Consumer Action INSIDER – December 2011


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What people are saying

I wanted to thank you so much for inviting me to this year’s Consumer Action Financial Empowerment Conference. It was wonderful! The panels were great and I always learn so much from the other practitioners who attend... Just like last year, you and your team did a great job. Your staff is always on top of everything, and so accommodating in every way. – Deborah Lowe Muramoto, California Capital Financial Development Corporation

This month's consumer tip: How to pick the right phone

In the market for a new phone? Your choices will range from feature phones to PDAs and smartphones, and you’ll want to consider design, features, performance and price. Learn more at Consumer Action’s WirelessEd site.

A note from Executive Director Ken McEldowney

On behalf of Consumer Action's board and staff, I would like to wish our readers a warm and safe holiday season. May you and yours look forward to another year of prosperity and good health.

I also want to thank you for another year of support for the consumer empowerment movement. Your donations help us assist people from all walks of life through our educational and advocacy work. I hope I can count on you to help keep giving.

2011 marked our 40th anniversary. The milestone gave us reason to reflect on our work over four decades and to recognize the impact we make on the lives of unrepresented and underserved people. The anniversary was also a time to look ahead to the work that needs to be done.

As noted in our most recent annual report, consumer advocates have a challenging agenda. Poverty and unemployment are worsening, the gap between the haves and have-nots is widening and there is a backlash in certain circles against regulations and government intervention that protect consumers. Despite these challenges, we will remain vigilant to ensure that consumers have a fair shot at financial independence and self-sufficiency.

The money we raise from individuals and private donors supports our advice and referral hotline (for which demand tripled in the past year) as well as our newsletters and special reports. We never charge individuals or community-based organizations for our multilingual educational materials. We don’t take a dime for helping consumers find advice and referrals to address their complaints. Research, writing and direct services cost money and we hope to keep our wide range of services free and accessible forever. Your support helps us continue to offer free services. To give to Consumer Action, go to

Consumer Action serves up financial empowerment to its network

“Credit is a muscle; if you don’t use it you lose it,” Ann Marie Erie advised the financial counselors and advocates who joined Consumer Action for its second annual National Financial Empowerment Conference in Chicago last month. Erie, a financial educator for Neighbors Federal Credit Union in Los Angeles, was part of a panel that focused on rebuilding credit after foreclosure.

This year's National Financial Empowerment Conference was underwritten by Consumer Action's Managing Money and Housing Information Projects, Visa and Capital One. Additional support was provided by Citi.

Participants at the free two-day conference learned that no matter which route their clients take out of housing distress, be it foreclosure, short sale or deed-in-lieu of foreclosure, their credit score will take nearly the same hit. Sarah Davies, a senior vice president for VantageScore credit scoring system, explained that recent late payments or foreclosures do the most damage to credit scores and that only time and disciplined, on-time credit payments can heal the score.

Veterans’ advocates, credit and housing counselors, and scores of other community-based groups in Consumer Action’s national network gathered to share best practices and to learn about the latest issues affecting communities. More than 60 financial empowerment counselors from close to two dozen states shared techniques on how to break the cycle of long-term poverty and help the “new poor,” who have seen their finances disintegrate, along with the economy, since 2008.

While families may have lower incomes, their technology needs are growing as they struggle to remain part of our increasingly wired society. Deciphering whether cell phones and cable TV were a “need” or a “want” was a challenge raised by many counselors who work to help individuals live within their means.

Panelists suggested using role models to help people take control of their financial lives. They recommended providing access to people who have achieved financial independence to make concepts like budgeting stick. Panelists noted that language is important. For example, the term “spending plan” carries less baggage than the word “budget” does.

“If you don’t plan how to spend your money, someone else will,” warned Vernette Allen, director of the Financial Futures Initiative at Action for Boston Community Development. Allen told the audience to encourage people to use their dreams, values and goals to create a spending plan that works.

Day one of the conference included experts from San Francisco and Chicago explaining a movement called “Bank On,” where cities partner with banks and credit unions to offer low- to middle-income consumers the opportunity to open a free checking account. Some programs offer “second chance” accounts to those who mishandled an account in the past. Gail Sanders explained that the “second chance”-style checking accounts from Fed Choice Federal Credit Union come with financial counseling to help individuals overcome previous mistakes. Each local Bank On program differs somewhat. Some focus on those who have never had an account and can save money on fees by using a bank or credit union instead of a check cashing service. One hundred cities now offer Bank On programs.

During his presentation, Dr. Billy Hensley of the National Endowment for Financial Education (NEFE) reminded participants of the importance of evaluating their work. Dr. Hensley suggested that counselors ask adult students what the “most engaging and least engaging” parts of a training were to try to capture valid outcomes from the effort.

At the start of the second day, the nation’s new consumer financial regulator, the Consumer Financial Protection Bureau (CFPB), was the focus of a presentation by Consumer Action’s Ruth Susswein, deputy director of national priorities. Susswein described how the CFPB, as the only regulator with the sole mandate to protect consumers, is trying to be a different kind of overseer by engaging consumers, lenders, investors and any other interested parties before writing new financial rules.

“The CFPB opened its doors only four months ago, and some in Congress have been working actively to slam those doors shut,” said Susswein.

Just days before the conference, said Susswein, the CFPB had kicked off its “Know Before You Owe” campaign, designed to make disclosure forms easy to understand when applying for a mortgage or student loan. The agency is combining two key mortgage forms, the Truth in Lending Disclosure and the HUD-1 Settlement Statement, into one form and consolidating other disclosure requirements to cut down mortgage paperwork by as much as 50 percent.

The CFPB opened its complaint division by working with card issuers to resolve consumers’ credit card complaints, said Susswein. “All types of consumer complaints are accepted but only credit card complaints will get the Bureau’s full attention for now.” (To file a complaint, visit [url=][/url] or call 855-411-2372.) Susswein told participants that the bureau will begin tackling mortgage servicing and foreclosure complaints in December.

Speaker Patrice Ficklin, associate director of the CFPB’s Office of Fair Lending and Equal Opportunity, was brimming with pride and excitement as she shared some of the bureau’s plans with the crowd. Ficklin explained her department’s mission to ensure “fair, equitable and nondiscriminatory access to credit.” She told the audience that the bureau is working on many of the issues raised by participants, such as payday lending, title lending, private student loans and more.

Consumer Action’s Michelle De Mooy turned the group’s attention to financial privacy, with a cautionary note to participants about the need to be vigilant in protecting sensitive personal information. As we increasingly conduct financial transactions on the Internet and mobile phones, we need to be informed as to how our financial information is used and who has access to such sensitive information.

De Mooy warned participants that companies and social media sites, like Facebook and LinkedIn, are not protecting our financial details as well as they should be, and that mobile phone users are exposed to financial risk whenever companies merge data with other data to create our “digital profiles.”

“Did you know that Google keeps your searches for 18 months?” De Mooy asked the audience, which seemed surprised by her statement.

De Mooy argued that we must be our own financial privacy watchdogs. She recommended using passwords or PINs on smartphones and computers to make it harder for hackers or thieves to steal our personal information.

The conference wrapped up with attendees reciting their favorite “best practices” gleaned during the two-day event. “I’m going to insist that my clients use a Ziploc bag to keep one month’s worth of receipts to see where their spending really went, ” said one financial counselor, while heads nodded all around the room.

Web spotlight: Latest annual report available

In our most recent annual report, Consumer Action provides a review of our accomplishments during the last fiscal year. The report tells the story of our growth and expanding reach through our free multilingual consumer education publications, community trainings, federal and state advocacy and free advice and referral hotline.

In our annual reports we make an effort to communicate little-known facts about Consumer Action. You might be interested to know that last year the organization:

  • Boasted a diverse workforce of 27: 65% are female; 35% are male. In terms of ethnicity, our office includes: 57% Asian, 27% white, 8% African American and 8% Latino. Half were born abroad and speak their native languages or dialects including Arabic, Cantonese, Gujarati, Hakka, Hindi, Indonesian, Japanese, Malay, Mandarin, Shanghainese, Taiwanese, Tagalog, Toisan, Urdu and Vietnamese.
  • Filled 2,569 bulk orders from 1,200 community-based organizations (CBOs) across the country, for a total distribution of 897,563 copies of our publications.
  • Traveled to 27 cities and trained 906 CBO staff members on six project initiatives.
  • Granted $89,000 in mini-grants to CBOs to support their financial literacy programs.
  • Assisted more than 5,300 individuals from 49 states on a variety of issues including: retailers/products, 23%; credit and financial services, 19%; phone and utilities, 15%; automotive, 12%; as well as a variety of miscellaneous concerns including scams, identity theft, medical billing, household moving and storage and home construction and repair.
  • Enabled 1,445 subscribers to send more than 4,300 messages to their elected officials on a variety of topics from financial reform to privacy. This includes 299 people who composed their own messages and sent more than 1,100 messages to their elected officials.
  • Received support from 20 corporations, one-fourth of which are Fortune 500 companies.
  • Enjoyed the support of 48 educational partners ranging from financial institutions to universities and law firms.
  • Received funds from 10 court awards (cy pres grants) and class action settlements.

Click here to read the annual report, including our achievements, profiles of two network CBOs and two staff members and our financial Statement of Activities.

Consumer Action and Microsoft team up to teach Internet safety

In early October, Consumer Action and Microsoft co-hosted a roundtable in Milpitas, CA as part of their ongoing partnership to promote Internet security. Community-based organizations attended the event, which boasted a blend of instruction and interactive exercises to help participants teach consumers how to protect themselves and their personal assets when using the Internet.

The event began with introductory remarks from Jonathan Noble of Microsoft and Kathy Li, Director of Consumer Action's San Francisco office. The training for this event was led by two of Consumer Action’s community outreach managers, Nelson Santiago and Linda Williams.

Williams presented the session on “Why Adults Learn,” an interactive discussion geared at helping participants understand ways to teach adult clients effectively. Consumer Action develops resources geared to adult learners, and Williams emphasized specific strategies to help community educators engage participants in a manner that best meets each individual’s learning style.

Santiago provided an engaging combination of lecture, hands-on activities and educational games to reinforce the Internet security information found in the Internet Safety educational module. The activities helped foster team building and networking among agencies as they competed to answer the most questions. Among other approaches, Santiago emphasized the importance of pointing out personal incentives for learning when presenting the materials in the community since participants are more likely to engage with teachers if they know there is something to be gained from their efforts.

The free Internet Safety educational module, created by Consumer Action in partnership with Microsoft, includes:

  • Internet Safety: A computer user’s guide to privacy and security: A brochure available in English, Spanish, Korean, Vietnamese, and Chinese
  • Internet Safety Trainer’s Manual: Questions and answers about protecting your privacy and security on the computer
  • Internet Safety lesson plan with class activities
  • Internet Safety PowerPoint slides

Click here to download the module free of charge.

"The threats are no longer just about identity theft," says Executive Director Ken McEldowney. "Potential dangers now encompass cyberstalking and cyberbullying, among others. If we hope to stay ahead of the many ways consumers can fall victim to harmful and deceptive practices, we need to engage the communities most at risk of not knowing the dangers."

Evaluations of the event showed that 50% of participants left the training having gained a better understanding of Internet safety and the potential risks on the Web. More than 55% of participants strongly agreed that their participation in the roundtable had fully equipped them to lead their own training efforts in their local communities. Consumer Action trainings aim to encourage interaction among fellow participants, and 77% of the attendees agreed that we had supplied ample opportunities for networking with others in their fields.

Amicus briefing: Should quasi-governmental self-regulators be immune from lawsuits?

Consumer Action joined Public Citizen, the Project on Government Oversight and U.S. PIRG in an amicus brief asking the Supreme Court to review a lower court’s decision to protect Wall Street’s most powerful self-regulators from lawsuits because they play a quasi-governmental role delegated to them by federal regulators.

Supporting the petitioner, Standard Investment Chartered, Inc., the amicus brief questions why the activities of a non-governmental self-regulatory organization should be subject to immunity from private legal action. There are valid reasons to immunize government agencies and jurists from legal action, but extending this benefit, known as “sovereign immunity,” to quasi-governmental agencies would not be in the public interest.

Standard Investment Chartered, Inc. sued the self-regulatory agency in question, the Financial Industry Regulatory Authority (FINRA), for misrepresenting material facts during the 2006 merger of the National Association of Securities Dealers (NASD) and the regulatory arm of the New York Stock Exchange, NYSE Regulation, Inc. The case centers on the rights of Standard Investment Chartered, Inc., which believes the misrepresentations led it and other member firms to give up voting powers in exchange for a payout when it was not in their best interests to do so.

NASD and FINRA are self-regulatory organizations charged by the federal Securities and Exchange Commission (SEC) with protecting investors and the public. Self-regulation frequently is likened to “the fox guarding the hen house.” In this case, the regulatory body has a vested interest in protecting its member firms—in this case investment brokers and companies—as well as the duty to protect investors. Without access to the courts, consumers could not hold such agencies accountable for conflicts of interest and failure to protect the public’s interests.

Surprising to those who protect consumers’ interests, lower courts agreed that FINRA should be immune to being sued because it carries out duties given it by a government agency, the SEC. The court held that suits involving private corporate actions couldn’t proceed if they were incidental to actions an organization took in its quasi-governmental role. The petitioner, Standard Investment Chartered, Inc., is seeking Supreme Court review of the lower court decision.

In the brief, Consumer Action and fellow advocates call on the Supreme Court to review Standard Investment Chartered, Inc. v. NASD. Because self-regulatory agencies such as FINRA have been granted enormous power over the lives of consumers, they should not have immunity from private legal action, as the most recent decision in the Second Circuit would provide.

Click here to read the brief.

Hotline Chronicles: Watch out for government grant scams

Sylvia* from Missouri contacted Consumer Action’s hotline to say that she had sent money to an outfit called the “Government Grant Office,” which promised a $7,000 “government grant” that she would not have to pay back. Unfortunately, Sylvia took the bait and wired a “security deposit” of $120 to a man in India. Not surprisingly, she never received the $7,000 but she did get another call from a “rude and pushy” woman who asked Sylvia to send another $412. Luckily, Sylvia did not fall for it again.

Sylvia asked, “What can I do to get my money back? Times are too hard to give my money away.” Sadly, there is probably nothing Sylvia or anyone else can do to get her money back.

But Consumer Action wants to warn all consumers about this scam offering a “government grant” in exchange for an upfront fee. Many consumers have received unsolicited calls and emails promising cash grants if they pay a fee and disclose their bank account information. Often, the swindlers claim that bank data is needed in order to directly deposit the grant into the victim’s account, but once the crooks have the bank account information, they can steal all your money.

Sometimes the swindlers ask that money be wired to them. Once the consumer has paid the fee, the swindlers continue to call or email to ask for more money, saying that an additional fee would increase the amount of the cash grant the victim will receive.

In another variation, scammers offer to assist the consumer in obtaining grant money if the consumer authorizes a withdrawal from his or her bank account.

Consumer Action has received numerous complaints about fake grants offered by the “Government Grant Office” and “America’s Grants Department,” among other names. Victims are offered awards ranging from $7,000 to $12,500—all they have to do is pay a processing or application fee and taxes. According to the individuals who contacted Consumer Action, they’ve gotten nothing in return for the fees, which ranged from $120 to $400, except maybe a useless pamphlet containing a list of potential grant sources.

“These swindles are a good reminder of why it is unwise to provide ANY personal information during an unsolicited call,” said Joe Ridout, a spokesman for Consumer Action. To be safe, only disclose bank and credit card information when you initiated the call and are certain that the company is legitimate, he added.

Consumers who gave out their account information should contact their bank or credit union. All victims should file complaints with their state attorney general and the Federal Trade Commission.

Banks and credit unions should assist victims with a “Regulation E form” that may offer protection against future fraudulent withdrawals, provided that the unauthorized transfer occurred less than 60 days ago.

The federal government operates a website,, where you can search for government grants offered by 26 federal agencies. A legitimate issuer of grants would never contact consumers out of the blue.

Consumer Action offers many free multilingual publications on how to protect yourself from frauds and scams, including Just Say No to Senior Scams. is a chronicler of “urban myths” and scam messages and emails. It’s a good idea to check emails and offers with Snopes before responding or forwarding to others. Here is a link to Snope’s entry on government grant scams.

The Federal Trade Commission offers a fact sheet on scams.

*Not this consumer’s real name

40th anniversary photo gallery

Missed our annual fundraiser and awards celebration? We've put together a photo gallery of our guests and highlights from the evening's festivities.

The Washington, DC event raised $147,460 to date, with contributions that included major gifts from underwriters Capital One, Microsoft, TracFone and Google.

The new fundraising benchmark was achieved with the active support of the event planning committee, chaired by Jason Alderman of Visa, Inc.

Click here to view the gallery.

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.

Click here to learn more about our staff.



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