Consumer Action INSIDER - March 2011

Save the Date! Join Consumer Action as it celebrates 40 years of service to consumer education and advocacy. What: Consumer Action 40th Anniversary and Awards Where: The Naval Heritage Center 701 Pennsylvania Avenue, N.W. Washington DC 20004 When: Oct. 18, 2010 – 6:00 to 8:00 p.m.

What people are saying

I use Consumer Action brochures in one-on-one credit counseling appointments, branch fairs and hand outs, networking events with business owners, and in financial literacy seminars that I present on various topics including improving and understanding credit, budgeting and teens and credit. Everyone takes them at the fairs. They really love the content and the worthwhile suggestions in each brochure. I love your materials and have been using them since 1997. Thank you so much for being a valuable resource for my organization. - Donna Christian, Affinity Federal Credit Union

Tip of the month: Families and credit cards

Give your child a credit card? It’s a decision only parents can make. Consider age, maturity, life needs and your family’s spending style. For more information, see Families and Credit Cards.

Credit card education project's reach is far and wide

Despite their conveniences, credit cards can be tricky for consumers who do not understand the terms that govern their credit lines and the impact that fees can have on their household budgets.

To help educate consumers, Consumer Action partnered with American Express to develop and distribute materials consumers can easily understand. Consumer Action trained on and distributed project materials through its national network of more than 8,000 community based organizations (CBOs). Consumer Action's multilingual training and distribution model gets educational materials into the hands of consumers who need them most.

Click here to read the report.

Elizabeth Warren’s listening tour conference call

An estimated 700 consumers joined a conference call hosted by Elizabeth Warren on Feb. 9. The call attracted a diverse range of people, including advocates, consumers, industry representatives, regulators and educators. The event was an outreach effort for the budding Consumer Financial Protection Bureau (CFPB) to learn about the priorities of the consumers it represents. Because of Consumer Action's efforts, hundreds of people from our CBO network were on the call.

A Consumer Action board member, Jim Conran of Consumers First, kicked off the discussion with a question on our behalf. He asked how Warren sees "complaint resolution being managed successfully and efficiently between the CFPB, state, local and nonprofit groups that also respond to consumer complaints?" Warren assured the group that in the future agency there would be a role for everyone.

The White House advisor spoke of the need for the public to contact the CFPB with problems and concerns. She believes that consumers will be the frontline "enforcers" by alerting the CFPB when problems arise.

Warren spoke of the CARD Act’s success in its first year in “disrupting” what she called the “front end/back end game,” where consumers are given certain costs upfront but charged more in fees and penalty charges after they begin to use the card.

Warren also discussed some of the areas the agency is likely to feature in the year ahead. These include payday lending, small dollar lending, private student loans, debt collection, credit reports and credit scores. Her vision for the agency breaks the bureau into sections for revolving debt such as credit card, mortgages, student and installment loans; stored value (prepaid) payments, overdraft service fees, and credit reporting.

The bureau has plans to create one-to-two page models for credit card and mortgage contracts. Warren said that her goal is to make the price and the risks of credit clear. She said it's important that consumers understand the risks so they can make the best choices and the market can work competitively and effectively.

Warren mentioned the threat to CFPB's funding by GOP House members and noted that if they are successful, the bureau's spending could be reduced by as much as 40%.

Claims on labels matter, at least in California

California consumers can take legal action if they determine that a product labled "Made in the USA" was actually manufactured elsewhere, according to the California Supreme Court's January decision in Kwikset v. Superior Court. The high court ruled that such lawsuits can be brought under the State Business and Professions Code. Consumer Action was one of nine consumer groups that signed onto an amicus brief in the case.

An earlier decision by the Court of Appeal found that lawsuits could not be raised if the purchased product was equal in value and condition as the product the consumer was thought to be buying, since no money had been lost. The Supreme Court disagreed.

Jack Benson brought a suit against Kwikset Corporation under the unfair competition and false advertisement laws for selling locksets labeled "Made in the USA" when parts of the product were of Mexican and Taiwanese origin. Benson held that he bought the product specifically because it was American manufactured.

The trial court found in favor of the plaintiff, but while the case was under consideration the electorate passed Proposition 64, which sought to deter lawsuits by consumers who were not directly affected. Prop 64 was later used on appeal by Kwikset defense, charging that the plaintiff had not lost money or property on the purchase. This argument found favor with the appellate court.

The California Supreme Court agreed to review the case and found, "The marketing industry is based on the premise that labels matter, that consumers will choose one product over another similar product based on its label and various tangible and intangible qualities they may come to associate with a particular source."

In the amicus brief, nine consumer groups argued that “In recent decades, the exponential growth in the number of products available for sale has been matched by a sharp increase in consumer interest in the 'social' or 'process' characteristics of those products: organic, non-genetically-modified, sweatshop-free, dolphin-safe, and cage-free, to name but a few.”

The consumer groups disagreed with the defendant’s position that it is up to a court to determine whether a product has the same value as the product they intended to purchase. They stated that such a position ignores the environmental, religious and other concerns that could well render the product worthless to the consumer.

“The decision is a terrific victory for consumers, and a gratifying one for the consumer groups whose amicus brief contributed many of the citations and examples utilized in the court's opinion,” says Ted Mermin of the Public Good Law Center.

Hotline Chronicles: Heartless treatment on Valentine’s Day

Laura* contacted Consumer Action’s hotline with a complaint against a local restaurant, where she and her Valentine had a meal to celebrate the holiday. The Wisconsin woman had paid for the meal with her debit card, and she left a cash tip. When she was reviewing transactions on her checking account a few days later, she saw that the restaurant had added a second gratuity on top of the food and drink charges.

Laura called the restaurant to complain about the unauthorized gratuity, but was told that she was mistaken and that the eatery had a trusted staff who would “never do such a thing.”

Laura took the right steps—she monitored her account for unauthorized transactions and she contacted the merchant to address the overcharge. But the merchant wasn’t willing to help, so our hotline counselors suggested that Laura contact her bank and dispute the charge.

Many people are aware that, when paying with a credit card, they have the right under Regulation Z and the Truth in Lending Act to dispute certain purchases and to request a “chargeback.”

Debit card users also have a right to dispute unauthorized transactions under Regulation E and the federal Electronic Fund Transfer Act.

You can contact your bank in person, by phone or in writing to dispute a transaction. The bank may ask you to fill out a form, sign it and return as confirmation of your dispute. The law requires that you be given provisional credit for the amount while your dispute is being investigated. (Provisional credit can take up to five days.) If your dispute is denied, the transaction will be allowed to stand and the provisional credit will be reversed.

TIP: When you are using your debit card to pay for a transaction for which there is typically a gratuity, such as a restaurant meal or haircut, and you intend to pay cash for the tip, write “CASH” in the space left for the tip, and fill in the total with the amount shown on the receipt. Always review all charges to make sure they are tallied properly and that you were not charged for items or services you didn’t order. Save a copy of your receipt.

Click here to submit a complaint to our hotline.

* Not this consumer’s real name.



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