Consumer Action INSIDER - May 2016


Table of Contents


What people are saying

The [Consumer Action “Put a Lock on It”] training materials were great and very useful! I am more aware of protecting myself online and will gladly utilize the information in my future work! — Stephanie Winder, Homeownership Specialist, NCALL Research Inc., Dover, DE

Did you know?

When you download free software, it could come with an unexpected addition: hidden programs that can cause problems on your computer ranging from the annoying to the downright dangerous. National Consumers League (NCL), which operates the newly re-launched website, offers a helpful alert explaining how unwanted software can infiltrate your computer, the damage it can cause and what you can do if you have inadvertently installed it.

Out and About: Measuring your financial health

When measuring financial health, it is more useful to take an in-depth look at a consumer’s overall financial state than a one-dimensional approach that looks solely at a credit score, account balance, insurance policy, etc. In April, the Center for Financial Services Innovation (CFSI) hosted a webinar entitled Measuring Financial Health: Eight Key Metrics, in which they presented their research on the eight ways to measure financial health in a holistic way. The Center also taught attendees, many of whom advise clients on financial and marketplace issues, how to begin collecting data in order to assess a client’s movement along the financial health spectrum over time. Consumer Action’s Audrey Perrott attended and reported on the webinar.

CFSI director Sarah Parker kicked off the webinar by revealing that 57 percent of the country (138 million people) is not financially healthy. She said that the eight indicators of financial health are housed within the four main day-to-day components of spending, saving, borrowing and planning. Parker explained that a consumer is considered financially healthy when he or she meets all of the eight indicators:

  • Spending less than his or her income;
  • Paying bills on time and in full;
  • Accumulating sufficient liquid savings;
  • Possessing sufficient long-term savings and assets;
  • Carrying a sustainable debt load;
  • Earning a prime credit score;
  • Enrolling in appropriate insurance; and
  • Planning ahead financially.

Parker then invited several guests to present at the webinar. The first guest was Michael Collins, the director of the Center for Financial Security at the University of Wisconsin-Madison. Collins provided an academic and service provider prospective and again urged attendees to look at several measurements over time, including how clients are balancing finances and credit; how they are prioritizing finances and what they are spending; how much they are saving; and what types of credit choices they are making. He emphasized the need to measure multiple factors since not every client is at the same place in their lives at the same time.

The next presenter, Rick Love of the MetLife Foundation, which offers grants to financial inclusion programs helping low-income populations, offered his perspective from the insurance and funder angle. He stressed that his foundation values financial health and wellbeing as a desired outcome in financial inclusion and that they are interested in bundled programs that serve the low- to moderate-income community. He mentioned a program that he believes operates as a model in serving this community: the Working Families Success Network. The comprehensive national program combines three services: financial education and coaching, employment and improved access to public benefits.

Brett King, the founder and CEO of the digital money management service Moven, wrapped up the webinar from a fintech perspective. King developed the Moven app, which has three core elements to help consumers track their finances: spending, saving and living smart. Moven does this by providing real-time receipts for purchases and gauging user spending throughout the month. According to King, Moven’s developers learned that consumers’ spending decisions are largely unconscious and that within two to three months of using the app (and becoming more conscious about day-to-day spending) users can reduce spending and save more by allocating resources in a more strategic and purposeful manner.

Learn more and access CFSI’s study on the eight ways to measure financial health here.

Coast-to-coast trainings on IP transition and prepaid cards

Consumer Action's Linda Williams and Nelson Santiago recently traveled from coast to coast conducting trainings and workshops to educate community-based organizations and consumers on both prepaid cards and the transition from traditional landline phone service to wireless and Internet protocol-based (IP) phone networks.

The pair first visited West Delray Beach, Florida, and the surrounding areas to hold nine IP transition workshops for consumers as well as a train-the-trainer session for staff of community-based organizations. The trainings are part of Consumer Action and AT&T’s New Phone Network Project. The workshops and trainings updated participants on the transition from traditional copper telephone networks to Internet-based phone service and educated them on related topics like Internet safety and ID theft prevention. IP systems use the same kinds of connections that deliver Internet to consumers, and allow consumers to make calls, send messages, watch videos and surf the web. West Delray Beach-based, a non-profit credit counseling service and longtime member of Consumer Action's community agency network, joined Consumer Action as co-host of the train-the-trainer session and helped to promote the half-day event.

Back on the West coast in late March, Williams and Santiago introduced San Diego community organizations to Consumer Action's new educational module on prepaid cards. The module and related materials were developed with financial support from Visa Inc. as part of our Know Your Card educational partnership. Prepaid cards have proliferated, with unbanked and underbanked consumers (those without a traditional checking or savings account) often turning to them to fill the void. "A consumer's guide to choosing a prepaid card” is intended to help consumers determine if a prepaid card can meet their needs and, if so, how to compare options and choose the best one. The module offers detailed information about how to estimate the monthly cost of a particular card, how to reduce or avoid fees, what card features to look for or steer clear of (overdraft coverage!) and what online tools are available to help compare available card options. During the prepaid cards training, Santiago echoed one of the key points in the module: "Prepaid cards have become more consumer-friendly over the years," he explained, "but because some cards are very expensive and not upfront about their fees, it's buyer beware!"

Jamie Woo of Consumer Action's San Francisco office was also on hand at the San Diego prepaid cards training. Due to Woo’s media outreach, the San Diego Chinese Press wrote an excellent article on the event (in Chinese), which you can access here.

Hotline Chronicles: Straight story on rental car insurance

Bebe* from upstate New York contacted Consumer Action’s hotline about an experience she had while renting a car in Orlando, Florida. Bebe had reserved a car for $15 a day using a travel booking site. When she arrived at the rental car counter at the airport, the representative said she would have to pay an additional $19.99 a day for auto insurance liability coverage. “I tried to decline the insurance because I have an auto policy for my own car that covers rentals,” Bebe said. “But they said I had to take their insurance if I couldn’t provide proof of my entire insurance policy, not just my insurance card.”

Bebe said others at the counter were facing the same dilemma and “arguing, hollering and crying at the men behind the counter.” Not wanting to ruin her vacation, Bebe said she just gave in and paid for the insurance, which more than doubled the amount she had expected to pay.

Unfortunately, the situation encountered by Bebe is very common—we found numerous complaints on the Internet about the same thing. When you rent a car, you should have liability coverage in case you hurt someone or damage someone’s vehicle or other property. You also should have a “collision damage waiver” (CDW) to cover you for damage to or theft of the car while you are renting it. (CDW is offered for free by many credit cards when you use the card to pay for the rental. But you need to decline the rental car CDW for the credit card coverage to apply.)

If you have an auto policy for your own car, and it covers you when you drive rental cars, you don’t need to duplicate the coverage. If you do not have coverage, purchase the rental car liability insurance. Having CDW coverage—either through a credit card or by paying for it at the counter—is advisable.

We suggested to Bebe that she take certain steps before her next trip. While not every car rental firm will be so insistent in demanding proof of coverage, it’s worth the trouble of making a copy of your auto insurance policy and bringing it with you to not spoil your trip. Also, take a copy of your credit card’s CDW coverage if you plan to use it.

We found many instances online where consumers said they were told at the counter that they needed to purchase the agency’s rental car insurance. Often they reported that their credit card coverage didn’t cover “down time” charges while the car was being fixed. We find, however, that this is rarely true and that the credit card companies often cover a lot and can be a good advocate to help you push back against unnecessary or inflated charges. Rental car agencies, however, can put a larger-than-usual “hold” on the credit card used to rent the car when customers decline the agency’s CDW in favor of their own credit card coverage.

Another defense against problems at the rental counter is to call your own insurer, your credit card company and the rental car agency to work through each party’s requirements before you leave home. A key question to ask your credit card issuer is “What is the maximum value of a car that is eligible for your credit card’s CDW?” Some card companies won’t cover cars worth more than $20,000 or certain types of vehicles, such as luxury SUVs, sports cars and vintage autos. Be sure you know if any activities (off-roading, for example) or locations (traveling across the border to Mexico) will void your coverage.

Take and save notes about the name of the person you spoke to, the number you called and the date and time of the call. Better safe than sorry!

It’s also a good idea to snap some photos (with the date stamp) of the rental car (front, sides and back) before you drive it away. And make sure you note any pre-existing damage on the contract.

Finally, if you travel for business, check with your employer about how it wants you to handle rental car insurance.

*Not this consumer’s real name

Proposed California initiatives could impact consumers

Ballot measures differ from most legislation passed in representative democracies. Ordinarily, an elected legislature develops and passes laws. In a ballot, however, the voters get to decide on often hot-button issues directly. To date, nine ballot propositions have been certified for California’s 2016 ballot, and more may qualify in the coming weeks. Here, Consumer Action spotlights a few key initiatives that will impact consumers.

The California Drug Price Relief Act is a major initiative that would lower the cost of prescription drugs for consumers. It would mandate that the state pay no more than what the U.S. Department of Veterans Affairs (VA) pays for prescription drugs (the VA is widely regarded as paying the lowest prices in the U.S.). Unfortunately, pharmaceutical corporations have funded opposition to the measure as they—of course—prefer to charge the state much more than they charge the hard bargainers at the VA.

So far, Big Pharma has spent about $53 million to crush the proposition (this is roughly 12 times what supporters spent to put it on the ballot). Incredibly, this amount represents more than the amount that has been spent on all other ballot measures in the 2015-16 election cycle combined. Pfizer and Johnson & Johnson have kicked in $5.7 million a piece, while four other drug companies have spent over $4 million each and five additional drug companies have added nearly $3 million to the cause. The drug corporations’ “astroturf” group (one that masks the true sponsors of a message or organization) goes by the name “Californians Against the Misleading Rx Measure,” despite the fact that almost all the money contributed to the group has come from out-of-state companies.

Consumer Action supports the Drug Price Relief Act.

Next, there’s the Fair Wage Act of 2016, which proposes raising the minimum wage to $15 by 2021. However, on April 4, 2016, legislation known as SB 3, which will boost the state minimum wage to $15 by either 2022 or 2023, depending on the size of the business, was signed into law. This means that the initiative will likely be withdrawn before November, as the measure is now mostly superfluous. The good news is that California will be raising the minimum wage at long last.

While there are some more outlandish proposals that have almost no chance of qualifying for the ballot (like requiring elected officials to regularly take lie detector tests, outlawing charter schools or lowering the drinking age to 18), a few other initiatives have not yet gathered enough signatures to appear on the ballot but may do so in time. One of these is the Invest in California’s Children Act. Currently the state taxes annual income above $290,000 at a slightly higher rate, but this is due to expire in 2018. The proposed constitutional amendment would make the higher tax rate permanent and would allocate half of the revenue from the taxes collected to education, 40 percent to low-income health care and the remaining 10 percent to children’s programs. Consumer Action supports this measure as well.

Coalition Efforts: Airline fees, student aid and net neutrality

Protect Pell Grant funding for students. As House and Senate Appropriations Committees prepare to announce top-line allocations, advocates urge Congress to protect Pell Grant funding from being reallocated for any non-Pell Grant-related programs. Despite strong opposition last year, the U.S. House of Representatives voted to cut the maximum Pell Grant for individual students by at least $845 and eliminate $56 billion more in overall mandatory funding for Pell Grants over the next 10 years. These cuts reduce or eliminate Pell Grants for nearly 9 million students, making it impossible for many to receive a higher education. Learn more.

A strong FCC preserves net neutrality. Consumer Action joined other consumer rights and privacy advocates in sending a letter to House of Representatives leadership expressing opposition to HR 2666, the “No Rate Regulation of Broadband Internet Access Act.” This bill would strip the Federal Communications Commission (FCC) of its authority to review certain practices of broadband providers related to their customers’ privacy. Despite its name, the bill has much less to do with preventing the FCC from setting rates for broadband service and more to do with preventing the FCC from investigating practices that may undermine existing open Internet rules. Learn more.

ACICS fails to enforce education standards; wastes $3.5 billion in federal aid. Consumer Action joined a coalition of 23 student and consumer protection organizations in asking the U.S. Department of Education to revoke recognition of the much-criticized Accrediting Council for Independent Colleges and Schools (ACICS)—the same agency that allowed the corrupt Corinthian College to keep its accreditation until the day it filed for bankruptcy. A recent ProPublica report found that students at schools accredited by ACICS were worse off than students at other schools: Only 35 percent of students graduate from ACICS-accredited schools, the lowest rate of any accreditor (the national graduation rate is around 59 percent). What’s more, within three years of leaving school, one out of five students who graduated from an ACICS-accredited school defaulted on their student loans. Learn more.

It’s time to protect travelers from airlines’ soaring fees. In 2015, U.S. airlines collected $10.8 billion in ancillary fees, an increase of 24 percent since 2014. These fees, combined with the historically low fuel prices and increasingly cramped seats, drove record profits for the industry, a trend that is expected to continue in 2016. Consumer Action joined consumer advocates in urging Senate leadership to support the inclusion of the “FAIR Fees Act” (S 2656) with the Federal Aviation Administration Reauthorization Act of 2016 (S 2658). FAIR Fees would prevent airlines from charging consumers unreasonable or disproportionate cancellation, baggage or other ancillary fees. Learn more.

Improving language access for homeowners is overdue. Communication improvements are needed in the mortgage industry for people who are not fluent in English. Currently, there is no comprehensive system for collecting or assessing the language needs of homebuyers or of homeowners. In a letter to the Federal Housing Finance Agency, Fannie Mae and Freddie Mac, Consumer Action and a group of coalition partners recommend data collection improvements that would help the federal government address important issues that impact many households in today’s diverse marketplace. Learn more.

Class Action Database: Mortgage kickback schemes don’t pay

Class action settlements involving Subaru and Family Dollar Stores were among 14 new cases added to our Class Action Database during April.

Another notable class action added was Fangman, et al. v. Genuine Title, LLC et al. The plaintiffs filed a class action against Genuine Title (a Maryland-based title company that offered real estate closing services) and Wells Fargo alleging Genuine Title unlawfully gave benefits to Wells Fargo employees who referred borrowers to Genuine Title in an illegal mortgage kickback scheme. Wells Fargo denied the allegations but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

The class members are Wells Fargo borrowers with federally related mortgage loans that were closed by Genuine Title between Jan. 1, 2009 and Dec. 31, 2014. For class definition purposes in this settlement, “specified loan officers” are Wells Fargo employees who were identified by a federal regulatory agency as having received unlawful benefits in exchange for a referral to Genuine Title. The class is divided into two categories:

  • Subclass 1: borrowers whose loan originated through specified loan officers and was closed through Genuine Title
  • Subclass 2: borrowers whose loan did not originate through specified loan officers but who did close through Genuine Title

The settlement provides a $16.2 million settlement fund. Subclass 1 members will automatically receive back 120 percent of the amount paid to Genuine Title on their HUD-1 settlement statement (excluding title underwriter’s fees). Subclass 2 members must submit a valid claim to receive back 50 percent of the amount paid to Genuine Title on their HUD-1 settlement statement (excluding title underwriter’s fees).

The claims deadline is May 31, 2016.

CFPB Watch: Online payday loans and debt collection

The Consumer Financial Protection Bureau (CFPB) released a new report revealing that consumers who take out online payday loans may find themselves hit with a triple whammy: penalty fees from both their bank and the online lender as well as the eventual loss of their bank account.

According to the report, half of those who borrowed money from online payday lenders were hit with an average of $185 in overdraft penalty fees or non-sufficient funds fees by their bank. Some were also slammed with late or returned payment fees by the online lender. What’s worse, one-third of borrowers hit with bank penalty fees had their accounts closed involuntarily.

Loan payments are typically debited directly from a borrower’s checking account. When funds are not available, online lenders often resubmit payment requests to the borrower’s bank multiple times a day. About a third of the time, these re-presentments succeed, often because the bank covers the payment via overdraft.

The CFPB released these results after studying 18 months of consumer checking account data from 2011 and 2012. The Bureau calls these fees the “steep, hidden cost“ of online payday loans and is expected to release rules applying to the payday industry sometime this spring.

Fines for online data protection flaws

Consumers’ sensitive, personal data was not securely protected when using the online payment system Dwolla, according to the CFPB. Dwolla collects Social Security numbers, birthdates, bank account and routing numbers, passwords and more.

The CFPB found that Dwolla claimed to securely encrypt and store sensitive, personal data but did not always do that. The CFPB ordered Dwolla to stop misrepresenting its data protection policies and to fix security flaws. The Bureau also fined Dwolla $100,000 for its deceptive business practices.

Monthly complaint report

Debt collection has taken the lead—exceeding even mortgage issues—as the most complained about category of consumer financial problems. Debt collection difficulties now account for 26 percent of all complaints reported to the CFPB. Consumers primarily complain about:

  • Attempts to collect debts not owed;
  • Repeated collection calls (even on the same day and/or at work); and
  • Not receiving enough information to be able to verify a debt.

More than one-third (38%) of all debt collection complaints are in regard to debts for the wrong person or the wrong amount. The complaints involve both debt collection companies and original creditors.

Pension plan lawsuits

The CFPB, along with the New York Department of Financial Services, sued Pension Funding, LLC and Pension Income, LLC for deceiving consumers by tricking them into borrowing against their pensions and hiding high interest rates and fees.

While there has not yet been a settlement, consumers who were borrowers or investors of these firms should have received a letter from Krista Freitag of E3 Advisors as the court-appointed custodian of the firms’ assets. For further information, contact E3 Advisors at (619) 512-2598 or .(JavaScript must be enabled to view this email address).

As of last year, CFPB lawsuits have resulted in over $10 billion in relief for more than 17 million consumers.

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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