• What people are saying
• Tip of the month: Online search for love can spell trouble
• Introducing our new Military Project
• Serving formerly incarcerated men and women
• At work with the new consumer bureau
• A report on our Privacy Information Project
• National Consumer Protection Week 2011
• Report on our 2010 hotline complaints
• Coming soon: 2010 Credit Card Survey
• Hotline Chronicles: Pay the minimum or face late fees
• About Consumer Action

What people are saying

I have had the opportunity to utilize your MoneyWi$e financial education while giving financial literacy workshops required for participants in the matched-savings programs known as Individual Development Accounts (IDAs). Along with the IDA workshops, Consumer Action's training and presentations have been invaluable as many of the participants have adopted the MoneyWi$e debt and money management strategies and in doing so become much wiser consumers. Many have reported that their improved money management skills have directly contributed to an increase in their FICO scores and overall credit worthiness. - Charles E. James, Asset Development Program, Community Action Partnership of San Bernardino County (California)

Tip of the Month: Online search for love can spell trouble

Love is on our minds in February, when we celebrate Valentine's Day. But for those seeking love online, becoming a victim of Cupid’s virtual arrow could mean trouble. Being asked for money on a dating site is one sign that all is not right in paradise. For other cautions and tips for online love seekers, visit the Hotline Chronicles archive.

Introducing our new military project

The Consumer Federation of America (CFA) reports that as of September 2010, there are 1,430,895 total active duty military personnel, with an additional 848,000 reserve personnel. Of these only 15% of enlisted personnel and 47% of officers will eventually become eligible for retirement benefits. Consumer Action is joining forces with CFA and Chase to improve the financial empowerment of recently separated veterans.

To start, the outreach department at Consumer Action and staff at CFA are conducting surveys of organizations serving veterans in the San Diego area as well as the families of military personnel and military veterans. Among other information, the survey is capturing:

• What existing/new materials are needed?
• What is currently being carried out in the way of financial education?
• How are the needs of the military population similar to or different from other population segments?
• What role do the organizations see for themselves, and how does this compare to the role of the military?

The results of this needs assessment will lay the groundwork for a roundtable training in San Diego scheduled for April. The format of the training will be largely determined by the needs assessment--although one possibility is the use of Consumer Action’s new Money Management 1-2-3 series, which provides concrete planning at key life stages.

Consumer Action is also planning a national needs assessment to extend the project to other parts of the country.

Serving formerly incarcerated men and women

Consumer Action’s Linda Williams hosted the first meeting of the Formerly Incarcerated Working Group (FIW) on Jan. 13. Sixteen organizations were represented on the teleconference call in a united cause to improve the financial literacy of the target population. The organizations are actively involved in the MoneyWi$e program that is jointly sponsored by Consumer Action and Capital One.

One of the lessons learned from the call is how best to refer to the community. The term “ex-offender” is indicative of past activities that do not help society focus on the individual’s future potential. To that end, the term “formerly incarcerated” became the preferred phrase and subsequently part of the name of this new initiative at Consumer Action.

During the conference call, participants shared what their organizations were doing to help formerly incarcerated persons obtain the financial tools to overcome housing, educational, and employment problems. The participants represented a diverse collection of groups already actively engaged in financial literacy, but only a few currently operate projects specifically aimed at the target community. Most of the groups are looking for ways to better tailor their existing programs to meet the needs of persons transitioning back into society.

Some of the suggestions that came forward in the way of future goals for the group were:

• Find ways to make financial education available to persons before they are released rather than wait until after they are released;
• Establish a system of sharing existing resources rather than attempt to reinvent the wheel;
• Consider the unique needs of formerly incarcerated persons with mental health issues, single mothers and other population segments;
• Facilitate local networks so that groups in the same city or state can collaborate on joint projects; and
• Work together to identify funding sources to start or expand projects.

The needs of formerly incarcerated persons are wide in scope. The group will meet again in April to hammer out some concrete goals to share resources to meet some of the more pressing needs of the community. Meanwhile, anyone interested in joining the group’s list-serve may do so by visiting this link to the Yahoo Email Group created by the participants.

For more information, contact Linda Williams, community outreach manager, via e-mail at: .(JavaScript must be enabled to view this email address).

At work with the new consumer bureau

Consumer Action has been working actively with the budding consumer bureau in trying to help it set its priorities, and in coalition with other consumer groups, helping to advise the CFPB in setting up a responsive complaint handling system.

In January, Avenida Guadalupe’s El Progreso Hall in San Antonio, Texas, was filled with advocates, counselors and consumers waiting to hear what the acting head of the new Consumer Financial Protection Bureau (CFPB) had to say about the new federal agency. But much of the day was spent listening to the "boots on the ground," as Professor Elizabeth Warren was visiting San Antonio for a “listening tour” with the new head of the CFPB’s Office of Service Member Affairs Holly Petreaus.

The CFPB leaders toured Lackland Air Force Base and took questions from military personnel, then headed to the community center Avenida Guadalupe. They met with homeowners, housing counselors, and other advocates to hear firsthand where the new consumer protection agency should be focusing its effort when it opens its doors this July.

One single mother wept as she shared her story of living through a multilayered foreclosure scam. She was followed by an attorney who laid out the legal obstacles with foreclosure scams in Texas.

Staff at the new consumer bureau reached out to Consumer Action to help make the San Antonio community aware of Professor Warren’s visit, and her interest in hearing from those who have been on the ground working to clean up predatory lending, and from families fighting to save their homes from foreclosure. Consumer Action alerted its partners at community groups in the San Antonio region to this opportunity.

Professor Warren got to hear how problems with payday loans, auto loans, internet lending, foreclosures scams and remittances are affecting people in San Antonio and throughout Texas.

“We are advocating for a system designed to help resolve consumer problems as well as respond to them,” said Ruth Susswein, Consumer Action’s Deputy Director, National Priorities. “Given our daily contact with consumers through Consumer Action’s hotline and frequent educational roundtables throughout the country, we’ve been able to offer 'nuts and bolts' advice to the Bureau about creating a complaint system that really meets people’s needs.”

Consumer Action has recommended that the CFPB devise a system that can be used pre-purchase to learn if others have filed complaints about a company or product, as well as post-purchase to solve problems if they arise.

Consumer Action has committed much staff time to this effort this past year, and continues to help ‘stand up’ the consumer agency, because we are committed to seeing the Bureau succeed. As the only government agency whose mission is consumer financial protection, we are eager to see this financial watchdog start to dismantle commonplace unfair and deceptive practices.

A report on our Privacy Information Project

Consumer Action maintains several comprehensive educational projects. One such endeavor is the Privacy Information Project, in which Consumer Action created resources for consumers related on evolving technology and the privacy risks that result from these advances. In this report, Consumer Action presents the Project's activities and achievements over the past eight years and gives recognition to the entities that made this work possible.

Click here to download the report.

It’s that time again—National Consumer Protection Week!

Consumer Action encourages organizations to take part in this year’s National Consumer Protection Week.

National Consumer Protection Week (NCPW) is a coordinated campaign that encourages consumers nationwide to take full advantage of their consumer rights and make better informed decisions. NCPW 2011 will take place March 6-12, 2011.

NCPW.gov is a thriving repository of information for consumers from the government and non-profits. Visitors to the site will be able to find materials to learn how to protect their privacy, stay safe online, manage their money, avoid identity theft, understand mortgages and steer clear of frauds and scams. The site also features a blog to more closely examine the issues that emerge from the publications.

Organizations actively working on financial education in their communities should consider organizing an event to take part in this public awareness campaign. Toolkits and other materials can be found on the NCPW.gov site.

Report on our 2010 hotline complaints

Consumer Action’s free, multilingual advice and referral hotline is a vital part of our mission. The national hotline provides consumers with an easily accessible information hub where they can receive one-on-one assistance, request educational materials, and get referrals to complaint-handling agencies.

Consumer Services Manager Joe Ridout manages the hotline, with assistance on English complaints from three part-time employees and three volunteers, while another two employees work part time on Chinese and Spanish complaints.

Our complaint handling team responded to an average of 360 complaints per month in 2010. The highest number of complaints was received in August, with 604, and December, with 571. We received complaints by email, phone and letter.

Chinese-language (Cantonese and Mandarin dialects) complaints comprised about 15% of the work, while Spanish-language complaints accounted for about 7%.

Credit and banking complaints totaled 20% of our overall complaints in 2010. The top complaints, accounting for 64% of all complaints in the credit and banking category, were credit cards (22.4%), debt collectors (15.3%), banking fees and service (12.3%), mortgage foreclosures (7.6%) and credit reports (6.6%).

Complaints about retail services and products also represented 20% of all complaints last year. The top subcategories were refunds, returns and exchanges, at 16.8%; repairs and warranties at 15.6%; defects at 10.9%; merchandise that was never received at 10% and overcharges at 10%.

Auto and vehicle complaints totaled 12.3% of all complaints we received. Of those, top categories were used car sales, 25.3%; repair dispute, 22.2%; new vehicle sales, 15.2%; auto finance and repossession, 8.4%; warranty issues, 6.20%.

Phone and TV related complaints account for 11.5% of all complaints we received. A quarter of them were about wireless phone issues and a fifth about cable and satellite TV.

Complaints about fraud, including identity theft, accounted for 7.3% of all complaints overall last year. Some of these fell into the above categories.

In the miscellaneous category, where 33% of our 2010 complaints were filed, the top five subcategories are:

• Tenant-landlord, 12.3%
• Medical and dental, 10.6%
• Lawyers and legal services, 7.2%
• Travel, 6.2%
• Home repair and construction, 5.5%

Click here to submit a complaint to the hotline.

Coming soon: 2010 Credit Card Survey

Consumer Action’s new Credit Card Survey will be released early this month, just in time for the first anniversary of the CARD Act on Feb. 22. Our survey, which presents findings from research conducted last fall, is chronicled in the Winter 2011 issue of Consumer Action News.

Check back soon—you’ll find a link under Featured News on our web site. You can find credit card surveys back through 1996 by choosing Survey Archive from the black sub-navigation bar on the home page.

Hotline Chronicles: Pay the minimum or face late fees

Martino*, a Florida man, wrote to our hotline in frustration over repeated late fees on his Macy’s credit card account. He didn’t notice when Macy’s increased his minimum payment from $20 to $25 a few months ago. Martino continued to send in $20, and the payments were considered late because he paid less than the minimum due. Department Stores National Bank, a holding of Citigroup Inc, issues the Macy’s card.

Martino was caught unaware by the change. However, advocates and the media have suggested that credit card issuers may be increasing minimum payments in order to charge higher penalty fees when cardholders pay late. The CARD Act prohibits late payment fees that are greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can't be more than $20. However, banks can increase the minimum payment floor to $25 and charge a fee of up $25. If one of your last six payments also was late, your fee may be up to $35.

When Martino caught on and called, he says an issuer rep told him, “This is the new minimum payment according to the law.” Wait a second—there is no specific credit card minimum payment required by law. There is guidance offered by national bank regulators suggesting that national banks create a minimum payment that is at least 1% of the principal balance, plus any interest and penalty fees. Banks have a flat monthly amount that kicks in if the formula results in a smaller payment.

Here is an example from Citi’s AAdvantage MasterCard:

To calculate the Minimum Payment Due, we begin with any past due amount. We then add any amount in excess of your credit limit. We also add the largest of the following: - The New Balance on the billing statement if it is less than $20; - $20 if the New Balance is at least $20; - 1% of the New Balance (the result is rounded down to the nearest dollar) plus the amount of your billed interest charges, any applicable late fee, and any applicable minimum interest charge; or - 1.5% of the New Balance (the result is rounded down to the nearest dollar).

Martino’s case is unfortunate because he failed to note that the bank was requiring a larger minimum payment. The CARD Act requires advance notice for changes in minimum payments. By failing to send the correct amount, Martino opened the door to more than one late fee. The outcome is doubly hard for Martino because his balance was less than $100. The only way he can get the money back is for the issuer to waive and reimburse the fees, which it refused to do when Martino called.

TIP: Read your credit card statement as soon as it arrives in the mail. When sending a payment, do not assume that your minimum payment is the same as it was last time. If you have automatic payments set up at your bank to cover your minimum payment, it pays to check your billing statement in case the minimum amount has changed.

Complaints about a national bank credit card issuer can be filed with the Office of the Comptroller of the Currency at [url=http://www.helpwithmybank.gov/contactus/index.html]http://www.helpwithmybank.gov/contactus/index.html[/url], which also lists options for filing by mail, telephone or fax.

*Not this consumer’s real name.

About Consumer Action

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 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.

Financial Education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of education resources. The organization’s extensive library of free publications offers in-depth financial information, while its hotline provides non-legal advice and referrals. Consumer Action also publishes an unbiased Annual Credit Card Survey that exposes 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 to moderate income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of more than 8,000 community-based organizations. Outreach services include training and free mailings of financial education materials in many languages, including English, Spanish, Chinese, Korean, Vietnamese, and others. Consumer Action’s rapidly expanding 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, regulations, and legislation by taking positions on almost 200 bills per legislative session and testifying at least three times per year. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.