Consumer Action INSIDER- July 2022


What people are saying

This was a great opportunity to learn more about the ACP [Affordable Connectivity Program]. [The webinar] was very in-depth and easy to understand! Thank you! —Stanley Christian, Barren River Area Development District, Bowling Green, KY

Did you know?

Raising the cap on wages subject to the Social Security payroll tax could help Social Security remain solvent far beyond the current 2034 insolvency projection. In 2022, the tax is applied only to the first $147,000 of an individual’s earnings—people earning more stop paying the tax when they reach the cap. According to a 2021 report by the Congressional Research Service, workers earning below the cap pay a larger proportion of their income than workers whose earnings exceed it. The authors of a proposed House bill, the Social Security 2100 Act, say it would, among other things, enable Social Security to achieve solvency over the next 75 years—a significant feat—by requiring the wealthiest American households to pay their fair share of taxes.

Discussing social media harms and kids' online safety

By Nelson Santiago

In late April, we heard a panel of engaging speakers—including Facebook whistleblower Frances Haugen and California legislators Nancy Skinner and Jesse Gabriel—at the Center for California Studies at Cal State Sacramento. The conversation, focusing on how misinformation in social media can harm children and how to limit industry practices that allow harmful content to thrive, was moderated by Jim Steyer, CEO and founder of Common Sense Media.

Steyer kicked off the discussion (“Making Technology Work Better for California's Kids”) by reminding attendees that California, not Washington, D.C., has proven to be the most important place in the nation for data and privacy regulation, not only because most tech companies are based there, but also because it has been the center of the most important legislative and regulatory privacy efforts in the U.S., including passage of the California Consumer Privacy Act.

When introducing Haugen, Steyer described how, after seeing deeply troubling patterns and practices at Facebook, she made the extraordinarily courageous personal decision, at great personal risk, to blow the whistle on Facebook. Haugen exposed astonishing details about how Facebook and other tech platforms amplify division, extremism, polarization and self-hatred—even violence—among their users.

Haugen, in 2021, told Congress that Facebook’s products harm children, stoke division and weaken our democracy, but that the company won't make changes because they have put profits before people. During the panel discussion, Haugen explained that a lot of the issues that she flagged in her disclosures about Facebook (now Meta), such as the use of algorithms that ultimately push users toward more extreme content, are also present across other tech platforms. For example, if a kid opens a new Facebook account with no friends and no interests, searches for a couple of things like healthy eating and healthy recipes, clicks on the first 10 items in their feed each day, and follows the suggested hashtags, in two or three weeks they will start seeing content that glorifies anorexia and self-harm. Kids aren't looking for the harmful content; the platform is providing it, said Haugen.

On hand to discuss potential legislative solutions were California State Senator Skinner and California Assemblymember Gabriel. Senator Skinner reminded attendees that, in every aspect of life, government has had to step in to regulate in order to ensure safety. For example, when car manufacturers didn't want to install seat belts because the extra cost would cut into profits, government required the seatbelts. She said that because corporations will rarely, if ever, voluntarily put safety measures in place if they feel it might interfere with profits, we, as a society, need to document the harms and require the safety measures.

Assemblymember Gabriel, who is a Democrat and chair of the Assembly Committee on Privacy and Consumer Protection, emphasized that part of what's creating momentum for regulation in this area is bipartisan interest; legislators are looking at the issues as parents. Gabriel described potential solutions. This includes the California Age-Appropriate Design Code Act, which would, if passed, require companies to take into consideration the best interests of kids, and other current legislation that focuses on transparency. He said it is "time for [tech companies] to pull back the curtain a little bit and be honest with policymakers and the public about their content moderation policy." Gabriel also discussed the importance of education, looking at how to best teach kids to be good digital citizens, so that they can protect themselves online.

Gabriel acknowledged that neither one bill nor one legislative session will be enough to solve everything, but said that progress must be made, and not just because as a father he worries about his kids. He warned that the impact of social media is the common thread that runs back to many of the challenges faced in the state—gun violence, hate crimes, and disinformation about climate change and elections.

For further reading see:

  • Slate’s “The Most Important Answer From the Facebook Whistleblower” (link)
  • Time’s “The 5 Most Important Revelations From the 'Facebook Papers'” (link)
  • PBS’s “Facebook’s leadership had ‘no appetite’ to fact check political ads, combat disinformation” (link)

Hotline Chronicles: Where’s my ‘loot’?

By Linda Sherry

Carmen* from Massachusetts contacted Consumer Action’s hotline asking how to respond to subscription-based Loot Crate, which has “not been sending out orders for some time, but is still charging people.” She said, “My emails to the company are going unanswered.”

Loot Crate sells boxes (“crates”) of promotional merchandise, such as T-shirts, comic books, cards and other “collectible” items, to fans of specific video games. Among the offers on its site at the moment, Loot Crate sells a box of items related to Fallout, a series of “post-apocalyptic role-playing video games” set in an “atompunk,” “retro-futuristic world,” for $39.99 (one crate) to $260.94 (six crates).

Carmen noted that “looking at Loot Crate’s social media pages, many people are experiencing the same issues.” She’s right about that—the reviews for Loot Crate are pretty poor. On the Better Business Bureau website, more than 500 people have complained about the company.

Amber J on Sitejabber (where there are hundreds of negative reviews) recently posted: “I started a bimonthly subscription for Wizards crates. I was charged three months in a row and only received one crate. I complained to the company and asked for my money back. They told me it’s a monthly charge. I sent the description of the box to them that says I'd be charged every other month. They refuse to refund me. I've still only received one box after three charges. So, I paid $140 for one box.” Amber J’s advice to consumers: “Don’t purchase from Loot Crate. They are a scam.”

Loot Crate filed for Chapter 11 bankruptcy in 2019 and continued operations, promising that “daily operations will continue as usual, unique and exciting fan items will be purchased, crates will be shipped, and all aspects of the business will go on as before the Chapter 11 filing.”

We advise that anyone who purchased Loot Crates but did not receive them, and were charged nonetheless, file a complaint online or by phone (877-382-4357) with the Federal Trade Commission (FTC). If you are being charged by Loot Crate but are not receiving the merchandise you ordered, the company is violating the FTC’s requirement for prompt delivery of items purchased on the internet, established under the Mail or Telephone Order Rule (which also applies to internet sales). In addition, contact your debit or credit card issuer to report that you never received the goods you paid for, and ask for a chargeback.

*Not this consumer’s real name

Out and About: Debt and the racial wealth gap

By Audrey Perrott

In June, this writer attended a presentation on Debt: When It Helps, When It Hurts, What It Could Do to Build Household Wealth. The hybrid in-person/virtual event, put on by the Federal Reserve Bank of New York, the Federal Reserve Bank of St. Louis, and the Aspen Institute Financial Security Program, covered the role policymakers, philanthropists and investors can play in improving access to capital as a tool for building long-term stability, including through access to loans for higher education, establishing or expanding a small business, or purchasing a home.

Johanna Smith-Ramani, managing director of the Aspen Institute Financial Security Program (FSP), kicked off the event by sharing some of the findings from the FSP’s research report Disparities in Debt: Why Debt Is a Driver in the Racial Wealth Gap. She noted that although there are countless anti-discrimination laws and constitutional guarantees of equality, the racial wealth gap is pervasive and growing. Most analyses of the racial wealth gap, however, do not take into consideration the role that debt plays in widening the gap. Many Blacks and Latinos have negative net worth.

Not all debt is bad, but some types are debilitating. What is in someone’s “debt stack” determines whether it is helping them to leverage wealth or holding them back. Credit card debt and student loan debt sit squarely in the very low wealth category. Asset-producing debt, such as mortgages, help build net worth over time. Smith-Ramani says our society is on the wrong trajectory for promoting wealth accumulation. Thirteen million households are experiencing negative net worth, with Black families significantly over-represented in that category. A white family is more likely to have a mortgage and other property-related loans, while a Black family is more likely to have student loans.

In a fireside chat with Mae Watson Grote, founder and chief executive officer of Change Machine, subject matter experts Lynette Khalfani-Cox, founder of The Money Coach, and Frederick F. Wherry, professor of sociology and vice-dean of diversity and inclusion at Princeton University and founding director of Debt and Dignity Network, weighed in.

Khalfani-Cox said that, for her, the Black student loan borrower trend resonates personally: After paying off $100,000 in credit card debt (and writing Zero Debt: The Ultimate Guide to Financial Freedom), she then spent a decade tackling $40,000 of student loan debt after earning her master’s degree at the University of Southern California. She indicated that we need to frame the conversation around types of debt: Some are harmful to financial goals, and others (like mortgages) are prudent ways to use debt to build wealth. (Forty-five percent of Blacks own their primary residence, compared to 73% of whites.) She also discussed the “Black tax”—an expectation in Black families that those who have achieved must help other family members. That expectation saps wealth creation, especially if multiple family members have limited incomes.

Wherry talked about the “Black tax,” too, explaining that his mother taps the “Bank of Fred” and other familial “banks.” He cautioned that if you are doing relatively well and have a lot of people in your network who need assistance, you will have less disposable income to put toward investments, hindering the ability to build wealth. He also raised a red flag about student loans, noting that Black and Latino graduates are more likely to have to take out student loans due to a lack of family inter-generational wealth, and they are more likely to be underemployed, even after graduation—both contributing to a wider wealth gap.

The panelists were asked how the “curb-cut effect” could be leveraged on the debt question (the term is used for laws and programs designed to benefit vulnerable groups, such as disability laws, that, in turn, benefit others—in the case of curb cuts, parents with strollers, cyclists, delivery people, etc.). They also were asked what questions they would pose to policymakers and product innovators who are trying to achieve change.

Khalfani-Cox advised innovators to consider if what you are doing is financially inclusionary or exclusionary. “If you are not helping, you are hurting.”

Wherry suggested innovators closely monitor inequality in the ways consumers are experiencing their financial products. If specific communities are having negative results, he said, it does not mean they don’t understand the product—it means that the product is not well designed for that population.

The day included panels of innovators and capital investors, who discussed their solutions for addressing debt and the wealth gap. The takeaways from the event were that the racial wealth gap is widening, and that there is a dire need for inclusionary policies, innovative financial products and services, and capital investment to address the problem.

Coalition Efforts: Measures would enhance privacy, expand homeownership and improve financial wellbeing

By Monica Steinisch

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

Protect young users online through child-related privacy and tech legislation. Consumer Action joined its allies in urging U.S. Senators Cantwell (D-WA) and Wicker (R-MS) to hold a Senate Commerce Committee markup this month on the Kids Online Safety Act (S 3663) and child-related privacy and tech legislation to protect young users online. Overall, youth have been faced with a growing mental health crisis in recent years, and associations with social media use are emerging. The Kids Online Safety Act seeks to hold social media companies accountable after their repeated failures to protect children and adolescents from the practices that make their platforms more harmful. The bill establishes a duty of care for social media companies to protect minors from mental health harms, sexual trafficking and illegal products. Additionally, the bill requires companies to go through independent, external audits, allows researcher access to platform data assets, and creates substantial youth and parental controls to create a safer digital environment. Learn more.

Downpayment Toward Equity Act would help close historical racial homeownership gap. Consumer Action joined 70 national and local organizations in a letter to U.S. Congressmembers Maxine Waters (D-CA) and Patrick McHenry (R-NC) expressing strong support for the Downpayment Toward Equity Act (HR 4495). The bill provides substantial downpayment assistance to first-time, first-generation homebuyers and helps close the historical racial and ethnic homeownership gap by giving underrepresented consumers an opportunity to create wealth through homeownership that they can pass on to future generations. Increasing homeownership is critical for the economy, for the financial security of millions of American households, for sustainable job creation, and for addressing the racial and ethnic wealth gap. Learn more.

Forty-year loan term would aid more struggling mortgage borrowers. Consumer Action and more than a dozen other advocacy organizations wrote to the Department of Housing and Urban Development (HUD) expressing support for the agency’s proposed amendment to existing regulations that would increase the maximum payment term of a loan modification from 360 months to 480 months. Mortgage interest rates have climbed by approximately 225 basis points in the past year, and there are approximately 350,000 FHA-insured borrowers in seriously delinquent status. Elevated interest rates make it challenging to provide the targeted payment relief that HUD seeks to achieve for the many borrowers who need it. The 480-month modification term would, in particular, provide needed assistance to borrowers who have already used their “partial claim”—an interest-free loan from HUD—since these borrowers have few, if any, other options for payment reductions. Learn more.

CFPB Watch: Employee training debt traps; and medical debt mistakes can end military careers

By Ruth Susswein

Some employees end up saddled with work-related debt because they are required to reimburse the employer if they leave a job before the end of a training program.

The Consumer Financial Protection Bureau (CFPB) has heard from workers who say they were required to repay up to $5,500 for job training if they left the company within two years of completing a training program. A nurse told the CFPB that a large healthcare provider requires a training program where new employees would owe $10,000 if they did not end up working full-time for the company.

The growing use of training repayment agreements has raised alarm bells at the nonprofit Student Borrower Protection Center (SBPC), which calls these arrangements part of a “shadow” student debt market that “turns on-the-job education into a predatory debt trap.” Employees have told SBPC that they’ve learned only after trying to leave the job that there was a training repayment clause tucked into their contract.

The CFPB wants to know more about employer-driven debt. They’re interested in learning if workers were aware of the repayment commitment upfront, and if the debt has threatened their future employment options. They also are seeking information about data firms that collect and sell workers’ data.

You can tell your story here, or by sending an .(JavaScript must be enabled to view this email address) with your comments (by Sept. 7).

Banking questions and answers

The Bureau also is collecting information about consumers’ customer service experiences with their banks. They want to know what information consumers are seeking from their banks and what info has been unattainable. They also want to know how you would feel about your bank sharing account data with others. You can send your comments by .(JavaScript must be enabled to view this email address). (Please include Docket No. CFPB- 2022-0040 in the subject line.)

Federal Homeowner Assistance Fund info in seven languages

The Consumer Bureau is getting the word out in multiple languages to help homeowners with limited English proficiency avoid foreclosure.

Homeowners with limited means who’ve been unable to make their mortgage payments because of COVID-19 may be eligible for federal Homeowner Assistance Fund (HAF) aid through their state. Generally, HAF dollars can be applied to mortgage payments, utilities, homeowners insurance and back taxes.

Basic eligibility information and links to apply are available in Spanish, Chinese, Vietnamese, Korean, Tagalog, Arabic and English. For details on HAF money and emergency rental assistance programs, see the “Emergency assistance for tenants and homeowners” issue of Consumer Action News.

Medical debt mistakes can put military members’ careers at risk

Medical billing errors on credit reports and aggressive debt collection tactics topped the list of complaints that military members and veterans reported to the CFPB in 2021.

More than 60% of the complaints were about credit reporting and debt collection, according to the Bureau’s latest annual Servicemember Affairs report.

Military members said credit bureaus were not responsive to their disputes, either failing to correct errors or taking too long to investigate.

Many of the mounting complaints centered on unpaid medical bills, more than half of which were debts that military members said they did not owe.

Servicemembers said they fear that one consequence of unresolved medical debt on a credit report is irreparable harm to their military careers, including loss of security clearance, housing, health care and employment.

Class Action Database: Unwanted sunscreen ingredient burns J&J

By Rose Chan

A class action settlement involving Audi vehicles with defective DSG transmissions was among 10 new settlements added to the Consumer Action Class Action Database during June.

Of note this month is the class action Re: Johnson & Johnson Sunscreen Marketing, Sales Practices and Products Liability Litigation.

The plaintiffs filed a class action against Johnson & Johnson (J&J) regarding the manufacturing, labeling, sale and marketing of certain Neutrogena and Aveeno sunscreen products. Plaintiffs claimed that J&J failed to disclose the presence of benzene, a known human carcinogen, in the products.

The Food and Drug Administration (FDA) regulates sunscreen products, and benzene is not on the FDA’s list of acceptable active ingredients for sunscreens. According to the FDA, long-term exposure to benzene through skin absorption may result in cancer.

Independent pharmaceutical testing company Valisure tested various Neutrogena sunscreen products and found a range of .01 parts per million to more than 2 parts per million of benzene. Valisure filed a citizen petition with the FDA on May 25, 2021, asking the FDA to recall the contaminated sunscreen products. J&J issued a voluntary recall of certain Neutrogena and Aveeno aerosol sunscreen products on July 14, 2021.

J&J denies it violated state laws but agreed to a settlement to end the lawsuit.

Consumers who bought certain aerosol and lotion sunscreen products (listed in section 6, on page 4) between May 26, 2015, and April 8, 2022, may be eligible for a $10.58 merchandise voucher per product for up to two products purchased per household.

The claims deadline is July 27, 2022.

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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.

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