Consumer Action INSIDER – May 2012


41st Anniversary Announcement

What people are saying

As an RSVP Health & Safety Coordinator I used your Vietnamese educational materials at the Worcester Senior Center in Massachusetts, where we have a large Southeast Asian population. With interpreting help from the center’s client advocate, we presented your wireless service and Internet safety info to a group of 45. We used your ‘Senior Scams’ and more for a group of 22 in collaboration with the BBB. We really appreciate your valuable info! — Rita Sullivan, RSVP-Worcester Area Volunteers

Did you know?

By this fall at the latest, mobile phone users will have a better chance of avoiding “bill shock” overage charges. Wireless plans will send free alerts when subscribers are in jeopardy of exceeding plan limits on voice, data and texts, or of triggering international roaming charges when travelling abroad. Click here to learn more.

Consumer Action Prepaid Card Survey

Marketed as a convenient way for consumers to manage money and control spending, and as a checking account substitute, prepaid cards are the financial tool of the hour. In its new Prepaid Card Survey, Consumer Action found that most prepaid cards come with an assortment of fees, but there are ways consumers can avoid many of them and find some value.

Consumer Action learned that all surveyed cards voluntarily extend Regulation E-type protections for unauthorized use and error resolution, although these arrangements lack legal requirements and could be changed at any time, for any reason. Most cards also offer FDIC insurance. As it released the survey, Consumer Action also began a petition to urge the CFPB to extend Reg E protections to general-purpose reloadable prepaid cards. Please sign!

Consumer Action reviewed 28 general purpose reloadable prepaid cards from 11 issuers and found that with a little effort to avoid fees, this fast growing payment and money management tool can help people control spending, make online purchases and distribute spending money to family members. They don’t require a credit check, generally allow cardholders to recover lost funds and don’t lead to debt. All but American Express’s prepaid cards offer FDIC coverage. American Express cards rely on state transmitter laws to keep funds on reserve.

The survey received national coverage from MSNBC and U.S. News Money. “There are more fees than you will typically find on either a credit or debit card,” Ruth Susswein, deputy director of national priorities noted in the MSNBC article. “There are fees for reloading money, ATM cash withdrawals, balance inquiries or making a purchase without enough money on the card. There may even be a fee if you close the account or don’t use the card for a few months.”

Click here to read the survey and review the details we collected about the cards.

Make online ‘code of conduct’ process fair and transparent

In February, the White House released a white paper written by the Department of Commerce outlining its Consumer Privacy Bill of Rights. The paper proposed a multi-stakeholder process to develop online privacy codes of conduct for industry.

“It’s absolutely critical to make sure the codes of conduct come from a process that is truly representative of all stakeholders and is fair, transparent and credible,” said Michelle De Mooy, Consumer Action senior associate for national priorities.

This process would bring together members of industry and civil society to develop voluntary online privacy codes of conduct for companies. These codes would be administered through a Safe Harbor program and would be enforceable through the Federal Trade Commission.

The National Telecommunications and Information Administration (NTIA) will facilitate the process of developing the codes. It issued a call for public comment on how the process should work and which privacy issues the process should address.

Consumer Action submitted comments to the agency calling for a fair and transparent process, one that is inclusive to consumer, privacy and civil society groups as well as industry representatives. In order to help define the Commerce Department’s recommendation for this effort, Consumer Action along with other leading advocates developed baseline principles to guide the process and give the multi-stakeholder effort the legitimacy it needs to succeed. These baseline principles are referenced in the public comments.

NTIA also asked for public comment on issues to be discussed during the multi-stakeholder process. Consumer Action recommended the agency focus on:

  • the rise of social media, including both data use by the companies themselves and use as it relates to consumer harms, such as for employment purposes, insurance rates or credit checks;
  • the collection and use of consumer personal information by data brokers;
  • the collection and use of data by mobile apps; and
  • the deployment of facial recognition technology in ways that outpace consumer expectations.

Click here to read Consumer Action’s comments.

Consumer Action advocates for used-car buyers

Joe Ridout of Consumer Action testified before California's Assembly Judiciary Committee in April about the importance of AB 1534, which would protect car buyers from misleading sales tactics by used car dealers. Many used car buyers are misled about the true value of previously owned vehicles. By requiring a disclosure of a vehicle’s fair market value on the car, AB 1534 would benefit California consumers by increasing transparency in sales and by making the used car market more competitive.

Deceptive pricing in used car sales is one of the most common complaints Consumer Action receives from consumers. In one case, a Los Angeles man told us he discovered that his car's Blue Book value was $2,455 after he signed a contract to pay $9,000.

Although dealers are fighting the bill, AB 1534 offers a middle ground between the current environment (in which consumers may be left in the dark about pricing) and legislative remedies that might require even more disclosure by auto dealers. For example, Assemblymember Roger Dickinson (D-Sacramento) suggested at the hearing that it would be even fairer for dealers to disclose the wholesale price they originally bought the used vehicle for alongside the marked-up retail price necessary to ensure an honest profit.

AB 1534 passed out of committee on a 6-3 vote, with one abstention. The bill now moves to the Appropriations Committee. We encourage interested consumers to use our free California Action tools, input your ZIP code and send an email to your state Assemblymember urging a Yes vote on AB 1534.

Community advocates empower consumers to prosper

Consumer Action carries out its education and training work through a national network of 11,000 contacts at more than 8,000 community-based organizations (CBOs).

The numbers grow as new organizations all over the country take part in our train-the-trainer meetings or learn of our educational materials.

The groups include consumer credit counseling agencies, cooperative extensions, faith-based groups, ethnic-serving organizations, shelters, libraries, street-level outreach groups, food banks, technical and workforce training groups, housing counselors, local consumer advocacy groups, legal aid providers and more. The staff members at these agencies are leaders in their communities. The groups are diverse, but one thing they all have in common are the goals of improving consumer literacy, empowering consumers to avoid fraud and helping their communities prosper financially.

Consumer Action’s websites, trainings and outreach staff enable community advocates to share their success stories, innovative strategies and how they’re using Consumer Action’s multilingual educational materials to empower their client communities.

We’d like you to meet staff members of two key groups in our network:

Community Resources Technicians, Arkansas
Nestled on the third floor of the First Presbyterian Church, just a short walk to the William Jefferson Clinton Library in Little Rock, is the office of Community Resources Technicians (CRT). Deborah Cooper and Philis Taylor work to ensure CRT’s success in carrying out its mission by providing financial literacy, homebuyer and entrepreneurial educational services to Arkansas consumers.

Armed with Consumer Action’s multilingual brochures, modules, lesson plans and activities, these advocates are equipped with the educational resources and tools needed to lessen the effects of intergenerational poverty at weekly trainings in all corners of the state. Cooper and Taylor attended a train-the-trainer event on credit cards in Memphis in 2010 co-hosted by Consumer Action and American Express. Since that time, the team has ordered more than 2,000 copies of our free multilingual educational publications.

Home Development Resources, Georgia
To find two more community advocates in our network, travel about 50 miles north of Atlanta to meet the team of Lina Cook and Jane Owens at Gainesville’s Home Development Resources, Inc. (HDRI). Cook and Owens are HUD-certified housing counselors who carry out the organization’s mission by conducting free homebuyer and debt management education classes.

Cook and Owens use Consumer Action’s multilingual educational materials to prepare a large Latino and growing Vietnamese population to manage debt and get ready for homeownership. Owens attended training on Credit Card Fraud co-hosted by Consumer Action and Washington Mutual Bank (now Chase) in Atlanta in 2008. Since that time, she’s been using Consumer Action’s educational materials in the free classes offered by HDRI.

Cook and Owens recently attended an Atlanta training on housing discrimination co-hosted by Consumer Action and HUD. The team plans to use the materials to train Gainesville residents to recognize and fight housing discrimination.

The anthropologist Margaret Mead once observed, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed it is the only thing that ever has.” To further Consumer Action’s mission to empower low- to moderate-income and limited-English-speaking consumers to financially prosper, our dedicated outreach team travels the country to meet and empower the community advocates who help us reach greater and greater numbers of underserved consumers. For more information, .(JavaScript must be enabled to view this email address).

Hotline Chronicles: Couple’s health insurance excludes maternity care

An Ohio man wrote to our hotline to complain that an agent for Blue Cross Anthem/Blue Shield sold him an individual health insurance policy that didn’t include maternity coverage. Arturo* told Consumer Action that he specifically asked the agent if maternity care was included because he and his wife were going to start a family. “Now my wife is pregnant and we find out that we don’t, in fact, have maternity coverage.”

We advised Arturo to contact his state insurance commissioner and file a complaint about the misrepresentation. Find your insurance commissioner at the National Association of Insurance Commissioners and click on States & Jurisdictions. His complaint should be based on the broker’s oral representations during the sale.

The situation reinforces a key responsibility for consumers: Do not sign a contract until you have read every word and are satisfied that it offers what you want. If you don’t have expertise in reading contracts, ask a knowledgeable friend to help. And draw up a list of questions and send them by email to your broker asking for a reply with written answers. Keep a copy of the email: It will serve as a paper trail if you hope to prove that deception was involved in the sale. Go elsewhere if an agent refuses to do this.

If Arturo and his wife had realized the truth about their policy, they might have been able to buy an add-on policy (known as a rider) to cover maternity care, at an additional cost. However, you can’t purchase a maternity rider when you’re pregnant and, unfortunately, individual insurance is already very high-priced, even without the additional cost of a maternity care rider.

According to the National Women’s Law Center, state and federal anti-discrimination protections ensure that most employer-sponsored health insurance covers maternity expenses. However, the Center allows that it is very difficult-and sometimes impossible-for women to find coverage for maternity care in the individual health insurance market. (In the individual health insurance market, consumers buy coverage directly from insurers. This is in contrast to employer-sponsored health care coverage, called “group” coverage.)

In a study of the availability of maternity coverage in the individual market, the National Women’s Law Center found that the vast majority (87%) of individual health plans available to a 30-year-old woman across the country did not provide maternity coverage.

As part of the 2009 Affordable Care Act, an estimated 8.7 million American women currently purchasing individual insurance will gain coverage for maternity services. Starting in 2014, all new health plans sold to individuals and small businesses will be required to cover maternity and newborn care-these services are explicitly listed in the law as "essential health benefits" that the plans must provide. Also, insurance companies in the individual and small group markets will no longer be permitted to charge higher rates due to gender (or health) status.

The Law Center’s 2010 Report Card notes that only seven states (Massachusetts, Montana, New Jersey, New York, Oregon, Vermont and Washington) require group and individual health plans to cover maternity care. Twelve other states have limited requirements. Click here to see the report card.

The federal government has set up the website to help explain the Affordable Care Act. The site features many helpful tools for consumers and a timeline of when new provisions are expected to phase in as well a real-life stories about how health care reform has helped consumers. You can add your story if you like!

*Not this consumer’s real name.

Consumer Action and Vets Group host training in DC

Returning from war and readjusting to civilian life can be difficult, particularly in today’s economy. Veterans and their families face unique financial challenges as they re-enter civilian society. Consumer Action’s Community Outreach and Training Manager Linda Williams traveled to Washington, DC in March to provide veterans and the groups that assist them with information they need to strengthen their money management skills.

Co-hosted with the VETS Group, the roundtable attracted veterans and veterans groups from the District of Columbia, Maryland and Virginia, as well as staff from New York Congressman Charles B. Rangel’s office. The roundtable was part of Consumer Action’s Veterans Project, sponsored by Chase.

Williams opened the training by sharing Consumer Action’s mission to help low- to moderate-income consumers financially prosper and assert their rights in the marketplace. Teaming up with agencies like the VETS Group is one way Consumer Action fulfills its mission, said Williams.

During the first half of the training, Williams facilitated a discussion about basic banking skills before moving on to the importance of keeping good credit and rebuilding credit. According to Williams, a critical, and often overlooked, step in building credit is opening and properly maintaining a bank account. “Successfully managing a bank account is the “training wheels” for solid personal finances,” she said.

Williams told the group that she recognizes that some consumers with poor credit histories can become discouraged and ask, “Why should I try to rebuild my credit?” But, said Williams, it’s never too late to start rebuilding a solid credit history-and it’s important to do so in order to rent a house, get a job, buy insurance or even get telephone service.

Williams made a “call to action” for participants to review their credit report every four months by staggering requests for their free annual report from each of the three major credit bureaus. She counseled that even those who use mostly cash should keep an eye on their credit reports for signs of identity theft. Her ID theft remark set the stage for an after-lunch presentation on identity theft and account fraud.

Joe Wynn, president of the VETS Group, remarked on the strong partnership between his organization and Consumer Action. “Consumer Action has been a tremendous resource in helping elevate the level of [credit] awareness among veterans,” said Wynn. Through Consumer Action’s free educational seminars and pamphlets, more and more veterans are learning how to monitor and repair their credit histories.”

Coalition efforts: Student aid, credit cards, generic drugs and CFPB funding

Protecting federal aid for students. Investigations conducted by the Government Accountability Office (GAO) have revealed questionable practices by some for-profit colleges, including their use of federal student aid revenues. Many prey on low-income students, minorities and veterans seeking to further their education. These individuals are encouraged to take on enormous student loan debts to pursue degrees or certificates that don’t help them get jobs. Consumer Action has lent its support to S. 2296, legislation by Senators Kay Hagan (D-NC) and Tom Harkin (D-Iowa). The Protecting Financial Aid for Students and Taxpayers Act amends the Higher Education Opportunity Act to prohibit postsecondary educational institutions from using revenues derived from federal educational assistance funds for advertising, marketing and recruiting. (The Higher Education Opportunity Act already prohibits colleges from using student aid revenues for lobbying.)

CFPB authority and funding. Consumer Action signed on to comments that define the “larger” debt collectors and consumer reporting agencies who will be subject to regular examinations by the CFPB. Consumer Action and other members of Americans for Financial Reform believe more clearly defined parameters will clarify CFPB supervisory authority over institutions with disproportionate impact on niche markets like minorities, military servicemembers, students and senior citizens. Among other benefits, the clarification would allow the CFPB to track the efforts of large firms with products and services that span more than one market. Click here to read the letter.

In a separate issue regarding the CFPB, Consumer Action joined efforts to block any shift to the consumer watchdog agency’s independent funding. GOP lawmakers want to bring CFPB’s funding under the congressional appropriations process and cut the budget by half in coming years. Currently, the CFPB has access to a certain percentage of the Federal Reserve’s total operating budget and the funds are not subject to review by Congress. Click here to read the letter.

Patient safety and generic drug labeling. Consumer Action supports the Patient Safety and Generic Labeling Improvement Act, which would ensure that generic drugs come with warnings of potential side effects. If passed, generic drug manufacturers would be obliged to print the same warning messages that brand-name drug manufactures must provide with their products under existing law. The law seeks to protect the safety of millions of Americans who consume generic drugs, estimated to make up 75% of pharmaceuticals on the market. The law will also clarify the judicial confusion of the 2011 Supreme Court decision in PLIVA v. Mensing, which denied relief to a patient using generic drugs despite a ruling calling for the opposite only two years before. Click here to read more about the PLIVA case.

‘Fee harvester’ credit card rule. Consumer advocates from national groups, including Consumer Action, met with Director Richard Cordray in April to encourage the Consumer Financial Protection Bureau (CFPB) to stay strong on rules protecting consumers from high-cost subprime “fee-harvester” credit cards. The CARD Act limits the first-year fees for a credit card account to 25% of the initial line of credit. However, First Premier, a subprime card issuer, tried to get around the rule by charging application or processing fees before the account was opened. When the Federal Reserve told the company to stop, First Premier sued and won a favorable ruling in federal district court in South Dakota. Linda Sherry, Consumer Action’s national priorities director, told Cordray that changing the CARD Act fee-harvester provision now would signal to financial services companies that the CFPB was easy to manipulate. Click here to read our press release, which contains a link to the CFPB’s proposal.

Publication spotlight: ID theft training materials get a revamp

In March, Consumer Action’s trainers and editorial staff worked together to revamp one of our most popular training modules, MoneyWi$e ID Theft & Account Fraud: Prevention & Cleanup. Community-based organizations nationwide rely on these materials to educate their clients on how identity theft happens, how to protect their personal information, what steps to take if their identity is stolen, what their rights are and the resources available to help. MoneyWi$e is a Consumer Action and Capital One financial literacy partnership.

The goal of the revisions, led by Consumer Action trainer Linda Williams, was to update the lesson plan and companion PowerPoint presentation to address emerging ID theft issues and to present the material in a way that is effective for all members of an audience, regardless of individual learning style.

As part of the overhaul, we:

  • added more photos, graphics and color to the slides to meet the needs of visual learners;
  • reiterated learning objectives throughout the class to reinforce our goals for participants and to help trainers stay on track;
  • rewrote the pretest, which is used by the trainer to assess participants’ knowledge and needs, in a way that uses “chunking,” a training technique that includes in each question a piece (or chunk) of the material that will be covered during the training;
  • expanded the lesson content to address emerging issues, such as tax return fraud, medical ID theft, and how to protect the identities of deployed military servicemembers and incarcerated men and women;
  • reduced the amount of text on the slides to make it easier for learners to take in key points at a glance;
  • moved some talking points from on screen to the Notes area, for trainers to reference and cover (or not) as needed based on the results of the pretest;
  • included four sample letters to creditors and credit reporting agencies that consumers can use to prevent or resolve a case of identity theft;
  • added more websites and resources in the Notes section of each slide to be used by trainers in preparation for the training and by participants after the class; and
  • included a link to an optional Jeopardy-style game that engages the entire group and reinforces the material in a fun way.

The result is a curriculum that takes into account the different learning styles-visual, auditory and kinesthetic-and is more current and comprehensive, with samples and resources that learners can use at home.

Williams field-tested the revamped module in mid-April at the 2012 Annual Conference on Financial Education in Orlando and received excellent feedback.

“This new curriculum is a trainer’s dream because it has everything needed to reach every member of the audience,” said Williams. “And it makes the material very manageable for the trainer.”

The new ID theft lesson plan and PowerPoint slides can be downloaded from the Consumer Action website.

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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