Consumer Action INSIDER - September 2019

 

Table of Contents

What people are saying

[Thank you for] responding [to my complaint] with answers. [I was] surprised at [your] speed of response and excellent referrals! [It’s typically] very difficult for average consumers to get advice/help with problem companies. — Wilda Wilson, North Carolina (via Consumer Action’s Hotline feedback survey)

Did you know?

Widely available direct-to-consumer genetic testing kits from popular companies such as AncestryDNA, 23andMe and MyHeritage have the potential to jeopardize your privacy and that of your relatives, along with your health and even your financial wellbeing. This Investor’s Business Daily article outlines five of the key reasons why Americans should think twice before buying a DNA testing kit, including that “many direct-to-consumer testing companies have signed lucrative data-sharing contracts with pharmaceutical firms.” Consumer privacy rights are bad business for the DNA testing industry, which is probably why it’s been reported that Ancestry, 23andMe and Helix are spending big and lobbying hard to block federal privacy provisions that might require more stringent rules for DNA testing than for other consumer data.

Consumers jumpstart their savings using FinTech apps

Consumer Action helped 38 consumers and nine non-profit staffers save nearly $22,000 during a five-month period through the use of new FinTech (financial technology) apps/online platforms, including Digit, SaverLife and Self Lender. The savings occurred as part of a financial technology distribution pilot program that Consumer Action conducted with 113 participants between March and November 2018.

“The thousands in savings that consumers achieved through this pilot program represented quite a feat, since four out of 10 U.S. households don’t have $400 saved to cover an unexpected expense,” said Consumer Action’s director of strategic partnerships, Audrey Perrott.

As a member of the Nonprofit-FinTech Exchange (a marketplace for non-profit and FinTech providers to collaborate and build high-impact partnerships), Consumer Action applied for and was awarded a grant to distribute the financial technology tools, as well as educational resources, to its network partners that joined the pilot, including Catholic Charities Dallas, Haven Neighborhood Services, HOPES CAP Inc. and VETS Group. Consumer Action was one of nine grantees in a cohort of pilot partnerships, and our work was featured in the Financial Health Network report “Cross-Sector Solutions: A Guide to Nonprofit-Fintech Partnerships.”

The app Digit automatically puts money into savings for users based on their spending habits, upcoming bills, etc., while SaverLife provides incentives to users who save, and Self Lender offers loans to help users build credit.

“We have had the unique opportunity to provide real-time feedback to financial technology innovators through the Nonprofit-FinTech Exchange,” Perrott explained. “Working with non-profits to make this technology available has made us aware that, as FinTech disrupts the mainstream financial system, it is the job of educators and advocates to teach consumers how to successfully use these new products, and to be vigilant in ensuring that FinTech is not harming their clients through discriminatory or predatory practices.”

Consumer Action created a FinTech fact sheet, measured participants’ financial health, and tracked the outcomes of those consumers who used the provided FinTech tools over a six-month period. Participants were selected from affiliates’ programs that provide volunteer income tax assistance (VITA), housing, credit counseling, workforce development and financial coaching to their clients. All of the participating agencies serve low-to-moderate-income consumers who are also “income vulnerable” (defined as being at greater risk of falling into poverty or experiencing a greater level of poverty), and participants included recent immigrants, veterans and members of other underrepresented consumer groups. These agencies are diverse in size, program budget and program offerings.

Consumer Action used a human-centered approach to select one FinTech app/tool for the participants at each site, based on the common financial needs identified by the participants. Each participating affiliate distributed the app or tool to its clients and staff, collected survey data using financial health survey questions provided by the Financial Health Network, and collected the resulting savings data.

Consumer Action will publicize the pilot program findings in an upcoming report.

“Although Consumer Action’s network partners and their clients achieved successes with the financial technology pilot, there is still a significant amount of research needed to improve financial health for low-to-moderate-income and limited-English-proficient consumers, promote financial inclusion, address areas of limited consumer protection, and increase FinTech adoption rates in underserved communities,” Perrott said.

FinTech, while convenient and helpful for many, may place income-vulnerable and LEP consumers at greater financial risk if they are not properly educated on how to use the tools and informed of any fees associated with their use. And, because the industry is still so new, there are (unfortunately) areas of FinTech that have minimal or limited oversight by financial regulators.

The FinTech pilot project was funded through the Nonprofit-FinTech Exchange, managed by the Financial Health Network with support from the JPMorgan Chase Financial Solutions Lab and the Principal Foundation®. Consumer Action is a member of the Financial Health Network and the Nonprofit-FinTech Exchange.

More than a hundred turn out for money management trainings, despite the heat

As an intense heat wave baked the East Coast, driving many to seek relief at the beach or pool, Consumer Action’s community outreach managers Linda Williams and Nelson Santiago stayed dry, delivering three free financial empowerment trainings in late July to community-based organizations in Virginia, Washington, D.C., and Maryland. The Money Management 1-2-3 trainings covered all aspects of financial health, from building a strong foundation to achieving budgeting goals and planning a secure future.

As the name reveals, the Money Management 1-2-3 module consists of three segments: Part 1 guides those who are starting out or starting over by presenting them with strategies to manage their income, use credit wisely and live within their means. The strategies presented in Part 2 can help consumers achieve financial goals through budgeting, accumulation of a nest egg and protection of their assets. Finally, Part 3 helps consumers plan a secure future as they prepare to leave the workforce for retirement.

Those attending the trainings came from banking and academic institutions, government agencies and faith-based groups, as well as non-profits that provide direct services to low-income and vulnerable consumers, such as those who were formerly incarcerated, young people, homeless people, senior citizens, veterans, and those seeking employment.

In Reston, Virginia, Williams and Santiago trained 30 representatives of community-based organizations. Of those, more than 95% responded in a post-training survey that they believed the training information and materials would be valuable in helping their clients understand the impact that life changes have on their finances.

In the District of Columbia, Williams and Santiago reached 55 staff from community-based organizations, nearly 90% of whom indicated that they found the training information and materials useful in helping their clients develop a plan to manage their money in order to build a safe financial future.

Finally, in Columbia, Maryland, Williams and Santiago trained people from over 40 community-based organizations, with 90% responding that the training provided them with needed resources and tools to help their clients meet unique and changing financial needs.

Summarizing how many felt, one participant stated: “I have been attending Consumer Action trainings for over 10 years, and I have never been disappointed. It was a great training!”

Williams and Santiago will return to Washington, D.C. on October 16 to present the Money Management 1-2-3 module to cafeteria employees in partnership with the Metro Washington Council’s Community Services Agency and Teamsters Local 639.

Hotline Chronicles: TV provider disputes lead to missing channels

John* from West Virginia wrote to our hotline with a complaint about his DISH Network pay-TV service. “Dish Network is in violation of its contract with customers!” John said. “They say they are in negotiations with Fox Sports over Fox pulling programming from DISH Network. Fox Sports is owned by [Walt Disney Co.]. As a consumer of DISH Network content, I am not getting the content I signed up for from DISH Network. This content comes from MLB [Major League Baseball]. DISH Network has explained to me that I can’t get the games from anywhere else, because Disney owns all rights to MLB, Fox Sports and all other broadcast companies!”

John is learning the hard way that pay-TV (cable and satellite) operators often lose channels (temporarily or permanently) over carriage disputes and what are known as “retransmission consent” negotiations with programmers that own channels and content, such as Disney. Retransmission consent simply means that, under federal law, the pay-TV operators must get permission—and pay the price—to carry a particular broadcaster’s programming.

While this is a frustrating experience for subscribers, there’s not a lot they can do but miss out on content while the parties duke out an agreement. John summed up many consumers’ feelings when he stated: “[Programmer consolidation has created] a monopoly in the very sense of the word! This type of conglomerate needs to be put back in its place!”

Unfortunately, disputes between pay-TV companies and those providing programs are governed more by greed than substantive regulation. The more programming, channels or stations a company owns or operates, the more leverage it has to demand higher retransmission fees from pay-TV operators. At the same time, however, there has been consolidation among cable and satellite companies, giving them more power to resist. Lost in these fights are the concerns of consumers like John. It’s up to the Federal Communications Commission (FCC) or Congress to fix this problem. Meanwhile, consumers will continue to suffer programming blackouts.

Public interest groups from across the political spectrum have urged the FCC for years to take steps to protect consumers in retransmission disputes between broadcasters and pay-TV companies. The FCC, however, has failed (and continues to fail) to take action.

Consumer Action believes that subscribers should get what they pay for, instead of being held at the mercy of disputing cable companies and broadcasters. At the very least, the FCC should empower consumers with transparent information on the prices and terms of every channel included in their subscription bundles, and give them the right to opt out of paying for any unwanted channels. Without such rights, the very people who support the system—customers—are playing on an uneven field.

We urged John to write to the FCC and his elected officials about how this issue is impacting him. Here’s where you can complain to the FCC. You can also write to your congressional representatives using Consumer Action’s free tool.

*Not this consumer’s real name

Coalition Efforts: Reining in robocalls, college costs and data loss

Calling for swift action on robocalls. In comments to the Federal Communications Commission (FCC), advocates called for more effective robocall protections, urging the FCC to redouble its efforts against the scourge of unwanted and illegal calls by implementing stronger laws, holding phone companies accountable to their customers, and using technology to intercept the scam calls before the phone rings. Learn more.

College Affordability Coalition releases Higher Education Act principles. In comments to the Federal Communications Commission (FCC), advocates called for more effective robocall protections, urging the FCC to redouble its efforts against the scourge of unwanted and illegal calls by implementing stronger laws, holding phone companies accountable to their customers, and using technology to intercept the scam calls before the phone rings. Learn more.

Equifax data breach demonstrates need for stronger cybersecurity regulation. As the Federal Trade Commission (FTC) proposes amendments to its Standards for Safeguarding Consumer Information (“Safeguards Rule”), consumer and privacy advocates have jumped at the opportunity to submit comments encouraging the Commission to enact stronger data privacy regulations, particularly as they relate to the way in which nationwide consumer reporting agencies (including Equifax, Experian and TransUnion) and other high-risk sectors handle sensitive consumer data. Learn more.

CFPB Watch: Is the fox guarding the hen house?

After the legally mandated position of Student Loan Ombudsman at the Consumer Financial Protection Bureau (CFPB) lay vacant for a year, the Bureau announced in August that it had chosen a collections industry insider to help student loan borrowers resolve their private student loan problems.

Robert Cameron was an executive at one of the nation’s largest student loan servicers, the Pennsylvania Higher Education Assistance Agency (PHEAA), which was hired by the U.S. Department of Education (ED) to collect on federal student loans. (PHEAA operates under the name FedLoan Servicing.) While at PHEAA, Cameron was responsible for ensuring that the company complied with federal and state laws. In 2017, the CFPB criticized PHEAA for mishandling the Public Service Loan Forgiveness Program that the company was solely responsible for managing on behalf of the ED.

The CFPB student loan ombudsman’s office analyzes borrower complaints about student loan servicers, debt collectors, private student lenders, debt “relief” companies and income-driven repayment plan problems. The ombudsman also helps private student loan borrowers solve ongoing disputes. Its work has been hampered since the former ombudsman, Seth Frotman, quit a year ago after charging that the Bureau’s leadership (appointed by President Donald Trump) was undermining the office’s efforts to combat abuses in the student loan servicing and for-profit college markets.

Bad debt collection companies fined millions, banned from business

Two debt collectors were fined and permanently banned from working in the debt collection industry under a proposed settlement filed by the CFPB and the New York Attorney General (NY AG). The agencies charged the debt collectors with purchasing “millions of dollars’ worth of consumer debt,” while inflating the amounts owed and relying on “illegal tactics to extract as much money as possible from consumers for their debts,” according to the CFPB.

The collectors and companies charged are Douglas MacKinnon, of Northern Resolution Group and Enhanced Acquisitions, and Mark Gray, of Delray Capital. Both companies are based in Buffalo. Using a network of “at least 60 additional debt collection firms,” the collectors are accused by the CFPB and NY AG of:

  • Misrepresenting the amounts consumers owed or were not required to pay;
  • Impersonating law enforcement and government officials; and
  • Falsely threatening consumers with legal action.

The CFPB and NY AG have proposed that MacKinnon, Northern Resolution Group and Enhanced Acquisitions return $40 million to aggrieved consumers and also pay a $10 million fine to each of the agencies, for a total of $60 million. Disappointingly, Gray is being required to return a mere $10,000 of the $4 million he has officially been ordered to repay consumers, likely due to insolvency. The $2 million in civil fines against Gray have also been suspended.

Final compensation details will be released when the settlement is approved by the court. Consumers who anticipate receiving compensation can contact the CFPB at 855-411-2372.

Disastrous debt collection rules

In May, the CFPB proposed new rules for debt collectors that would limit the number of times per week collectors can attempt to reach a debtor to seven attempts and one conversation per debt (not per person). Under the rules, debt collectors could send unlimited numbers of texts and emails to people they believe owe money.

Consumers have until Sept. 18 to voice their concerns over these proposed rules, which we believe protect collectors more than consumers. For more information, and to contact the CFPB about the rules, click here.

Class Action Database: Massage Envy to ease the tension with vouchers

A class action settlement involving Coca-Cola and its advertising of Seagram’s Ginger Ale was among 12 new settlements added to the Consumer Action Class Action Database during August.

Of note this month is the class action settlement McKinney-Drobnis v. Massage Envy.

The plaintiffs filed a class action against Massage Envy, charging that the membership-driven national massage parlor chain violated its member contracts, which barred increases in monthly membership fees. Massage Envy’s membership agreement contains options to pay by month or in full. Members who choose “in full” pay the annual membership amount when they sign up. Members who choose to pay monthly have a set payment amount stated in their agreement.

Massage Envy’s membership agreement automatically renews on a month-to-month basis, with terms stating that the same monthly payment amount is charged after the initial term of the membership expires, until the membership is cancelled. The contract only allows cancellation if the member moves more than 25 miles from any Massage Envy location or a physician certifies that the member cannot receive the services.

Plaintiffs allege Massage Envy increased the monthly membership fees without notice or consent. Massage Envy admitted no guilt but said that it was agreeing to a settlement to avoid further action in the lawsuit.

You are part of the class if, between Nov. 4, 2006 and June 7, 2019, Massage Envy increased your monthly membership fees. The settlement provides vouchers for retail products or services at Massage Envy. The value of the vouchers depends on the increased amount the class member paid:

  • $75 or less in fee increases may be eligible for a $10 voucher.
  • $75.01 to $125.00 in fee increases may be eligible for a $20 voucher.
  • $125.01 to $175.00 in fee increases may be eligible for a $30 voucher.
  • $175.01 to $225.00 in fee increases may be eligible for a $40 voucher.
  • $225.01 or more in fee increases may be eligible for a $50 voucher.

The claims deadline is Sept. 20, 2019.

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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