Consumer Action INSIDER - June 2014



Table of Contents


What people are saying

Our Cooperative Extension Program and the Holding Institute Community Center in Laredo are collaborating with a wonderful contact from Consumer Action’s MoneyWi$e conference last year—the Goodwill Good Choices Portal of San Antonio. YEAH!— Crisanta Mussett, Family and Consumer Sciences, Cooperative Extension Program, Prairie View A&M University, TX

Did you know?

Summer is a busy time for families on the move. Before hiring a mover for your household goods, know your rights and how to spot the red flags of moving fraud. Protect Your Move, a partnership between federal, state and local officials and the moving industry, has advice to help you make a more secure move.

Corporate Advisory Board members help foster new connections

In January of 2013, Consumer Action formed a Corporate Advisory Board (CAB). The purpose of the CAB was to expand Consumer Action’s network by inviting selected representatives of industries related to Consumer Action initiatives, who, in a volunteer capacity, would be willing to provide experience, expertise, insight, opportunities and recommendations for advancing our strategic initiatives.

Jennifer Openshaw, a columnist for Dow Jones MarketWatch and founder of Women’s Financial Network, chairs the CAB. Members include Robin Strongin (Amplify Public Affairs), Rob Sherman (CTIA-The Wireless Association), Dirck Hargraves (VOX Global), Larry Blanchard (CUNA Mutual Group), Heidi Kotzian (Unik Consulting LLC) and Dennis Jay (Coalition Against Insurance Fraud).

“Since the financial crisis, companies have been hungry to find ways to ‘do good’ on behalf of consumers,” said Openshaw. “Consumer Action—with its long history, on-the-ground reach and pro-consumer mission—makes it a natural fit. It’s been exciting to see companies and partners—through the CAB team—open their doors to working with us and make a real difference in the financial lives of consumers.”

CAB members have been instrumental in facilitating constructive conversations with companies and organizations new to Consumer Action. Its impact has helped to increase corporate giving for our two major annual events, the National Consumer Empowerment Conference and the Consumer Excellence Awards reception. In addition to helping cultivate relationships with new companies and organizations, CAB members also have helped improve communications with companies Consumer Action already works with. The CAB meets quarterly by conference call.

“CAB members have helped us develop new ways to broaden our base of support and educate potential partners about our mission,” said Ken McEldowney, Consumer Action’s executive director. “We have made contact with new companies, non-profits and government agencies and meet with chambers of commerce that represent African American and Latino small businesses.”

In the coming year, Consumer Action will continue to work closely with CAB members in areas such as insurance, telecommunications, banking and consumer finance and privacy. Going forward, we plan to increase CAB membership to enable us to reach out to even more potential partners.

Team effort: NEFE and Consumer Action host webinars

The National Endowment for Financial Education (NEFE) and Consumer Action co-hosted two webinars in late April for the most active educational partners in Consumer Action’s community-based organization (CBO) network. Seventy-five CBO representatives tuned in.

Mary “Jeannette” Schultz, project manager of grants and research at NEFE, led the webinars. Schultz instructed network partners on how to navigate and use free NEFE resources. She focused specifically on NEFE’s Financial Workshop Kits and its Financial Education Evaluation Toolkit.

Schultz kicked off the sessions with an overview of NEFE—who it is, whom it serves, and the resources it offers for consumers, educators and facilitators, and educational partners.

“The NEFE kits are an excellent resource for any community educator or workshop facilitator who is committed to delivering financial education information to underserved audiences and helping people manage their finances,” said Consumer Action’s Audrey Perrott, associate director for outreach and training.

NEFE offers resources for consumers school-aged through retirement. Ten workshops are tailored to specific audiences: Special Circumstances, Human Services, Low Income, General Financial Education, Health and Disability, Aging, Youth, Diversity, College Series and Workplace. Each workshop series includes a licensing agreement, PowerPoint presentation, script, handouts and supplemental resources to help anyone give successful presentations, anticipate questions and evaluate the program’s success.

To keep the audience engaged, Schultz polled webinar participants and provided real-time results for the audience. The response rate to the polls was 95 percent.

“Webinars have long been a top-ranking tactic among senior marketers and for good reason—they work,” said Schultz. “More often than not, webinars deliver information about an organization’s mission, programs and resources by strengthening awareness of the organization’s track record and incrementally building trust ... among potential prospects, project managers and facilitators.

NEFE would like to conduct additional webinars. If you are interested in participating in future co-hosted webinars, .(JavaScript must be enabled to view this email address). Provide your name, organization, topics of interest and an indication of which months you’d be available for trainings.

NEFE has agreed to send webinar resources to interested groups. Click to send an email to .(JavaScript must be enabled to view this email address).

To learn about new and upcoming workshop kits and conferences, click here to sign up for NEFE's free quarterly newsletter.

Hotline Chronicles: Escalating your Post Office complaint

The U.S. Postal Service (USPS) is a great institution. With the sheer size and breadth of its work, it’s kind of amazing that more things don’t go wrong. But sometimes things do go wrong—then what can you do?

Deepika* from Florida has been involved in the immigration process of becoming a permanent resident and was waiting for her Green Card to arrive in the mail. She said she’d had no problem getting other mail about her application from the immigration authorities. Unfortunately, the envelope containing her Green Card got lost in the mail.

“I’ll put in for a replacement,” said Deepika, who contacted our hotline to find out where she could complain about the lost letter. “But I want to make the local delivery office aware of the problem, but every time I call I wait on hold and then get the run-around.”

Deepika did the right thing in attempting to work with her local Post Office staff. However, there comes a point when it makes sense to escalate a complaint when no help is coming from local authorities.

Consumer Action’s hotline counselors recommended the following steps:

  • Before you give up on the local office, ask to speak with the manager or postmaster of the local Post Office.
  • If you are unable to get resolution from your local Post Office, call USPS customer service at 800-275-8777 or visiting visit online. You can file a complaint with customer service on the phone or by using the “Email Us” Webform. You can also write to the Postal Service's Consumer Advocate at Office of the Consumer Advocate, United States Postal Service, 475 L'Enfant Plaza, SW, Room 4131, Washington DC 20260-2200.
  • If you suspect theft, fraud, waste or have suffered abuse committed by the USPS or a USPS employee, you can file a complaint with the USPS Inspector General's Office (OIG) by phone at 888-USPS-OIG (888-877-7644), by email at .(JavaScript must be enabled to view this email address) or by using the complaint Webform online.
  • The Postal Regulatory Commission’s Office of Public Affairs and Government Relations (PAGR) can assist in resolving customer complaints and fix certain problems. Contact the agency online, by email at .(JavaScript must be enabled to view this email address) or by phone at 202-789-6800. The office provides a Consumer Complaint Guide online.

Before you contact the Postal Service or the Commission, ask yourself what you’d like to see come out of your complaint. Finding Deepika’s missing Green Card might not be possible, but it’s in the public interest to let the USPS know about the loss. There might be an issue with theft or fraud and you are well within your rights to let the authorities know—in fact you might help protect other consumers by doing so.

“Communicating with huge institutions and companies can be frustrating,” said Linda Sherry of Consumer Action. “Try to stay calm and follow up at regular intervals to bring attention to your complaint. Keep receipts, notes of contacts’ names and the times you reached out, or any other evidence that might bolster your complaint.”

*Not this consumer’s real name.

Class-action Roundup: Option ARM borrowers may get refunds

Consumer Action’s Class Action Database keeps you up-to-date on a number of important collective legal actions and settlements you might be eligible to join, including a notable one for borrowers who made deferred interest payments on “option ARM” mortgages but were not given the opportunity to claim a tax deduction on them.

In May, the Consumer Action staff added five class action settlements to our Class Action Database. Visit the page to view these and other important cases.

Notable among the new settlements is Horn v. Bank of America N.A. Plaintiffs claimed that Bank of America underreported to the IRS the amount of deferred Interest paid by borrowers of “option adjustable rate mortgages” (option ARMs) in tax years 2009-2012. The underreporting on annual Mortgage Interest Statements (Form 1098) cost borrowers who itemized mortgage interest on their income taxes.

An option ARM is an adjustable rate mortgage with several possible payment options. One would be to pay a minimum amount that does not cover interest owed in a particular month. The portion of the interest that is not paid during the months is called “deferred interest” and is added to the principal balance.

The bank argued that the Internal Revenue Service (IRS) regulations do not require deferred interest payments to be reported on Form 1098. The bank denied the allegations in the case but it agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

The bank has agreed to file Form 1098s with the IRS and provide copies to affected borrowers. Form 1098 allows the IRS to check the accuracy of mortgage interest deductions claimed on individual tax returns.

Borrowers who made deferred interest payments for tax year 2009 may be eligible for 75 percent of the tax deduction value of the payments. Borrowers who made such payments in the 2010-2012 tax years will receive amended Forms 1098 along with a payment of $40 per amended form. The claim deadline is Sunday, July 13, 2014. Click here to visit the claim page.

CFPB Watch: A roundup of recent doings at the Bureau

Consumer Action DC-based staff actively follows the Consumer Financial Protection Bureau and participates in activities at the Bureau related to consumer complaint resolution, mortgages, foreclosure prevention, student loans and debt collection. In our CFPB Watch feature we bring our readers regular updates of what the Bureau is doing to serve consumers and prevent fraud and other abusive practices, including the results of behind-the-scenes supervisory examinations.

Payday lenders, debt collectors, credit bureaus and mortgage servicers have been ordered to refund money to hundreds of thousands of consumers in recent months. The content of the orders is not public (no specific companies have been named) but the sheer size of the restitution is striking—$70 million has been returned to approximately 775,000 consumers.

CFPB examiners found illegal activities in some cases and system-wide “flaws” in others, such as companies “consistently failing to have a system in place to track and resolve consumer complaints.” The Bureau has put businesses on notice that they are expected to respond to consumer complaints and identify problem areas that may harm customers. For the first time, non-banks are under federal regulatory supervision via the Bureau. Among the issues defined by the Bureau:

  • Payday lenders deceived and illegally harassed borrowers in order to collect debts.
  • Debt collectors illegally misled consumers with baseless threats of lawsuits, harassed borrowers with as many as 20 calls every two days and failed to properly investigate borrower disputes.
  • Credit bureaus were found to have improperly handled consumer disputes.

In a separate settlement, Bank of America was ordered to refund $727 million to consumers for unfair billing and deceptive marketing of credit card “add-on” products. When customers called BofA on other business, telemarketers pitched its Credit Protection Plus program, over-promised the actual benefits of the service and went ahead to enroll people who declined the offer. In addition, the bank billed customers $12.99 a month for “identity protection” services that promised to monitor customers’ credit and alert them to any fraudulent activity, but the bank did not alert anyone of anything. Bank of America customers will receive credits to their account and non-customers will receive refunds.

The CFPB’s $727 million settlement with Bank of America was the fifth settlement the Bureau has reached with credit card companies (Capital One, Chase, American Express and Discover) for deceptively marketing optional services.

Recently the CFPB’s student loan ombudsman warned private student loan borrowers that automatic defaults could occur on their loans if a co-signer died or filed for bankruptcy. Borrowers complained to the CFPB that some lenders were demanding full repayment of loans even when the consumer was paying the loan on time. Borrowers in auto-default may suffer damaged credit records and debt collection calls through no fault of their own.

The CFPB urged lenders to ease auto-default rules and to make it easier for qualified borrowers to remove co-signers from student loans. The Bureau advises consumers to request a co-signer release where possible and has created a sample letter to assist borrowers.

The CFPB recently held a forum to discuss ways to improve the home buying and home owning process. Industry participants, from realtors to lenders to regulators, participated in the half-day event.

The Bureau announced that as of August 2015, homebuyers must receive mortgage closing disclosure forms at least three business days prior to closing. This gives consumers a chance to review the documents and seek advice, if necessary, prior to the deadline pressures at the closing table. The CFPB had earlier created more user-friendly mortgage disclosure forms to make closings more understandable. For more information, see the Bureau’s Know Before You Owe campaign.

The CFPB is interested in partnering on innovative pilot projects such as electronic closings (“e-closings”) that use technology to improve the process. The Bureau believes that e-closings may have the potential to save time and money for lenders while giving borrowers additional time to review the transaction. However, questions have been raised about borrowers without access to the Internet as well as the possibility of fraud and manipulation. For now, the CFPB seeks to identify best practices for electronic closings that will benefit the industry and consumers. Those who would like to know more about this process can read the April 23 article Take more control over the mortgage closing process with technology on the CFPB website.

Privacy on the agenda: Facial recognition, medical records and Internet regulations

Facial recognition technology, software programs that “read” the unique characteristics of individual faces and tag each visage with an ID number, are rapidly being used without the knowledge or consent of consumers, both by companies hoping to sell more products and for government surveillance. The National Telecommunications and Information Administration (NTIA) convened a multistakeholder process in January to explore the issue. Consumer Action has been participating in the meetings.

The Obama Administration set the agency to work with advocates and industry to determine a code of conduct for businesses that use facial recognition technology. The document would offer voluntary guidelines on best practices for using the technology. The discussions also have examined how the use of IDs generated from facial recognition technology might violate consumer privacy. The next multistakeholder process meeting will be held on June 3, 2014, and is open to the public. Click here for more information.

Public policy panel

Microsoft’s public policy team in Washington, DC regularly hosts small forums on issues such as online privacy and Internet security. Recently, Microsoft partnered with Patient Privacy Rights, a patient rights group, to host a conference that touched on a broad array of health privacy concerns, including electronic health (e-health) delivery and records.

Consumer Action's senior associate of national priorities Michelle De Mooy sat on a panel at the conference. De Mooy spoke about the importance of patient control and access to medical records, citing inefficiencies and privacy risks associated with e-health. “When patients ‘own’ their own records, it cuts down on errors and allows direct communication with providers,” De Mooy said.

De Mooy also pointed out that many of Consumer Action’s constituents are on the outskirts of the health care system because of ethnic, cultural, geographic and economic characteristics. Allowing patients to control their records remotely and with easy-to-use privacy controls could alleviate some of these divisions, she said. This population is also the most impacted by privacy crimes such as identity theft and fraud, noted De Mooy.

At the Health Privacy Summit in DC on June 4-5, De Mooy will debate the chief privacy officer of IMS Health, Kimberly Gray. Click here for more information about the summit.

Freedom and the Internet

At the upcoming Computers, Freedom, and Privacy Conference, titled “The Internet wants to be free,” De Mooy will join a panel to discuss how state and federal privacy regulations interact and sometimes overlap. The Computers, Freedom, and Privacy Conference will be held June 8-10 at the Airlie Center, Warrenton, VA. Click here for more information about the conference.

Taking action to protect students and taxpayers from useless degrees

Increasingly, students are indebting themselves at schools that promise to prepare them for jobs but don’t deliver on that promise. Consumer Action has helped drum up grassroots support for an improved rule to cut off student aid to career-focused programs at for-profit and non-profit colleges that fail to prepare students for “gainful employment.”

In an effort to save taxpayers money and crack down on for-profit vocational schools that fail to provide graduates with legitimate job prospects, the Obama administration has outlined “gainful employment” rules to counter predatory or deceptive practices at institutions that receive federal taxpayer-funded student aid. If a school promises to prepare enrollees for specific jobs, it would be subject to the gainful employment rules.

This spring the U.S. Department of Education (ED) released a draft rule to regulate for-profit institutions that leave students with incomplete or worthless degrees, no job prospects and saddled with student loan debt. The proposed rule would cut off student aid to career-focused programs at for-profit and non-profit colleges if the program’s student loan default rate reached 30 percent or if half of its graduates failed two student loan debt standards. This would be a significant threat to the industry, as many for-profit colleges receive up to 90 percent of their funding from federal sources.

Graduates of two-year, for-profit career training programs average a loan debt of $23,590. By contrast, most community-college graduates owe nothing upon graduation. ED recently reported that 72 percent of for-profit schools produced graduates who on average earned less than a high school dropout working full time.

In response to the draft rule, Consumer Action joined a broad coalition of 50-plus organizations representing students, veterans, consumers and civil rights groups in filing public comments calling on the administration to strengthen the rule in five specific ways: Provide financial relief for students in programs that lose eligibility; limit enrollment in poorly performing programs until they improve; close loopholes and raise standards for the programs; preserve and protect low-cost programs where most graduates don’t need to borrow; and prohibit problem schools from offering new programs for at least three years.

Consumer Action emailed a Take Action! alert to its supporters, urging them to join the coalition in submitting their own comments for a stronger final rule. Consumer Action received 217 letters and submitted them to the education department. (Sign up for future Take Action! alerts here.)

The for-profit industry is lobbying heavily at the White House and the education department, stating that the proposed rules are too stringent and will limit education opportunities for students who may not be accepted to traditional private and public universities. Senator Christopher S. Murphy (D-CT), who joined several Democratic senators in urging the department to issue a stronger rule, responded to the industry by saying that no college should fear compliance. “All we’re asking them is to prove that their advertising is actually true,” said Senator Murphy.

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.



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