Consumer Action INSIDER – March 2012


41st Anniversary Announcement


What people are saying

"I teach financial literacy classes to low-income families of Hudson County, New Jersey. Every single class has received rave reviews! ... [Your education materials are] wonderful, easy to use and highly effective.Linnet Brown, WomenRising Inc.

This month's consumer tip

With the price of gasoline on the rise, use technology to find the best prices. Gas Buddy is a website and a mobile app (both free to use) that help you find the lowest nearby gas prices. AAA, the Automobile Association of America, a paid, membership-based roadside assistance service, also offers online and mobile comparisons of gas prices at nearby stations as well as tips for saving on gas. Read more at the AAA website.

The looming privacy implications of facial recognition technology

Along with exciting opportunities born from new technology, consumers face new threats to their personal privacy. Facial recognition technology threatens to remove the comfortable anonymity that many citizens expect as they go about their daily lives. As surveillance technologies are more widely adopted by business and governments, repugnance and fear of a total surveillance society has grown.

Consumer Action has long advocated for the protection of consumer privacy. Recently our national privacy advocate, Michelle De Mooy, wrote to the Federal Trade Commission (FTC) in response to a request by the agency for comments on facial recognition technology.

Calling for FTC action to regulate commercial use of the technology, De Mooy outlined some of Consumer Action’s concerns about the misuse of the technology, citing a Facebook feature that automatically identified and tagged Facebook users’ faces when they uploaded photos. “The propriety with which the company seems to believe that it owns its users—from their basic information to their photographic likenesses—is disturbing,” wrote De Mooy. “Many consumers are alarmed at the idea of their images being obtained, used and stored without their knowledge or explicit consent.”

More and more companies are considering ways to use facial recognition technology, from targeted ads in stores and public places to security and authentication of financial services accounts. Many such services are “opt in,” but De Mooy notes that “opt in doesn’t offer much consolation to users who are denied access to online services because they choose not to be digitally corralled by facial recognition technology.”

Because facial recognition technology is still new, Consumer Action believes there is still time to place reasonable constraints around its use. Because this technology, and technology in general, is susceptible to error, it is a probability that false matches will occur.

“Companies should not be allowed to unrestrainedly feed their advertising addictions by covertly and irresponsibly turning consumers’ lives—and the core of their personal privacy, images of themselves and their families—into commercial products,” concluded De Mooy in the comments.

Read the letter.

From Wall Street to the classroom

The Occupy movement has had a profound impact on public discourse about the power and responsibilities of world markets. In rebellions against the status quo reminiscent of the 1960s, Occupy has attracted many youthful supporters.

As part of a year-long project at Oceana High School in Pacifica, California, to help students understand the country's financial system, Consumer Action’s Joe Ridout visited Laurie Hughes' senior humanities class early this year to discuss financial practices that launched the “99 percent” movement, named for the inequality in income and assets between the country’s wealthiest “one percent” and the rest of the population increasingly beleaguered by the state of the economy.

Ridout's presentation triggered an animated discussion about the influence of money in politics and how this dynamic was, in part, responsible for the inequality between the average worker and America's top percent.

"Joe's information clearly connected to the content that the students had been learning," said Hughes. "His presentation was a great followup to their work on current economic conditions in the United States."

Ridout addressed consumer choice in financial services, explaining from the perspective of a saver or borrower how to weigh the benefits of choosing a credit union over a large bank. He led the class in a discussion about building credit and touched on real-world examples, like pulling a free credit report before financing a car. Ridout outlined some ways that credit cards can be helpful if the cardholder understands concepts like chargeback rights, free extended warranties, rewards, revolving balances and the perils of overspending and late payments.

Facing college, the high school seniors expressed a special interest in student loans. Ridout guided the class through the differences between federally guaranteed loans and private loans. He also explained the impact of subsidized and unsubsidized loans on the ultimate cost to borrowers.

"The students came with a myriad of questions and Joe was able to provide clear answers," said Hughes. "Many of my students come from immigrant families who do not have access to this information, so this valuable content was taken home and shared with their guardians."

Parents, high school teachers and teenagers may be interested in Consumer Action’s Teens and Money module, which covers budgeting, figuring out if a purchase is a "need" or a "want," banking, writing checks, savings, credit cards, credit reports, driving and cell phones. Capital One sponsored the development and distribution of the module. Also, through a partnership with American Express, we offer Families and Credit Cards.

Hotline chronicles: Disputing an insurance company’s ‘total loss’ value

Pauly,* a California resident, emailed Consumer Action’s hotline last month to complain about a decision by his auto insurer to consider his damaged car a “total loss.” This can be a particularly distressing outcome for the owner of a beloved car because the company will not pay to fix the vehicle—instead the company offers a flat payment for the car and comes to take it away. Even more frustrating, in some states the law requires the vehicle owner or the insurance company to change the title of a car declared a “total loss” to a salvage title, which reduces the value of the car.

Pauly’s 2001 Nissan Altima was parked by the curb when it was hit by a speeding drunken driver. The insurance company determined it would cost $8,000 to fix the car, and offered Paul $5,000. Pauly thought that $5K was too little because his car was “fully loaded and in excellent condition with only 73,000 miles on it.”

If the car owner wishes to keep the car, they might be able to do so if they accept a cash payment from the insurer, minus the salvage value (money recouped by selling your vehicle to a salvage vendor). Consider if the law in your state requires you to change the title of the car to indicate that it is a salvage vehicle.

When an accident causes extensive or costly damage to your car, it's possible your vehicle will be declared a total loss. In general, vehicles are declared total losses when the cost to return them to pre-accident condition is as much as or more than the actual cash value of the car. Sometimes the insurer will declare a vehicle a total loss when the repair cost, plus the salvage value, exceeds the vehicle's actual cash value.

Consumers are rarely the winners in such deals, because while the payment from the insurer is often a fair market value (or even higher in some cases) it can be difficult for the insured to get a comparable replacement car without paying more out of pocket.

The amount offered to Pauly was actually quite fair. According to Kelley Blue Book, the fair market value is $3,800 and the price to buy the same model in excellent condition with comparable mileage would be about $5,300, if he could find it.

What are your choices when your car is ruled a total loss by your insurer? Generally, and subject to the laws of your state, you may have these options:

  • Take the payment and buy a replacement car. It’s likely you won’t get an exact match of your current car, and you may decide to pay more for another car in order to get a newer vehicle. Expect the insurer’s representative to take possession of the car almost immediately.
  • Push for a higher payment. Gather documentation on the fair market value of the car from local dealerships, classified ads and Kelley Blue Book but realize that the value of your car may be less than you think it is. Enlist the help of a private attorney if you feel you are really being low-balled. Find an attorney at the National Association of Consumer Advocates (NACA).
  • If your insurer allows it, take the payment less the salvage value and repair the car at your own expense and sell it on the open market, knowing that it may be subject to a “salvage” title brand.

Before you make any decision, discuss the decision with the insurer and research the laws of your state in regard to total loss and salvage vehicles. Check with your state insurance regulator for information and resources that can help with your research. Find your regulator at the National Association of Insurance Commissioners.

* Not this consumer’s real name

Activists target corporate politicking and bank payday loans, seek to improve fuel standards

Consumer Action has joined fellow consumer organizations on a variety of pressing issues.

We signed a letter to House and Senate judiciary committees requesting hearings to explore constitutional remedies to overturn the Supreme Court’s decision in Citizens United v. FEC. In Citizens United, the court ruled that corporations are guaranteed the same free speech rights to influence elections as are individuals, opening the floodgates of corporate money to influence elected officials and public policy. The letters to the House and Senate committees can be found on the People for the American Way website under Freedom of Speech.

The growing public concern about gasoline and its burden on household budgets has resulted in a new level of bipartisan support for higher fuel economy standards. Consumer Action joined the Consumer Federation of America and 22 other organizations in submitting comments to the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) to demonstrate the consumer, economic, security and environmental benefits of higher fuel economy standards. The comments can be read here.

More than 250 organizations and advocates joined a call to stop banks from making predatory payday loans at up to 365% APR. The coalition letter was delivered to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray at a Feb. 22 hearing in New York City that highlighted many anti-consumer banking practices. Copies were submitted to the Federal Deposit Insurance Corporation, the Federal Reserve and the Office of the Comptroller of the Currency. The letter and full list of signers can be found here.

In January, dozens of community-based organizations in Consumer Action’s network joined other groups as signatories on a Los Angeles Times ad in support of the strongest possible California clean car standards. Ken McEldowney, executive director of Consumer Action, is co-chair of the California Clean Cars Campaign, the ad’s sponsor and one of the driving forces in passage of a strong suite of new Clean Cars Standards adopted Jan. 27 by the California Air Resources Board (CARB). The new standards will save consumers money, reduce air pollution and support new jobs and investment in the fast-growing clean energy economy. Click here to see the ad.

We celebrate National Consumer Protection Week

Consumer Action will join government agencies and other non-profit organizations to promote consumer education during National Consumer Protection Week, March 4-10. During the week, Consumer Action will post articles on its Facebook page highlighting its rich collection of helpful consumer education materials in English, Spanish, Chinese, Korean and Vietnamese. Consumer Action will also tweet about helpful resources and tips throughout the week. ‘Like’ us on Facebook and follow us on Twitter.

Here are just a few of the resources offered by Consumer Action:

Consumer Action Take Action Center Identify your lawmakers at the federal, state and local levels and send them e-mails on topics of concern to you and your community. Send “letters to the editors” of national and local media. Respond to our alerts, register to vote, learn about Congress or contact national and local media.

E-Mail Action List Sign up with us and get an email alert when your involvement can make a critical difference. If you choose, your information will be saved so that you can take action any time without re-entering your information.

Consumer Booknotes Each year, hundreds, if not thousands, of books containing advice on and in-depth examinations of consumer issues are published. Consumer Action highlights the best of these resources on its Consumer Booknotes page.

Consumer Action News Consumer Action News is our organization’s newsletter. The most recent issue, Fall 2011—Secured Card Survey, contains news and information about choosing and using secured credit cards, alongside the results of our secured card survey.

Consumer Action Publications Consumer Action creates award-winning, free, multilingual educational guides on a wide range of personal finance topics and other subjects of interest to consumers. Browse our publications alphabetically or by date. If “Order Publication” is indicated, community-based organizations and non-profits can place bulk orders online.

You can find more tips and information to help consumers protect their privacy, manage their money and debt, avoid identity theft and avoid frauds and scams on the National Consumer Protection Week website.

New initiative to stop ticket-buying ‘bots’

Consumer Action, the National Consumers League and Fan Freedom Project have asked leading sports, concert and event ticketing companies to join forces in a new effort to thwart the use of anti-consumer automated ticket-purchasing software, also known as “bots.”

Following many of the concert industry’s near-instant sellouts, artists, promoters and ticket companies have blamed scalpers and their use of bots, which are digital purchasing tools that bombard online digital box offices such as Ticketmaster and block regular consumers from access to face-value tickets.

“In many circumstances it appears that bots are being used by unscrupulous ticket resellers to gain an unfair purchasing advantage,” said Jon Potter, president of the Fan Freedom Project. “If this is the case, bots are cutting to the front of the line and cheating consumers out of the best tickets.”

Opposition to bots is nearly unanimous, yet until now little has been done to stop them.

“All parties involved, including artists, fans and ticketing companies, have an interest in ensuring that consumers have fair access to face-value tickets at the box office,” said Linda Sherry, director of national priorities for Consumer Action.

The three consumer organizations sent letters to Ticketmaster CEO Nathan Hubbard, Paciolan CEO Dave Butler and Veritix CEO Samuel Gerace asking them to join the effort to oppose bot use. The groups proposed cooperation to:

  • Encourage all resale exchanges to include in their Seller Terms of Service an explicit prohibition against reselling tickets that have been obtained with bots as well as requirements that resellers permit anti-bot audits and cooperate with government inquiries into alleged bot purchases.
  • Request that the Federal Trade Commission and National Association of Attorneys General create a task force to investigate the use of bots, and agree to cooperate with that task force’s work.
  • Support anti-bot legislation in states that do not already have anti-bot statutes.
  • Promote the creation of an industry-wide confidential data service to measure bot usage.

“While we have not always seen eye to eye with the primary ticketing industry, the need to find a pro-consumer, pro-competition solution to the bot problem is one area that everyone should agree on,” said John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League.

For more information on the effort, visit the Fan Freedom Project website.

MoneyWi$e 2012 mini-grant recipients announced

Nine community organizations that attended MoneyWi$e trainings in Texas and Louisiana or used MoneyWi$e materials in their communities have been awarded mini-grants by Consumer Action and Capital One to support financial empowerment in diverse communities. Consumer Action will award further mini-grants later this year. The agencies selected have demonstrated effective use of the Consumer Action-Capital One MoneyWi$e curricula as part of innovative outreach programs to diverse groups, including teenagers, immigrant victims of domestic violence and people with disabilities.

From face-to-face counseling sessions to group workshops, these organizations will use MoneyWi$e materials to educate consumers about personal finance basics, including basic banking, credit and budgeting, to help them save and plan for short- and long-term financial goals.

This year, the 2012 Consumer Action/Capital One MoneyWi$e mini-grant recipients are:

  • Azteca Economic Development and Preservation Corporation (AEDPC), Laredo, Texas. Using the MoneyWi$e modules Banking Basics, Micro Business and Improve Your Credit, AEDPC will teach banking basics to unbanked and underbanked consumers in the Laredo area. Consumers will receive help in opening low-cost savings or checking accounts with local banks or credit unions.
  • Advocacy Resource Center for Housing (ARCH), McAllen, Texas. Through a collaboration with Workforce Solutions and a local Capital One Bank branch, ARCH will offer training sessions using the MoneyWi$e curricula and assist clients with budgeting, obtaining and interpreting credit reports, establishing bank accounts and saving regularly.
  • Consumer Credit Counseling Service of Greater San Antonio, San Antonio, Texas. In collaboration with the San Antonio Housing Authority, the organization will educate subsidized housing residents using MoneyWi$e banking, money management and credit curricula. Clients will receive assistance in developing spending plans, obtaining copies of their credit reports and improving credit scores by better managing and repaying debts.
  • Easter Seals Central Texas (ESCT), Austin, Texas. The local Easter Seals chapter will provide education to potential homebuyers in its Texas Home of Your Own program using the MoneyWi$e credit and homeownership modules. Financial literacy classes will be offered to the organization’s Employment Service Program participants using the MoneyWi$e banking, money management, savings and homeownership modules. Trainees in its Paid Job Training program will have the opportunity to attend a basic banking training and receive incentives to open bank accounts.
  • Goodwill Industries of Central East Texas (GWICET), Lufkin, Texas. The organization will provide education and financial literacy training to low-income community members using MoneyWi$e curricula and other supplemental materials. Participants that successfully complete the financial literacy training will be offered individualized financial coaching, help in opening savings accounts and encouragement to succeed in achieving realistic savings goals.
  • Louisiana State University AgCenter, Covington, Louisiana. The AgCenter will use a train-the-trainer model to help Louisiana State University educate youth, provide MoneyWi$e financial education sessions for students and reinforce learning through a “real-life” simulation to increase the awareness of financial literacy, money management, banking basics, ID theft and account fraud.
  • Christian Women’s/Men’s Job Corps of Port Arthur, Port Arthur, Texas. Through its New Beginnings program, the organization will provide financial literacy education to low-income consumers in parts of Jefferson County using MoneyWi$e and other supplemental materials; help clients repair and maintain good credit ratings; and offer one-on-one mentoring to establish savings goals and budget action plans. The program will employ speakers from local financial institutions and partner with them to offer incentives to local unbanked residents to open accounts. The program has obtained meeting space through collaboration with a local college and will draw clients through a partnership with Jefferson County courts.
  • Opportunities Industrialization Center (OIC) of Ouachita, Inc., Monroe, Louisiana. The project will incorporate financial literacy education into a job training curriculum at OIC facilities in Dunlop and Richwood, Louisiana. Using the MoneyWi$e curriculum, the project will train clients on setting financial goals, creating a workable budget, improving credit, establishing a savings or other bank account and obtaining a copy of their credit reports from the three national credit reporting bureaus.
  • Oficina Legal del Pueblo Unido (South Texas Civil Rights Project), Alamo, Texas. The organization will help immigrant survivors of domestic violence who want to live independently from their abusive spouses to build the financial knowledge and skills that will allow them to establish successful independent lives. The group will leverage its Promotoras program to train former clients to become grassroots advocates and provide education, guidance and referral services to other immigrant victims of domestic violence. Clients will be trained on basic banking, budgeting, savings and, if appropriate and desired, homeownership sustainability.

“We are excited to watch the progress of the innovative projects funded by MoneyWi$e this year,” said Consumer Action Executive Director Ken McEldowney. “We expect that they’ll have significant financial empowerment impact in their communities.”

About Consumer Action

Consumer Action is a nonprofit organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective, and trusted consumer organizations in the nation.

Financial Education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of education resources. The organization’s extensive library of free publications offers in-depth financial information, while its hotline provides non-legal advice and referrals. Consumer Action also publishes an unbiased annual credit card survey that exposes excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.

Community Outreach. With a special focus on serving low- to moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of more than 8,000 community-based organizations. Outreach services include training and free mailings of financial education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s rapidly expanding network is the largest and most diverse of its kind.

Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulations and legislation by taking positions on almost 200 bills per legislative session and testifying at least three times per year. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.

Click here to learn more about our staff.



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