Consumer Action INSIDER - May 2017


Table of Contents


What people are saying

We found your [debt collection] training to be very informative and helpful and [Consumer Action staff member] Linda Williams was fantastic. Very knowledgeable and energetic! — Billie Egan, Housing Counseling Program Director, Blair County [Pennsylvania] Community Action Program

Did you know?

The U.S. Food and Drug Administration (FDA) doesn’t define the food labeling term “natural” or “all-natural,” and it doesn’t challenge its use as long as the food does not contain added color, artificial flavors or synthetic substances. However, foods labeled “all-natural” may affect your pocketbook, according to a study published in the Journal of Food Science, which found that consumers were willing to pay more for a product labeled “all-natural” as compared to the same product without the label. Bottom line: Until the FDA defines the term, base your food purchases on the ingredient list and nutrition labels, not on package claims!

Consumer Action educates seniors on elder fraud, scams

In March, Consumer Action partnered with Woolf House, an affordable senior rental housing community in San Francisco, to conduct two elder fraud presentations (in both English and Chinese) for community residents and case managers.

Everyone must be on guard against scams, but seniors are often especially vulnerable. Many crooks—and even friends and family members—take advantage of the good nature of seniors to cheat them. According to a 2011 report by MetLife, victims of elder financial abuse suffer an estimated $2.9 billion in losses annually.

Consumer Action staff have partnered with Woolf House several times over the years to provide consumer education to community residents. This time, Consumer Action Associate Director of Outreach & Training Audrey Perrott conducted the English presentation, while Community Outreach Manager Jamie Woo did so in Chinese. Over 40 residents and two case managers attended the presentations.

“We appreciate the ongoing opportunities to partner with Woolf House to deliver these critical educational services to their residents,” Perrott said.

The presentations covered content from Consumer Action’s elder fraud educational training module. Perrott and Woo discussed types of fraud, how to detect fraud, victim resources and more. As a bonus, the trainers engaged in a game of “fraud bingo” with residents to test their knowledge in a fun and safe environment (and award prizes!). The game posed scenarios such as: “A person calls you to say that you’ve won a huge sweepstakes that you never entered. This is a…?” and allowed players to mark their bingo sheets with answers. (This call is a scam!)

Attendees left the presentation with an arsenal of information to protect against elder fraud and report any abuse to the appropriate authorities.

Woolf House’s Social Service Manager Ellen Trinh thanked Perrott and Woo “for the wonderful presentations, which our seniors loved!” She added that “the information was very helpful.”

Consumer Action partners with its nearly 7,000 network partners to educate consumers across the country and empower them to prosper financially. Core products and services include multilingual consumer education publications for underrepresented consumers; train-the-trainer events in-person and online; ongoing support of network partners; and much more.

DASH for the STASH: Learn investment skills, enter to win cash

Now in its fourth year, DASH for the STASH is an investor education and protection program and poster contest that arms investors with the information they need to make crucial investing decisions. The 2017 DASH for the STASH program runs April 1-Oct. 31, 2017. The program is a partnership between the Investor Protection Institute (IPI) and participating state securities offices.

DASH features a series of informational posters exhibited in participating host locations in the following states and jurisdictions: Alaska, the District of Columbia, Florida, Iowa, Kentucky, Ohio, Pennsylvania and Wyoming. (Click here for more information about hosting in these states.) DASH also offers an online game that allows participants nationwide to enter (regardless of state). This game provides investor education and protection content in a format similar to a video game. All U.S. citizens can join “Ira the Squirrel” in collecting investor education and protection information and answering quiz questions for a chance to win a $150 contribution toward a new or existing IRA.

Meanwhile, physical hosts (which can be libraries, schools, community organizations, workplaces, etc.) in the aforementioned states display a DASH poster set (four topic posters and one rules poster), hold event(s) to promote their program and encourage participants to enter the contest.

Participants visiting host locations read the content on each of the four posters (covering financial advisers, investment fees, investor fraud and building a nest egg), scan the unique QR code to access that topic’s quiz question, and submit their answer via smartphone, tablet or computer. One winner in each participating state will be chosen in a random drawing of eligible participants who logged the correct answers for all four posters. The winner will receive a $1,000 contribution to a new or existing IRA for 2017.

The location with the most contest entries in their state will win a $100 contribution for their educational resource collection. If your group is located in one of the participating states and wants to take part, contact Joanne Kuster, 2017 DASH multi-state coordinator, at 515-991-5632 or .(JavaScript must be enabled to view this email address).

Last month, Consumer Action staff mentioned the DASH program at a Pittsburgh, PA, debt collection roundtable. So far, Consumer Action has recruited five agencies (three located in Pennsylvania) to host the DASH contest and its educational program. The popular event was attended by the Pennsylvania Department of Banking and Securities, which served as the state co-sponsor of the DASH program.

Hotline Chronicles: Home insurance goes up and up

An Oklahoma man, Marley*, contacted Consumer Action’s hotline to ask about how he could convince his insurance company that the inflation adjustment on his homeowners insurance policy was resulting in a home that was “grossly over-insured” for the actual replacement cost, adding that his premiums were becoming unaffordable.

We recommended that Marley contact his state insurance department. (Find yours here.) We also explained that he could switch from a “replacement value” to a “cash value” policy, but noted that with a cash value policy he could find himself underinsured if disaster struck and he needed to rebuild his home.

“Replacement value” policies guarantee that you can rebuild your home for the prevailing per-square-foot cost of construction in your area. They also ensure that any special or unusual features of your existing home (which you should list separately on the policy) will be covered if rebuilding is necessary. Typically, your premium will increase if your home was built with luxury materials. Many replacement value policies feature “inflation guard” coverage based on the average increase in real estate values in your area, which can add to premium increases year after year.

With a cash value policy, the policyholder must cover the gap between the cost of rebuilding and the amount the insurance will pay once home “depreciation” is deducted. (The longer you have owned your house, the more your home’s value has depreciated.) If you have replacement cost coverage, however, you are insured for the full cost of rebuilding (although you may not be covered fully for the market cost of your home, which can be different from the cost to rebuild).

Many experts recommend insuring for replacement cost and adding an additional 25 percent endorsement for cost overruns. It’s also important to know that most homeowners insurance policies cover the structure, not the contents, for replacement cost value. Usually, the contents of your home will be covered for their actual cash value—cost minus depreciation. Keeping an inventory with receipts and photos can help you get the best insurance reimbursement for your home’s contents when you make a claim.

Review your homeowners insurance coverage annually to make sure the policy still fits your needs. This is a good time to get quotes from other insurers. If you have made improvements to the home, let your agent know that you need to increase the coverage. Your goal should be to maintain coverage equal to the estimated replacement cost for your home.

For more advice on insurance, read our Insurance checkup: assessing and adjusting your coverage.

*Not this consumer’s real name

CFPB Watch: Credit bureaus, consumer complaints and ‘alternative’ data

Thanks to Consumer Financial Protection Bureau (CFPB) oversight, credit bureaus’ chronic problems with accuracy, complaint investigation and resolution are showing signs of improvement, according to the Bureau’s new supervisory report.

When credit report data is inaccurate, consumers pay more or lose out on opportunities to obtain affordable car or home loans, credit cards with good terms, insurance coverage and even employment.

During supervision of the credit reporting market, the CFPB uncovered ongoing problems at the big three credit bureaus: Experian, Equifax and TransUnion. These problems included:

  • frequent deficiencies in credit report data accuracy;
  • failure to review or consider all relevant information submitted in consumer disputes;
  • failure to consistently notify furnishers (i.e., lenders) of disputes; and
  • furnisher failure to supply correct information to the credit bureaus.

Because of this, the CFPB started requiring credit bureaus to improve identification and correction of mistakes and to add quality control programs in order to consistently improve reporting accuracy. The CFPB also required data furnishers (lenders) to improve and correct the data they provide to credit bureaus.

In addition, the CFPB directed credit bureaus to improve consideration of consumers’ proof when handling disputes, maintain evidence that they are conducting reasonable investigations, and better notify consumers of dispute outcomes. The CFPB’s supervisory report demonstrates progress in these areas.

The CFPB fines Experian

The CFPB recently fined Experian, the largest of the three major credit bureaus, $3 million for deceiving consumers about the use of the credit scores it sold them. Experian led consumers to believe that its PLUS score would be used by lenders in assessing their creditworthiness, when in fact the PLUS score was merely an educational score and not used in credit decisions.

The CFPB has compiled a list of issuers that offer customers free scores that are used in credit decisions. Credit scoring companies FICO and VantageScore also provide information on where you can get free scores, and many consumers have access to free credit scores through their credit card issuers.

Annual complaint report

More than 1.1 million consumers have filed complaints with the CFPB—up seven percent in the last year—according to the Bureau’s 2016 annual complaint report.

Two-thirds of all complaints involved debt collection, credit reporting or mortgage problems. More than 40 percent of the debt collection complaints reported to the CFPB pertain to continued collection attempts on debts not owed, while three-fourths of all credit reporting complaints revolve around incorrect information in a credit record. Problems with mortgage payments, loan servicers and loan modifications top the mortgage complaints list.

The CFPB forwards the complaints it receives to companies to be resolved, and analyzes them to spot patterns of problems and harmful emerging trends that require extra attention. (See Consumer Action’s study of the CFPB complaint database and process.)

The Bureau has also created tools to help consumers understand and address many top-tier complaints. You can learn, for instance, what legal limits you can apply to debt collectors, and how to respond when you are being treated unfairly. There are also tips on how to correct credit report errors and improve your credit record, as well as a full collection of resources on how to shop for a home loan, compare offers and understand the documents you are signing.

Alternative data

Lenders are looking into new ways to evaluate a consumer’s creditworthiness. These alternative data sources could include non-traditional sources of information (typically not found on a credit report) such as rent or cellphone payments. Some of these data sources, such as one’s social media habits, are controversial and raise privacy issues.

The CFPB is currently examining how different types of alternative data are used in an effort to learn if non-credit-related data is expanding access to credit or if it is leaving lenders with erroneous impressions of consumer creditworthiness and, subsequently, closing opportunities to credit. The Bureau also is interested in the existing and emerging risks and benefits to consumers.

Whether you’ve had experience obtaining credit with alternative data or just have an opinion on the subject, the CFPB is seeking your feedback. Do you think using your cellphone payment or social media history could help you or someone you know obtain a reasonable loan? You can learn more and submit your comments on the pros and cons of using alternative data here. The comment deadline is May 19.

Coalition Efforts: Postal costs, student protections and independent agencies

Postal advocates call for an end to price cap. The Postal Regulatory Commission is reviewing the effects of the current rate system, capped by the Consumer Price Index (CPI), to see how it impacts the U.S. Postal Service’s ability to meet the objectives stated in the Postal Accountability and Enhancement Act. The commission’s recommendations include eliminating the CPI cap, which places financial pressures on the Postal Service, putting the agency at risk by holding back necessary infrastructure changes, needed capital investments and the ability of the USPS to fix safety and health issues (e.g., to replace an outdated fleet of vehicles). It also damages the USPS' ability to restore and protect good postal services. Learn more.

Advocates urge continued scrutiny on fraudulent colleges. Advocates working on behalf of consumers, students, civil rights, veterans and servicemembers penned a letter to Department of Education (ED) Secretary Betsy DeVos, urging her to continue implementing and enforcing critical ED accountability provisions designed to protect students and taxpayers from unmanageable student debt, as well as waste, fraud and abuse in higher education. In particular, the coalition opposes all actions to delay, weaken or repeal regulations surrounding gainful employment, incentive compensation, “borrower defense to repayment” and college accountability. Learn more.

A push for regulatory leadership that is unimpeachably independent. Donald Trump ran on a platform of "draining the swamp" of corruption in Washington, DC. Yet, as president, he has been installing a revolving-door government run by representatives of the big businesses that government is supposed to be regulating. In a letter to Democratic Senate leadership, coalition advocates reminded senators that the need for public-minded watchdogs has never been greater. Signers agree that the American people deserve independent agency representatives that are not operating under excessive corporate influence, including those working in critical agencies like the Federal Trade Commission, Federal Communications Commission and Securities and Exchange Commission. Learn more.

Class Action Database: Get paid back for bad prepaid cards

Class action settlements involving clothing retailer American Eagle Outfitters and SuperAmerica convenience stores were among 14 new settlements added to the Consumer Action Class Action Database during April.

Of note this month is the class action Federal Trade Commission v. NetSpend Corporation. The Federal Trade Commission (FTC) brought the action against the prepaid debit card company NetSpend under the Commission’s laws to prohibit unfair or deceptive acts or business practices. The FTC charged that NetSpend deceptively advertised access to consumer funds on its prepaid debit cards.

When consumers buy a prepaid card, they either purchase one that has a certain amount of money already on it or they add money to the card. Before consumers can use the card, they are required to activate it. (For more about selecting a prepaid card, see Consumer Action’s educational materials on prepaid cards.)

Instead of giving card purchasers “guaranteed approval” and “immediate access” to their own card funds, the FTC alleged, NetSpend denied or delayed the activation of its cards. (In many cases, despite the fact that consumers had already bought or invested money into the cards, NetSpend failed to “automatically approve” purchasers, resulting in the money on the consumers’ cards being lost.) The FTC’s investigation also revealed that cardholders who did receive approval waited weeks to access their own funds, contrary to NetSpend’s representation that the funds were “always available.”

The FTC also alleged that NetSpend promised to issue provisional credit when cardholders disputed charges on their cards. In many cases, however, NetSpend did not issue the provisional credit. Furthermore, NetSpend often waited several weeks to refund money to those cardholders who closed their prepaid debit card accounts.

NetSpend agreed to a $53 million settlement and will be notifying consumers who are eligible for a refund by email and paper notices. To receive the refund, consumers will need to fill out the form that NetSpend will send.

To contact the FTC about this settlement, email .(JavaScript must be enabled to view this email address).

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 more than half a dozen 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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