Consumer Action INSIDER - September 2012


Table of Contents

What people are saying

At Consumer Action's recent training on Identity Theft and Senior Scams, Redwood Gardens' residents eagerly soaked up the information on fraud and identity theft. Our Chinese community was thrilled to have a presenter who spoke their language. A few of our residents went on to take action immediately—they requested credit reports and called their creditors. Your "fraud bingo" learning exercise was icing on the cake. — Andrea Brown, Redwood Gardens, Berkeley

Did you know?

Recipients of scholarship and student loan proceeds can’t be required to have the funds deposited to a specific bank or debit card. There may be a financial institution that operates on your campus, but you generally can’t be required to use a specific account or card to access your student aid. If you have received a federal student loan, your school must provide a paper check or cash option.

Read more at the Consumer Financial Protection Bureau.

Hotline Chronicles: Booking hotels online

The Internet has made it a lot easier to book room at the inn, but doing some homework can help ensure you’ll be just as pleased when you get there.

Nothing can turn a restful vacation into a stressful one faster than bad lodging. Jenny* called our hotline to complain about the New York Catskill Mountain resort where she had booked a room online. She told us that the “place looks nothing like the website photos.” The Pennsylvania woman got her $100 deposit back but had to find another place to stay.

These days, most hotel rooms are booked online, and a lot of travelers base their decisions on website photos and the style and design of the hotel’s site. Big mistake! “Before you book a hotel room or resort stay online, do additional research,” advises Linda Sherry of Consumer Action. After reading Jenny’s complaint, Sherry went to and checked out the resort. “Out of 109 traveler reviews, 52 were rated ‘terrible.’ For me, that imbalance alone would have put it on my reject list.” is just one review site. Travelers can post reviews on hundreds of hotel booking sites, travel magazine sites like Frommer’s Budget Travel, social networks like Facebook and Google+ and online referral sites like Yelp. To really get a sense of a hotel or resort, Sherry suggests looking at more than one review site. Check out the photos uploaded by travelers as well as the hotel’s official photos. Look at the overall number of completely negative reviews compared to how many people reviewed the place. Read some of the reviews to see what prompted them. Do an Internet search for the name of the hotel and resort as well to see what pops up.

Learn to balance the information you read in reviews. Almost every hotel or resort will attract some negative reviews. Weigh what you read by how reasonable the reviewer seems to be. Another good sign is if the management responds to complaints in a helpful way, without being defensive.

“Hotels and resorts are not cheap to begin with,” said Sherry. While it’s a difficult pill to swallow, $200-per-night rooms are at the low end of the spectrum in many desirable resort areas. “Places that get resoundingly good reviews may have a greater sense of their own worth and charge more.” Sherry says it’s a challenge, but not impossible, to find a good place to stay at a fair price if you do your homework. Remember that discount hotel sites often require that you pay in full in advance, and have strict rules about cancellations and refunds. When you find an attractive rate on a hotel booking site, check out the hotel’s own website to see if a similar deal is available with better cancellation policies.

When you get to the hotel, if something is not as described, point it out immediately to the management. Ask for another room. Write down the names of everyone you speak to and save the list. If you booked through a hotel site, call the website customer service department and enlist its help in your case. After you come home from a vacation, good or bad, post your own reviews online to inform other travelers about your experiences.

Jenny called us back to say that she had complained to the Better Business Bureau and they had suggested that she might have taken her own photos so she could have submitted them to the hotel’s management along with “screen shots” of the rooms as shown on the hotel’s website. We think this is a sensible tip if you find yourself in a similar situation. However, if you do your homework up front before booking, you might find you can avoid such problems.

*Not this consumer’s real name

Celebrating the CFPB’s first anniversary

Consumer Action joins supporters of the Consumer Financial Protection Bureau (CFPB) to mark its one-year milestone and to hear what’s on the consumer watchdog’s agenda.

Maybe there were no balloons or birthday cake as consumer, civil rights and labor groups gathered in Washington, DC to mark the first anniversary of the Consumer Financial Protection Bureau (CFPB), but consumer advocates are celebrating the year-old agency and its leader, Richard Cordray. (Consumer Action was among the groups that sponsored the CFPB celebration.)

The CFPB director shared his assessments of the bureau’s early achievements and future plans. Cordray, a former Ohio Attorney General, is a strong speaker on behalf of the federal consumer watchdog. He proudly told the crowd that the CFPB has created tools—for example, its consumer complaint-handling service and searchable database of complaints, the new “Know Before You Owe” mortgage disclosure forms and a college financial aid shopping sheet—to help consumers make more informed decisions and avoid problems. He commended the staff at the consumer bureau for having an “appreciation for the harm these issues can cause” to individuals and families who find themselves over their heads in today’s complex world of financial goods and services and multi-layered marketplaces, ranging from payday lenders to Wall Street brokerage firms.

“We want people to know that the choices they make today are deals they can count on in five or more years to come,” said Cordray.

Director Cordray explained that differences between private and federal student loans were “invisible” before the bureau shined light on some glaring private-loan flaws, such as the potential for interest rate volatility and fewer forgiveness options when borrowers face financial trouble. (Federal student loans offer greater debt reduction and forgiveness options.)

Cordray described the bureau he heads as “accessible to all parties,” “reasonable, fair, thoughtful and balanced,” and a place where consumers will find that “someone is on their side.”

He laid out the CFPB agenda for the coming year, which includes a focus on student loans, overdraft rules and fees, payday loans and prepaid card issues. Also in the works:

  • New mortgage servicing rules. By January 2013, mortgage servicers will be required to alert borrowers to any scheduled rate increases, implement error resolution procedures and prevent foreclosure sales from taking place without first considering a borrower’s request for a loan modification. Cordray would like to see “no surprises and no runarounds” for consumer mortgages.
  • Credit reporting and debt collection supervision. For the first time, supervision of these entities will fall to the bureau.
  • Complaint database expansion. This year, the bureau opened a public, searchable database with general information about the credit card complaints it receives. In coming months, complaints received about other financial products and services will be opened to the public.

The bureau, in its first year, has opened many rulemakings to public comment and continues to develop innovative ways to allow the public to have a say in its regulatory undertakings. Since its creation, the bureau has recognized a need to hear from individuals as well as industry and public interest groups.

In recent rulemakings, consumer advocates have pressed for more detailed information, including summaries of the complaints, to be provided to the public. Consumer Action, along with 20 other advocacy groups, suggested that it is possible to summarize the gist of each complaint without revealing personally identifiable information.

Consumer Action also filed prepaid card comments with the CFPB, calling on the bureau to require prepaid card issuers to provide users with the same legal protections against errors, loss and theft as debit card users enjoy under Regulation E of the Electronic Fund Transfer Act. Consumer Action also recommended banning balance inquiry fees, automated customer service fees and other price-gouging fees. A petition signed by 357 people calling for Reg E protections for prepaid cards was included in Consumer Action’s comments.

An eye on emerging privacy issues

Consumer Action’s DC office outlines some of the emerging privacy issues it’s working on.

As technology and the online marketplace continue to evolve and grow, consumers are able to do an increasing variety of personal tasks via the Internet on their home computer or mobile devices. With these new capabilities, however, come new consumer privacy and security concerns.

Consumer Action's Senior Associate for National Priorities Michelle De Mooy, who monitors privacy issues from Consumer Action's DC office, explains three emerging privacy issues:

Mobile banking. Most consumers are using their computers for financial transactions. With the proliferation of mobile banking apps, more and more also are using their mobile devices for these transactions. This raises certain privacy concerns: Not all apps are legitimate (built and overseen by your bank). And some financial account aggregation apps collect and use a large amount of your personal financial data, disclosing such terms only in long and legalistic privacy policies that few users read (or understand). Also, users may connect to these apps through insecure wireless connections and fail to use basic security measures, such as locking their phones with a password, to protect their sensitive data.

Location tracking. For interactive marketers, “location, location, location” is the focus. Because we use our mobile devices for so many tasks these days, and they are often with us throughout the day, targeted advertising based on location is becoming big business. If marketers can get to you as you are walking by (or through) a given business, you might be more receptive to promotions and coupons. Location data is perhaps the most personal of data, telling a company exactly where you are at any given time and allowing them to combine this information with offline information such as your date of birth, address, spending habits and even your credit history to create a “picture perfect” target for their marketing efforts. Though more and more apps and online companies are recognizing the need to keep location information private or to explicitly ask before using it, some are not.

Kids online. Free websites aren’t always entirely free—ad revenues support many free sites and users often “pay” by accepting (knowingly or unknowingly) tracking devices on their computers, responding to promotions and taking part in online surveys. Children are especially vulnerable to marketing, as advertisers believe that lifelong brand preferences are well established by the pre-teen years and work hard to gain a toehold early on.

More and more social and shopping websites are eyeing kids as new target markets, hoping to connect with young people and earn their loyalty as lifelong users. Sites collect user data and either share or sell it to data brokers, who in turn provide consumer profiles to the ad networks that serve targeted ads. The Children's Online Privacy Protection Act (COPPA) restricts what information websites can collect from kids under 13, but companies have found ways around the law. In the coming years, parents will have to be diligent as young people play and buy online in marketers’ crosshairs.

Consumer Action endorses SafeMoney account

A new framework for a safe and affordable bank account for low-income depositors garners Consumer Action’s support.

Consumer Action has joined a number of organizations to endorse the SafeMoney™ account, a basic bank account designed by the California Reinvestment Coalition (CRC). Coalition members are promoting the proposed basic account framework with the goal of enriching bank account options for low-income depositors. SafeMoney has been developed as an affordable wealth-building account.

According to Consumer Action’s Joe Ridout, our California-based consumer services manager, checking account fees have mushroomed in the last few years at large banks, which leaves low-income depositors in a bind. “Some have grudgingly paid expensive fees that whittle away at their modest savings,” said Ridout. “Others have become so repelled by rising bank fees that they have closed their accounts and left the financial mainstream altogether, which tends to become even more expensive once they turn to check-cashers and prepaid cards.”

The CRC compared the proposed account with two current alternatives: a large-bank basic checking account and a prepaid card, many of which are marketed as bank account alternatives because they can be used, to some extent, like a debit card. SafeMoney was the clear winner, said Ridout, because it avoided the “junk” fees (such as a fee for checking your balance) that exist on many prepaid cards and the high monthly maintenance fees of $12 or more on most basic bank accounts.

The SafeMoney account framework features a $3 monthly fee, low-cost money orders, free in-network ATMs and no minimum opening deposit. For more information, go to Ask your bank to consider offering the SafeMoney account.

Evaluation process vital to our success

Consumer Action continues to tweak its evaluation process to ensure we receive the greatest participation and most detailed feedback from those who use our materials and attend our training events.

Consumer Action has been conducting evaluations of our trainings and publications for years. Initially, our evaluation program was limited to gathering immediate post-training feedback. In 2009, we decided that we wanted a broader and more rigorous evaluation process—one that would help us gauge not only the immediate impact of our efforts (such as the training participant’s confidence in being able to replicate the training in his or her community), but the intermediate- and long-term impact as well.

Consumer Action worked closely with Brandeis University’s Heller School for Social Policy and Management to develop a new evaluation process whereby training participants might be given both pre- and post-training evaluations and also be sent follow up Web-based surveys.

For some trainings, participants are asked to complete pre- and post-training written evaluations along with one-, three- and six-month online evaluations. For other trainings, participants complete a post-training evaluation and a 60-day online evaluation. To gauge our effectiveness, we ask about the extent of intermediate- and long-term changes made by the clients of participating community-based organizations (CBOs)—things like paying down debt, developing a savings plan, improving credit scores, buying a home or starting a business.

The full participation of our CBO network is crucial for our evaluation program to be truly effective. The feedback we receive reveals what impact we are having in the community and what we can do to improve or enhance the training sessions, materials and support we provide to our network partners. To promote participation in the evaluation process, we have offered a chance to win an iPod shuffle to those who completed the surveys.

In August, Consumer Action will launch a new evaluation program for our MoneyWi$e publications. Partners will receive a short letter with their MoneyWi$e orders explaining what we are looking for, and the actual evaluation surveys will be sent out approximately three months after the order is fulfilled. This new procedure grew out of a more informal publication evaluation process that we’ve used for the last couple of years. We hope to gain a better understanding of the value of the publications, learn about “best practices” for using the materials in both group and one-on-one counseling sessions, and discover ways we can improve our educational modules.

Using your phone in an emergency or power outage

Over the last two months, Consumer Action and AT&T have published two rounds of tips and advice to help consumers make the best use of their smartphones in an emergency and to stay connected in a power outage.

In July and August, Consumer Action and AT&T together put out two rounds of easy-to-follow tips and advice geared toward helping consumers make the best use of their smartphones in an emergency and stay connected even when the power goes out.

Our first release, in early July, was “11 great ways your smartphone can work smarter in an emergency.” With more and more consumers relying largely—or even solely—on wireless service, it’s increasingly likely that a mobile phone will be the first thing they’ll reach for in an emergency. In fact, the Federal Communications Commission (FCC) reports that 70 percent of 911 calls are placed from wireless phones, and that percentage is growing. Our 11 tips include: downloading free apps (software specially designed for mobile devices) that do things like help keep track of family members and locate a shelter; using alternative power sources to keep phones charged when the power is out; and taking advantage of social media to stay informed.

In mid-August, we published “Stay connected during a power outage,” which highlights several small steps consumers can take that will help them stay connected to family and essential services during a power outage, which is more likely to occur during the summer, when the demand for energy is highest. Since many phones—particularly cordless models—and some types of voice service won’t work without electricity, it’s important that consumers understand whether their particular phone and service would still function in a power outage. If not, they should keep a simple, non-cordless phone handy to use with either traditional landline or VoIP (Internet) service, and extra, charged batteries or a solar, car or hand-powered charger for their mobile phone.

We also encouraged consumers to learn more about conserving energy. California residents can sign up for Flex Alerts [], which are urgent requests to voluntarily reduce electricity use when high demand strains the power grid. Consumers outside California can contact either their energy provider at the number on their billing statement or their state's Public Utilities Commission to find out if there is a similar energy "demand response program" for their region.

Both sets of tips were publicized via press releases, web postings, email messages to our national network of community-based organizations, and blog posts at, our wireless education website sponsored by AT&T.

“As summer heats up, we’re reaching out to consumers to provide them with information on how to stay in communication during an outage or emergency,” said Rhonda Johnson, vice president of regulatory affairs for AT&T. “We are working with Consumer Action on this initiative because of its effectiveness and deep expertise in reaching consumers and communities in California.”

Protect Your Identity Week

Consumer Action is a member of the coalition supporting the 2012 Protect Your Identity Week campaign, taking place October 20-27.

Consumer Action will once again participate in Protect Your Identity Week, an annual campaign to promote public awareness about identity theft and ways to protect personal information.

This year, Protect Your Identity Week will be October 20-27, including weekend events that offer mobile device recycling, shred trucks and presentations by national identity theft protection companies.

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 unbiased surveys of consumer services to expose excessive prices and anti-consumer practices and 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 dozens of 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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