Consumer Action INSIDER - June 2016


Table of Contents


What people are saying

The [Consumer Action “Put a Lock on It”] workshop was very informative. The training will not just benefit my clients, but my coworkers, friends and family. I am definitely going to share what I learned with everyone. Thank you! — Barbara Gorrell, Collaborative Support Programs of New Jersey

Did you know?

After serving our country, U.S. military veterans often face significant financial challenges related to multiple deployments, frequent relocation and the resulting employment challenges for military spouses, and transitioning to civilian life. In May, the National Foundation for Credit Counseling (NFCC) released survey data highlighting these financial challenges and how they hinder military veterans and their families’ financial stability and asset building efforts.

New ‘Insurance Checkup’ fact sheet: Are you covered?

The central message in Consumer Action’s recently published “Insurance Checkup: Assessing and adjusting your coverage” is that insurance is not a “buy it and forget it” product. Many life events, from having a baby or getting a new job with a longer commute to remodeling your home or getting a dog, most likely will require an adjustment to your insurance coverage. Even something as passive as an increase in home construction costs (or the value of your collection of Star Wars figurines!) could warrant a policy change.

The “Insurance Checkup” fact sheet offers one huge reason to revisit your insurance policies annually (or sooner, if life events warrant): Most people couldn’t bounce back from the loss of their home or a liability lawsuit without adequate insurance coverage.

To help consumers recognize the kinds of life events that could increase or decrease their coverage needs, the “Insurance Checkup” guide lists specific events that should prompt them to reassess their protection in each of the insurance categories covered: auto, homeowners/renters, personal liability, life and health. For example, you will almost certainly have to purchase new coverage or adjust your current coverage if:

  • You add a driver to your household or remove one
  • You’ve adopted a dog or no longer have one
  • You’ve remodeled or added to your home
  • You’ve gotten married or had a child

One way that consumers can find themselves perilously uninsured is by participating in the “sharing economy” without the appropriate coverage. If you’ve started renting out your home or a room in it through a service like Airbnb or VRBO, your insurer could claim you’re running a business and deny coverage if guests file claims because they were injured or their property was damaged while in your home. Likewise, if you are essentially operating a taxi service by chauffeuring paying passengers as a driver for a service like Uber or Lyft, an accident might not be covered by your regular auto insurance. (Some of these companies may offer some coverage, but you should contact them and your insurer directly to discuss insurance needs.)

In addition to spurring insurance consumers to be proactive about managing their coverage, the publication also offers some guidance to readers considering optional types of coverage—rental car reimbursement and roadside assistance, for example. Additionally, the publication alerts consumers to important policy features that they may want but not know to ask for, such as “replacement cost” rather than “actual cash value” coverage, or “building code upgrade.” The publication points out that additional coverage like personal liability umbrella policies (PLUP), which protect your assets from major claims by providing liability coverage above and beyond your homeowners and auto policies, can provide vital protection for a relatively low annual premium.

Ultimately, there are a number of excellent resources the consumer can turn to for help with identifying and purchasing the right protection. One of them is the insurance agent. An insurance professional familiar with your current policies can provide valuable guidance regarding how to plug any holes, and even how to save money on premiums. The “Insurance Checkup” fact sheet lists other resources, too, such as online home inventory tools and places to research companies and agents.

Click here to download the “Insurance Checkup: Assessing and adjusting your coverage” fact sheet, which is free for personal use or distribution to your clients and community.

This just in: Financial Literacy Project a huge success

Consumer Action recently released a final report on the success of our Financial Literacy Project, made possible by funding from the Rose Foundation for Communities and the Environment. The 2015 project awarded $5,000 in mini-grants to six community-based organizations across the country. These groups used the stipends to educate unbanked and underbanked consumers about how to open bank accounts and make wiser banking decisions (including reducing account fees, switching to lower-cost accounts, opting out of courtesy overdraft protection and eliminating out-of-network ATM fees).

The grantee organizations reached a total of 242 clients during the project period and helped these clients open 140-plus bank or credit union accounts. Overall outcomes exceeded expectations in terms of the number of bank accounts opened. “We were gratified to see that an impressive number of participants took real action to improve their financial health by, for instance, adding money to savings accounts, eliminating or reducing fees paid for check cashing services and selecting the right overdraft protection plan,” said Ken McEdowney, Consumer Action executive director.

While the numbers tell a compelling tale, Consumer Action’s report also includes selected success stories narrating the progress that participants made toward financial empowerment as they moved away from wealth-stripping financial services like predatory payday loans and began to use mainstream banking products.

Take Maria, for instance, a young single mother of three who was unbanked due to a negative banking history. Prior to participating in the program, she believed that costly check cashing services were her only option. With encouragement, Maria opened checking and savings accounts at a credit union and learned to manage her accounts properly. She said she now avoids check cashing facilities at all costs. Maria also opened a savings account for her three children, ages eight, nine and 10, so they can learn to save allowance money and get started on the road to financial literacy.

The Rose Foundation-funded educational module, A Wise Choice: Checking and Savings Accounts, proved to be a useful educational tool throughout the project and will continue to make an impact on consumers going forward. (Several community-based organizations have indicated that the module has become the core their financial literacy programs.)

Consumer Action is grateful to the Rose Foundation for its continued support of our financial education initiatives and proud to boast of the Financial Literacy Project’s solid and impressive return. “The project has not only had a huge positive impact on the day-to-day lives of many consumers, but also on their prospects for building wealth and achieving their future financial goals,” noted McEldowney.

Hotline Chronicles: Mystery transaction infuriates bank customer

Carmelo* from Los Angeles contacted Consumer Action’s hotline when he noticed that $100 was being deducted from his checking account on a regular basis for a subscription to a publication for investors. When he called the company, it said that he had ordered one of its newsletters, the Franklin Prosperity Report. Carmelo told us that he never ordered it and hadn’t even been receiving it.

Our counselors advised Carmelo to ask his bank to block the recurring charge and to file a complaint with the Federal Trade Commission (FTC). The FTC doesn’t handle individual complaints but does gather information on large-scale deception by companies that may ultimately become targets of its enforcement activities.

Online, a number of other consumers have complained about the company that offers the Franklin Prosperity Report, NewsMax. Some say they were subscribed when they responded to an offer for a “free” book and provided their credit card or bank account numbers to pay for the shipping and handling. Subsequently, they too noticed recurring charges and some said that the free offer had included an agreement to subscribe to three newsletters. When consumers called to cancel the newsletters, only one was cancelled. Upon further investigation, they found that they had to cancel each of the newsletters independently. On its website, NewsMax says it has made it easier for consumers to cancel unwanted subscriptions.

Many consumers find small recurring charges included in their credit card or bank statements. The term for these unwanted or unnoticed charges is “cramming.” Cramming happens when a company adds a charge to your bank account, credit card statements or phone bills for a service you didn’t order or use. Some of these charges are made in an attempt to trick consumers who fail to spot them.

The FTC has stated that many consumers who complain about debit card cramming have recently applied for an online payday loan. The agency said that consumers who complain are often given the runaround—either transferred to various representatives or just hung up on.

Cramming charges may be small, but they can quickly add up, and you may lose your rights to dispute these charges after 60 days. The best way to avoid cramming is to review your bank account, credit card statements and other bills as soon as you receive them. Look for unrecognized charges. Some may appear only once, others might be monthly “subscription” charges. Keep an eye out for generic-sounding services and fees listed under names like “Min. Use Fee,” “Activation,” “Member Fee,” or “Subscription” as these could be services you didn’t order. Dispute unrecognized charges with the company named. If this doesn’t resolve the situation, report the unauthorized charges to the company in question.

If you suspect you’ve been a victim of cramming on your bank account, credit card statement or other bills, file a complaint with the FTC online or by calling 877-FTC-HELP (382-4357). If you find unrecognized, unwanted charges on your wireless or landline phone bill, file a complaint with the Federal Communications Commission (FCC) online or by calling 888-CALL-FCC (225-5322).

*Not this consumer’s real name.

Out and About: More transparency and accuracy in credit reporting

In late April, Consumer Action’s Audrey Perrott attended a Credit Builders Alliance webinar titled What you need to know about new credit reporting requirements: Impacts of the NCAP for reporters and others. The webinar detailed how the new National Consumer Assistance Plan (NCAP) will change the ways that credit reporting bureaus handle consumer data and generate credit reports.

The NCAP was conceived in May of 2015, when the three major credit reporting agencies—Experian, Equifax and TransUnion—came to an agreement with attorneys general from 31 states to improve the ways that the bureaus investigate disputes, restrict the reporting of certain types of negative debts, and ensure that data gets matched to the correct consumer file. As a result of the program’s implementation, consumers will enjoy more transparency and accuracy in credit reporting.

Elisabeth Johnson, director of membership at the Credit Builders Alliance, facilitated the webinar. Johnson discussed the key changes brought about by the NCAP, which will be phased in between now and 2018.

Starting June 15, furnishers (those who report information to the credit bureaus about consumers) will be required to report the original creditor name and the valid account type classification code in all reports to credit bureaus. These fields are required for each account or item reported. In addition, debt that did not arise from a loan contract or agreement to pay, including but not limited to certain fines, tickets and assessments (e.g., library fines, speeding tickets, parking tickets, etc.), may no longer be reported on a consumer’s credit report.

In September, furnishers will be required to issue a full, updated credit report every month, which will include accounts paid within the last 180 days or accounts requiring deletion or correction.

Finally, next September (2017) several new changes will come about. Furnishers will not be able to report medical debt to the credit bureaus for 180 days from the time the debt was incurred (in order to provide consumers and their medical providers time to resolve insurance payments and other billing issues).

In addition, any accounts opened on or after Sept. 17, 2017, will be required to contain consumers’ full names (first, middle, last and generation) as well as their full Social Security numbers and dates of birth (or dates of birth alone if a consumer does not have a Social Security number). This requirement will help to reduce the instances of mixed or merged files. A mixed or merged file occurs when a credit bureau combines information in a consumer’s credit file with information about another consumer. This has occurred when consumers have the same names, birth dates, addresses, etc.

Johnson outlined additional benefits of the NCAP, including increased visibility of the website (which allows consumers to get their credit report for free) on credit bureau homepages; more information (including contact information) for companies (furnishers) that provide the bureaus with (sometimes faulty) information on consumers; and the fact that bureaus will no longer be able to sell other “add on” products to consumers who call with a dispute. Credit bureaus often attempt to sell optional credit monitoring and other unnecessary products to consumers when they call.

Consumers (and furnishers) can take steps to help ensure error-free credit reports as well. Johnson recommends using your full name and date of birth on credit applications; alerting lenders to any new addresses or phone numbers; not substituting individual tax identification numbers (ITIN) for Social Security numbers; and informing your lenders if your Social Security number changes (a rare occurence).

Click here if your group is interested in becoming a member of Credit Builders Alliance. (Membership is intended for non-profit organizations, government entities, and consumer and advocacy groups that are committed to helping consumers build credit.)

Coalition Efforts: Credit scores, chemicals and colleges

Proposed bill would damage the credit scores of millions. Consumer Action joined consumer and civil rights advocacy groups in expressing their opposition to the Credit Access and Inclusion Act of 2016 (HR 4172). Proponents of the bill argue that it helps those with little or no credit build their credit scores by allowing utility and telecom companies to report their customers’ on-time payments to credit reporting agencies. In reality, the legislation would create a negative credit score for “thin file” or “no file” consumers (who are disproportionately from low-income and moderate-income minority communities). In areas like employment and insurance—where a negative credit report or low score could harm job prospects or increase rates—it is often better to have no credit history. In addition, the bill would preempt existing state and local privacy protections that prevent companies from sharing a customer’s financial information without their consent. Learn more.

More policy riders threaten consumers’ financial, retirement security. A coalition of 254 groups is urging Congress to reject any federal appropriations bill that contains inappropriate or “ideological” policy riders. These riders, which were wildly popular among some conservatives during the last budget cycle, would jeopardize policies that restrain Wall Street abuses and weaken new legislation intended to protect American families and their retirement savings. The riders often are little more than special favors and sweetheart deals for big corporations and ideological extremists, and Consumer Action and other groups believe they have no place in the appropriations process. Learn more.

Keep the CFPB strong on forced arbitration. Here we go again! Those who have opposed both increasing consumer protections and the creation of the Consumer Financial Protection Bureau (CFPB) are now fighting to take away your day in court. Coalition advocates are urging Appropriations Committee members to reject any proposals that might weaken or limit the CFPB’s ability to take action against companies who include forced arbitration [] clauses in their consumer contracts. After the well-documented abuses that led up to the 2008 financial crisis, Congress included in the Dodd-Frank Act a provision that specifically authorized the CFPB to restore consumers’ legal rights by regulating, curbing or outright prohibiting forced arbitration clauses in consumer contracts. Learn more.

For-profit colleges seek reprieve on regulation intended to protect students. The for-profit school industry has requested that the U.S. Department of Education (ED) delay implementation of the gainful employment rule—a law that is aimed at cracking down on under-performing career-training programs. In response, coalition advocates wrote to the ED reminding the department that the rule is needed to protect students and taxpayers from over-priced, poor-quality education programs that consistently saddle students with debt they cannot repay and degrees or certificates they cannot use. Learn more.

Groups urge chemical disclosures on personal care products. Most people assume cosmetics and personal care products are tested for safety before hitting store shelves. In truth, personal care products are one of the least regulated industries in the U.S. In an effort to improve the public’s health by reducing exposure to toxic chemicals, Consumer Action joined consumer advocates in asking Procter & Gamble to fully disclose the mixture of ingredients in all of its products. Doing so would give consumers more information about the products they buy and use every day, and encourage the industry as a whole to disclose ingredients. Learn more.

Class Action Database: Home Depot hack a real fixer upper

Class action settlements involving Whirlpool and Westlake Financial Services were among 16 new cases added to our Class Action Database during May. The Whirlpool lawsuit claimed that certain dishwasher models overheat and stop working. The lawsuit further claimed that the defendants breached warranties, were negligent and violated various state consumer protection statutes. Westlake Financial Services was charged with making automated calls (robocalls) to its automobile finance customers’ cell phones, which is prohibited under the Telephone Consumer Protection Act.

Plaintiffs in The Home Depot, Inc., Customer Data Security Breach Litigation class action alleged that the home improvement retailer did not adequately protect customers’ personal and financial information, leading to a breach of customers’ personal information. In September of 2014, Home Depot revealed that criminal intruders hacked its self-checkout terminals and customer email files, but it denied the allegations that it did not protect consumer information. Regardless, the company agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

The class members are consumers who used a credit or debit card at a self-checkout lane between April 10, 2014 and September 13, 2014 (and the card was compromised) or consumers who were informed by Home Depot that their email addresses were compromised.

The settlement provides a $13 million settlement fund. Consumers whose payment cards were compromised are eligible for 18 months of Identity Guard® Essentials monitoring services. They may also receive reimbursement of documented out-of-pocket losses and unreimbursed charges to their cards as well as up to $10,000 in reimbursements for documented time spent attending to card errors. Associated losses may include bank fees, restricted access to funds, unreimbursed unauthorized charges and expenses for identity theft or fraud.

The claims deadline is Oct. 29, 2016.

CFPB Watch: Class action suits, student loans and Spanish speakers

The Consumer Financial Protection Bureau (CFPB) is seeking to restore consumers’ rights to their “day in court” during disputes with financial firms.

Buried in the fine print of most credit card, bank account and car loan contracts is language that prohibits consumers from banding together to file a class action lawsuit. The CFPB has proposed a rule that would lift the ban on these suits.

Consumers who have signed away their rights to a court trial are often restricted to “forced arbitration”: one-sided, confidential proceedings that lack a judge or jury and a right to appeal. (Consumer Action opposes mandatory arbitration but has no issue with its voluntary use when both parties agree to use it. Along with 163 groups, Consumer Action recently called on the CFPB to prohibit the use of forced arbitration clauses in consumer contracts.)

Unfortunately, the Bureau is not proposing to outlaw forced arbitration clauses. Instead, it proposes to prohibit companies from including “class action bans” in consumer contracts. This would mean that consumers still may be required to settle individual disputes in arbitration forums but are free to join class action lawsuits.

The CFPB also has proposed that firms report annually to the Bureau on the outcome of all mandatory arbitration claims and awards in order to remove some of the secrecy from the arbitration process. Finally, the Bureau is considering making the results of arbitration awards public. If you would like to weigh in on the proposed arbitration rule, the CFPB ([url=][/url]) will be accepting public comments over the next two months here. Monday, August 22, 2016 is the deadline for comments.

Playbook for student loan payback

Nearly three-quarters of borrowers who’ve defaulted on federal student loans were actually eligible for income-driven repayment plans. These students could have avoided damaged credit records and other repercussions had they qualified for a loan modification.

To assist these borrowers, the CFPB and the U.S. Department of Education have unveiled plans for a new personalized guide to student loan repayment options called the Payback Playbook.

When student loan borrowers log in to their student loan account online, open their monthly bill or receive an email from their loan servicer, the Payback Playbook would provide them with information they need to make informed choices about getting an affordable monthly payment via available repayment plans.

The CFPB is seeking your input on how to make this tool as useful as possible. For more information see Consumer Action’s Playbook alert and send your comments to the CFPB by June 12.

The CFPB en español

The CFPB has launched two new tools to communicate with Spanish language consumers. You can now follow the latest Bureau happenings on Twitter at @CFPBespanol and on Facebook.

The Bureau has also updated translations and added more resources to the Spanish language version of its popular “Ask CFPB” function (Obtener respuestas) and to its Spanish language website in general.

Annual complaint report

The CFPB announced that consumer complaints about debt collection were the top complaint category for 2015, surpassing mortgage problems for the first time since the Bureau began taking complaints in 2011. (Most mortgage complaints feature problems related to loan modifications and problems with foreclosures.) Nearly one-third of all 2015 complaints were related to debt collection, with consumers complaining primarily about being hounded for debts they didn’t owe. Credit reporting troubles came in second (20% of complaints) and mortgage complaints came in third (19%). Credit reporting complaints overwhelmingly point at incorrect credit file information.

Click here for details on the latest annual complaint report.

Click here to file a complaint regarding financial products or services.

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 7,000 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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