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Consumer Action INSIDER - April 2019

Table of Contents

What people are saying

I don’t know how much most nonprofit organizations know about what Consumer Action can do for them and their clients, but Haven Neighborhood Services is fortunate to have you as a partner to help us and our clients: Consumer Action staff is just an email or a phone call away! — Erika Toriz-Kurkjian, Executive Director, Haven Neighborhood Services

Did you know?

Wi-Fi-connected home devices like digital assistants (“Hey, Alexa!”) and video doorbells are wildly popular. But when PCMag recently surveyed more than 2,000 U.S. consumers about “smart home” devices, privacy was the number one concern. And no wonder, given the stories about eavesdropping thermostats and peeping nanny cams. We hope other states will take California’s lead: The state passed a law (effective Jan. 1 of next year) that bans default passwords (like the ubiquitous “admin” and “password” combo) on internet-connected devices manufactured or sold in the state, forcing new users to create unique login credentials. Worried that your connected devices are collecting too much easily accessible personal data? See Consumer Reports’ Privacy tips for the Internet of Things.

Out and About: Capitol Hill press conference kicks off Arbitration Fairness Act

Consumer Action National Policy Advocate Lauren Hall attended a press conference in Washington, D.C., in late February to support the introduction of the Fair Arbitration Injustice Repeal (or aptly-abbreviated “FAIR”) Act to end the unfair practice of pre-dispute forced arbitration clauses in consumer, worker and other contracts. House Judiciary Committee Chairman Jerrold Nadler (D-NY), House Judiciary Subcommittee chairs Hank Johnson (D-GA) and David N. Cicilline (D-RI), and Senator Richard Blumenthal (D-CT) held the press conference. Standing with the lawmakers were former Fox News Anchor Gretchen Carlson, employees from Chipotle and Google, and others who have been harmed by the practice of forced arbitration. The policymakers introduced the main FAIR Act alongside several similar pieces of legislation written to address forced arbitration in specific industries.

You might not know it, but when you sign a contract for a cell phone, credit card or many other products and services—or even an employment contract—you are often signing away your future right to justice in the fine print. This pre-dispute “deal” gives corporations the upper hand by mandating that any legal disagreements that arise between the consumer or employee and the company be “resolved” not before a judge and jury, but in a private forum. Specifically, the disputes must be settled by an arbitrator selected by the company—who frequently rules in favor of the company, no matter how much it has wronged the consumer/employee.

“We’re not going to wait for corporate America to do the right thing. We need to end forced arbitration now!” Senator Blumenthal proclaimed at the well-attended press conference (which garnered widespread media coverage).

Those speaking out on the harms of forced arbitration included: a former Chipotle employee who had been forced to work without pay after clocking out (and was fired for bringing it to the attention of management, with no recourse, since he had unknowingly “agreed” to arbitration in his employment contract); a woman who was physically abused by her boss and similarly had no recourse, even after she ended up in the hospital; and another woman who was sexually assaulted by a massage therapist at a Massage Envy clinic, yet forbidden from cancelling her monthly membership due to a forced arbitration clause buried in the terms of Massage Envy’s mobile app.

Forced arbitration clauses not only keep consumers from pursuing their individual constitutional right to a fair trial, they often prevent them from being able to join together (via a class action lawsuit) to sue a company that has wronged hundreds or thousands of people.

In addition to rolling out the FAIR Act, press conference speakers presented the results of surveys showing that 83 percent of Democrats and 87 percent of Republicans want to see forced arbitration ended through federal legislation.

“When considering how forced arbitration is weaponized against consumers, one need only look at a company like Wells Fargo,” Hall explained. “Over the last several years, the mega bank has opened thousands of fraudulent accounts in customers’ names, tricked them into buying unnecessary and costly auto insurance and improperly foreclosed on distressed borrowers’ homes, only to hide behind arbitration clauses to avoid answering for its many crimes!”

In addition to establishing the FAIR Act, a number of elected officials are creating legislation to curb mandatory arbitration in particular industries. Senator Sherrod Brown (D-OH), for example, introduced the Arbitration Fairness for Consumers Act to address corporate financial malfeasance and end forced arbitration in student loan, credit card and other similar contracts. Consumer Action is a member of a national coalition supporting the FAIR Act, Senator Brown’s bill and other similar legislative efforts.

Hablamos con la Mexican American Opportunity Foundation

Consumer Action has partnered with the Mexican American Opportunity Foundation (MAOF) since 2013 to help educate and empower its primarily Latino clients. MAOF was established in 1963 to provide workforce and job training services to help this population achieve white-collar employment; it is now the largest Latino-oriented family services organization in the U.S.

MAOF’s mission is to provide for the socio-economic betterment of the greater Latino community of California, while preserving the pride, values and heritage of the Mexican-American culture. It accomplishes this through a number of programs offering early childhood education, job training, financial education and direct services for senior, immigrant and youth populations.

Consumer Action’s Audrey Perrott caught up with lsaias Hernandez and Raul De La O of MAOF to learn more about the esteemed organization.

AP: Tell us about your financial capability program?

IH: We’ve expanded our financial education program to include financial capability services, meaning we now offer or refer clients to safe and affordable financial products and services. At MAOF, we enroll clients in credit building and savings programs like Lending Circles, Fuente Crédito, ScholarShare529 and SaverLife as well as offer financial coaching and free tax preparation services.

Consumer Action has given us valuable opportunities to network at conferences and events, which has allowed us to develop relationships and partnerships to learn from innovative organizations in order to offer products to our clients that help them reach their financial goals.

AP: What has been the biggest challenge in serving consumers through the different stages of life?

IH: In 2018, we were selected by Local Initiatives Support Corporation (LISC; the nation's largest community development support organization) to operate one of its Financial Opportunity Centers (FOC) in Los Angeles. LISC’s FOC model is used to partner with non-profits around the country to help integrate income support services with financial capability and employment assistance. In offering these resources to parents from our early childcare education centers, we learned that social services, while needed, offer an immediate short-term positive impact, but financial capability and employment services allow us to have a long-term relationship with our childcare clients [parents]. We’re now able to track data over an extended period of time and show the positive impact for these clients in the areas of financial, health and social wellbeing.

AP: Have you found Consumer Action’s publications to be helpful to your work?

IH: The Consumer Action publications are a big help. We integrate the fact sheets into our curriculum and use both the Spanish and English publications. We’ve downloaded materials from the debt collection module and benefited from the Get credit for your hard work publication. We have also ordered publications from the modules covering checking and savings accounts, auto insurance and insurance in the sharing economy, as well as materials from the WirelessED and Money Management 1-2-3 trainings. We would not have been able to expand our programs without all of Consumer Action’s articles, publications and advocacy promoting financial reform at the state and national levels.

AP: Have MAOF staff attended Consumer Action’s National Consumer Empowerment Conference?

RD: Yes, the conference was a good introduction to consumer protections and advocacy. It was also helpful to connect to other practitioners. In addition, we were excited to bring the latest FinTech information back to our director, and we plan to develop and implement resources to educate consumers on how they can utilize this valuable technology.

IH: Yes, we are not policy experts; as practitioners, we’re busy with our daily work helping consumers and tend to rely on the advocates, through conferences like yours, to help us dive deeper in understanding the issues impacting consumers from a national or macro level.

Hotline Chronicles: Dog’s surgery drains owner’s resources

Margaretha,* from Northern California, contacted Consumer Action’s hotline after she was charged thousands of dollars in veterinary fees for her dog’s surgery.

“I feel I was taken advantage of,” she told us. “In short, I paid $7,220 for a recent surgical procedure to remove my doggy’s bladder stones. He was operated on four years ago for the same condition at a cost of $2,220. The circumstances were identical this time, except I agreed to pay $500 more for a board certified surgeon. The rest is just highway robbery.”

On average, pet owners spend $235 per year in recurring medical costs for a dog and $160 for a cat, according to the American Society for the Prevention of Cruelty to Animals (ASPCA). Unfortunately, this figure doesn’t account for costs associated with cancer, chronic illness or surgery, leading many pet owners to purchase pet insurance. The North American Pet Health Insurance Association offers a helpful guide on doing so.

Margaretha’s story illustrates the importance of comparing veterinary costs before agreeing to surgery or signing up for extended care plans. Since Margaretha had already agreed to the operation and paid the bill in full, however, we advised her to try to negotiate a return of the fees (or at least a portion of the fees) with the vet’s office, emphasizing the cost of the surgery four years ago compared to the most recent procedure. If that didn’t work, we suggested she submit a complaint to her state’s veterinary regulator, sometimes referred to as a veterinary “state board,” which could put pressure on the vet’s office to renegotiate the fees. (Find your state’s veterinary regulator using the American Veterinary Medical Association’s guide to “State Legislative Resources by State.”) We also suggested Margaretha consider posting on social media or review sites to warn others of the high fees charged by the practitioner she hired.

It is important for pet owners to know that if malpractice occurs during the course of a medical visit or procedure, in some situations they can sue the veterinarian involved. However, according to the legal advice website Nolo, it can be difficult to win a veterinary malpractice lawsuit unless you can prove these four things:

  • The vet accepted responsibility to treat the animal;
  • The vet failed to meet professional standards for care;
  • The animal was killed, injured or became sicker as a result of the vet’s incompetence or carelessness; and
  • As a result of that injury, the animal's owner experienced some kind of harm or “damages” (typically of a monetary nature).

If your pet is a support animal, you may have a more compelling lawsuit. See “What To Do When You Believe a Vet Has Harmed or Killed Your Companion Animal.” This article also addresses pursuing your case in small claims court.

Our hotline counselors offered some additional suggestions that owners can follow when they learn their pet needs surgery:

  • Contact several veterinarians for second opinions and estimates of surgery costs.
  • Check out student-run clinics at local veterinary colleges (they can be less expensive).
  • Ask your vet’s office if they offer financial assistance or an extended payment plan. Avoid the credit cards offered by veterinarian offices, as they tend to have high interest rates, similar to medical credit cards for humans. (See the Humane Society’s “Having trouble affording veterinary care?” for more info.)

Even without vet visits, general pet ownership costs can be high; here are some suggestions from the ASPCA for reducing them.

And, last but not least, AARP offers an article on how you can budget for the costs of owning a pet and be better prepared for unexpected expenses.

*Not this consumer’s real name

Coalition Efforts: Wall Street should pay more; prescriptions should cost less

It’s time for Wall Street traders to pay their fair share. Consumer and human rights groups nationwide are supporting a tiny tax on financial transactions that aims to raise revenue for important government programs benefiting the public and cutting down on speculative behavior in the stock market. The Wall Street Tax Act of 2019 would impose a small tax (0.1%, or 10¢ per $100) on securities transactions, including trades of stocks, bonds and derivatives. Learn more.

Consumers need stronger credit reporting protections. Consumer Action joined more than 80 advocacy organizations in supporting the biggest overhaul of the consumer credit reporting industry in years. House Financial Services Committee Chairwoman Maxine Waters (D-CA) introduced the Comprehensive Consumer Credit Reporting Reform Act of 2019 to protect consumer data, prevent identity theft and ensure the accuracy of consumer credit files. Learn more.

Forced arbitration silences victims of corporate abuse. Consumer Action joined coalition advocates in supporting Senator Sherrod Brown’s (D-OH) effort to restore Americans’ right to a day in court with the Arbitration Fairness for Consumers Act (S. 630). (Read a story about the bill’s introduction elsewhere in this issue.) Ending the use of forced arbitration in student loans, credit card agreements and employment contracts gives working Americans a fighting chance (through lawsuits and class actions) to hold powerful special interests accountable when they overcharge customers, commit fraud, engage in unfair debt collection and lending practices, and more. Learn more.

Fighting for comprehensive reform in prescription drug pricing. A coalition of progressive organizations sent a letter to Congress urging it to lower prescription drug prices for U.S. consumers. The letter implores House leadership to develop and pass comprehensive reforms to encourage the development of less expensive generic drugs and prevent price gouging on existing medications, regardless of whether the treatment costs are covered by Medicare, private insurance or Medicaid. Learn more.

CFPB Watch: Problems with mortgage payments and PACE loans

The largest increase in the number of complaints consumers filed with the Consumer Financial Protection Bureau (CFPB) concerned prepaid cards and checking or savings accounts, according to the Bureau’s most recent complaint summary (which compares data from August-October 2017 with stats from August-October 2018).

The greatest decrease in complaints concerned student loans—a concerning statistic at a time when many borrowers are struggling with student loans. The Bureau attributed the decline to its directing less attention to student loan servicing enforcement actions. In fact, in 2018 (under former acting director Mick Mulvaney) the CFPB shuttered its student loan office.

A full 40 percent of complaints received in October 2018 involved credit reporting problems. Debt collection complaints accounted for 23 percent of the grievances filed, while other top complaint categories related to mortgages and credit cards.

The CFPB’s recent complaint snapshot report revealed a slew of consumer mortgage problems. More than 40 percent of consumer mortgage complaints revolved around “trouble paying during the payment process.” Consumers reported receiving statements with inaccurate information (such as erroneous late fees or incorrect loan payoff amounts) and/or failing to receive on-time statements (causing confusion about how mortgage payments were applied). Others reported not receiving statements at all, even after multiple requests (possibly due to a change in mortgage servicer). Consumers also complained that payments were misapplied (such as extra payments not being applied to the loan’s principal). Finally, consumers reported that escrow account amounts were short on funds, which was often attributed to increases in hazard insurance or taxes, although, upon further inspection, consumers noticed that those costs hadn’t risen.

Consumers also recounted trouble getting help from mortgage servicers when they were struggling with illness, financial downturn or the aftermath of natural disasters. They complained that their servicers were often unresponsive or confusing in their communications. Some borrowers said they had to respond to multiple requests from the servicer for the same documents.

For details on all categories of consumer financial complaints (searchable by date, consumer product, state and more) visit the CFPB’s complaint database.

Listening tour

Before reporting to both houses of Congress last month with an update on the CFPB, Director Kathy Kraninger traveled to San Francisco, New York and Chicago on a “listening tour” to gather feedback on non-profit community leaders’ priorities and concerns. Kraninger heard about the value of the Bureau’s complaint database (which former acting director Mick Mulvaney had threatened to take offline) and the importance of turning the agency’s attention to small business lending.

Rules coming for PACE loans

In last month’s Insider we reported on problems homeowners were having with Property Assessed Clean Energy (PACE) loans. These loans are designed to help homeowners afford energy efficient home improvements, such as solar panels, and are repaid through property tax assessments. Many homeowners are reporting that they were misled about the high cost of these loans and are now having trouble selling their property or refinancing outstanding loans.

“PACE lenders evade mortgage laws, enabling contractor fraud, promoting elder financial abuse, and causing problems for homeowners looking to refinance or sell their homes, all while providing insufficient and at times minimal energy savings,” said John Rao, staff attorney at the National Consumer Law Center (which has addressed the issue of PACE loans).

The CFPB has announced it will propose rules related to PACE financing, and is seeking information to better understand how these loans are financed and if consumers are evaluated for their ability to repay before being issued a loan. Consumer advocates are urging the CFPB to enact rules that would require lenders that offer PACE loans to adequately underwrite the loans, mandate lenders offer disclosures before consumers sign a loan contract, and ensure that consumers have the right to cancel the contracts.

If you want to share your experience or opinion on PACE loans with the Bureau, email .(JavaScript must be enabled to view this email address). (You must include Docket No. CFPB-2019-0011 in the subject line.) The deadline for comments is May 4, 2019.

Class Action Database: Vizio TV is too smart for its own good

A class action settlement involving overdraft practices at Navy Federal Credit Union was among 14 new settlements added in March to the Consumer Action Class Action Database.

Of note this month is the class action settlement In re: Vizio, Inc., Consumer Privacy Litigation, which followed an earlier action by federal and state regulators over the company’s “smart TV” privacy practices. In 2014, the Federal Trade Commission (FTC) and the Office of the New Jersey Attorney General (NJ AG) filed a lawsuit against Vizio for engaging in unfair business practices and misleading consumers about Vizio TVs’ “smart interactivity” feature. According to the FTC complaint, Vizio’s automated content recognition (ACR) software collected data on what viewers were watching without their express consent. The FTC alleged that Vizio shared households’ personal and location data—including IP addresses and ZIP codes—with third-party companies. Vizio settled with the FTC and the NJ AG in 2017 and agreed to delete data collected before March 1, 2016, and to obtain customer consent for future data collection.

Now, a civil class action over the practice has been settled and is open to claims. The class alleged that Vizio automatically collected data without prior notice or consent via the smart interactivity feature, which was turned on by default, and subsequently sold the personally identifiable information it collected to data brokers and advertisers. Vizio denied the allegations but agreed to a $17 million settlement to end the lawsuit. Vizio also agreed to delete all of the data it collected between Feb. 1, 2014, and Feb. 6, 2017.

Consumers who bought certain Vizio smart TVs during this time period may be eligible for cash payment. Learn more here.

The claims deadline is April 29, 2019.

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 seven 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 bulk 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.

 
 
 

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