Consumer Action INSIDER - July 2024


What people are saying

"Glad to read facts about circulating scams. I recognize most of them, but it’s always good to be updated on new ones.” —SCAM GRAM reader Julie Z, Fountain Valley, CA  (subscribe to our mailing list to get the SCAM GRAM delivered directly to your inbox)

Outreach staff meets learners where they are

By Monica Steinisch

In last month’s issue of the INSIDER, we wrote about the May 22 webinar we presented on consumers’ rights related to manufacturers’ warranties on smartphones, tablets and computers. Since then, Consumer Action outreach staff members Nelson Santiago and Jamie Woo have continued the work to educate about warranty rights, in person, at various locations in and around San Francisco.

Woo teaches Chinese-speaking consumers at the Asian Women’s Resource Center in San Francisco

So far, we’ve reached hundreds of consumers and CBO staff on-site at the Mexican Consulate (San Jose); Family Connections Centers (San Francisco); Day Worker Center of Mountain View; Asian Women’s Resource Center (San Francisco); Bayview Commons Apartments (San Francisco Housing Development Corporation); and Cameron House (San Francisco). The visits were a mix of workshops and tabling events, and a combination of group and one-on-one education.

Santiago speaks to a group of residents in San Francisco’s Bayview district

Request a consumer rights workshop at your location! Our English-, Spanish- and Chinese-speaking outreach team is planning more in-person workshops and tabling events on warranty rights over the coming weeks. If you're in California and would like a presentation for your clients or staff about smartphone and computer warranty rights and California's new right-to-repair law, please contact Community Outreach Manager Nelson Santiago at .(JavaScript must be enabled to view this email address). We can also participate in your community fairs and other educational efforts/events.

Coalition Efforts

By Monica Steinisch

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

Bank merger reform. Consumer Action and fellow advocates submitted comments to the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) regarding regulatory proposals to reform the bank merger process. The merger process can be a significant opportunity to improve economic justice for BIPOC and low-income communities. However, the signers pointed out, the current merger process is strongly biased in favor of merger approval, with little consideration given to community impacts. The groups urged the agencies to reform the bank merger process to, among other things, end expedited reviews of bank merger applications; require bank applicants to demonstrate that communities will be better off after the merger (rather than worse off, with a loss of branches, loans and jobs); place greater consideration on the potential impacts of “smaller” bank failure and climate-related financial risks; and provide meaningful opportunity for impacted communities to provide input and to inform the ultimate decision by regulators. Read the letter here.

Adequate IRS funding. Consumer Action was among the nearly 100 organizations signed on to a letter to the House Appropriations Committee expressing strong opposition to the House Majority’s FY25 spending proposal. Under the appropriations bill, the IRS would suffer drastic cuts, which would result in the agency’s new Direct File program being abandoned. Direct File is a free filing option for eligible taxpayers that was piloted during the 2024 tax season. The program proved such a success that it is scheduled for nationwide implementation for the 2025 tax season. It is projected that, at full capacity in a few years, Direct File could save taxpayers $11 billion a year between filing fees and time costs while also helping them access $12 billion in tax credits for families that qualify but are currently missing out. The funding cuts under the bill would not only block implementation of this crucial new program, they would also threaten much-needed efforts to modernize the IRS and impede the agency’s ability to ensure that the wealthy and large corporations pay the taxes they legally owe. Read the letter here.

CFPB Watch

By Ruth Susswein

The Consumer Financial Protection Bureau (CFPB) is proposing to ban medical debt from most credit reports. This would prevent credit bureaus from sharing medical debts with lenders and, as a result, would stop lenders from denying people loans based on debts from medical bills and medical collections. (Consumers would still owe the debts that have been removed from their credit files.)

Medical debt on a credit report does not accurately predict if a person will repay a loan, according to CFPB research. Unlike most other types of debt, medical debt is often unplanned—not consciously taken on, the way a loan or credit card balance is. In many cases, collectors coerce people to pay debts that may, in fact, be mistakes or that should be paid by insurance. Medical bills are disputed at three times the rate of credit card debts, and seven times the rate of student loan bills, according to the CFPB.

The proposed rule would not remove from credit reports any credit cards used to pay medical debts.

The Big Three credit bureaus (Equifax, Experian and TransUnion) had already, in April 2023, deleted medical debts under $500 because of pressure by the Bureau. Despite that voluntary change, 15 million Americans still have $49 billion in outstanding medical bills listed on their credit records. Most are from the South and live in low-income communities.

With medical debt eliminated from most lending decisions, the Bureau is hopeful that qualified consumers will be eligible for more loans and mortgages. (Some who are opposed to the change predict that, without being able to evaluate a person’s medical debt load, more medical providers may require upfront payments.)

On a related note: Have you used a medical credit card? If you were persuaded to use a medical credit card with high rates or deferred interest, the Bureau wants to hear your story. Share your experience here.

Two strikes and you’re out

Even after a consumer’s bank account was bone dry, the Bureau found, payday and installment lenders would try to withdraw money from the empty coffers over and over again, resulting in a pile of junk fees—nonsufficient funds fees, overdraft fees, and others.

Now, after being held up by industry opposition, the Bureau has reinstated its two-strikes-and-you’re-out rule. Under the rule, if a lender fails to withdraw funds after two attempts, they are forbidden from trying again unless the borrower authorizes them to do so. The rule is expected to go into effect on March 30, 2025.

Snowballing car loans

The second biggest debt consumers carry, after mortgages, is car loans. New CFPB data shows that we owe more than $1.6 trillion on auto loans, and more than 10% of borrowers financed the unpaid balance from a prior vehicle loan into a new loan.

The Bureau’s first auto finance-related Data Spotlight report focuses on negative equity—the amount owed on a vehicle that is greater than the car’s value (referred to as being “upside down”).

When consumers trade in a car with negative equity, the outstanding balance on the old loan gets rolled into the new loan. Taking out a larger (possibly unaffordable) loan and paying interest on negative equity puts consumers in greater jeopardy: Consumers who rolled the balance of an old loan into a new vehicle loan were far more likely to be at risk of having their car repossessed within two years.

The average negative equity included in new vehicle financing was $5,073, and nearly $3,300 for used vehicle financing, according to CFPB data.

The CFPB discovered that nearly 12% of car buyers between 2018 and 2022 had negative equity. Until now, this type of detailed auto data had been pretty scarce.

Also concerning, the Bureau found that the outstanding balances (negative equity) that consumers were refinancing continued rising in 2023.

Class Action Database: Oversharing costs TaxAct $15 million

By Monica Steinisch

Among recent settlements added to the Consumer Action Class Action Database is the settlement reached in a case alleging that a variety of “smart” treadmills and other equipment manufactured by iFIT were sold with touchscreen consoles containing a defect that caused the units to fail following mandatory software updates. If you purchased a qualifying piece of exercise equipment on or before Jan. 23, 2023, you may be eligible for a free repair, a refund, or a credit toward the purchase of fitness equipment or service from NordicTrack, ProForm or Workout Warehouse. The deadline for claims is May 6, 2025.

Of note is the $14.95 million settlement that TaxAct, which offers DIY online tax preparation software, agreed to. The case alleged that the company shared users’ personal and financial information with third parties, including Facebook/Meta and Google, without permission, in violation of federal and California privacy laws. It did so through the hidden use of tracking tools on its website. If you or your spouse used TaxAct to complete a Form 1040 and filed your return between Jan. 1, 2018, and Dec. 31, 2022, you may be eligible for a payment and the free use of TaxAct Xpert Assist for your tax year 2024 return. The deadline for claims is Sept. 11, 2024.

Earlier this year, we shared a Washington Post article warning consumers of TurboTax’s efforts to get users of its online tax preparation service to agree to share information from their tax returns—information that would be used to serve up advertisements for financial products like credit cards and loan offers. As the article makes clear, you have the legal right to refuse permission; tax preparation services, by law, can only use the financial information you provide to help you prepare and file your tax return.

About Consumer Action

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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, 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.



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