Table of Contents

• What people are saying
• Did you know?
• DC staffer speaks on mobile ads at FTC workshop
• Rocky start to online privacy meetings
• Hotline Chronicles: New wireless phone? New contract!
• Overdrawn and done-in by overdraft fees
• Coalition efforts: Dairy subsidies, online privacy, rent-to-own and arbitration
• Update on California consumer protection legislation
• Consumer Action brings MoneyWi$e to DC
• Digital Dollars training in San Diego
• About Consumer Action

What people are saying

Thank you so much for the great information [Consumer Action provides]. I love organizations that make the preparation for initiating new training programs easy, direct and effortless. — DeLilah Howard Collins, Norfolk (VA) Department of Human Services

Did you know?

According to a survey by online consumer resource guide Consumer World, consumers without prescription coverage can save an average of 16% on the cash price of certain prescriptions by using a free drug discount card. Download the full report for a comparison of discounts and links to card issuers. While you're at it, visit NeedyMeds online for another discount card option along with links to programs that offer free or reduced-price drugs.

DC staffer speaks on mobile ads at FTC workshop

At the end of May, the Federal Trade Commission (FTC) hosted a day-long public workshop to explore possible changes to the agency's Dot Com Disclosures, a 12-year old report that provides guidelines to industry for making effective advertising and privacy disclosures on the Internet. Disclosures are the means by which a company informs its customers about important details related to transactions they make, such as automatically committing to a six-month membership program with purchase, or the way in which customers’ personal information will be used or shared. May's workshop focused on new challenges that have emerged since the first set of guidelines was issued, mostly with regard to disclosures in social media and the mobile marketplace.

Consumer Action's Michelle De Mooy, senior associate for national priorities, spoke on a panel dedicated to mobile advertising disclosures, where she emphasized the needs of underserved and non-English-speaking communities. For example, she discussed the fact that some mobile phones may have slower download speeds, making it more likely that consumers with these phones will ignore or never even see lengthy or graphic-intensive advertising notices. She also explained that non-English-speaking consumers, who have been shown to be at a much higher risk for financial fraud and abuse, may not be able to understand a notice that is in English and written in “legalese.”

Rocky start to online privacy meetings

Last year, the Obama Administration (via the Department of Commerce) unveiled a Consumer Privacy Bill of Rights that proposed a framework for protecting individual privacy online. It also announced plans to convene meetings this summer with privacy advocates and industry representatives to develop industry codes of conduct around online privacy. The National Telecommunications and Information Administration (NTIA) facilitated the first of those meetings on July 12, and Consumer Action's Michelle De Mooy attended.

According to De Mooy, though well meaning, the meeting was disorganized and ultimately fruitless. "NTIA had the idea that a diverse group of people with opposing viewpoints could come to agreement about some issues right away," De Mooy said. "Unfortunately, both the lack of meeting structure and the inability of these groups to form consensus combined to make the meeting a disappointment."

Privacy advocates, including Consumer Action, also criticized the NTIA for starting the process of developing industry codes of conduct with the single issue of making mobile applications more transparent, or forthright, about how they collect and use consumer information. "Transparency is great, but it is only one piece of a bigger privacy puzzle," De Mooy said.

"Transparency is basically meaningless without consumer control or choice. For instance, agreeing to a lengthy privacy policy does little to give consumers control over their data and the protection of their privacy." During the meeting, De Mooy spoke about the importance of holding mobile platforms, like Apple and Google, accountable for providing consumers with applications that offer stringent privacy protections.

Despite these initial setbacks, Consumer Action intends to be a part of each NTIA monthly meeting in order to continue a dialogue with industry and policymakers about the best ways to protect consumer privacy online.

Hotline Chronicles: New wireless phone? New contract!

Janine* from San Francisco wrote to the Consumer Action hotline to express her outrage at T-Mobile, her wireless company. A customer since 2005, she went to a local retail store a couple of months ago because her phone didn’t work. A helpful clerk said she was eligible for a free phone, which she accepted.

Recently, Janine called her wireless carrier to cancel her service. No problem, she was told, but you’ll have to pay a $217 early termination fee. Janine, who knew her initial two-year contract had run out years ago, was shocked to learn that by accepting the new, free phone, she had started the clock on a new two-year contract.

Free or discounted phones typically come with one- or two-year service contracts. Often, making changes in service or accepting a free replacement phone will also extend your contract.

Consumers who don’t want a contract can pay full price for a phone or choose a prepaid wireless plan. Many stores sell mobile phones, including wireless carrier stores, electronics outlets and Internet retailers. You can buy and activate a prepaid phone and service at many retailers, as well. And many prepaid wireless plans come with heavily discounted phones. With prepaid (or pay-as-you-go) service, you may pay somewhat more per minute, but you can cancel at anytime without termination fees. Prepaid plans are even available for data-ready devices such as smartphones.

If you’re currently bound by a contract you’d like to get rid of, check out websites like cellswapper.com or celltradeusa.com, where consumers can try to sell partially used wireless contracts for a fee that generally will be less than the carrier’s termination fee.

Our counselors advised Janine that she could submit a complaint to her state public utilities regulator. However, we advised that such a complaint may be a long shot, and that she should state that the clerk did not inform her orally about the contract extension during the transaction. Visit the National Association of Regulatory Utility Commissioners to find your regulator.

“This is a point of misunderstanding with a lot of consumers,” said Joe Ridout, Consumer Action’s consumer services manager. “The wireless carriers need to explain the trade-off for a new phone and to make sure customers aren’t blind-sided by early termination fees.”

We sent Janine a link to our new Cell Phone Savvy brochure, which provides information on how to avoid problems with your wireless device and service. The brochure is part of a Consumer Action series called Empower U, funded by the California Consumer Protection Foundation.

*Not this consumer’s real name

Overdrawn and done-in by overdraft fees

A federal rule in effect since 2010 gives consumers the choice to avoid overdraft fees on certain debit card transactions and ATM withdrawals by forbidding banks from putting the transactions through when there are insufficient funds unless the consumer has given prior consent. The 2010 rule requires consumers to “opt in” if they want to let their bank pay one-time, non-recurring debits and ATM withdrawals when the account balance isn’t sufficient to cover them. Consumers who have opted in and overdraw their account can be charged an overdraft fee. For consumers who don’t opt in, debits and ATM withdrawals that would overdraw the account are declined and no overdraft fee is charged. (Consumers could still encounter merchant fees for “returned items,” however.)

The 2010 opt-in rule doesn’t apply to checks and recurring debits such as online bill payments or electronic checking account debits. Even when the accountholder hasn’t opted in, banks can still cover these types of transactions and charge an overdraft fee.

Consumer Action and other advocates have called the 2010 rule faulty because of this loophole, meaning even consumers who do not opt in can still be charged overdraft fees. Consumer Action advocates that consumers who do not opt in should be spared overdraft fees on all debit card and electronic checking account transactions, including purchases, ATM withdrawals, automated payments and online bill payments. Now, the federal Consumer Financial Protection Bureau (CFPB) is reviewing overdraft practices with an eye to improving on the 2010 rule.

In its comments to the CFPB on the impact of overdraft programs on consumers, filed June 26, Consumer Action drew on feedback it received from people who are fed up with being penalized by as much as $37 per item when they inadvertently overdraw their accounts.

Matt, from the state of Washington, ended up being charged more than $200 in overdraft fees when an automated payment went through before his deposit cleared, leaving a deficit of $2. For Sarah, from Chicago, an overlooked recurring payment overdrew her account and triggered $120 in multiple overdraft fees. These are just two of many consumers to contact Consumer Action about expensive, unfair overdraft fees incurred even though they did not opt in to allow overdrafts.

Consumer Action also took aim at the ways banks manipulate daily debits. Sometimes banks pay debits from largest to smallest to maximize overdraft fees, which they charge for each transaction that bounces. Consumer Action called on the CFPB to ban this practice and require that financial institutions always process consumer transactions in a manner that is advantageous to customers. Read Consumer Action’s comments.

Coalition efforts: Dairy subsidies, online privacy, rent-to-own and arbitration

Consumer Action works on many important consumer protection issues in coalition with other organizations. Here we highlight some or our recent efforts.

Dairy programs in farm bill. Consumer Action joined the Consumer Federation of America, Consumers Union and the National Consumers League in a letter to the House Agriculture Committee opposing the inclusion of dairy programs in the 2012 farm bill. “The last thing consumers need right now is unnecessary artificial increases in the price of food staples,” says Linda Sherry of Consumer Action.

Federal dairy “supply management” programs that restrict milk production, such as the Senate farm bill’s “Dairy Security Act,” artificially reduce the supply of milk throughout the country, thereby increasing milk and dairy product prices for consumers. As milk prices increase, low-income consumers are hit especially hard since they spend a higher percentage of their income on food than other consumers. In addition, the price increases caused by these programs negatively affect federal nutrition assistance programs, on which millions of low-income families depend, by increasing program costs and reducing their purchasing power.

Unfortunately, the pro-supply management forces won the day in the Ag Committee, but Consumer Action and its allies are encouraged by the level of support in committee as well as by reports that Speaker of the House John Boehner, who voiced concerns about supply management, would go to the House floor and speak against it. Read the groups’ letter here.

Ensuring civil society participation in online privacy standards. In June, in advance of a July 12 meeting to develop voluntary industry codes of conduct under the Obama Administration’s plan to improve online privacy for consumers, consumer groups wrote to Lawrence Strickling of the Commerce Department to outline their suggestions for a credible multi-stakeholder process. “Civil society must be able to participate in the meetings to the fullest extent possible, and that means two-way, contemporaneous communication. …Since there is no funding for civil society representatives from outside of the Washington area to travel to the meetings, this is clearly impossible.”

The groups, who are critical of the process set up by the Commerce Department, pushed back against its decision to have agency staff act as proxy for people who are not physically present. “Equitable participation requires both in-person and real-time remote access,” wrote the groups.

In April, the groups polled members and suggested ways to foster meaningful remote participation, including an audio bridge with an operator to queue comments and questions via a toll-free conference call bridge and an Internet Relay Chat that people could use to make comments, which could be viewed online and projected in the meeting room.

Joining the letter were the American Civil Liberties Union, Center for Digital Democracy, Common Sense Media, Consumer Action, Consumer Federation of America, Consumers Union, Electronic Frontier Foundation, Consumer Watchdog and US PIRG. Read the groups’ letter here.

Groups oppose faulty ‘rent-to-own’ legislation. Consumer groups, led by the Americans for Financial Reform coalition, oppose House and Senate bills that purport to protect rent-to-own (RTO) customers. Instead, the Consumer Rental-Purchase Agreement Act (H.R.1588 (Canseco) and S.881 (Landrieu)) would preempt stronger state consumer protection laws.

“Congress should not overturn state laws that prevent predatory financial practices or that provide consumers basic information about the cost of RTO transactions,” stated the groups.

Rent-to-own businesses are appliance and furniture retailers who arrange lease agreements rather than typical installment sales contracts. The companies are popular with cash-strapped customers who don’t have access to credit or savings. These leases are short term, so that "rental payments" are due weekly or monthly. Consumers only obtain title after payments are made for 18 months (78 weeks) or more. If the consumer fails to make payments, the company repossesses the goods and the consumer is out-of-pocket for all previous payments. Even if the customer does make the rental payments long enough to eventually own the item, the accumulated cost is many times what the merchandise is worth. Under most rent-to-own contracts, the customer will pay between $1,000 and $2,400 for a TV, stereo or other major appliance worth as little as $200 used and seldom more than $600 new.

The industry aims its marketing efforts at low-income consumers by advertising in minority media, buses and public housing projects. Statistics from the FTC show that the rent-to-own customer base is among the poorest, and that the vast majority of their customers enter into these transactions with the expectation of buying an appliance and are seldom interested in the rental aspect of the contract. Data also show that the RTO industry targets military families. Read the groups’ letters here.

Dodd-Frank Act calls for study of binding mandatory arbitration provisions. Consumer Action joined other consumer organizations in comments on the arbitration study the Consumer Financial Protection Bureau (CFPB) is required to conduct under the Dodd-Frank Act. For consumer organizations, the study will be a critical first step in exercising the consumer watchdog agency’s authority to ban or limit forced arbitration clauses in contracts for consumer financial services and products under its jurisdiction.

Consumer Action has a long history of working to reform binding mandatory arbitration in consumer contracts that give all the power to the company. Consumers are forced to accept these clauses in order to receive a service and/or product and, in accepting the terms, they waive their right to take disputes to court.

Arbitrators, unlike courts, are not obligated to apply the law and their decisions cannot be appealed. Discovery is extremely limited and traditional rules of evidence and procedure (which might provide consumers with some level of fairness) are typically not applied. Decisions often are not explained and are never made public. Finally, consumers have no protection from arbitrators with conflicts of interest or incentives to side with the companies that repeatedly consume their services. Read the full letter here.

Update on California consumer protection legislation

As the California legislature enters its summer recess, we provide an update on some of the actions we've been involved in.

California Homeowner Bill of Rights wins. The big win for consumers was the California Homeowner Bill of Rights, which passed both houses of the legislature on July 2 and now goes to Governor Jerry Brown's desk for a signature. With its passage, California is poised to lead the nation in reforming bad banking practices and defending homeowners. The package of bills (Senate Bill (SB) 900 and Assembly Bill (AB) 278) will prohibit robo-signing and dual tracking. Robo-signing is when companies automatically sign thousands of contracts and affidavits without verification of the information. Dual tracking is when lenders pursue foreclosure proceedings even when the distressed homeowner has applied for a loan modification. The Bill of Rights also requires the lender to provide a single point of contact for borrowers (which should greatly increase accountability at banks) and permits Californians to sue if they are victims of illegal foreclosures.

Last-minute loss for bill to curb collection agency abuses. One unexpected casualty of the Homeowner Bill of Rights victory was SB 890 (Leno), which would have protected consumers from a litany of collection agency abuses. This bill, which had sailed through the Assembly with the strong support of numerous consumer organizations, was a model of compromise legislation (both Encore Capital and the Debt Buyers Association testified in support, and the California Association of Collectors did not oppose it). But the bill was blindsided by the California Bankers Association in retribution for the passage of Leno's SB 900, which the bankers opposed. Bankers, essentially quiet during 18 months of negotiations on SB 890, jumped in with the argument that banks could be considered "debt buyers" if one bank bought a credit card portfolio from another bank. Leno argued that the bill would have no effect in that scenario, but the industry opposition helped kill the bill in committee.

Arbitration clauses allowed. SB 491 (Evans), which attempted to restore class action rights that Californians lost in the Supreme Court ruling in AT&T Mobility v. Concepcion, passed out of its house of origin in the Senate, but died in the Assembly Judiciary Committee. The Concepcion decision removed consumers' ability to participate in class actions when they are harmed by businesses that require arbitration to settle disputes. Arbitration forums tend to favor business interests over those of consumers. SB 491 would have allowed Californians to seek collective redress in arbitration. The bill failed when two Democrats (Alyson Huber and Toni Atkins) joined with the Republican minority (Don Wagner, Brian Jones and Jeff Gorell) to block it in committee.

Proposed “Buy Here Pay Here” auto dealership requirements. Three bills intend to protect consumers against often-predatory “Buy Here Pay Here” auto dealerships that extend credit to car buyers. Consumer Action’s Joe Ridout testified before the Senate Judiciary Committee on behalf of AB 1447 (Feuer) and AB 1534 (Wieckowski) on July 3. Each passed out of committee and has moved to the Appropriations committee. These bills, along with SB 956 (Lieu), would require these dealerships to offer buyers a limited warranty, price disclosure and more affordable interest rates.

Bill requires table saw safeguard. A bill supported by Consumer Action to protect table saw users from serious injury (AB 2218) passed out of committee 3-1. According to the Consumer Product Safety Commission, Americans suffer 67,300 blade contact injuries each year, costing $2.36 billion. Nearly all these injuries can be prevented when a table saw is equipped with an "active injury mitigation system" to automatically stop the blade when it comes into contact with flesh. This technology, which is already available but not widely used, would be required for new table saws sold in California beginning in 2015. The bill now awaits a Senate floor vote, expected sometime in August. Steve Gass, inventor of the saw-stopping technology, said at the hearing, "We're keeping our fingers crossed…since we still have 'em."

Preventing employers from demanding access to employees’ social media accounts. Sometimes odd-sounding legislation is proposed because the existing law is unpalatable to some interests. One bill in this session, for example, considered the question of who is legally allowed to brush the teeth of a dog, while another centered on the issue of whether husbands who attempt to murder their wives should be entitled to alimony if later divorced from the surviving victim. Existing state law has allowed an imprisoned attempted murderer to collect alimony from his victim, now his ex-wife. And the dog dentistry argument has raged for years as veterinarians attempt to protect their monopoly against dog groomers who would do the job for less money if the law allowed.

Does it sound just as odd that we’d need to pass a law to prevent employers from requiring employees to turn over their social media usernames and passwords? Believe it or not, this is a spreading practice by employers. The good news is, bills meant to prevent the practice—SB 1349 (Yee) and AB 1844 (Campos)—look on target for passage. SB 1349 was just voted out of the Assembly Higher Education committee (8-0) and now goes to the Appropriations committee.

Consumer Action brings MoneyWi$e to DC

The Opportunities Industrialization Center of Washington, DC (OIC/DC) and Consumer Action came together in the nation’s capital to host a full day of training for community and faith-based organizations on the widely used MoneyWi$e curricula. The OIC/DC provides literacy, occupational skills and job readiness training, placement services and case-management services to DC residents with multiple barriers to employment.

At the start of the session, Consumer Action Community Outreach Manager Linda Williams noted that partnering with agencies like the OIC is one of the ways in which Consumer Action is achieving its mission to “help all consumers assert their rights in the marketplace.” She next facilitated an interactive session geared toward helping participants understand ways to teach adult clients effectively, emphasizing specific strategies to engage participants in ways that meet diverse needs and learning styles. Williams then trained participants on using the MoneyWi$e modules to inform and empower their clients. Williams ended the training with a group activity that focused on a case study of fictional client Sally Walker. The case study highlights some of the key concepts in the MoneyWi$e modules, including the importance of ordering individual specialty consumer reports, which can have an indirect but significant impact on a consumer’s budget.

“I was highly impressed with the materials and activities used at the training—particularly the Sally Walker activity, because it was so thorough and thought-provoking,” said Yehwroe D. Sinyan, the economic education coordinator for the NAACP. Sinyan also said that even after she left the workshop, she continued to think about the implications of the choices that “Sally” made and how those decisions might translate to her own life.

Another training participant, JaQues Anderson, a GED instructor at Anacostia Community Outreach Center, said, “This was my first MoneyWi$e training and boy were my eyes opened! I thought I was doing something just shredding my mail. But in just two hours I learned a myriad of other steps I need to take to protect myself and my identity.” Anderson went on to say, “As a result of the training, I am now teaching other consumers about the opportunities criminals have and how to protect against fraud. I cannot wait to receive my MoneyWi$e training materials so I can train my students on ID theft and how to better manage their money.”

The MoneyWi$e curricula, developed by Consumer Action in partnership with Capital One, provides in-depth brochures, leaders’ guides, lesson plans, activities and PowerPoint presentations for trainers seeking to teach core financial literacy topics. The May 10 “train-the-trainer” roundtable in DC focused on topics such as identity theft, money management, rebuilding credit and saving to build wealth.

Digital Dollars training in San Diego

Consumer Action joined Visa in San Diego to host a half-day of training for community, government and faith-based organizations on the Digital Dollars training module. The June 6 “train-the-trainer” regional meeting, led by Consumer Action Community Outreach Manager Nelson Santiago and Associate Director of Outreach and Training Audrey Perrott, focused on how to navigate the new online and mobile economy.

The Digital Dollars training module, developed by Consumer Action in partnership with Visa, includes three in-depth brochures, a lesson plan with class activities and a PowerPoint presentation for trainers seeking to teach consumers how online and mobile banking and payments work, help them understand what the advantages and disadvantages of banking or paying electronically may be and provide them with the tools that will enable them to protect their assets and their privacy while banking online and paying on the go.


The training began with introductions, which included participants telling what demographics they serve and how they planned to use what they learned, and ended with a game that tested participants’ knowledge of the material. In between, Perrott provided a tour of the Consumer Action website, pointing out how anyone—and everyone—could get involved in consumer advocacy by taking advantage of Consumer Action’s e-advocacy notifications and tools at the Take@ction area of our website. In post-training evaluations:

• 100% of participants who responded either “strongly agreed” or “agreed” that they could use the training information and materials to teach their clients about online banking, mobile banking and mobile payments.
• 92.5% “strongly agreed” or “agreed” that they would place an order for the Digital Dollars materials the day of the training or within 60 days.
• 100% indicated that they planned to use the module within the next 60 days.

Consumer Action and Visa will be co-hosting regional meetings for CBO staff in Chicago and Philadelphia in September. For more information, contact Outreach Department .

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 unbiased surveys of consumer services to expose excessive prices and anti-consumer practices and 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 and Vietnamese. 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 dozens of 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.

Click here to learn more about our staff.