Consumer Action INSIDER - March 2020

 

Table of Contents

What people are saying

My excitement after attending this [Consumer Action FinTech training] session was hard for me to contain! The one ingredient my team had been missing was knowing the financial impact we were making with our families—a question we continuously ask. For the first time, I was able to understand their Financial Health Scores; we [also] got to examine the individual’s [financial health] profiles and learn how, as a coach or counselor, we can motivate the consumer using this ability to quantify the measurement of their financial health. — Althea Saunders-Ranniar, Bon Secours Community Works Director of Financial Services & Education

Did you know?

Tax-related identity theft occurs when someone uses your stolen personal information, including your Social Security number, to file a tax return to claim your refund. You may not be aware that you’ve been a victim of identity theft until the Internal Revenue Service (IRS) notifies you of a possible issue with your return. An ounce of prevention is worth a pound of cure, however, which is why the IRS’s Taxpayer Guide to Identity Theft offers precautionary advice to help you stay safe by protecting your data and identity now. The guide also helps you identify possible tax-related identity theft as it’s occurring, and advises you on the immediate steps you should take to protect your information in the event of data breaches, computer hacks and the like.

Out and About: Rigging the market to inflate the cost of prescriptions

Last month, Consumer Action’s DC-based National Policy Advocate Lauren Hall went to an Association for Accessible Medicines (AAM) briefing where healthcare experts and industry representatives discussed how the federal government’s budget and policy priorities are causing drug affordability problems for millions of Americans. Speakers also presented changes in policy that could lower the costs of generic medications and biosimilars (less costly alternatives to name-brand drugs, such as Humira).

According to AAM, the average generic copay is $5.63, versus $40.65 for a name-brand drug. And, as prescription drugs costs and payments continue to rise (even in public programs like Medicare and Medicaid), the use of generic alternatives has actually blunted the effect of increasing brand-name drug prices, saving the U.S. healthcare system $293 billion in 2018 alone. (See the Consumer Action News Prescription Drug Cost Crisis issue for more information on the overall rising costs of meds.)

However, a new study conducted for AAM by the nonpartisan healthcare consulting firm Avalere Health (which bills itself as a “a vibrant community of innovative thinkers dedicated to solving the challenges of the healthcare system”) reveals substantial gaps in generic substitution for the millions of seniors covered by Medicare. Shockingly, the study found that as the cost of a brand-name drug increases, generic substitution rates decrease, causing Medicare to incur unnecessarily high costs (money that ends up in the pockets of Big Pharma) and forcing consumers to pay more out of pocket for meds. According to Avalere, some Medicare Part D (the prescription drug coverage part of Medicare run by private companies) plans are even “less likely to substitute generics for expensive brands”!

A 2018 Health and Human Services (HHS) analysis further reveals that the U.S. government spent around $9 billion on brand-name drugs (offered in Medicare Part D plans) that had generic competitors, even though substituting the generic versions would have saved the federal program (and taxpayers) $3 billion in one year (2016) alone. (Approved generic drugs usually can be manufactured and sold after patents protecting the brand-name version expire.)

It is a common practice by Big Pharma to patent “new” uses for existing, already patented drugs so that the widely used medications never reach the point where they can be marketed as generics. As the public interest non-profit Public Citizen points out, “Overly broad U.S. government patent standards and interpretations enable drug corporations to…engage in patent evergreening to prevent generic competition.”

The process is discouraging even to major drugmakers, such as TEVA (the largest generics manufacturer), who find it frustrating trying to navigate the unnecessarily costly and time-consuming legal and regulatory process now required to bring generic meds to market.

AAM’s presentation revealed significant opportunities—many would argue, responsibilities—to increase the availability of generics.

“Policymakers must commit to encouraging competition in the healthcare marketplace—particularly when it comes to government policies around purchasing generic meds and regulations to rein in anticompetitive gaming of the system through brand-name drugmakers’ market monopolization and patent abuses,” Hall said. “The last thing we want is for generics manufacturers to throw up their hands and stop producing these more affordable drugs because they find it so difficult to bring them to market. Our government needs to ensure its citizens have access to affordable generic medications and stop the widespread market rigging, which only benefits wealthy drug manufacturers, who, frankly, don’t care if we live or die.”

Concerned about the costs of your medications? Both AAM and AARP allow patients to quickly and easily send a message to their lawmakers.

Coalition Efforts: Regulating robocalls, rents and facial recognition

The FCC really must regulate providers’ efforts to curb robocalls. The Federal Communications Commission (FCC) received a whopping 3.78 million consumer complaints about robocalls in in 2019 alone! Fortunately, Congress also passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act late last year. The law aims to crack down on robocalls by requiring voice service providers to implement caller ID technology to show if a call appears to be legitimate or from a scammer. It also directs the FCC to monitor and regulate the providers’ efforts to rein in spam calls and texts. In preparation for the FCC’s second annual report on robocalls, advocates are calling on the agency to take further sensible action to hold voice service providers accountable for their efforts to stop the annoying scam calls (such as mandating that they provide customers with explicit instructions for using call-blocking tools). Learn more.

Federal deregulation attempts increase barriers to affordable housing. All over the country, housing affordability has become a crisis. The number of households spending more than half of their income on mortgage or rent has skyrocketed in the past decade. Almost 50% of renters are struggling with unaffordable rents, and the homeless population is rapidly growing in high-cost areas. Under Trump-appointed leadership, the Department of Housing and Urban Development (HUD) published a request for information—ostensibly in “response” to the housing crisis—to examine how federal regulations could be creating barriers to affordable housing. In response, advocates are pointing out the obvious: That it’s not regulatory efforts causing the lack of affordable housing, but recent moves to deregulate. As the advocates point out, “the federal government has withdrawn from providing or developing affordable housing units. Compounding the problem, there is a set of deregulatory efforts now under way that are withdrawing crucial commonsense oversight from the housing and financial markets, enabling discrimination, and, thereby, increasing barriers to affordable housing.” Learn more.

Backlash grows over use of facial recognition. In a letter to the Privacy and Civil Liberties Oversight Board—a somewhat controversial independent executive branch agency that advises the president on data privacy issues—privacy and civil liberties groups pressed the board to urge President Trump and his administration to prohibit the federal government from using facial surveillance on the American public. Advocates are ringing the alarm after a December 2019 federal study by The National Institute of Standards and Technology found pervasive racial bias in facial surveillance technology, and a January 2020 New York Times investigation revealed that a startup company, Clearview AI, had stockpiled more than 3 billion photos from websites and social media profiles and offered them to law enforcement to help them match the public’s photos with those of criminal suspects. Considering the startup’s violations of existing privacy laws, and the bias and discrimination in the facial recognition systems that are currently in use, advocates recommend a blanket moratorium on the federal government’s use of facial recognition technology. Learn more.

Hotline Chronicles: Handyman app cancellation fees frustrate customer

Caroline* from New York City wrote to Consumer Action’s hotline about her displeasure with an app-based handyman and cleaning service called Handy [dot] com. Caroline said the app would not allow her to cancel an upcoming appointment with one of its professionals, and that she had been charged a fee for failing to cancel by the deadline.

We looked at Handy’s cancellation policies and found that they are presented clearly online. However, we also discovered many complaints from consumers and professionals claiming that it was an ordeal to cancel services. (Here is a link to complaints at the Better Business Bureau of New York.) Many felt they were unfairly charged fees for cancellations that were not their fault, such as when the professional cancelled at the last minute. Others complained they were given “credits” for future services instead of a refund.

When using any type of service, you need to know what the costs are. This includes the cancellation rules. When you make an appointment via an app, consider adding an alert to your online calendar to warn you of any upcoming cancellation deadlines. For example, Handy says that if you cancel at least 24 hours before any scheduled appointment, you will neither pay a cancellation fee nor be charged for the service you booked. Cancelling between two and 24 hours beforehand carries a $15 fee, but no other charges for the cancelled service. If a professional service is cancelled within two hours of the appointment, or you miss the appointment altogether, the company will not refund your prepayment.

If you are attempting to cancel an appointment at least 24 hours in advance and the Handy app (or any service-based app) doesn’t immediately register your cancellation, we suggest you call or message the company right away to make sure your cancellation is noted and your money is refunded. And get the company to send you an email or in-app message confirming the cancellation/refund, if possible. If you cancelled on time and the company still charged you a fee, you have a good case that the vendor charged you in error, and you can dispute this with your payment company.

As a general rule, for payment and billing of online services, it’s a good idea to use a credit card instead of a debit card. If you pay by credit or charge card online, your transaction will be protected by the Fair Credit Billing Act (FCBA). Under the FCBA, you can dispute charges and temporarily withhold payment while your credit card issuer investigates your dispute. Of course, you can use your debit card to pay for online services. However, the debit card dispute process varies by issuing bank, and it can take more time and effort to resolve.

When you have a problem with an online or app-based vendor, or any supposedly reputable merchant, first try to reach the company’s customer service department and seek ways to resolve the issue. If that doesn’t work, reach out to your payment card issuer. Finally, if all else fails, here are some places to lodge a complaint:

For more information and tips for disputing purchases and fees, read Consumer Action’s How to Complain, which is available in English, Spanish and Chinese.

*Not this consumer’s real name

CFPB Watch: Collaborating to take on student lending complaints

Under a new agreement, the U.S. Department of Education (ED) and the Consumer Financial Protection Bureau (CFPB) will once again play a joint role in handling student loan complaints. Prior to 2017, the agencies both worked to address borrower complaints. In 2017, however, ED Secretary Betsy DeVos terminated the partnership after a dispute over which agency should handle certain federal student loan complaints. The disagreement led the ED to order federal loan servicers not to comply with CFPB loan examiners’ requests, effectively freezing the Bureau out of the oversight part of the complaint resolution process.

The agencies now say they will play nice and share borrower complaint information, as well as coordinate to track student lending problems and resolve complaints. They will also hold quarterly meetings to review complaint trends and resolutions.

The ED will take the lead on federal student loan complaints related to loan program issues, while the CFPB will focus on problems related to federal consumer finance law. The Bureau will also continue to be the primary agency handling complaints about private student loans.

The Bureau has its work cut out for it. In 2018, the CFPB’s Student Loan Ombudsman’s office lost its staff after its ombudsman resigned in protest of then-acting director Mick Mulvaney’s abandonment of student loan borrowers and his alleged cozy relationship with the financial institutions his Bureau was tasked with regulating.

The ombudsman’s office is responsible for “receiving, reviewing and attempting to resolve complaints from private student loan borrowers…compiling and analyzing complaint data on private education loans” and other activities to protect student borrowers.

The new student loan ombudsman, Bob Cameron, recently told Consumer Action that he intends to hire one staffer to work with him on these duties. Consumer Action’s take? One staffer will not suffice, although we are glad to see long-awaited progress in addressing the neglected issue of resolving predatory student lending complaints.

Consumers should continue to send student loan complaints to the CFPB at consumerfinance.gov/complaint or directly to .(JavaScript must be enabled to view this email address) (attention Bob Cameron). The CFPB will transfer any federal student loan complaints that should be managed by ED to that agency. Borrowers can also send their complaints directly to the Department of Ed’s Federal Student Aid or ombudsman’s office.

CFPB Director Kathy Kraninger said the two agencies are also working on a second agreement that is meant to reignite the Bureau’s oversight process of federal student loan servicers. At a hearing before the U.S. House Financial Services Committee, Kraninger told lawmakers that the agencies are negotiating to conduct joint examinations of loan servicers in the future.

Kraninger admonished by some Congressmembers

Perhaps not surprisingly, given the above, last month Rep. Cindy Axne (D-IA) accused Kraninger of “abandoning her responsibility to supervise and examine student loan servicers” during the CFPB director’s presentation of the Bureau’s Fall 2019 Semi-Annual Report to Congress.

In her testimony, Kraninger touted the Bureau’s emergency savings campaign, called Start Small, Save Up. She also announced that in April the CFPB plans to release revisions to its own payday loan rule. The already controversial revisions are expected to gut a beneficial component of the rule, created under the previous administration,that would require lenders to assess a borrower’s ability to repay high-cost loans before approving them.

In addition to announcing that the Bureau was reviewing an “extensive number” of payday comments, Kraninger said it continues to consider comments on an additional proposed rule to allow third-party debt collectors to contact debtors seemingly without limit, in some cases, and on a third rule pertaining to reductions in the amount of vitally important home mortgage data that companies are required to supply to the CFPB.

Chairwoman Maxine Waters (D-CA) and others in Congress admonished Kraninger for harmful new policy proposals, including one that would severely limit the use of the Bureau’s authority to charge a company with “abusive” behavior. Under the Dodd-Frank Act of 2010, Congress gave the Bureau the authority to prohibit unfair, deceptive and abusive acts or practices by industries it regulates. However, charges of “abusiveness” have rarely been made. Kraninger’s Bureau has announced that,furthermore, even if it does accuse a financial firm of unfair or deceptive practices, it will not sue the company for “abusiveness” at the same time. Kraninger also stated that the Bureau would not fine companies that “mistakenly” act in an abusive manner, if they made a “good faith” effort to comply with the law.

While many advocates and legislators see Kraninger’s approach as yet another step toward protecting companies more than consumers, the director assured Congress that her new policy does not mean that the Bureau will “never” bring abusiveness claims against the companies it oversees.

Class Action Database: ASUS owes for laptop overheating, battery issues

A class action settlement involving automaker Subaru’s Starlink in-vehicle technology system was among seven new settlements added to the Consumer Action Class Action Database during February.

Of note this month is the class action Carlotti, et al. v. ASUS Computer International, et al.

The plaintiffs in this case allege computer manufacturer ASUS falsely advertised its Rog Strix GL502VS and Rog Strix GL502VSK laptops as suitable for high-performance video gaming and video editing. The models were marketed as powerful, portable machines that contained independent cooling systems. According to the plaintiffs, however, the cooling systems weren’t independent, leading to the laptops overheating.

Furthermore, the plaintiffs claim that even when the laptops were plugged in and charging through an electrical outlet, their batteries continued to drain. Finally, the plaintiffs have alleged that the ensuing warranty “repairs” made to the machines were worthless, since ASUS replaced the defective components “with identical and equally defective components.”

ASUS has denied the allegations but agreed to a $20 million settlement to terminate the lawsuit.

You are part of the class if you bought either of the two laptops (new) between May 4, 2014 and Nov. 19, 2019.

The settlement provides for an extended warranty (issued by ACI technical support) allowing for qualifying repairs on the ASUS Rog Strix GL502VS laptops until the later of:

(1) three years from the computer purchase date, (2) 90 days from the final repair approval date, or (3) 180 days from the date of a prior ASUS replacement of the internal power supply and/or power adapter.

Class members must contact ACI technical support (888-678-3688) to obtain their qualifying repair.

The settlement also provides class members who purchased either computer with a cash payment or credit certificate. Members are divided into three claims groups:

  • Group A members, who are in possession of their laptop proof of purchase, bought their laptop from the ASUS website or registered their laptop with ASUS before Jan. 10, 2020 as reflected by ASUS records. These members must file a claim and provide their laptop serial number to be eligible to choose between a $110 cash payment or a $210 credit certificate.
  • Group B members, who must have made a complaint to ASUS’s customer service department regarding the laptop’s power or overheating issues before March 19, 2019. These members must file a claim to select between a $110 cash payment or a $210 credit certificate. (Note: ASUS will automatically opt to send the $210 certificate to those class members whose contact information it has retained—no claim filing necessary.)
  • Group C members, who are only required to provide their laptop serial number and submit a claim in order to choose between a $55 cash payment or a $105 credit certificate.

For more detailed information on the three groups, click here.

The claims deadline is April 3, 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 Consumer-Action.org, 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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