• What people are saying    
• Join us: Anniversary awards ceremony and convening tomorrow!  
• Coalition Efforts
• CFPB Watch
• Class Action Database: A failing grade for not discharging student loans in bankruptcy
• About Consumer Action

What people are saying

"Oh, I just love these [SCAM GRAM newsletters]. They are so informative and I send them on to people that I know who might be duped." —SCAM GRAM reader Joan, Fairfield, CA (subscribe to our mailing list to get the SCAM GRAM delivered directly to your inbox)

Join us: Anniversary awards ceremony and convening tomorrow!

By Monica Steinisch

Tomorrow—Thursday, Nov. 2—Consumer Action will gather with friends and supporters in Washington, D.C., to celebrate 52 years of advocating for and empowering the nation’s consumers, particularly low- and moderate-income, limited-English-speaking and other underrepresented individuals and families.

As part of the celebration, we will hold our annual Consumer Excellence Awards ceremony, recognizing individuals and organizations who have had a significant impact in the areas of consumer protection, education and empowerment. This year’s award recipients are Consumer Action’s own Ken McEldowney, former executive director, and Linda Sherry, former director of national priorities; Angie Garcia Lathrop, Bank of America’s community affairs executive for corporate social responsibility and a long-time consumer ally; and the Mexican American Opportunity Foundation, a nonprofit founded in 1963 to elevate opportunities for the Mexican-American community that today serves people from all racial and ethnic backgrounds.

We hope you’ll join us for the reception and awards presentation—6-8 p.m. at the AT&T Forum for Entertainment, Technology and Policy—if you are in the D.C. area. Learn more and register here.

Earlier in the day, from 1-2:30 p.m. (ET), Consumer Action will host a virtual convening: 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. You can register for the convening, at no charge, here.

As we mark more than half a century of consumer education and advocacy, we thank our supporters and allies for making our work possible.

Coalition Efforts

By Monica Steinisch

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

"Poison pills" in the appropriations process. Consumer Action was one of almost three dozen advocacy organizations that supported House Democrats’ letter to House and Appropriations Committee leadership requesting that they stop hindering the appropriations process by proposing riders for harmful, extreme policies. These “poison pill” policy provisions bog down the appropriations process with controversial policy debates, creating a political impasse at a time when the U.S. has urgent needs. The letter urged Republican leaders to bring forward clean appropriations bills—free of contentious poison pill riders—and adequately fund the federal government in Fiscal Year 2024. The letter also urged the Appropriations Committee to provide adequate funding to non-defense discretionary programs, despite House Republicans’ efforts to lower the spending caps already set by the bipartisan debt ceiling package. Spending levels below the caps, the letter pointed out, would threaten the health, safety, security, and economic well-being of Americans. Read the letter here.

The value of loan servicer/borrower meetings to prevent foreclosure. Consumer Action and allies submitted comments to the Department of Housing and Urban Development (HUD) expressing support for the agency’s proposal to retain the requirement that loan servicers meet with delinquent FHA-insured mortgage borrowers early in the stages of default. These meetings are crucial because they facilitate better borrower understanding of the various assistance options available to enable them to avoid foreclosure. The groups also expressed strong support for HUD’s proposal to eliminate the loophole that allows servicers to forego the mandatory meeting if they do not have a branch office within 200 miles of the financed property—effectively eliminating the meeting for many borrowers. The groups stressed that even if the meeting is via phone or video rather than in person, it can be of great value in helping borrowers keep their homes. Further, advocates offered recommendations for ensuring that these meetings are meaningful. Read the letter here.

Reclaiming the right of defrauded students to have their day in court. Fellow lawmakers and more than a dozen advocacy organizations, including Consumer Action, supported the reintroduction of the Court Legal Access and Student Support (CLASS) Act by U.S. Senate Majority Whip Dick Durbin (D-IL) and U.S. Representative Maxine Waters (D-CA). By prohibiting an institution of higher education from receiving Title IV federal student aid if the school’s enrollment agreement requires mandatory arbitration or otherwise restricts students’ ability to pursue claims against the school in court, the legislation would ensure that students defrauded by for-profit colleges would retain the right to their day in court. The statement from the lawmakers points out that legitimate nonprofit colleges and universities do not include mandatory arbitration clauses in their enrollment agreements. The legislation is squarely focused on the for-profit college industry, which has a record of predatory practices that leave many students with insurmountable debt while the schools avoid accountability. Read the press release here. 

CFPB Watch

By Ruth Susswein

In the case against the Consumer Financial Protection Bureau (CFPB) that went before the Supreme Court in October, some of the conservative justices on the court were (despite being more likely to oppose the CFPB) clearly skeptical of the arguments being made on behalf of the payday lenders who are challenging the CFPB’s authority. 

The case (CFPB v. CFSA) is intended to dismantle the Consumer Bureau by upholding an appeals court ruling that the CFPB’s funding structure is unconstitutional. The Bureau’s opponents claim that since the Fifth Circuit Court of Appeals decided that the Bureau’s funding, which comes from the Federal Reserve rather than from Congress, is unconstitutional, then the agency and all of the rules it has established in its 12-year history are unconstitutional. 

The arguments laid out before the Court have been based on the Appropriations Clause of the Constitution. They assert that Congress must dole out money to the agency, even though Congress intentionally wrote the law creating the CFPB in a way that has the agency deriving its funding from the Federal Reserve. Congress’s goal was to prevent the Bureau’s budget from being used as a political tool.

Each of the high court’s progressive justices, plus conservative Justices Brett Kavanaugh, Amy Coney Barrett and, at times, even Clarence Thomas, appeared to have a hard time buying the argument that only Congress could fund a federal agency. 

The Supreme Court’s ruling will have a significant impact not only on the CFPB, but also on all of the other federal financial regulators that too are funded outside of the annual congressional appropriations process. The decision is expected by next summer.

Crackdown on junk fees

The CFPB was joined by President Biden, the Federal Trade Commission (FTC), and other federal agencies last month in a crackdown on junk fees. The Bureau defines junk fees as unavoidable, surprise, excessive or unnecessary charges.

The CFPB warned large banks and credit unions that the agency will consider it an “unreasonable obstacle” if the financial institutions charge consumers junk fees for requesting basic information on their own accounts. 

The CFPB says companies will return $140 million in bogus fees to consumers for such things as paper bank statements never sent, worthless add-on products (such as gap insurance on a repaid auto loan), and unrefunded fees for money transfers that failed to arrive on time. 

Hidden fees that appear at the tail end of a purchase make it very difficult to compare costs for auto loans, airfares, concert tickets, hotels, and many other things. The FTC has proposed a rule that would ban businesses from advertising prices that fail to disclose hidden mandatory fees. The rule would require companies to reveal fees up front, explain what they’re for, and tell consumers if they are refundable.

CFPB saves consumers billions in bounced check fees

Director Chopra’s use of his bully pulpit to end punitive fees can be credited with saving consumers an estimated $2 billion in nonsufficient funds (NSF) fees. According to a special CFPB report, nearly two-thirds of large banks have eliminated bounced check fees. Unfortunately, four of the five largest credit unions continue to charge them. These $30-$40 fees are known to hit low-income and minority consumers the hardest.

TransUnion violates renters' rights

According to the CFPB, the credit reporting company TransUnion has been selling tenant screening reports “riddled with errors,” harming consumers’ ability to obtain housing. 

Tenant screening reports typically provide a “risk score” or a recommendation to rent or not to rent—too often based on inaccurate or misleading information. Yet without specific information about what went into the score or recommendation, it is extremely difficult for consumers who are denied housing to correct erroneous information. 

The CFPB and the FTC have ordered TransUnion to: 

• Stop reporting evictions that were dismissed or sealed. 
• Clean up duplicate reporting of eviction records. 
• Disclose to consumers the third-party companies (e.g., LexisNexis) that provided the inaccurate information in their reports.

Failing to assure “maximum possible accuracy” in tenant screening reports is a violation of the Fair Credit Reporting Act. 

TransUnion’s tenant background check subsidiary—TransUnion Rental Screening Solutions—will pay $11 million in restitution to harmed consumers and a $4 million penalty to the CFPB’s victims relief fund.

Phantom security freezes

The Bureau has also charged TransUnion with lying to consumers about adding a security freeze to their credit reports. (A free security freeze locks a consumer’s credit file to prevent fraud.)

TransUnion failed to place (or remove) a security freeze on tens of thousands of consumers’ credit reports, according to the CFPB. The credit bureau lied to consumers when it assured them that their security freeze was complete, when, in fact, their request was put into a multiyear backlog, amidst 40,000 other requests.

The Bureau has ordered TransUnion to pay $8 million for these violations. The CFPB lists TransUnion as one of its biggest repeat offenders. This is the Bureau’s fourth action against the credit bureau in seven years.

Class Action Database: A failing grade for not discharging student loans in bankruptcy

By Monica Steinisch

Among recent settlements added to the Consumer Action Class Action Database is the $9.75 million that Freedom Financial Network and associated companies agreed to pay to settle allegations that the defendants violated the Telephone Consumer Protection Act by making prohibited calls (unsolicited pre-recorded calls to numbers on the National Do Not Call Registry) to sell debt-relief services. If you received these calls between May 17, 2017, and April 17, 2018, you may be eligible for payment. The deadline for claims is Nov. 25, 2023. 

Of note is the $16 million settlement that Navient agreed to in a case alleging that the private student loan lender and servicing company failed to discharge student loans for borrowers or co-borrowers who filed for bankruptcy. The lawsuit alleges that these private student loans—loans not made, insured or guaranteed by a governmental unit or nonprofit institution—are dischargeable in bankruptcy because the amount disbursed to the borrower exceeded the borrower’s “Cost of Attendance.” (Broadly speaking, government student loans are more difficult to discharge in bankruptcy.) 

You are part of the settlement class if you are a borrower or co-borrower who filed for bankruptcy protection on or after Oct. 17, 2005; you became obligated to repay the loan(s) before you filed for bankruptcy; the bankruptcy court issued an order of discharge for the loan(s); and you have never reaffirmed your private student loan(s) (in other words, voluntarily agreed to pay the debt). 

Under the settlement, Navient will forgo collection on the amount of the debt discharged in the bankruptcy; will repay the amount you paid to Navient on any loan(s) discharged in bankruptcy if you submit a claim form; and will delete or update how your loan is reported to the credit bureaus.

The deadline for claims is Nov. 20, 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.