Consumer Action INSIDER - January 2014


Consumer Action wishes you a very happy and prosperous New Year!

Table of Contents


What people are saying

The Asian Law Caucus [part of Asian Americans Advancing Justice] really appreciates the honor of receiving the 2013 Consumer Excellence Award. Many thanks to Consumer Action for thinking of us and recognizing our language access work. — Angela Chan, senior staff attorney, Criminal Justice Reform Program, Asian Americans Advancing Justice-Asian Law Caucus

Did you know?

Many large banks use arbitration clauses in credit card and checking account agreements, and roughly nine out of 10 clauses allow banks to prevent consumers from participating in class actions. The Consumer Financial Protection Bureau (CFPB) found that in credit card contracts, arbitration clauses were almost always more complex and written at a higher grade level than the rest of the terms and conditions. Read more at the CFPB website.

‘Advertorials’ draw scrutiny at FTC workshop

The Federal Trade Commission (FTC) held a workshop last month on the subject of “native advertising,” a form of Web advertising in which advertisers write and post editorial articles that appear to have been written by an unbiased source. Often the fact that the article is an advertisement is hard for consumers, even savvy ones, to discern. This ambiguity earned the workshop the title “Blurred Lines.”

Consumer Action's senior associate for national priorities Michelle De Mooy joined the panel on “Consumer Recognition and Understanding of Native Advertisements.” Other panel members included David J. Franklyn, a professor who is director of the McCarthy Institute for IP and Technology Law at the University of San Francisco School of Law, and Chris Jay Hoofnagle, lecturer in residence and director of Information Privacy Programs at Berkeley Law & Technology Center, who discussed their recent surveys of consumers to measure understanding about native advertising. Not surprisingly, they found that consumers were often confused about such “advertorials,” even when they were labeled with the words “sponsored content.”

De Mooy, in her remarks, focused on the impact on disadvantaged consumers, who often access online content via mobile devices and may not have sufficient bandwidth to download the design elements that advertisers claim establish the line between advertisements and other content. She said that the industry has, in fact, created a system that is meant to fool consumers.

“The confusion is deceptive and purposeful,” said De Mooy. “Advertisers get more money when they get more clicks, period.”

De Mooy added that many times these advertisements discuss important issues, like medical or financial products. “Consumers aren’t getting both sides of the story,” De Mooy said. “There may be relevant information that is not included in the story because sources didn’t pay to be included.”

For more about the FTC workshop, including a recording of the live event, click here.

Consumer Action helps with Spanish consumer news feature

Consumer Action is offering guidance for a regular consumer protection feature on Spanish-language Univision 14, KDTV. The station, in deciding to increase its coverage of consumer affairs, reached out to Consumer Action and other San Francisco Bay Area groups to help identify pressing consumer concerns of interest to the Latino community.

According to Joe Ridout of Consumer Action, Univision has long recognized the importance of consumer news for its viewers. It took the service a step further this fall when it began airing a live Thursday news segment titled Consumidor al Día (Consumer Daily). The feature calls on leading experts to discuss personal finance topics and help answer questions submitted by viewers regarding consumer rights, financial challenges and possible scams.

Along with Consumer Action, some of the other contributors to the consumer protection segments include the California Reinvestment Coalition, the Center for Responsible Lending, the Mission Economic Development Agency, the East Bay Community Law Center and the San Francisco District Attorney’s office. Topics have included credit scoring, identity theft, saving money and homeownership. Bay Area viewers can find the segment on Univision 14’s Noticias 14 each Thursday at 6 p.m. Most of the segments can be found online as well.

Ridout contributed to a recent segment on debt collection. Click here to view it online.

“We applaud Univision for providing in-depth financial literacy information to help empower its viewers to make smart decisions about their money,” said Ridout, Consumer Action’s San Francisco-based consumer services manager.

Filipinos everywhere help Yolanda disaster victims

In the wake of super typhoon Yolanda, people in the U.S. and abroad rushed to donate cash and goods for the thousands affected by the disaster. In addition to these Good Samaritans, scammers came out in force to trick donors into sending money into the wrong hands.

Ricardo Perez, in charge of mailroom operations at Consumer Action, is of Filipino heritage and speaks Tagalog. His language skills allowed him to quickly translate government scam alerts into Tagalog for distribution by the Federal Trade Commission. We asked Perez a few questions.

How does it make you feel that scammers would take advantage of such a terrible tragedy?

RP: It's very disappointing because with tragedy this big you expect people to come together and help each other out, but there is always an opportunist to take advantage. It makes me think these scammers must be inhumane.

Were you glad you could put your expertise to use in helping to translate this scam alert?

RP: Yes, it gives me the sense of feeling that even though I was not there to help physically, I was able to provide good information for my fellow Filipinos worldwide who may not be aware that such scams can happen.

Have you heard about efforts in your American Filipino community to help people in the Philippines?

RP: Yes, a freight cargo that ships worldwide to the Philippines accepted box donations for delivery free of charge to specific destinations in Manila where donations are accepted, and a lot of Filipino-American community organizations raised funds for the victims of typhoon Haiyan (Yolanda). There was an outpouring of support.

Would you suggest a legitimate place to make donations to help survivors?

RP: They can send their donations to the following agencies:

Hotline Chronicles: Consumers recoil from payday lender practices

Consumer Action hears from many consumers who have become ensnared in short-term, high-interest loans, commonly referred to as “payday” loans because borrowers typically give the lender a signed personal check as collateral with the intent to pay the loan back out of their next paycheck. If the borrower doesn’t repay the loan (with interest) in a couple of weeks, the lender deposits the check or uses the information on it to debit the consumer’s account.

“It’s distressing how many people resort to payday loans despite the traps,” said Linda Sherry of Consumer Action. “But we have to recognize there are few alternatives for consumers without access to credit.”

Sherry warns that payday loans may seem easy on the front end, but even small loans can send consumers into a debt spiral. If the loan goes to collections, the debt will balloon and the borrower will be hounded and harassed.

Katka* from North Carolina took out a $700 payday loan, managing to whittle the loan down to $400 before she became ill and had to take leave from her low-wage job. She said that the company “would not acknowledge the money I already paid and escalated the amount to $1,780.”

Now back on the job, Katka says she has “been harassed at work and home with threats of legal and criminal charges which were shared with my employer. When I attempted to establish a payment plan, I was told I would be in jail.” (In fact, you won’t go to jail for not paying back a payday loan, but you could be forced to pay the money back if the lender sues you and the court orders repayment.)

Our hotline counselors advised Katka to file a complaint with the North Carolina Attorney General’s office. While North Carolina has outlawed storefront payday lenders, Internet payday lenders attract state residents. Internet payday loans are not legally enforceable in North Carolina but online lenders based elsewhere argue they are not subject to North Carolina law.

Victor* from Las Vegas contacted our hotline about “the mistake I made of borrowing from a payday lender.” Victor was keeping up with the “horrendous high interest rates” but was unable to reduce the original loan amount when he lost his job. “I tried to reach an agreement with the lender, asking them to wait until I could find a stable job so I could pay in full as I had done in the past. But they just ignored my problem and began to try to collect the debt using the debit card number I had provided when I took out the loan.”

The debits caused his checking account to overdraft, triggering fees from his bank and allowing more and more interest to accrue on the payday loan. In desperation, Victor went to the bank and closed his account and opened a new account with a new debit card. Several weeks later he found that a debit from the payday lender on the old debit card had been charged to his new account. The bank told Victor that it suspects that the employee who closed his old account forgot to close the debit card out as well.

Since the bank acknowledged an error but did nothing to reverse the debit on Victor’s new account, we advised him to write to the bank’s president and to file a complaint with the Nevada Department of Business and Industry, which regulates banks doing business in the state.

While it won’t help all payday borrowers to extricate themselves from the grip of these predatory lenders, it’s good news for all consumers that the Consumer Financial Protection Bureau (CFPB) is serious about making sure that payday lenders follow the law.

In mid-November, the Bureau took its first enforcement action against a payday lender. Cash America International, Inc. was ordered to refund consumers for robo-signing court documents in debt collection lawsuits. The Bureau also found that Cash America—one of the largest short-term, small-dollar lenders in the country—violated the Military Lending Act by illegally overcharging servicemembers and their families. Cash America will pay up to $14 million in refunds to consumers, and it will pay a $5 million fine for these violations and for destroying records in advance of the Bureau’s examination.

Last month, the CFPB filed its first action against an online loan servicer, CashCall Inc., for collecting money consumers did not owe. The CFPB alleges that CashCall and its principals engaged in unfair, deceptive and abusive practices, including illegally debiting consumer checking accounts for loans that were void.

The Bureau also began accepting payday loan complaints in early November. Submit a complaint:

  • Online at
  • By phone at (toll-free) 855-411-CFPB (2372) or 855-729-CFPB (2372) (TTY/TDD).
  • By fax at 855-237-2392.
  • By mail at Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244.

In addition, the CFPB provides extensive free educational resources.

For those who need a loan, consider these alternatives:

  • A pay advance from your employer.
  • Small consumer loans from credit unions or community banks.
  • A cash advance on your credit card. (Even at 30% interest on a $500 advance, you would pay less than $20 in interest if you paid the loan off within two months. Repay it as soon as possible.)
  • Peer-to-peer loans. Websites such as and connect individuals with money to lend with borrowers who have “good” credit scores.
  • Prevent the need to borrow small amounts for emergencies by building up an emergency savings account.

*Not these consumers real names.

No docs, no bank account? Keep looking!

It’s widely acknowledged that a bank account can help people manage their money better and save for emergencies and financial goals. Nelson Santiago of Consumer Action’s Los Angeles office works with community-based organizations focusing on immigrants. He says that newcomers give a variety of reasons for not opening bank accounts—but not all are true barriers. One frequently cited reason is the inability to get a Social Security number or a U.S. government-issued ID.

But Santiago says that the lack of traditional identification documents should not be a barrier to having a bank account. Immigrant consumers without traditional identification documents have been able to open accounts at many financial institutions. Wells Fargo began accepting consular ID cards from Mexico in 2001 and later widened its acceptance of the cards to additional countries. Many other banks, both large and small, as well as credit unions also accept consular ID cards, along with Individual Taxpayer Identification Numbers (ITINs) in place of Social Security numbers.

Despite the increased acceptance of nontraditional forms of ID, Consumer Action still receives questions from community-based organizations seeking to educate immigrant clients about banking opportunities for those who lack a Social Security card or state-issued ID.

Santiago suggests two good sources of user-friendly and reassuring information to share with immigrant clients: the Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corporation (FDIC).

In the “Ask CFPB” section of its website, the federal Consumer Financial Protection Bureau includes the question, “Can I get a checking account without a social security number?” It answers that consumers are not required to have a Social Security number to open a checking or savings account, adding that many banks and credit unions will accept an ITIN or other forms of identification from foreign citizens. (Visit "Ask CFPB.") (Either a Social Security number or an ITIN is required to open an interest-bearing account. But immigrants should be aware that the Internal Revenue Service (IRS), the federal taxing authority of the U.S. and the agency that doles out tax ID numbers, does not share individuals’ personal information with immigration officials.)

Although the CFPB is straightforward about the acceptability of nontraditional forms of ID, consumers may be left wondering just how common it is and whether they will be able to find an institution willing to open an account for them. A 2011 FDIC survey found that 58 percent of banks accepted a non-U.S. passport, 40 percent accepted ID from a foreign consulate and 73 percent accepted ITINs.

However, the FDIC noted that banks are not required to accept alternative ID. Given the numbers in the survey, Santiago reminds consumers not to be discouraged if the first institution they visit denies them the opportunity to open an account. Consumers seeking to establish a bank account and lacking traditional forms of ID should check with several local banks and credit unions to learn if consular ID cards, non-U.S. passports and ITINs are accepted. “Then, open an account at the institution that can meet your needs at the lowest cost,” says Santiago.

Tips for consumers

Be prepared to check with more than one financial institution, both large and small. Ask what types of ID are accepted from customers without Social Security numbers, U.S. passports or state-issued IDs.

Banks and credit unions that participate in local “Bank On” initiatives throughout the country (e.g. Bank on Denver, Bank on San Francisco, etc.) are working to help unbanked consumers establish bank accounts. Bank On partner institutions are among those that regularly accept nontraditional forms of ID. To find a local Bank On program, click here.

To find a credit union you may be able to join, go to or call 800-358-5710, or visit

To find a local community bank, visit the Independent Community Bankers of America website.

If a foreign passport or consular ID card from your country is acceptable, contact your embassy and/or local consulate office for information on how to obtain one. (Not every foreign country issues consular ID cards.)

If you find a bank or credit union that will accept an Individual Taxpayer Identification Number (ITIN) and you haven’t already obtained one to file your tax returns, the financial institution may provide you with information on how to get one for purposes of opening an account. You can download an ITIN application at the Internal Revenue Service website. Click here to learn more.

A tax advisor can also provide you with assistance obtaining an ITIN. Free advice for eligible consumers may be available from a local IRS Volunteer Income Tax Assistance (VITA) program. Click here for information on VITA programs and requirements for obtaining an ITIN. A local United Way office may also be able to direct you to additional programs offering tax assistance and advice. Click here to find a local United Way agency near you.

‘Hangout’ for a discussion on financial health

Consumer Action and Chase Blueprint in October hosted a live panel discussion focused on the results of research into how financial literacy and complexity—not just income and employment status—impact the financial health of consumers seeking to rebound after the recession. A video of the event can be found online on Consumer Action’s YouTube channel.

The discussion, which took place using Google “Hangout on Air,” brought together Gerri Detweiler of, who served as moderator; Consumer Action’s Linda Sherry; Tom O’Donnell, Chase’s senior vice president of quality; Rick Harper of Consumer Credit Counseling Service of San Francisco; and Ron Shevlin, Aite Group senior analyst. The panelists discussed takeaways from the research and offered ideas on what can be done to help consumers get and stay on the right financial path.

The Aite Group-Chase Blueprint survey showed that the recession caused many consumers to be more disciplined about their finances and consider accepting more financial advice than before. But it also showed that consumer perceptions of financial complexity are closely intertwined with financial health. Of those surveyed whose financial health has declined since the recession, 31 percent said their financial life is very complex, citing a variety of financial penalties and multiple loans. Yet, of those who say their financial health has improved since the recession, 43 percent say the complexity of their finances has decreased.

Shevlin said, “Reducing financial complexity is crucial for consumers looking to recover from the recession. Consumers who borrow from multiple sources find their financial lives to be complex, but those who use tools to help them manage their spending and borrowing make progress in simplifying their finances. Being in control drives financial health.”

“The recession was a challenge for all Americans, but with challenges, lessons are learned, and we are very encouraged to see the increase in financial discipline and literacy,” said O’Donnell.

O’Donnell said that a formula for reducing financial complexity is “control, simplicity and a predictable financial situation. As an example, compare a $100K mortgage to a $2K credit card balance. Many consumers say they are more confident about managing the mortgage—even if it’s a much larger debt—but have less confidence in managing the credit card account because the payments are less predictable.”

O’Donnell also said that similar “pulse point” surveys had prompted the company to create Chase Blueprint, a free feature on Chase Sapphire, Sapphire Preferred, Freedom, Slate, and Ink credit cards. Blueprint allows cardholders to avoid paying interest on some purchases by paying them in full, even when they carry a balance on other purchases. It also allows cardholders to create a payment plan to pay off credit card debt more quickly than they would by only paying the minimum monthly payment. Chase says that about 90 percent of those who created a Blueprint payment plan stuck to it.

(Chase Blueprint has created a consumer education website called the Resource Center for Mindful Spending, which O'Donnell referenced several times during his presentation.)

Sherry said not understanding as well as denial about what you owe definitely adds to financial complexity. “My advice to consumers is pretty simple: Face up to your debts, lay your 'cards on the table.' Sit down and arrive at a plan—it’s not rocket science, we just need to acknowledge the borrowing we have done in the past and figure out how to get control of our bills.”

Sherry explained how Consumer Action relies on an informal network of community educators that have a common interest in helping people get back on their feet financially. “We provide free materials and trainings to the community groups and they pass along what they have learned to their communities. Feedback from our evaluations is very positive—the groups tell us they can use our resources to do a large or small training, help people who speak other languages and provide materials to people during one-on-one sessions.”

Rick Harper of Consumer Credit Counseling Service of San Francisco said it was “not surprising at all that the products with the most fees were the ones that triggered the feeling that these products are complex.” He said ease of operation is a big factor in why consumers seek help from credit counseling agencies, which provide debt management services and money management trainings such as Sharpen Your Financial Focus, an initiative of the National Foundation for Credit Counseling (NFCC).

Sherry and O’Donnell pointed out that consumers may need to look only as far as their own bank or credit union for money management assistance. “We have seen successes when consumers reach out directly to a banker to better understand their situations,” said O’Donnell. “Of the people who said they had a better handle on their finances, more than 40 percent had spoken to an individual at a bank or other financial institution to help them understand their financial situation.”

Sherry said that most financial institutions today offer personal financial management programs, usually online, that allow customers to categorize and review spending on bank accounts, credit cards and investment accounts as well as to create spending plans and budgets. “I’m a fan of these programs—personalized pie charts and cash flow graphs really can help you understand where your money is going.”

Class action roundup: From payday loans to telemarketing

Consumer Action’s turned up a new batch of class actions and settlements now open to claims for refunds by affected consumers.

Georgia Cash America. Georgia consumers may be eligible for a share of a $36 million settlement if they obtained a payday loan of $3,000 or less between October 9, 2001 and April 1, 2006 from Georgia Cash America. The company reached a settlement over allegations of charging improper fees and interest. Click here for details. Deadline is Jan. 14, 2014.

MoGreet Text Spam. Consumers who received unauthorized text messages from certain retailers may be eligible for up to $105. The MoGreet text spam settlement will resolve a class action lawsuit (Lockett v. MoGreet Inc.) that alleges certain retailers were sending text message advertisements to consumers through MoGreet’s mobile platform or one of its affiliated service providers (YesMail Inc. and InfoGroup Inc.) in violation of the Telephone Consumer Protection Act (TCPA). Click here for details. Deadline is May 4, 2014.

Ticketmaster. Consumers who were redirected from to and purchased tickets on between April 1, 2008 and Feb. 5, 2009 may be eligible for a one-time rebate of 18.5 percent of the total ticket purchase transaction, up to $100, or $10 cash. The company reached a settlement over allegations that it misled the consumers into buying more expensive tickets on the partnering website when event tickets were still available at face value on Click here for details. Deadline is Mar. 29, 2014.

Honda Civic. The lawsuit alleges that the suspension of certain 2006-2008 Honda vehicles caused premature or uneven rear tire wear. Consumers who purchased or leased those models may be eligible for cash reimbursement for repair expenses. Click here for details. Deadline is Jan. 16, 2014.

BMW Mini. The lawsuit alleges that the CVT (continuously variable transmission) of certain 2005-2008 MINI vehicles are defective. Consumers who purchased or leased those models may be eligible for cash reimbursement for out-of-pocket repair expenses and warranty extension. Click here for details. Deadline is Apr. 2, 2014.

Southwest Airlines. Consumers who conducted credit or debit card transactions at the airport or cargo counters and received an electronically printed receipt containing the expiration date of the consumer’s credit or debit card between Oct. 17, 2007 and Oct. 21, 2012 may be eligible to receive a pro rata share of the $1.8 million settlement. Click here for details and claim form. Deadline is Feb. 5, 2014.

Discover Financial Services. Consumers who received pre-recorded telemarketing phone calls on their cell phones on or after Nov. 30, 2007 may be eligible for up to $40 cash. Click here for details and claim form. Deadline is Feb. 25, 2014.

About Consumer Action

Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer 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.

Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and nine topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose 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- 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 and consumer 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 at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.



Quick Menu

Facebook FTwitter T