• What people are saying
• Consumer Action to celebrate 52 years of service
• Webinars educate on synthetic ID theft and examine debt disparities
• CFPB hears testimony on dark side of medical credit cards
• Coalition Efforts
• CFPB Watch
• Class Action Database: Herbalife settles over duping distributors
• About Consumer Action

What people are saying

"Consumer Action provides the most informative webinars. I currently do Social Services for a senior center and have been able to keep up to date on important topics provided by Consumer Action. Thank you."

—"Getting a Handle on Debt” webinar attendee Christine Lyas, Milford Senior Center, Milford, CT (view the webinar on Consumer Action’s YouTube channel) 

Consumer Action to celebrate 52 years of service

By Anna Flores

For more than 50 years, Consumer Action has empowered low- and moderate-income, limited-English-speaking, and other underrepresented consumers to financially prosper through education and advocacy. As we prepare to celebrate our 52nd year of service, we invite you to join us at our anniversary events, scheduled for Nov. 2, 2023. The day will feature two events: a virtual (online) convening and an in-person reception and awards presentation in Washington D.C. 

This year’s virtual convening, from 1-2:30 p.m. (ET), will feature a panel discussion on “Serving Generation Z: Post-COVID challenges and practical solutions.” This discussion will bring attention to the obstacles faced by Gen Z as they prepare for and strive to attain economic security in an increasingly complex world. We will focus on areas such as financial capability, mental health, digitization and privacy, and discuss how these issues are interrelated. Our speakers will outline the challenges youth face, consider the societal consequences of failing to address their needs, and offer practical solutions attendees can implement in their communities. (Register for the convening here.)

The in-person reception and awards presentation will take place later that evening, from 6-8 p.m. (ET) at the AT&T Forum for Entertainment, Technology and Policy in Washington D.C. We are especially pleased to announce that our former executive director, Ken McEldowney, will receive this year’s Consumer Excellence Award in recognition of his 45 years of service to Consumer Action. Special recognition awards will also be presented to Linda Sherry, Consumer Action’s former director of national priorities, Angie Garcia Lathrop, community executive with Bank of America, and Southern California-based Mexican American Opportunity Foundation.

Additional information on both events, including a link to register, a list of current sponsors, and sponsorship opportunities can be found at https://www.consumer-action.org/anniversary. You can also reach out to .(JavaScript must be enabled to view this email address) for more information. 

We hope you’ll join us.

Webinars educate on synthetic ID theft and examine debt disparities

By Monica Steinisch

Consumer Action presented two webinars in mid-July that drew hundreds of participants seeking to learn about timely issues and gain knowledge and resources they could use themselves and share with others. The free presentations are designed as trainings for community-based organization staff, who can take what they learn and share it with their communities across the U.S.

The first webinar, produced with funding from Experian, tackled synthetic identity theft—or “Frankenstein fraud.” Now the fastest-growing type of fraud, synthetic ID theft has crooks piecing together information from different people to create a new identity. The Federal Trade Commission (FTC) estimates that up to 85% of identity theft today is synthetic, and this type of fraud is one of the hardest to detect. The typical victims are low-income individuals, the elderly, people experiencing homelessness, individuals seeking to re-enter, and children.

Michael Bruemmer, Experian's vice president of data breach resolution and consumer protection; Charles A Harwood, director of the FTC’s Northwest Region; and Eva Velasquez, president/CEO of the Identity Theft Resource Center, headlined the 90-minute webinar. Their presentations covered how synthetic ID theft is perpetrated; the impact on businesses and individuals; what tools and resources are available to help consumers avoid and deal with synthetic ID theft; and more.

View “Understanding the impact of synthetic ID theft” on Consumer Action’s YouTube channel.  

In “Disparities in Debt: Understanding the case for economic equity,” we examined how disparities in debt, including differences in lending and credit reporting practices, exacerbate wealth inequality across races. Produced with funding from Wells Fargo, the webinar also included a discussion about the positive impact that economic equity could have on our economy. Our speakers, Dr. William Rodgers III, vice president and director of the Institute for Economic Equity at the Federal Reserve Bank of St. Louis; Shehryar Nabi, senior research associate at the Aspen Institute Financial Security Program; and Adam Ruege, director of strategy and evaluation at Community Solutions, broached critical issues such as why households of color are disproportionately likely to hold harmful debt; how fees, fines and speeding tickets help keep people impoverished; how discrimination in credit reporting and scoring has led to disparities in debt; the impact of racial disparities in rental and utility debt on homelessness; and how achieving household income equity could generate billions of dollars for our economy, likely creating more housing, goods and services for all consumers. 

View “Disparities in Debt” on Consumer Action’s YouTube channel. 

We offer new webinars throughout the year, most of which qualify for continuing education units for AFCPE-certified personal finance professionals. Avoid missing future presentations by subscribing to Consumer Action’s email list.

CFPB hears testimony on dark side of medical credit cards

By Ruth Susswein

Patients are, often unnecessarily, ending up burdened with high-cost medical debt because they converted their healthcare bills into credit card debt. This was the message shared by CFPB Director Rohit Chopra with panelists and advocates at a medical debt hearing in Washington, D.C., in July.

Advocates testified that consumers are signing up for deferred interest medical credit cards, like CareCredit from Synchrony Bank, and when they cannot repay the huge medical bills by the deadline, interest gets added to the balance at about 27% annually. There is also the real prospect of wage garnishment and property liens for card users who can’t make the required monthly payments.

Most painful may be the fact that many of these indebted patients had other options. Some have private insurance that would cover much of their medical costs. Others could qualify for financial assistance through a nonprofit hospital, Medicare or Medicaid. 

Given their tax-exempt status, nonprofit hospitals have a legal obligation to provide health care, even for those who cannot afford it. However, hospitals often are not notifying patients of their eligibility for free or reduced-cost medical services. Some hospitals, advocates said, do mention the existence of financial assistance programs (charity care) to consumers. But because these programs often have a lengthy and complex application process (requiring proof of income, proof of citizenship, etc.), hospitals steer patients toward the option of a medical credit card, which offers nearly instantaneous approval. Similarly, the private insurance claims process can, under certain circumstances, be lengthy and time-consuming. Hospitals, physicians and dental offices are motivated to promote medical credit cards by the promise of prompt payment for their services.

As an example, in Maryland alone, 60% of people who were pursued by collectors for medical debt in 2021 should have received free care. Maryland now has a law that requires medical services providers to “identify, notify and refund those who were wrongly pursued,” said Marceline White, head of Economic Action Maryland.

Likewise, excessive out-of-pocket medical costs (for example, for out-of-network or emergency care) may qualify for special billing protections under consumer protection legislation such as the No Surprises Act. If a patient uses a credit card to pay a medical bill, however, he or she, regrettably, loses those protections. By converting medical bills into credit card debt, consumers forfeit the options and protections afforded to those with medical bills and become subject to the rules governing consumer credit reporting and collections. More than half (58%) of all debts listed on consumers’ credit reports are medical debts, and patients who use a medical credit card are more likely to be sued for payment on that debt, advocates said. 

Director Chopra noted that the use of medical credit cards has expanded from financing elective cosmetic surgical procedures to paying for general surgery and root canals. He asked consumer advocates what they most want from federal agencies to help prevent the financial fallout from using medical payment products.

Top asks

Nearly everyone agreed that all medical debt should be banned from credit reports. This year, the Big 3 credit bureaus—Equifax, Experian and TransUnion—removed medical debt under $500 from consumers’ credit records. However, the change in reporting does not apply to medical debt on a credit card. Advocates urged the Bureau to follow Colorado’s lead: The state has a new law that bans all medical debt collections from credit files and caps interest rates on medical debt at 3% (as does Arizona).

Advocates also urged the Bureau to restrict or eliminate deferred interest plans on credit cards to protect consumers from unanticipated high-cost debt.

Director Chopra acknowledged that the Bureau has much more work to do regarding medical debt and credit reporting, and he suggested that we watch for an upcoming rulemaking (on the Fair Credit Reporting Act) that will address these matters.

Coalition Efforts

By Monica Steinisch

Consumer Action and its allies recently called on policymakers and regulators about these important issues:

Freedom of payment choice. The Consumer Choice in Payment Coalition (CCPC), of which Consumer Action is a member, voiced support for the bipartisan Payment Choice Act, reintroduced by U.S. Senators Bob Menendez (D-NJ) and Kevin Cramer (R-ND). The legislation would ensure customers have the freedom to choose how they pay for goods and services. Specifically, it would prohibit retail businesses from refusing cash payment—a practice that denies equal access to consumers who are unbanked. It would also prohibit higher prices for using cash instead of other forms of payment. The Senate version of the Payment Choice Act is a companion bill to H.R. 4128, introduced in the House of Representatives by Congressmen Donald Payne, Jr. (D-NJ-10) and John Rose (R-TN-06). While electronic payments are most widely used, nearly 20% of all payments in the U.S. are made with cash. For the 4.5% of U.S. households who are unbanked or underbanked—most often, those in already underserved communities—cash is the only option, and these consumers should not be penalized through higher prices or excluded from fully participating in our economy. Read the press release here.

Limits on (unwanted) automatic subscription renewals. Consumer Action joined allies in a letter to the Federal Trade Commission (FTC) expressing strong support for the agency’s proposed changes to its Negative Option Rule for subscriptions. Free trial conversions and recurring subscription services cost consumers hundreds of millions of dollars each year. These unexpected charges are especially harmful to low-income consumers. Among the new requirements under the proposed FTC rule would be clear and conspicuous disclosures of automatic renewal terms, affirmative consent, and easy cancellation procedures. Specifically, businesses would have to send annual reminders for subscriptions involving “anything other than physical goods.” Such reminders would need to “identify the product or service, the frequency and amount of charges, and the means to cancel” and be delivered in the same manner through which consent was provided. They would also have to offer simple and easy cancellation methods, which the FTC calls “click to cancel” (e.g., a consumer who purchases a subscription online must be allowed to cancel online). The groups urged the FTC to go further by also requiring sellers to obtain consumers’ consent to recurring charges within six days before a free trial converts into a paid subscription and to provide notice to their subscribers prior to each recurring charge. Read the letter here. 

Insulin access and affordability. Consumer Action was one of 40 organizations—all committed to advancing access to affordable medicines for patients in the United States—to sign on to a letter to Majority Leader Schumer, urging him to include key policies to expand access and lower insulin prices in the anticipated drug pricing package. The advocates pointed out that to deliver the relief that insulin-dependent patients need and put an end to insulin profiteering, the legislation advanced out of the Senate must: 1) Ensure people with private insurance and those without insurance, who are most vulnerable to rationing, have access to the insulin they need; 2) Stop insulin manufacturers from charging excessive prices; and 3) Prevent anticompetitive tactics by drug corporations and middlemen from interfering with patient access to lower-priced insulin products, including biosimilars. Despite reforms advanced by the 117th Congress and concessions by insulin manufacturers that reduced drug prices and expanded access to lifesaving treatments like insulin, more than a million people in the U.S. still must ration insulin, including a disproportionately high number of Black Americans who require insulin (23.2%), compared with 16% of Hispanic and White Americans. Read the letter here.

Equitable and accessible housing financing. As a member of the Language Access Task Force of Americans for Financial Reform (AFR), Consumer Action joined in comments to the Federal Housing Finance Agency (FHFA) strongly supporting the agency’s proposed rulemaking on fair lending oversight and equitable housing finance. The coalition, which was convened to advocate for improved language access for borrowers with limited English proficiency (LEP) as they navigate the financial marketplace, supports all major components of the proposed rule, including the decision to codify the requirement that the Enterprises (Fannie Mae and Freddie Mac) create and maintain Equitable Housing Finance (EHF) plans, which can be a powerful tool to ensure our conventional mortgage market works to narrow, instead of widen, our country’s racial wealth gap. The coalition also expressed support for requiring the Enterprises to use the Supplemental Consumer Information Form (“SCIF”) to collect information on borrower language preference at loan origination. In addition, said the letter, the FHFA should require the Enterprises to compel lenders and servicers to provide limited-English-proficient borrowers with meaningful language access, including translated vital documents and oral interpretation. 
Read the letter here.

CFPB Watch

By Ruth Susswein

Nearly half a million homeowners with mortgages serviced by Mr. Cooper (formerly known as Nationstar) had mortgage payments erroneously debited from their bank accounts by payments processor ACI Worldwide and ACI Payments. 

These payments, made without borrowers’ knowledge or authorization, were processed using ACI’s Speedpay product, which automatically transfers a homeowner’s mortgage payment from their personal bank account to Mr. Cooper.

According to the CFPB, ACI, during internal testing of its payment platform, created fake payment processing files that, “due to weaknesses in its information security practices,” were sent to borrowers’ banks for processing. This resulted in unauthorized debits totaling approximately $2.3 billion. The payments have since been returned.

ACI will pay a $25 million penalty into the Bureau’s victims relief fund for the illegal withdrawals. ACI is also banned from using sensitive customer financial data for testing without consumers’ consent, and the company must adopt reasonable security practices. This is the Bureau’s first penalty regarding illegal information handling.

Bank of America fined

The CFPB has taken action against Bank of America (BofA) for a trio of account-related offenses. 

Under the CFPB order, BofA must return more than $80 million to customers after repeatedly charging them a $35 nonsufficient funds (NSF) fee on the same declined transactions. (Last year, the bank eliminated NSF fees and reduced its overdraft fee to $10.) 

The bank must also compensate consumers who incurred costs as a result of bank employees secretly opening new credit card accounts in the customers’ names without their knowledge or consent, as well as the tens of thousands of reward card holders from whom the bank improperly withheld cash rewards or bonus points. 

As part of the CFPB action, BofA has agreed to stop opening fake accounts and repeatedly charging illegal nonsufficient funds fees, and it must disclose material limitations on any rewards cards bonuses and provide bonuses as advertised. 

In addition to the more than $80 million going to consumers, the country’s second largest bank will also pay $90 million in penalties to the CFPB, which will go directly into the agency’s victims relief fund, and another $60 million to the Office of the Comptroller of the Currency (OCC), for “double-dipping” on fees. 

In total, BofA will pay $250 million in fines and restitution—far less than its competitor Wells Fargo, which settled with the Bureau last December for $3.7 billion for similar violations.

Consumers should contact BofA at .(JavaScript must be enabled to view this email address) or 855-729-1764 with any questions about NSF fee refunds. 

Thank you, CFPB!

The Consumer Bureau celebrated its 12th anniversary in July. In the last dozen years, the agency has: 
•    Returned $17.5 billion to consumers in compensation, cancelled debt and principal reductions. 
•    Imposed $4 billion in penalties on violating companies. The fines go into the victims relief fund to compensate consumers whose violators could not afford to provide direct financial relief.
•    Directed 4 million complaints to companies to address consumers’ disputes. The Bureau handles 3,000 complaints per day, on average.

Time to re-enroll in Medicaid and CHIP coverage

The Consumer Bureau is helping the Dept. of Health and Human Services (HHS) spread the word that everyone who receives health care through Medicaid or the Children’s Health Insurance Program (CHIP) must renew their coverage to remain insured. Re-enrollment is necessary because the COVID-era protections that mandated automatic continuous healthcare coverage have expired.

Medicaid and CHIP recipients should receive a status letter from their state or health plan regarding their continued eligibility through these programs. Consumers should update their contact information and complete and submit all forms attached to the status letter. 

For those who are no longer eligible for Medicaid or CHIP coverage, HealthCare.gov’s “Find Local Help” search tool and “Medicaid & CHIP” information page can help you explore your healthcare options.

Class Action Database: Herbalife settles over duping distributors

By Monica Steinisch

Among recent settlements added to the Consumer Action Class Action Database is the settlement Vasona Management, a property management company operating in the San Francisco Bay Area, reached with the California Civil Rights Department to resolve claims that the company discriminated against tenants with children. If you are a current or former tenant who lived with a child under age 18 at any of the qualifying Vasona Management properties between April 13, 2016, and July 1, 2019, you may be eligible for payment. The deadline for claims is May 25, 2023.

Of note is the $12.5 million that Herbalife, a multilevel marketing (MLM) company selling weight loss products, nutritional supplements and personal care products, agreed to pay to settle a case alleging that the company misled distributors of its products about the value of attending the company’s events. MLMs are companies that use distributors (individuals) to sell products directly to consumers, rather than selling through retail outlets. The company encourages distributors to recruit new distributors, and everyone earns commissions from the sales made by the people they recruit. In addition to these commissions generated by distributors, those at the top of the company pyramid also make money from products and services—such as sales training—sold to the distributors. In this case, the plaintiffs claimed that Herbalife induced distributors to sign up for events that cost $600 or more per year to attend, and misled them about the financial benefits of attending its “Circle of Success” events. In reality, said plaintiffs, the people who really benefited were the top-level distributors who were paid for appearing at the events. The company has not admitted guilt in the settlement.

This is far from Herbalife’s only run-in with the law. The company paid $15 million in 2014 to settle allegations that it is a “pyramid scheme” that does not allow distributors to make a profit. And in 2016, the Federal Trade Commission sued Herbalife, alleging that the company and its affiliates deceived consumers into believing they could earn substantial money selling the company’s products. Herbalife settled with the FTC and agreed to pay $200 million to compensate consumers and fundamentally restructure its compensation plan. As reported by Forbes, the Consumer Awareness Institute has found that 99% of people who participate in MLMs lose money. (Interest piqued? Listen to season 1 of The Dream podcast for a deep dive into the pull—and reality—of MLMs.)

If you are an Herbalife distributor and you purchased tickets to two or more U.S.-based Herbalife events between Jan. 1, 2009, and April 6, 2023, you may be eligible for payment. The claims deadline is Aug. 4, 2023.

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 and consumer literacy and advocating for consumer rights both in 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. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database, and more. Our in-language media outreach allows us to share scam alerts and other timely consumer news with a wide non-English-speaking audience.

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 more than 6,500 community-based organizations. Outreach services include in-person and web-based training and dissemination 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.