Consumer Action INSIDER - August 2022


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[Consumer Action’s] articles are readable, and concise. Not lengthy essays that are time consuming to get through. The information is current, and helpful.

—RR, Manistee, MI, via Consumer Action feedback survey

Did you know?

The Federal Trade Commission (FTC) is working to ensure that consumers have options when it comes to repairing faulty or broken products. In a recent “right to repair” case, the Commission ordered Harley-Davidson and Westinghouse “to fix warranties by removing illegal terms and recognizing the right to repair, come clean with customers, and ensure that dealers compete fairly with independent third-parties.” According to the FTC, the companies imposed “illegal warranty terms that voided customers’ warranties if they used anyone other than the companies and their authorized dealers to get parts or repairs for their products”—sources that are potentially more expensive than independent repair shops. Learn more about the FTC efforts to ensure that manufacturers do not place restrictions on repair rights by locking customers into unfair contractual terms.

Experian funds financial capability/credit education initiative with DEI lens

By Audrey Perrott

Experian has made a commitment to Consumer Action for a multi-state financial capability and credit education initiative with a diversity, equity and inclusion (DEI) lens. The goal of the project is to help diverse, underrepresented consumers improve their financial health through education and action.

Lack of credit and/or poor credit are stumbling blocks to building wealth. Consumer Action designs, implements and manages financial capability programs that empower credit invisible and other underrepresented consumers to take action and improve financial health.

According to a 2015 Consumer Financial Protection Bureau (CFPB) study entitled Data Point: Credit Invisibles, 45 million adults are considered credit invisible. Other key findings of the report include: 1) There is a strong correlation between income and having a credit score; and 2) Blacks and Hispanics are more likely than whites or Asians to be credit invisible or to have unscored credit records.

Having an education does not eliminate the wealth gap for Black college-educated households. According to research from the Federal Reserve Bank of St. Louis, white college graduates are significantly and substantially more likely to provide and receive financial support for education and/or a home purchase, while Black college graduates are significantly more likely to financially support their parents.

The racial wealth gap is widening at an alarming rate for Blacks and Latinos. Consumer Action has seen and documented improvements in financial health in our past financial capability projects, but there is still much more work to be done.

The goal of the project is to provide diverse underrepresented consumers (CBO staff, clients and other stakeholders) with intensive, culturally appropriate financial education; distribute credit building tools that provide an Experian credit report and/or a FICO® credit score; deliver one-on-one coaching, counseling or group education; assist consumers to develop or review an existing spending plan; measure financial health; and provide credit education to other stakeholders.

Consumer Action is eager to introduce more credit-building tools to the community-based organizations (CBOs) we work with and their diverse underrepresented consumers. We are also pleased to collaborate again with Experian on a credit education initiative.

Hotline Chronicles: Interest-heavy payments burn

By Linda Sherry

Dedrick,* a California resident and self-identified “senior,” wrote to our hotline to complain that payments on a $3,180 car title loan he signed for in October 2019 are nowhere near ending, despite his having paid $9,434 so far. “To this day I have paid LoanMart over $9,434.88. Only $75.18 went towards the principle. It shows that I still owe a balance of $3,105.08,” wrote Dedrick.

LoanMart (aka Wheels Financial Group), a lender with storefronts and websites where people who provide their car title and some proof they are employed can get a loan secured by their vehicle. When borrowers are approved for a loan secured by their car, LoanMart holds on to their title until the loan is paid. On its website, it says, “By using your car’s title to secure the cash during the loan process, you are essentially borrowing…positive equity from your car and turning it into cash!” Unfortunately, borrowers who default on their loans can get stuck in a cycle of spiraling debt or have their cars repossessed. Even those who pay the required minimum payments each month face exorbitant finance charges.

We advised Dedrick to submit an online complaint to the federal Consumer Financial Protection Bureau. We also suggested he contact the California Department of Financial Protection and Innovation Consumer Services Office to file a complaint (online or by calling 866-275-2677).

At the CFPB and at other complaint sites online we found many tales of woe about LoanMart. The problems encountered by customers include barriers to paying more than the minimum required each month and difficulty in paying loans off in full. Many mentioned the “predatory” interest rates.

On ComplaintsBoard, one man attached a copy of the LoanMart “promissory note and security agreement” for his 2014 loan. It listed the annual percentage rate as 187.15%, the amount financed as $2,729, and the “finance charge” as $12,676. An all-caps warning near the signature line reads: “This is a high cost loan. You may be able to obtain a loan from someone else at a lower rate of finance charge…Think carefully before you decide to take this loan.”

Dedrick, in his complaint, mentioned that he took out his vehicle title loan “just seven days” before California Governor Gavin Newsom signed Assembly Bill 539—legislation that restricts finance charges and loan terms, with a goal to rein in predatory lending practices. The law applies to car title lenders, and restricts annual percentage rates to 36%. (Read more about the law here.)

Consumer Action has long warned consumers to avoid car title loans. While some who need money may ignore the advice to “think carefully before you…take this loan,” perhaps Dedrick’s situation (as well as that of many other complainants) will serve as a red flag to avoid a bad deal.

Coalition Efforts: Simplified tax filing and improved air passenger rights among advocacy efforts

By Monica Steinisch

Consumer Action and its allies recently called on policymakers and regulators about these important issues:

Simplification of tax filing would improve family economic wellbeing. Consumer Action joined a broad coalition of national, state and local organizations in a letter to members of Congress expressing strong support for the Tax Filing Simplification Act (TFSA) of 2022, which would require the Department of Treasury to implement meaningful reforms to simplify the process by which families file their tax returns. Filing taxes can be complicated and burdensome for many individuals and families, and, if done incorrectly, could result in millions of people losing out on the credits and benefits they are owed. In fact, ordinary taxpayers spend an average of 13 hours doing their taxes and often pay more than $200 for paid filing services, despite the government already having the data needed for most taxpayers with simple returns. This legislation would improve family economic wellbeing by reducing reliance on paid tax preparers and increasing access to critical credits and benefits, including the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). Learn more.

FTC should investigate Google’s data collection practices. Consumer Action was one of 10 groups that signed on to a letter from the Trans-Atlantic Consumer Dialogue (TACD) urging the FTC to open an investigation into Google’s data collection practices for consumers creating a Google account. Through what the letter characterizes as “manipulative design”—intentional design choices that make it easier for the consumer to inadvertently agree to greater data collection and/or make it more difficult to opt out or limit data sharing—Google’s account sign-up process fails to meet the conditions required for informed consent. The groups assert that the length of time and complexity required to exercise better privacy protections on a Google account constitutes a “dark pattern” that steers consumers into consenting to extensive and invasive data collection—essentially a surveillance fast track. An FTC investigation into Google’s practices would help ensure that U.S. consumer privacy rights are protected. Learn more.

Air travelers deserve better under 2023 FAA reauthorization. Nine consumer advocacy groups, including Consumer Action, sent a joint letter to the House Committee on Transportation and Infrastructure and to the Senate Committee on Commerce, Science, and Transportation urging action on travelers’ urgent needs and priorities that have been exacerbated by the pandemic. Among the range of legislative reforms the groups are urging is the requirement that airlines allow minor children to be seated with their parents and caregivers at no extra cost; that travelers be able to board the next available flight (regardless of airline) when their original flight is delayed; and that ancillary fees be transparent and proportional to the cost of the service provided. The sought-after reforms could be enacted through next year’s reauthorization of the Federal Aviation Administration (FAA). Learn more.

Groups say influencer marketing to minors violates Section 5 of FTC Act. More than two dozen consumer, privacy and parent groups wrote to the Federal Trade Commission (FTC) to commend them for examining stealth advertising to kids in digital media, but pressed the agency to take enforcement actions against perpetrators of unfair or deceptive marketing to children now, rather than waiting until the conclusion of the FTC’s October 2022 workshop to explore the issue further. While stealth advertising can take many forms, influencer marketing—endorsements and product mentions from individuals (even virtual characters) who have a dedicated, trusting following—is the most prominent and well-researched type of stealth marketing to people under the age of 18. Studies show that standard disclosures are ineffective on children, making stealth advertising directed at them both deceptive and unfair as defined by Section 5 of the FTC Act. As such, the groups urged the FTC to immediately issue guidance making clear to all parties—platforms, brands, influencers and third parties—that it is a violation to target young people with influencer marketing, and to follow up the guidance with enforcement actions. Learn more.

CFPB Watch: Pressure on banks to protect P2P users, vanishing credit lines, and defending your data privacy

By Ruth Susswein

Consumers who use person-to-person (P2P) money transfer services, like Zelle or Venmo, often are left holding the bag when they are scammed by a fraudster and their bank refuses to refund the fraudulent transaction.

The Consumer Financial Protection Bureau (CFPB) is expected to release new requirements for banks to refund some money scammed from consumers using Zelle and other P2P services, according to the Wall Street Journal.

While consumers are legally protected from unauthorized bank transactions, the situation gets more complex for P2P customers when they get tricked into transferring funds to a fraudster. Unfortunately, when consumers turn to their bank for help, the bank generally refuses to reimburse the funds, saying the consumer authorized the money transfer.

The CFPB is weighing how much investigation banks should be required to do when customers are defrauded, and when banks must compensate consumers for those losses. We will keep you posted.

Disappearing credit lines

Maybe it should come as no surprise that as inflation rises, credit card companies are prepared to cut their potential losses by slashing consumers’ credit lines. Credit card issuers seek to reduce their risk that cardholders could take on more credit than they can handle and be unable to pay.

Consumers’ lines of credit were dramatically reduced in 2019, according to a new report on credit line decreases by the CFPB. The Bureau found that about two-thirds (67%) of consumers who were hit with a credit line decrease did not have a credit card delinquency.

The report reveals that the median decrease on a credit card limit was about 75%. Credit lines often dropped to about $400, removing most available credit on the card. Skimpy credit lines are especially disruptive to consumers with few credit cards who rely on credit during difficult economic times. These vanishing credit lines have mainly affected consumers with credit scores below 720. Most cardholders with superprime scores (720 and above) have been untouched.

Such significant reductions in credit lines can damage a consumer’s credit score because about one-third of our credit score is calculated based on how much available credit we have versus how much credit we have used (credit utilization). Once credit lines were slashed, consumers with prime and below-prime credit scores were considered “maxed out,” with 94% of their available credit consumed.

CFPB warns credit reporting companies and users to protect consumers’ data privacy

The Consumer Bureau cautioned credit reporting agencies and companies that use credit reports that they have an obligation to protect people’s data. The Bureau warned that users could be held criminally liable if they abuse their access to people’s credit files.

“Americans are now subject to round-the-clock surveillance by large commercial firms seeking to monetize their personal data,” said CFPB Director Rohit Chopra. “The CFPB will be taking steps to use the Fair Credit Reporting Act to combat misuse and abuse of personal data on background screening and credit reports.”

To protect people’s privacy, the Bureau reminds credit bureaus that they must carefully and accurately match the credit file to the correct person, and companies must have a “permissible purpose” to use the data.

The Consumer Bureau celebrated its 11th anniversary on July 21.

Class Action Database: Not a dry eye for Restasis manufacturer

By Monica Steinisch

A class action settlement involving Britax Child Safety, Inc. and allegations that some of the company’s child car seats are defective and that purchasers paid more for the seats than they otherwise would have if they had known of the defect was among the new settlements added to the Consumer Action Class Action Database during July.

Of note this month is a class action against pharmaceutical company Allergan. The lawsuit claimed that Allergan engaged in a monopolization scheme that kept generic versions of Restasis, a prescription treatment for chronic dry-eye conditions, off the market and made Restasis prices higher than they otherwise would have been. Allergan has agreed to pay Restasis buyers $30 million dollars to settle the antitrust lawsuit.

Pharmaceutical patents typically run out after 20 years, after which other pharmaceutical companies can introduce their own, lower-priced generic versions of the product. Allergan attempted to delay competition for Restasis by selling its Restasis patent in 2017 to the Saint Regis Mohawk Tribe in New York. This strategy to maintain its monopoly failed when, in 2019, the U.S. Supreme Court rejected Allergan’s argument that the sovereign status of the tribe shielded the Restasis patent from U.S. Patent and Trademark Law.

If you bought Restasis between May 1, 2015, and July 31, 2021, and you live in one of 26 covered states or Washington, D.C., you may be eligible for a payment. For more information about eligibility, visit this webpage.

The claims deadline is Aug. 11, 2022.

About Consumer Action

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Consumer Action is a nonprofit 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 both in 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, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database, and more. 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. Our in-language media outreach allows us to share scam alerts and other timely consumer news with a wide non-English-speaking audience.

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 more than 6,500 community-based organizations. Outreach services include in-person and web-based training and bulk 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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