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Released: October 31, 2016
Consumer Action INSIDER - November 2016
Table of Contents
- What people are saying
- Did you know?
- Consumer rights in the state of California
- Coalition helps communities help vets
- Hotline Chronicles: Groupon, LivingSocial deals disappoint
- Navicore Solutions uses Consumer Action's materials to help clients
- Coalition Efforts: Fraud, facial recognition and home loans
- Class Action Database: Volkswagen emissions scandal heats up
- CFPB Watch: Prepaid card protections, free credit scores and more
- About Consumer Action
What people are saying
Thank you for the [Smart About Money] webinar [hosted by Consumer Action and the National Endowment for Financial Education]! It was very informative and the accompanying website has so much information all in one place. It’s easy to use and easy to understand, it introduces the information in a step-by-step process, I’m able to go through the material at my own pace, I’m able to select material that interests me or the client and I’m able to refer back to it whenever needed! — Dorine Prine, Program Coordinator, Gila County Community Action Program, AZ
Did you know?
A recent review of robocalls tied to the 2016 presidential election found that political scam calls have increased 614 percent since the beginning of the year. Typically the crooks are trying to gain personal information by asking consumers to “verify” voter registration; obtain account numbers by seeking “contributions” to a favored candidate; or bilk money from consumers by offering prizes for those who take political surveys and then asking targets to pay for the shipping, taxes or handling costs for the so-called prizes. Read more at Credit.com.
Consumer rights in the state of California
In 2016, the California State Legislature passed laws that represented both major wins and major letdowns for consumers living in the Golden State. A bright spot occurred in September, when Governor Jerry Brown signed SB 1150, a bill authored by Senators Mark Leno and Cathleen Galgiani to protect widows, widowers and other heirs from unnecessary foreclosures. The California Reinvestment Coalition co-sponsored SB 1150 along with the California Alliance for Retired Americans and many housing and economic rights advocates. The new law will go into effect January 1, 2017.
Without this law, banks and other mortgage servicers could refuse to speak to surviving homeowners and could foreclose on them simply because the deceased person was the only one listed on the mortgage. Under the new law, servicers now will have to speak with these surviving homeowners and provide clear information about their options and the process to assume the mortgage and possibly seek a loan modification.
Consumer Action was outspoken against another piece of important legislation, which was unfortunately passed over the summer despite our opposition. The bill—AB 516 (introduced by Assemblymember Kevin Mullin)—will result in car buyers being charged more due to an increase in what is known as a “document fee.” This fee already has more than tripled over the past 30 years (even as the actual cost of generating documents during an automobile sale represents just a small fraction of what it once was). Consumer Action is concerned that the new law will not protect vulnerable consumers whose dealership fails to send them permanent license plates within 90 days. The bill calls for the creation of a new class of felony for anyone who alters a temporary tag (even for drivers who, despite their best efforts, have not received plates within 90 days).
Consumer Action also was active in attempting to influence another consumer-related bill—SB 899 (introduced by Senator Ben Hueso). The bill sought to end price discrimination based on gender (in the wake of a pricing survey that revealed that identical products marketed to women and girls cost around 7 percent more than the same products marketed to men or boys). California already prohibits this class of discrimination when it comes to services (e.g., haircuts). Unfortunately, legislators would not extend the ban to products, and the bill died in the Assembly Judiciary Committee.
Happily, some of the most egregious anti-consumer bills were defeated as well. AB 2395 sought to decommission all landlines in California. This bill was carried by the second-year assembly member Evan Low, who has quickly emerged as one of the most anti-consumer legislators in the state. Remarkably, Low's bill would have imperiled public safety by cutting many seniors and residents residing in rural areas off from 9-1-1 service. Fortunately, it died in the Assembly Appropriations Committee.
Some legislation of interest led to compromises. AB 287 (introduced by Assemblymember Richard Gordon) would have made it legal in the state for car dealers to knowingly sell unsafe recalled used cars to consumers if they merely "disclosed" that the vehicles were under recall. Consumer Action argued that this was a recipe for real disaster, as car buyers who didn’t take the cars in to get the defects repaired would be exposed to danger. Subsequently, Assemblymember Gordon withdrew the bill when it became apparent it would fail to pass Senate Judiciary Committee review. Eventually, Gordon amended the bill in positive ways, which led us to drop our opposition. The final form of AB 287, for example, now prohibits the rental or sale of unrepaired recalled cars by rental car companies, and bans advertising a car as "certified" if it has an unrepaired safety recall. The Governor signed the bill on Sept. 27.
Another of Assemblymember Gordon's bills, however, was beyond repair due to its rampant privacy threats. AB 2688 billed itself as health privacy legislation that would, in reality have weakened privacy protections when people used health and fitness devices (e.g., Fitbit trackers), and would have allowed companies to share health and fitness information with third parties (which consumers likely would not have been aware of or approved of). Fortunately, the author withdrew the wildly unpopular bill in the Senate Judiciary Committee after it became clear it would not have enough votes to advance.
Coalition helps communities help vets
Consumer Action has been busy traveling to communities across the U.S. to educate those that serve veterans, servicemembers and military families on how to best prepare this population for their financial futures. Consumer Action’s efforts are on behalf of the Veterans Financial Coalition, funded by Visa Inc.
This year the coalition has held “train-the-trainer” veterans roundtables in San Diego, CA, Killeen, TX and Jersey City, NJ. The trainings, which feature our informative Economic Survival Guide for Servicemembers and Veterans, are geared toward community-based organizations in cities with large veteran populations.
“There is a critical need to reach and educate the many veterans residing in areas like Central and South Texas and to provide them with the knowledge they need to protect themselves and prosper financially,” said Ken McEldowney, executive director of Consumer Action. “With proper training, education and access to appropriate resources, we believe this oftentimes vulnerable population can make appropriate, informed decisions about the financial future.”
Scammers and predatory lenders often aggressively market to former and current military members, offering high-interest payday loans, credits cards with abusive terms and other sketchy financial products. This makes it particularly important for military families, that are often low income, to be aware of the legitimate borrowing and banking options available to them and the many laws designed to protect them.
Each training session, led by Consumer Action’s outreach managers, prepares representatives of participating local community-based organizations to conduct one-on-one financial education, counseling, group presentations and workshops in their communities. Participants earned continuing education units from the Association for Financial Counseling and Planning Education (AFCPE), another Veterans Financial Coalition partner. Rosa Gonzalez-Abrego, senior director of housing services programs at Easter Seals Central Texas, attended the Killeen roundtable. The event was particularly timely for the organization’s staff, as the agency recently was awarded a grant from the Texas Veterans Commission to serve disabled veterans. The grant enables the organization to make essential home repairs and modifications for disabled veterans living in unsafe, inaccessible homes. At the same time the group can reach veterans in need of financial counsel. The Easter Seals chapter is a long-time community partner of Consumer Action.
Easter Seals Central Texas intends to incorporate Consumer Action’s Economic Survival Guide into its disabled veterans education efforts. The group’s staff will give veterans the information during their initial assessments and offer an option to receive further counseling on the topics outlined in the training module.
Hotline Chronicles: Groupon, LivingSocial deals disappoint
Jamie* from Texas and Karma* from New Jersey reached out to Consumer Action about services they bought via the online coupon providers Groupon and LivingSocial.
Jamie purchased a Groupon offering “$40 for unlimited air duct and dryer vent cleaning with furnace check-up ($235 value).” The $40 coupon entitled him to service for one unit at $40. He selected this option even though there was another option covering service for two units at $89. He arranged an appointment with the service provider, and when the technicians visited his home he was told that his furnace was in good condition. Then he was handed an invoice and asked to pay $89. Feeling pressured, he paid the bill. “They gave me no service and charged me the two-unit fee of $89!” he complained.
Karma bought a coupon from LivingSocial for $99 that entitled her to five hours of housecleaning from a local service provider. She called the housekeeping service three times on three different days to schedule the cleaning, leaving phone messages each time. Hearing nothing in return, Karma called LivingSocial and asked for a refund. LivingSocial responded that she’d missed the deadline for refunds and therefore it was only able to issue a credit that she could then use for another discounted LivingSocial deal. Karma wondered how LivingSocial could sell discounted services on behalf of a company that doesn’t respond to customers.
Online deal sites
Companies like Groupon and LivingSocial allow consumers to buy coupons or vouchers online to save on a variety of products and services. They promote “deals” offered by local companies that want to attract new customers. Some studies have shown that participating businesses have difficulty retaining most of the new customers attracted by coupon offers. Also, these businesses may find they do not have the capacity to handle the additional business generated by the coupon deals, or may face declining profits from the deals.
Customers who use the coupons may face pressure to purchase additional services from the vendor (“up-selling”).
Both Groupon and LivingSocial outline their policies on their websites. However, terms can be difficult to understand, vary by deal and definitely do not offer enough protection when the merchant is non-responsive or insists on collecting for work that wasn’t necessary.
LivingSocial says refunds are available within seven days of purchase and after that time a credit may be provided in the form of “deal bucks” subject to expiration dates.
Given that these are “social” companies, we advised both consumers to complain publicly on the companies’ Facebook pages and Twitter accounts. More and more companies are responding quickly to consumers who reach out to them via social media. If no help is forthcoming, we advised both consumers to consider contacting their payment card providers and asking for a charge-back because the services were not provided.
Should you consider using online deals?
Online deals, also known as “social couponing,” are very popular with consumers and may offer some great benefits. They’re also the source of significant complaints online. The same issues Jamie and Karma experienced are the subjects of many online complaints. Often, the complaints center on non-responsive merchants or those that refuse to honor deals. While this is the fault of the company advertising through the deal site, it’s still important to make sure that the deal site (which is giving a platform to these companies) has a policy in place to allow you to recoup your money. It’s also a good idea to check out the actual service provider or merchant by entering its name in a search engine, looking it up on Yelp or another peer review site, or checking the Better Business Bureau before you buy the deal.
We advise a cautious approach to social coupons. It’s crucial to know that participating merchants and service providers generally expect you to resolve complaints with the coupon company, not with them.
*Not this consumer’s real name
Navicore Solutions uses Consumer Action's materials to help clients
Navicore Solutions, a national non-profit providing credit counseling, housing counseling, budgeting and financial education to consumers in need, contacted Consumer Action in September to let us know about the benefits they’ve experienced using our Money Management 1-2-3 training module. Created under Consumer Action’s Managing Money Project, the materials help instruct community-based organizations like Navicore on how to best help their clients build a strong financial foundation, achieve financial goals and plan a secure future.
Navicore Illinois relationship manager Janice Parker enthusiastically expressed her gratitude for the resource, writing: “Thank you for all the work Consumer Action does to support our industry staff. Programs like Money Management 1-2-3 not only help stretch the non-profit industry budget (time spent creating the curriculum, free materials, etc.), but also help the communities in which we live and work!”
While Navicore does use Consumer Action’s modules as freestanding educational courses, the organization mainly uses our publications to supplement its own in-house curriculum. For instance, Parker recently conducted a series of workshops that incorporated our Money Management 1-2-3 materials at a number of Illinois community centers, like Helping Hands Resource Center, a local non-profit agency providing personalized services to individuals and families in need.
After Parker contacted us, we asked her some in-depth questions about her organization and how it uses Consumer Action’s education materials.
To start, can you tell us who, exactly, your target audience is? Typically, the consumers we serve are facing a financial crisis due to loss of employment, illness, change in marital status, over-extension of credit or the loss of a family member. Seventy-five percent of the consumers that we counsel have incomes that are less than 80 percent of their respective area median income.
Where are your offices located? We operate 11 offices in 10 states nationwide. Our corporate headquarters is located in Manalapan, NJ, but we also have satellite offices in Dedham, MA; Owings Mills, MD; Farmington Hills, MI; Raleigh, NC; Dallas, TX; Roseville, MN; Henderson, NV; Peoria and Champaign, IL; and San Diego, CA.
You have quite a big presence nationally! So what specific materials are you using in your financial literacy program? In addition to Money Management 1-2-3, we’ve used Consumer Action modules addressing elder fraud, teens and money and banking basics.
Your organization has received MoneyWi$e mini-grants from Consumers Action to conduct financial education. How did they work out? Great! In June 2010, we were awarded a $5,000 mini-grant to use Consumer Action’s MoneyWi$e curriculum as part of a larger life skills training program (which incorporated counseling services, education and guidance) for Family Promise of Monmouth County, New Jersey. The program has helped them improve services to area homeless families with children.
(Editor’s note: MoneyWi$e is a comprehensive financial literacy training program created by Consumer Action with funding from Capital One.)
Then, in October 2010, we were awarded another $5,000 mini-grant to provide financial education to Head Start staff and parents in Dallas, TX using the MoneyWi$e curriculums. The grant also enabled us to provide them with one-on-one counseling and group educational services on budgeting, credit report review and correction, and credit and savings management.
Finally, in May 2012, we were awarded an additional $7,500 mini-grant to again use the MoneyWi$e curriculum, this time to conduct a nine-month financial literacy program for residents of Manna House, a New Jersey transitional housing facility for young, unemployed and undereducated mothers dependent upon public assistance.
You've attended our National Consumer Empowerment Conference. What did you get out of the experience? The knowledge and resources I got from the conference have allowed me to provide even more help to our clients by sharing information and tools that build financial empowerment. The conference equips community leaders and educators to initiate innovative outreach programs for the populations we serve. The materials and knowledge shared at the conference not only allow us to educate our clients, but to connect them to other resources and new pathways to financial empowerment.
Navicore Solutions strengthens the well-being of individuals and families through education, guidance, advocacy and support. The organization was founded in 1991 and provides a wide range of services, including: personal financial counseling; financial education; debt management counseling; pre- and post-bankruptcy counseling and education; student loan counseling; and comprehensive housing counseling (pre-purchase, rental, default/foreclosure and HECM counseling). The agency is a member organization of the National Foundation for Credit Counseling (NFCC) as well as a HUD-approved Housing Counseling National Intermediary. It is accredited by the Council on Accreditation. Click here to learn more about Navicore Solutions.
Coalition Efforts: Fraud, facial recognition and home loans
Protecting immigrant victims of the Wells Fargo fraud. Wells Fargo employees set up more than two million unauthorized accounts for current customers just to meet sales quotas and get commissions. In the aftermath of the scandal, Consumer Action joined consumer and civil rights groups in pressuring the credit bureaus to give immigrant victims of Wells Fargo’s underhanded sales tactics free copies of their credit reports in their native languages so that they can dispute any fraudulent accounts that were created in their names. In a coalition letter to Experian, TransUnion, Equifax, Early Warning Services and FIS, advocates asked that the reports be made available in, at a minimum, Spanish, Chinese, Vietnamese, Korean, Tagalog, Russian, Arabic and Haitian Creole. Learn more and read the letter.
Police using facial recognition programs without safeguards. Consumer Action was one of 50 national civil rights, civil liberties, faith and privacy organizations that sent a letter to the U.S. Department of Justice urging it to investigate the increasing use and impact of facial recognition technology by police. The letter comes amid mounting evidence that the technology is violating the rights of millions of Americans and having a disproportionate impact on communities of color. Learn more and read the letter.
Green loans may cause homeowners to see red. PACE (Property Assessed Clean Energy) loans are a special kind of financing sponsored by local governments and used to pay for energy-efficiency improvements, such as solar panels, energy-efficient appliances and windows. The U.S. Department of Energy (DOE) provides best practice guidelines for homeowners, but these guidelines don’t adequately educate property owners about the dangers of the loans, which are based on equity in the building as opposed to ability to repay. In a letter to the DOE, Consumer Action joined other advocates in urging the agency to better alert consumers of the serious risks associated with these seemingly appealing loans. Learn more and read the letter.
Class Action Database: Volkswagen emissions scandal heats up
This month we highlight a major proposed settlement involving 2.0-liter Volkswagen and Audi diesel vehicles. In September 2015, the Environmental Protection Agency (EPA) accused Volkswagen of installing emissions-cheating software on more than 475,000 diesel cars dating back to 2009 models. Since then, the Federal Trade Commission (FTC), the EPA, California’s Attorney General, the California Air Resources Board (CARB) and other plaintiffs have charged that Volkswagen falsely advertised the vehicles’ emissions levels.
Now Volkswagen has agreed to a $14.7 billion settlement that provides $10 billion to compensate consumers and $4.7 billion to mitigate pollution and invest in zero-emission vehicle technology.
Consumers who have purchased or leased the following 2.0-liter turbo-charged direct injection (TDI) engine vehicles may be eligible to join the settlement:
- 2013-2015 VW Beetle
- 2013-2015 VW Beetle Convertible
- 2010-2015 VW Golf
- 2015 VW Golf SportWagen
- 2009-2015 VW Jetta
- 2009-2014 VW Jetta SportWagen
- 2012-2015 VW Passat
- 2010-2013 and 2015 Audi A3
The $10 billion settlement fund will provide two options for class members in addition to a cash payment:
- Buyback: Consumers can choose to have Volkswagen buy back the car or terminate their leases without an early termination penalty; or
- Emissions modification: If an emissions modification is approved by the EPA and CARB, consumers will receive a free, approved emissions modification and extended emissions warranty.
The buyback program was approved by the court on Oct. 25. Once class members’ claim forms are submitted and approved and they accept the final offer packets, the class members can schedule the buyback or repairs within 90 days.
The claims deadline is Sept. 1, 2018. For more information, visit the official settlement website here.
CFPB Watch: Prepaid card protections, free credit scores and more
The Consumer Financial Protection Bureau (CFPB) has ordered online lender LendUp to pay $1.83 million in refunds to 50,000 borrowers for misleading them with loan offers the company claimed would improve consumers’ credit scores while graduating them to lower interest rates over time. Flurish Inc., doing business as LendUp, offers small-dollar loans online in 24 states.
“LendUp pitched itself as a consumer-friendly, tech-savvy alternative to traditional payday loans, but it did not pay enough attention to the consumer financial laws,” said CFPB Director Richard Cordray. The CFPB says LendUp hid the true cost of the loans and, in some cases, did not supply credit bureaus with loan payment information to help build or rebuild a consumer’s credit history as advertised.
In addition to the required consumer refunds and $1.8 million fine, LendUp must stop misrepresenting the benefits of its loans. Consumers should receive a refund in the next few months without having to request it.
New prepaid card protections
Prepaid cardholders will have new protections for card loss, unauthorized transactions and purchase disputes when new CFPB rules take effect in October 2017.
The amount of money a consumer can lose on cards that are lost or stolen will be limited to $50 if the loss is reported within two days of learning that the card is missing.
Card issuers will be required to investigate and resolve prepaid cardholder complaints about fraudulent charges or errors. If a dispute is not resolved quickly, issuers must restore a customer’s funds while they continue investigating.
Under the new rules, the most common prepaid card fees must be disclosed on the card’s package, and all fees a consumer might have to pay must be included inside the package and online. Basic account balance information, transaction history and a schedule of fees also must be available to consumers for free by phone and online.
It’s still rare for prepaid cards to offer overdrafts or extend credit, but to stave off future problems, the CFPB requires companies to wait 30 days after a consumer registers the prepaid account before offering a credit feature. This gives consumers time to gain experience with the basic prepaid account before deciding if they want to apply for the credit feature. In addition, if credit is issued, issuers must:
- Evaluate cardholders for their ability to repay the debt before issuing credit;
- Provide regular monthly statements, like a credit card bill; and
- Give cardholders at least 21 days after the statement date to pay any credit bills that are due.
The rules apply to prepaid cards, payroll cards and mobile wallets that store funds. For more information, see Consumer Action’s prepaid card protections alert.
Get your free credit score
The list of companies that offer consumers access to a free credit score is growing, thanks in large part to the Bureau’s efforts at encouraging credit card issuers and others to make the scores available to consumers at no charge.
The CFPB is proposing to prepare an actual list of companies that offer this free service to consumers and is asking for feedback on the idea. You can share your thoughts here. Check with your payment card company or bank to see if it offers free credit scores.
Fines for debt collection threats
The CFPB charged that Navy Federal Credit Union deceived customers to get them to pay off delinquent debts and froze them out of their accounts.
It directed Navy Federal to pay $23 million to harmed members. In addition it levied a $5.5 million fine against the credit union for falsely threatening to sue or garnish credit union members’ wages and, when members' payments were late, contacting their commanding officers about the overdue bills.
In addition, the credit union must stop blocking delinquent members’ access to their ATM, debit and checking accounts, and must revise its debt collection tactics.
Servicemembers who received a threatening letter are eligible for $1,000 in relief. Navy Federal will contact members directly to provide the compensation. (If you've moved or changed your contact information, let the credit union know.)
It’s important to note that debt collectors are prohibited from threatening to:
- Report servicemembers’ debts to commanding officers;
- Prosecute customers under the Uniform Code of Military Justice; and
- Revoke customers’ security clearances.
For more on servicemembers’ rights when dealing with a debt collector, click here. For general information on how to communicate with debt collectors, protect yourself from lawsuits and more, see Consumer Action’s guide to debtors’ rights.
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 Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and nine 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.