Consumer Action INSIDER - January 2013


Table of Contents


What people are saying

Thank you for the materials you provided. I have distributed them to our Family Support Specialists who work with families in setting financial goals. The feedback is that the families like to have materials to take home. We have held successful financial literacy trainings with parents who are now saving, opening different types of accounts or just following a budget plan. - Jessica Varela, Southwest Human Development (Phoenix, AZ)

Did you know?

The U.S. Consumer Product Safety Commission (CPSC) warns parents and caregivers to keep single-load liquid laundry packets locked away from children. The soft, colorful packages look like candy but they contain toxic substances that dissolve quickly when placed in the mouth or handled with wet hands. Click here to read the CPSC Safety Alert (PDF).

Consumer Action News: It pays to be ‘frugal’!

Hate to waste money? Believe in the saying "A penny saved is a penny earned"? So does Consumer Action, and we wish you a more prosperous 2013 with a new compendium of money management and savings tips in the Winter 2012-2013 issue of Consumer Action News, our quarterly newsletter.

The "Frugal Issue" contains these stories and more:

  • Monica Steinisch examines the trend to live simply, noting that the idea of simple living has become more attractive to many consumers, who have had to figure out how to deal with the reality of higher gas prices, lower investment returns and, in some cases, pay cuts.
  • Ruth Susswein offers a variety of tips for saving money and cutting back, from a free text-messaging app to pulling the plug on electronics that suck power in “standby” mode.
  • Michelle De Mooy offers a run-down on dozens of free online and Web-based tools aimed at helping you track and manage your finances so that you can find ways to streamline your budget and potentially save money.
  • Linda Sherry writes about leveraging credit wisely by borrowing only for big-ticket items and emergencies, and paying down balances quickly to save on interest charges and keep your credit line available if you need it in the future.

New guide to potential credit card 'checkout fees'

Consumer Action has issued a brief guide to help consumers understand new and potentially higher costs when they use a credit card at some retailers. As a result of a settlement between retailers (both online and offline) and the payments industry, consumers may soon begin seeing retailer surcharges, or “checkout fees,” when using their credit cards at brick-and-mortar stores or merchants’ websites.

The settlement, reached in July between retailers, nine major banks, Visa and MasterCard, gives retailers the option to pass credit card acceptance costs on to consumers through checkout fees. The preliminary settlement was signed on November 9, making the settlement terms effective by mid-January 2013.

The guide, Checkout Fees: Consumer rights and retailer responsibilities, can be accessed on Consumer Action’s main website and on its Know Your Card site.

The guide was created in partnership with the Electronic Payments Coalition (EPC), which includes credit unions, community banks and payment card networks.

CBOs gather for briefing on social media privacy

Consumer Action invited Bay Area representatives from our network of community-based organizations to join us in Oakland on Dec. 13 for a briefing on privacy and control for social media users. Nearly 30 participants gathered for the four-hour event, which included presentations from Consumer Action privacy expert Michelle De Mooy and Facebook’s Krista Kobeski.

De Mooy spent the first half of the day covering why privacy matters, how to decide what to share and what not to share, what social media users do and don’t have control over, how to find and use social network privacy controls, what kind of personal information is collected and how it’s used, and tips for staying safe when online or using mobile “apps.”

The presentation was broken up by a group exercise that tasked participants with identifying whether a social media user should “Share,” “Don’t share” or “Share with reservations” a given “post,” or message. There was consensus that you shouldn’t share “Calling in sick today was the best idea ever—saw a great movie and now I’m hangin’ at the beach!” Other sample posts elicited more discussion.

After lunch, Facebook presented its Pages feature, which enables businesses and organizations, including the non-profits that attended the briefing, to take advantage of social networking to spread their message, attract supporters and initiate a dialogue. The presentation segued into how users can maintain their desired level of privacy while taking advantage of social media. Participants were clearly intrigued by the potential in social media—Facebook answered questions until time ran out.

The briefing was the result of discussions that began in August, when De Mooy met with Facebook’s manager of privacy and public policy to explore ways that Consumer Action could enhance the social media giant’s efforts to educate current and prospective users on privacy and control. Consumer Action has helped dozens of other companies, including AT&T, Microsoft and Visa, reach a large and diverse population (including non-English-speaking consumers and those who may currently avoid social media out of privacy or safety concerns) at the community level and get direct feedback from organizations about what they and their clients need most.

The Oakland briefing was conducted to guage overall interest in the topic, understand current perceptions and concerns around social media privacy, and identify the types of information and tools that grassroots educators and their clients want.

Consumer Action, fellow advocates sit down with Microsoft

Consumer Action and other influential privacy, consumer and civil liberties advocates joined representatives from Microsoft at the company’s headquarters in Redmond, Washington, last month. The meeting gave participants a chance to talk frankly about current issues in online privacy, such as developments around “Do Not Track” (DNT), a project that is being fleshed out through an international body called the W3C, or World Wide Web Consortium. W3C members include advocates, industry members and early pioneers of the Web.

DNT would allow consumers to block advertisers and publishers seeking to track them across websites. Microsoft has publicly supported DNT by making it available in Internet Explorer 10 by default as consumers go through the initial software installation—the first browser to do so.

The meeting agenda also touched upon emerging technologies and how they might impact privacy in the coming year. Advocates and representatives promised to continue this productive dialogue in 2013.

Advocates, industry collaborate to improve mobile app transparency

When advocates, industry and government convened for the first time in August as part of the National Telecommunications and Information Administration’s (NTIA) White House-driven, multi-stakeholder process to determine industry codes of conduct for mobile apps, it was viewed as a process that might not produce constructive results.

The first challenge was improving transparency around how personal data is used and shared on mobile devices. However, differing interests between industry representatives and consumer advocates led to bickering and conflicting agendas, leaving many wondering if the entire process would fall apart. As a result, Consumer Action, World Privacy Forum and the American Civil Liberties Union decided to branch out from the larger process and create a working group with the Application Developers Alliance (ADA) to produce a tangible solution for consumers.

At the Nov. 30 meeting convened by NTIA, our working group briefed the larger assembly on a draft industry code of conduct and three transparency screens in development, each of which offers consumers a clear look at the data leakage that occurs through mobile applications. The New York Times covered the briefing and included a photo of one of the proposed screens, which lists twelve categories of data that could be collected and shared by an app.

While the sample screens were met with unanimous approval from both industry and advocates, it's unclear if they will be the final product of the process, which still has to work through such issues as what constitutes consumer agreement to data collection and sharing.

The working group is focused on refining and finalizing the screens in the coming weeks, along with a sample document that details the app developer’s commitment to transparency. Consumer Action will remain active in the process. The next NTIA meeting will be on January 17.

Amicus briefing: Municipal refunds of illegal taxes

Last month, Consumer Action, the National Association of Shareholder and Consumer Attorneys (NASCAT) and the Tax Foundation's Center for Legal Reform submitted an amicus brief to the California Supreme Court arguing that governments that impose illegal taxes should have to make refunds to the entire affected class of consumers rather than establish a cumbersome process in which each affected taxpayer has to file an individual claim.

The brief was submitted in McWilliams v. City of Long Beach, a class action case granted review by the Supreme Court in July, following an unpublished appeals court decision that allowed the plaintiff to bring a class action challenging the long-distance telephone service tax refund procedure.

Hotline Chronicles: Restocking fees gripe customers

Joe,* from Texas, contacted Consumer Action’s hotline to complain that a large office supply chain had charged him a restocking fee when he returned a defective computer under an extended warranty purchased from the retailer. He received a new computer but said that the store charged a restocking fee because he did not have the original packaging intact. Our counselors advised Joe to write to the CEO of the chain, pointing out that in this particular instance a restocking fee was unwarranted because the computer was defective and would have needed repair anyway before it could be re-sold as “refurbished” merchandise.

If, shortly after purchase, you discover that an item is defective, you should not have to pay a restocking fee when you return it. You may have to press the point, and escalate your case to higher management, but it is not fair to charge restocking fees for faulty merchandise.

Restocking fees are common, especially when returning electronics. Consumers might also encounter these fees on furniture and automobiles. Most often, the fees are a percentage of the price, from 10 percent to 25 percent, although we’ve seen higher in rare cases.

Here are few tips on how to avoid restocking fees:

  • Be certain you truly want the items you buy, since returning impulse purchases that you later regret might cost you a fee.
  • Before you purchase an item, read the retailer’s return policy, which should mention if your purchase is subject to a restocking fee. Disclosure in advance of the purchase may be required in some states, but even if that is not the case where you live, lack of disclosure or notice forms a good basis for a complaint that your return should not be subject to a fee.
  • Check with your state attorney general’s office or consumer affairs agency to learn your consumer rights regarding restocking fees, if any.
  • Open all items carefully and save the original packaging, tags and receipts. Use a box cutter, small sharp knife or scissors to cut carefully along the cellophane wrapper. Sometimes you can make a package appear pristine by sealing it back up with a little tape.
  • Ask if you can avoid a restocking fee if you agree to accept a merchandise exchange or store credit for your return.
  • If you are returning an item by mail to an online retailer, make sure to package it carefully and purchase insurance. Returned items damaged during transit may be subject to an additional restocking fee.
  • When you give an item as a gift, make sure to get a gift receipt (these don’t have the price on them) and include it in the package. Retailers may waive the restocking fee on gift exchanges and returns.

Also, while it might not save you a restocking fee, remember to delete any personal data before returning unwanted or defective electronics, such as computers or mobile phones.

*Not this consumer’s real name

MoneyWi$e returns to Dallas

Consumer Action’s outreach team returned to Dallas in October, providing financial literacy training via our MoneyWi$e program to 42 staff members from local community-based organizations, government agencies and academic institutions. The daylong training centered on timeless topics, such as establishing and rebuilding credit, managing your money, avoiding and dealing with identity theft, banking and saving.

MoneyWi$e is a financial literacy partnership between Consumer Action and Capital One. Lindsey Jamar, a Capital One community affairs team member, and Audrey Perrott, Consumer Action’s associate director of training and outreach, welcomed the organizations and provided some background about the MoneyWi$e partnership and its long-term commitment to promoting financial literacy in diverse communities.

Linda Williams, one of Consumer Action’s community outreach and training managers, kicked off the day with a session on how to effectively teach adults. She discussed motivations for adults to learn, their various learning styles and how to connect with diverse audiences. She also discussed issues that may create barriers to adult learning.

During a second session, on money management, Williams segued into a group activity using a case study for a fictional client, Sally Walker. This case study covers elements of the MoneyWi$e money management, identity theft and rebuilding credit modules. Participants broke into teams and discussed their action plans for Sally, drawing on information and materials in their MoneyWi$e toolkits. Each team then presented their action plans to the larger group.

Community outreach and training manager Nelson Santiago led sessions on establishing and rebuilding credit. He covered the importance of good credit, how to obtain your credit report, how your credit rating determines the interest rate you pay on borrowed money and strategies for rebuilding good credit. Santiago also discussed secured cards and told the group about several key resources, including Consumer Action's secured credit card survey. Williams provided an overview of the banking and savings modules and gave participants a note-taking guide for each topic to help them retain key concepts.

The trainers joined forces to lead a “teach-back,” or “fishbowl,” activity, during which participants working in small groups selected one of six MoneyWi$e modules to review and present to the full group. The module choices were Banking Basics, Micro Business, Rebuilding Good Credit, Elder Fraud, Saving to Build Wealth, and ID Theft and Account Fraud. (All can be found on the MoneyWi$e website).

Each team was given a condensed version of the module it chose and tasked with developing an engaging way to present the material. Some participants used skits to present the information while others used the module’s PowerPoint slides. The purpose of the exercise is to demonstrate how quickly trainers can grasp the MoneyWi$e materials and be prepared to deliver the content effectively to their target audience.

Consumer Action received a lot of positive feedback regarding the training. Jesse A. Sanchez of the Dallas County Home Loan Counseling Center wrote in his evaluation: “The training was very beneficial and coordinated very well. Thank you for the opportunity to attend and for the materials that will contribute to our financial literacy programs and our effort to help our local community.”

Welcome changes for consumers coming in 2013

Here are some of the changes coming soon as a result of consumer advocates’ efforts, along with just a few of the issues our advocacy staff will continue working on.

Mortgage servicing: New rules expected from the Consumer Financial Protection Bureau (CFPB) by January 21 will define what legally qualifies as a “safe mortgage” and what tools borrowers will have to fight abusive or predatory loans.

Rules requiring mortgage documents to provide clear and timely disclosures about rates, fees and warnings before rates rise are expected.

Timely and “reasonable investigation” of consumer complaints regarding mortgage servicing errors, and consideration for loan modifications prior to foreclosure, are another set of anticipated rules.

Remittances: International money transfer rules that will take effect in spring 2013 (no set date) will require remittance issuers to disclose the exchange rate, fees, taxes and amount of money to be delivered before consumers pay. Consumers are supposed to receive a receipt, be allowed a 30-minute right to cancel the transfer and get a refund, and have errors investigated and a refund issued in some cases.

Free credit scores: Legislation may be introduced that would entitle consumers to a free credit score annually with their free credit report.

Credit report disputes: The CFPB has begun accepting complaints about credit bureaus. The consumer bureau released a study in December stating that about 40 percent of disputes relate to debts in collection. The CFPB is expected to review how the big three credit bureaus handle disputes and whether the process is functioning for consumers.

Used Car Rule: Expect consumer advocates to continue to press the Federal Trade Commission (FTC) to revise it’s proposed Used Car Rule to make it harder for dealers to skirt responsibility for repairing cars and disclosing known defects prior to sale.

CARD Act impact: The CFPB has launched an inquiry into the impact of the credit card law that banned retroactive interest rate hikes and reduced late and over-the-limit fees. The Bureau wants to know how pricing has been affected by the law and if unfair or deceptive credit card practices still exist. A report to Congress on the bureau’s findings is expected in 2013.

Prepaid card rules: The CFPB is expected to release rules governing general-purpose prepaid cards sometime in 2013. Since last summer, the bureau has been studying the prepaid card market and gathering information. Consumer Action and others have weighed in, recommending that the same consumer protections provided for debit cards under Regulation E be extended to prepaid cards. (Currently, protections extended when a prepaid card is lost or stolen are voluntarily.) Regulators may also rule on whether to permit a credit line to be tied to a prepaid card.

Student loans: 2013 may bring legislation that would limit the number of years student borrowers would be required to repay a loan, and would improve income-based repayment plans.

We expect 2013 to be another productive year on the consumer protection scene, and Consumer Action’s INSIDER newsletter will continue to update you on our work to defend consumers’ rights.

About Consumer Action

Consumer Action is a non-profit 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 both in 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 financial and consumer services to expose excessive prices and anti-consumer practices, 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 7,500 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 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 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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