Consumer Action INSIDER - February 2020


Table of Contents

What people are saying

[Read Consumer Action’s SCAM GRAM to learn] How to stay one step ahead of crooks, conmen, and grifters. — Bob Bubenik, via Facebook

Did you know?

Since 2010, the Internal Revenue Service’s (IRS) budget has been reduced by about 20%, and the number of full-time employees working for the agency has declined by approximately 22%. The Office of the Taxpayer Advocate—the independent organization within the IRS that helps taxpayers and protects taxpayer rights—has pointed out in its newly released annual report to Congress that answering 100 million telephone calls, conducting audits and staying on top of enforcement actions requires adequate budget and staffing (which the IRS sorely lacks). The report recommends that Congress increase funding for taxpayer service and information technology (IT) modernization, noting, “Mostly because of antiquated technology, a smaller workforce and an increasing workload, [the IRS] cannot afford to provide the quality of service that taxpayers deserve.” Read the full report for these and a slew of other pressing concerns relevant to taxpayers.

Confused about healthcare coverage? We’ve got you covered

Consumer Action recently published its new Get Covered health insurance education and training module. The three-part module divides its content up according to coverage sources and demographics (from students to seniors to immigrant populations) to enable users to easily access the information they need.

In the first of the three guides, Get Covered: Navigating private and government health insurance, readers learn about the various sources of individual—not “group”—health insurance (including detailed information about the Affordable Care Act, or ACA, Health Insurance Marketplace), how to purchase coverage, and what options they have for healthcare are if their income is very low or they are ineligible for certain government or private programs.

The second guide, Get Covered: Understanding your employer-sponsored health plan, explains how employer-sponsored health insurance works, how to approach the plan selection process, and what to know about enrolling and maintaining coverage.

Finally, Get Covered: Choosing and using Medicare delves into the government health insurance program that covers 44 million Americans. This guide explains when and how to enroll in Medicare, what each of the “parts” of the program covers (Medicare Part A, B, C and D), what to consider when making your coverage choices, and where to find more information.

Even after the implementation of the Affordable Care Act, obtaining and maintaining affordable healthcare coverage remains a challenge for many U.S. residents, as does navigating the many available options.

“Making the wrong health insurance choices can result in inadequate coverage and higher out-of-pocket costs,” said Ken McEldowney, Consumer Action’s executive director. “Our goal in creating this new module is to prepare everyone, regardless of age or financial, employment or immigration status, to make informed decisions about their medical coverage.”

In addition to the three guides, the module includes a backgrounder (written in question-and-answer format) that expounds on the information in the guides, and three slide decks for use by community educators in group presentations.

The Health Insurance module was created under Consumer Action’s Insurance Education Project. All components of the module are available for free download from the Consumer Action website, with the three guides also available in print (in limited quantities) for order by community-based organizations. The guides are being translated into Spanish, Chinese, Vietnamese and Korean, for availability in the spring.

Consumer Action to host financial technology (FinTech) trainings

Consumer Action will host two in-person trainings—one on Feb. 5 in Los Angeles and the other on Feb. 19 in Washington, D.C.—along with two webinars on Feb. 13, to educate our community partners about financial technology (FinTech) and provide them with strategies to assist consumers in improving their financial capability. The trainings are made possible through a generous grant from the Wells Fargo Foundation.

The trainings will introduce participating groups to Consumer Action’s Improving your financial health through FinTech guide and complementary resources. Consumer Action will also share key takeaways from its recent FinTech innovation work during the trainings, and practitioners will have the opportunity to share best practices for integrating technology into existing financial coaching and counseling programs.

With grants from the Wells Fargo Foundation and JPMorgan Foundation, Consumer Action has translated the Improving your financial health through FinTech guide into Spanish, Chinese, Vietnamese and Korean. (Community groups will have the opportunity to order these publications for free.)

“We are pleased to scale our FinTech innovation work and collaborate with fellow Nonprofit-Fintech Exchange Interest Group partners and FinTech innovators,” Consumer Action’s Audrey Perrott said. “We’re also excited to bring these parties together to share their best practices for integrating FinTech into existing consumer coaching, counseling and credit building programs, and to spread the word about our upcoming FinTech mini-grant program.”

In Los Angeles, Consumer Action will be joined by the following community partners/presenters: Erika Toriz-Kurkjian, executive director of Haven Neighborhood Services; Isaias Hernandez, community development director of the Mexican American Opportunity Foundation; and client services director Joanna Cortez Hernandez and financial coach Efrain Segundo of Mission Asset Fund.

In the nation’s capital, Consumer Action will be joined by the following Nonprofit-Fintech Exchange Interest Group partners/presenters: Dara Duguay, chief executive officer of Credit Builders Alliance; Ayanna Fortson, director of housing and community development for the National Urban League; and Katherine Rios, director of financial empowerment for UnidosUS.

In addition to Consumer Action staff, webinar speakers will include Nonprofit-Fintech Exchange Interest Group partners Laura D’Alessandro, senior program officer for family income and wealth building at the Local Initiatives Support Corporation (LISC); Adam Rust, managing director at WiseWage and research director at Reinvestment Partners; and Samir Goel and Abbey Wemimo, co-founders of the digital savings and credit-building platform Esusu.

Webinar participants will have the opportunity to learn from leaders in the FinTech, financial coaching and financial capability fields who have served low-to-moderate-income, limited-English-speaking immigrants and other underserved and diverse populations across the U.S. Readers interested in participating in the webinars can follow the links below to register.

(Please note: The same webinar content will be delivered once in the morning and once in the afternoon; you do not need to register for two webinars on the same day.)

Webinar One: Feb. 13, 2020, 10:00 a.m. PST, 12:00 p.m. CST, 1:00 p.m. EST

Webinar Two: Feb. 13, 2020, 1:00 p.m. PST, 3:00 p.m. CST, 4:00 p.m. EST

Hotline Chronicles: Spreading the word stops scams

At Consumer Action, we continue to hear disturbing stories of people who have become victims of financial scams. This is why so much of our work is centered on guides, newsletters and other materials that attempt to warn the public about scams and frauds.

One recent story, from a man named Larry,* was especially heartbreaking:

“I received a call from a person who said he represented my computer security firm. He said he owed me a $200 refund,” Larry said.

“He asked me to turn on my computer and log in to my bank account so that he could place the money in my account. I did so, and watched as the $200 was added. The next day, he called again and said he’d made a decimal mistake and actually placed $20,000 into my account! He asked me to log in again and showed me that there was indeed $20,000 in my account. He said he was going to get fired because of the mistake and asked me to send a cashier's check to cover the loss. I went to the bank and did so. Obviously, when I checked there was $20,000 dollars in my account—which was not there before—so I didn’t question it. He must have removed the money, and now I’m out $20,000.”

Unfortunately, there’s not a lot that we can do to help Larry. We advised him to speak with the bank, file a police report and submit a complaint to his local consumer protection agency about the scam.

But there is something we can all do to help protect other potential victims: share information with friends and family about common scams.

A new study entitled “Exposed To Scams: What Separates Victims From Non-Victims,” by the Better Business Bureau, the FINRA Investor Education Foundation and the Stanford Center on Longevity, concluded that having prior knowledge about frauds, even generally, is particularly helpful in avoiding victimization. By staying on top of common frauds and scams and spreading the word, you might help people around you avoid being scammed and suffering financial losses.

The study features a survey of Americans and Canadians who were targeted by scammers and reported it to the Better Business Bureau. Nearly half (47%) of the 1,408 survey respondents did not engage with the fraudster, and so were not victimized. Thirty percent engaged but did not lose money, while 23% engaged and ultimately lost money. What can we learn from this? For one: Do not engage with scammers!

Another major survey conclusion was that simply knowing about specific types of scams, and understanding the general tactics that scammers use, can help targets avoid becoming victims. In the survey, 30% of respondents who rejected attempted scams were aware of the specific fraud before they were targeted. Respondents who had heard about the scam before were significantly less likely to lose money (9% versus 34%) when a scammer contacted them. Among respondents who did not engage with the scammer, almost half (49%) reported having general knowledge about the methods and behaviors of scammers. Those who did not give scammers the time of day were also more likely to report that they had knowledge of how scams operate.

Oddly, while most respondents reported not believing word of mouth to be a particularly good source of information about scams, slightly more than 40% of respondents said they had obtained information about frauds via…word of mouth! This proves that, despite what people think, word of mouth is an important source of awareness and protection.

Check out Consumer Action’s materials on protecting yourself and others from scams and fraud, and sign up for our monthly e-newsletter, SCAM GRAM (by inputting your email address on the right side of our website under “Join Our Email List”). Then, spread what you learn with friends, family and coworkers (both on social media and in daily conversation). Who knows—you may save someone like Larry a lot of financial pain.

*Not this consumer’s real name

Senators demand to know: Where’s the relief for wronged consumers?

Why is Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger providing little to no financial relief to wronged consumers? That’s the question 15 U.S. senators are urging the Inspector General (IG) of the Federal Reserve to investigate.

The senators charge that the CFPB director has consciously chosen to disregard legal precedent by failing to provide compensation to victims in four recent fraud cases.

In one case, last year, the Bureau fined online payday lender Enova International Inc. $3.2 million for withdrawing money from consumers’ bank accounts without authorization, but did not require Enova to return the funds to consumers that they had illegally obtained.

Last January, the Bureau hit Sterling Jewelers with a $10 million penalty for opening up store credit card accounts and enrolling customers in payment protection plans, all without customer consent. Consumers did not receive refunds for the unwanted protection plans.

“The Bureau’s approach to restitution under Director Kraninger creates a perverse incentive for companies to violate the law by allowing them to retain all or nearly all of the funds they illegally obtain from consumers,” the senators wrote in a letter to IG Mark Bialek, whose role is to detect waste, fraud and abuse within the programs and operations of the Federal Reserve Board and the CFPB.

Consumer Action has been calling attention to the lack of restitution for harmed consumers at every opportunity—directly with Kraninger, and during meetings with Bureau staff.

The Bureau had long been the agency consumers could rely on to fight for them when they had been financially injured; under previous leadership, it had returned nearly $12 billion to 27 million wronged consumers. Since the Trump administration has neutered the agency, the grand total the Bureau has secured in consumer relief has sat at approximately $12 billion—for 29 million consumers (an additional 2 million). To put it another way, under prior leadership, the CFPB had announced 116 enforcement cases against consumer finance companies that used deceptive or misleading practices, producing an average consumer relief of over $94 million per case. Although Kraninger, a Trump administration appointee, has announced three enforcement cases alleging deceptive practices, the CFPB, under her direction, has agreed to settle each case without ordering any monetary restitution for victims.

More updated figures will be available from the Bureau in the coming weeks.

“If today’s CFPB has enough evidence to charge a company with defrauding consumers, then it must live up to its mission to protect consumers, hold firms accountable for their financial abuses and make consumers whole,” said Consumer Action’s Deputy Director of National Priorities Ruth Susswein.

“The CFPB also has the authority to seek monetary restitution for harmed consumers and impose fines when it uncovers violations of the law,” noted the Consumer Federation of America in an announcement of its 2019 study, by University of Utah S.J. Quinney College of Law Professor Christopher Peterson, of the agency’s enforcement program decline. Yet, the organization pointed out, “Activity in both of these areas is on the decline—overall enforcement activity is down by 80% from the Bureau’s peak productivity in 2015 and average monetary relief to victims down by 96% per case.”

Coalition Efforts: Pushing back against fraud, greed and misinformation

OCC proposal could greenlight predatory lending schemes. Consumer Action joined a coalition of more than 100 organizations in opposing a proposed rule from the Office of the Comptroller of the Currency (OCC) that would facilitate predatory loans. Specifically, the rule would make it easier for payday and other high-cost lenders to use banks as a “fig leaf” to hide behind in offering the public predatory loans at annual interest rates of 100% and higher. These rates are currently prohibited under many state rate cap laws. The terrible scheme is known as “rent-a-bank” or “rent-a-charter.” Learn more.

Advocates urge CFPB to create strong consumer protections for PACE borrowers. Property Assessed Clean Energy (PACE) programs offer loans for energy efficient home improvements, including solar panels, HVAC systems and energy efficient windows. Unfortunately, the loans can also be used to finance questionable or unnecessary projects foisted on consumers by unscrupulous parties. PACE loans, offered through “home improvement” contractors—often via door-to-door sales—and secured by a property tax lien, are collected through a property tax assessment that takes priority over (i.e., must be paid prior to) a homeowner’s existing mortgage. PACE programs must be authorized by state and local governments, but are privately run, with little to no government oversight. Advocates have encouraged the Consumer Financial Protection Bureau (CFPB) to use its authority to issue a rule that applies the Truth in Lending Act to the PACE loan industry. They have also requested that the CFPB continue to research the PACE market in order to develop strong protections that curb widespread program abuse. Learn more.

Pharmacy benefit managers are driving up drug costs for patients. Prescription drugs represent one of the most significant and growing costs to American patients. But what is driving these costs? Advocates in a massive coalition for affordable drugs are calling for transparency in drug pricing and in the drug distribution chain. The coalition highlights the role of pharmacy benefit managers (PBMs)—“middlemen” in the drug supply chain that have financial incentives to raise the rates of the drugs sold to pharmacies—as one of the biggest factors contributing to the ballooning prices. The coalition is championing the passage of the bipartisan PBM Transparency and Prescription Drug Costs Act (HR 5304), which would hold secretive PBMs accountable by requiring increased transparency in their pricing practices. Learn more.

New credit report portal would make resolving errors easier for consumers. Advocates recently wrote to Congress in support of the Protecting Your Credit Score Act of 2019 (HR 5332). The bipartisan bill directs the three credit reporting bureaus to work together to create one online portal to provide consumers with free and unlimited access to their credit reports and scores. The portal would also allow consumers to more easily initiate and resolve disputes with the bureaus. Finally, it would allow users to view which parties the bureaus have sold their data to within the prior two years. Two of the biggest issues facing low-income communities are limited access to affordable credit and inaccurate credit information, which, together, can lead these consumers to borrow from high-cost payday lenders. HR 5332 places the burden of resolving inaccurate credit information on the bureaus, instead of the consumer. Learn more.

CFPB Watch: New task ‘farce’ outrages advocates; help for housing counselors

Consumer advocates have blasted the Consumer Financial Protection Bureau (CFPB) for staffing a new taskforce with legal academics who have a history of opposing not only consumer rules, but also the very existence and purpose of the Bureau itself.

The CFPB has stated it has appointed the five-person Taskforce on Federal Consumer Financial Law to produce research and legal analysis to “harmonize, modernize and update” federal financial regulations and to flag “inconsistencies” in the regulations.

Public interest advocacy group USPIRG’s senior director of federal programs, Ed Mierzwinski, dubbed the group a task “farce,” and other consumer advocates agree. Many have drawn attention to the fact that the anti-consumer positions of task force members defy the Bureau’s very mission to protect consumers against predatory financial practices. Advocates anticipate that the new body has been created to craft recommendations to justify gutting consumer protection laws.

“It’s shocking that the CFPB director didn't even appoint a token pro-consumer person to this sham taskforce,” said National Consumer Law Center Associate Director Lauren Saunders.

Rather than rooting out unfair and deceptive practices by financial firms, both former (Mick Mulvaney) and current (Kathy Kraninger) CFPB leadership have emulated the Trump administration’s policies, opting to focus the Bureau on reducing and relaxing regulations on consumer financial protections, including rules to reign in predatory payday lenders and debt collectors.

Frequent CFPB critic and George Mason University Antonin Scalia Law School Professor Todd Zywicki will chair the new task force. Other members include former professor and Federal Trade Commission (FTC) official Dr. Howard Beales; former attorney for the Farm Credit Administration and former FTC official L. Jean Noonan; retired Federal Reserve economist Dr. Thomas Durkin; and private attorney and former FTC official William MacLeod.

CFPB advisory committees

The Bureau is now accepting applications for membership to its four advisory committees: The Consumer Advisory Board, the Community Bank Advisory Council, the Credit Union Advisory Council and the Academic Research Council.

Those with expertise in the areas of consumer education, consumer protection, community development, consumer finance, debt relief, student lending or small dollar lending are encouraged to apply to the Consumer Advisory Board. The CFPB states that the purpose of the four independent stakeholder groups is to provide it with “formal input on everything from consumer engagement, to policy development, to research.”

The application deadline is Feb. 27. Click here for more information on these committees, and here for details on how to apply.

California creates “mini-CFPB”

As the CFPB’s consumer protection efforts dwindle under Trump administration-appointed leadership, California’s governor decided to launch a state-level CFPB-like watchdog agency: the Department of Financial Protection and Innovation.

According to the governor, this mini-CFPB will work “zealously on behalf of consumers” to oversee companies operating in the financial sector (banks, lenders, etc.) and to create new rules for debt collectors, lenders and the like. The agency is expected to begin operating this summer, under the direction of former federal CFPB attorney and current Commissioner of the California Department of Business Oversight Manuel (Max) P. Alvarez.

No-action is good news for counselors, lenders and consumers

Housing counseling agencies are optimistic that a major hurdle has finally been overcome in their efforts to receive bank funding for the counseling services they provide for potential homebuyers and existing homeowners.

The CFPB has issued Bank of America a “no-action” letter that gives the bank assurances that no punitive supervisory or legal action will be taken against it for financially supporting the counseling.

Mortgage lenders have, for years, been concerned that if they funded the work of HUD-approved housing counselors, they might be considered in violation of certain mortgage rules under the Real Estate Settlement Procedures Act (RESPA). The CFPB’s recent “no-action” letter puts that worry to rest.

Approximately 1,600 Housing and Urban Development (HUD)-approved housing counseling agencies help more than one million consumers each year with budgeting for a mortgage, pre-purchase advice and post-purchase loan modification assistance. Click here to find a local HUD-approved housing counseling agency in your area.

Class Action Database: is probably wishing it hadn’t…

A class action settlement involving XCEL Premium Motor Oil was among 10 new settlements added to the Consumer Action Class Action Database during January.

Of note this month are a series of class action settlements involving the Telephone Consumer Protection Act (TCPA).

The TCPA places limits on certain types of calls to consumers. Specifically, it prohibits calls made by automatic telephone dialing systems (also known as automatic dialers). Automatic dialers use computer equipment to store or create telephone numbers and dial them en masse. The TCPA also bans unsolicited telemarketing text messages to cell phones, as well as prerecorded messages, called robocalls, unless consumers have explicitly consented to them (for more on robocalls, click here).

Either the Federal Communications Commission (FCC) can enforce the laws established in the TCPA, or private individuals can bring lawsuits against TCPA violators. Violators face fines of up to $500 per violation, or the actual monetary loss to the consumer (per violation), whichever is greater.

The first TCPA class action covered in Consumer Action’s database involves the energy company Vivint Solar. Plaintiffs allege that the company made prerecorded calls to consumers on the Do Not Call Registry using an automatic dialer. Vivint denied the allegations but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

Individuals who received unsolicited calls by third parties marketing Vivint products and services between July 1, 2014, and Nov. 8, 2019, may be eligible for a pro rata share of the $975,000 settlement. The claims deadline is Feb. 21, 2020.

The second case involves electric and natural gas services company Oasis Energy sending unsolicited prerecorded messages to consumers’ cell phones. Oasis also denied the allegations, but agreed to a $7 million settlement to avoid the burden, expense and risk of continuing the lawsuit.

Individuals who received Oasis’ prerecorded messages (also known as ringless voicemails) between Feb. 12, 2014, and Sept. 25, 2019, may be eligible for cash payment. The claims deadline is Feb. 20, 2020.

The third case involves unsolicited text messages sent via autodialer on behalf of ContextLogic (owner of the e-commerce app Wish, which features scrolling displays of low-cost merchandise offered by independent sellers).

ContextLogic denied the allegations but agreed to a $16 million settlement. Individuals who received unsolicited text messages related to the e-commerce marketplace between April 6, 2014, and Sept. 24, 2019, may be eligible for either cash payment or the e-commerce marketplace’s in-app currency. The claims deadline is Feb. 25, 2020.

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, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and seven 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 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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