during an engaging after-school session. The students talked about their use of the Internet for games, social networking and communicating with friends. By the end of the training, the children were reciting the rules, which include basic guidelines like never giving out passwords or personal information without a parent’s permission.

The trainers commended Consumer Action's administrative team for its hard work assembling folders for the workshops. With the team's assistance, Williams and Santiago were able to provide close to 8,000 educational publications to the more than 400 consumers they reached.

Consumer Action's workshops were well received, and Williams and Santiago will return to Florida in March to conduct additional workshops.

Coalition Efforts: Cars, corporations and a strong CFPB

Cars now safer to rent, thanks to mom-turned-advocate. A mother’s decade-long crusade resulted in President Barack Obama signing a bill that requires rental car companies to repair vehicles under safety recall before renting them to consumers. Californian Cally Houck lost her daughters, Raechel, 24, and Jacqueline, 20, in 2004 when they crashed while driving a rental car that was subject to an unrepaired recall. Houck has said she was shocked to find that no federal law prevented renting cars with unrepaired recalls and she began her long campaign to remedy the oversight. Consumer Action, Consumers for Auto Reliability and Safety (CARS) and many other advocacy organizations worked to mobilize individuals and community groups across the country to support the bill, leading to its successful passage. The new law means it is now illegal, under federal law, for a rental car company with a loaner or rental car fleet of 35 vehicles or more to rent, loan or sell an unrepaired recalled rental or loaner car until the safety defects have been repaired. Learn more.

Major corporations urged to stop using forced arbitration. Consumer Action joined coalition advocates in writing a letter to the CEOs of American Express, General Electric, JPMorgan Chase & Co., Sears, Citigroup, Toyota and Discover Financial Services, asking them to stop putting forced arbitration clauses in their contracts. The corporations compel millions of American consumers to surrender their constitutional right to seek redress in the legal system after being victimized by unfair, deceptive or fraudulent corporate business practices. Learn more and read the letter.

Against changing the leadership structure of the CFPB. Powerful banks and Wall Street cronies in Congress escalated their campaign to defund and “defang” the Consumer Financial Protection Bureau (CFPB) because the federal agency protects consumer over corporate interests. The American Bankers Association and other major trade groups representing Wall Street revealed that they are the driving force behind intensified congressional efforts to pass a bill (HR 1266) in an effort to eliminate the Bureau's single director and replace him with a highly-politicized five-member commission. Learn more and read the letter.

CFPB Watch: Brave new world of banking; financial wellbeing test

The Consumer Financial Protection Bureau (CFPB) has put companies on notice that automatic debits (also known as recurring payments) from customer bank accounts must be fully authorized. When permission is granted, consumers allow companies to automatically withdraw money from their bank account. The Bureau has noticed that some companies are not getting proper permission or are not disclosing all details related to preauthorized debits.

The CFPB has stated that businesses must:

  • Obtain consumer permission before auto-debiting;
  • Provide, in writing, the amount and timing of the automatic payments; and
  • Keep records of a consumer’s authorization.

Consumers who use auto-debiting to pay recurring bills (mortgages, credit cards, gym memberships, etc.) have complained to the CFPB that they’ve had trouble revoking these automatic payments. In some cases, such as with payday lenders, consumers may not have realized that they agreed to auto-debiting to repay a loan. By law, consumers have the right to stop auto-withdrawals if they prefer to pay their bills a different way.

The CFPB has created sample letters for consumers to use to notify a business, bank or credit union that they no longer authorize automatic withdrawals.

The CFPB advises consumers to call the company and also to send a letter revoking authorization to both the business and the bank (or credit union). Consumers can stop payment if they notify the bank within three business days of the next payment’s due date. The Bureau wants consumers to know that a creditor cannot require them to repay a loan via auto-debit from their checking account as a condition for granting the loan. Anyone who has a problem cancelling automatic payments can file a complaint with the CFPB.

Monthly complaint report. The CFPB’s most recent complaint report focuses on bank accounts. Consumers report problems opening up and managing bank accounts. Once opened, consumers have been having trouble accessing funds and have complained that accounts have been closed without explanation. Others say that they’ve not been able to resolve disputes or receive refunds for cancelled transactions. Click here for further details on this month’s report.

Credit card complaints were the focus of the previous month’s report, with billing disputes listed as the biggest complaint, which included late fee problems, billing errors and concerns about the 60-day time limit from the statement date to dispute a credit card charge.

Measuring financial wellbeing. The CFPB has been working on a way to measure “financial wellbeing,” which they define as consumers’ ability to meet their ongoing financial obligations, feel secure in their financial future and make choices that allow them to enjoy their lives.

The Bureau has created a tool to help counselors and financial educators evaluate their clients’ financial security and wellbeing. The tool has 10 questions to gauge consumers’:

  • Sense of control over monthly finances;
  • Capacity to absorb financial shocks;
  • Ability to make financial choices that allow them to enjoy life; and
  • Ability to meet long-term financial goals.

The CFPB recommends using its financial wellbeing scale to initially assess and then track progress over time. For more information, click here.

Pros and cons of mobile financial services. More and more consumers are taking their financial services mobile. Consumers are using smartphones and other devices to check a balance, pay a bill or make a deposit. More than half (52%) of those with smartphones say they used mobile banking last year, according to the Federal Reserve.

The CFPB recently released a report on the opportunities and risks that mobile financial services present, particularly for financially vulnerable consumers. Based on comments from consumer groups, regulators and the financial services industry, the CFPB’s Office of Financial Empowerment reports that access to faster transactions (by remote deposit using a smartphone camera, for instance) may save consumers money and result in less reliance on high-priced financial services. However, some underserved consumers are hesitant to “go mobile” because of security fears about fraud and access to personal financial information. Some groups raised concerns about the amount and type of data collected and shared, particularly through a device that is always with you and can track location. For more information on the Mobile Financial Services report, click here.

Class Action Database: Bad background checks

Consumer Action added 11 new class action settlements to our Class Action Database in December.

One notable class action is Speers v. Pre-Employ, Inc. Pre-Employ is a company that provides employment background screening reports. It meets the definition of a consumer reporting agency (CRA) under the Fair Credit Reporting Act (FCRA).

The plaintiffs filed a class action against Pre-Employ alleging that it failed to ensure that adverse public record information included in its reports was complete and updated. Pre-Employ denied the allegations but agreed to a settlement to avoid a trial.

To be part of the class, you must have been the subject of a background report prepared by Pre-Employ between Oct. 16, 2011 and Aug. 17, 2015, and that report was corrected after you filed a dispute saying information it contained was inaccurate, incomplete or not up to date.

If the settlement is approved, class members will receive payments automatically. The final approval hearing is on Jan. 27, 2016.

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 7,000 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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