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Consumer Action INSIDER - January 2021

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Did you know?

The Federal Trade Commission (FTC) enforces consumer protection laws to stop illegal business practices and get refunds to people who have lost money. The agency returned more than $610 million to consumers during the 2019-2020 fiscal year. (If you include all consumer refunds administered by federal agencies, the figure rises to $1.5 billion!) To learn more, read “Recent FTC Cases Resulting in Refunds.” Consumers who receive a refund check may wonder if the refund is legitimate: Here is what the agency has to say about how to identify a legitimate FTC refund check.

Don't leave thousands on the table this tax season!

Consumer Action has just published an updated version of our Get Credit for Your Hard Work guide reflecting increases in income limits and credit amounts. The guide for the 2021 tax-filing season (i.e., 2020 tax returns due in April) is available to download now in English, Spanish, Chinese and Vietnamese. A Korean translation will be available by mid-January.

Widely considered the federal government’s most effective antipoverty program, the EITC puts money back into the pockets of qualifying low- and moderate-income working taxpayers when they file their tax returns. Qualifying workers can get the money even if they don’t owe any taxes—but they must file in order to claim the credit (even if their income is so low that they normally would not file a tax return).

With EITC credits ranging from $538 for childless filers to $6,660 for filers with three or more children during the 2020 tax year, the 20% of eligible workers who fail to file and claim the credit are leaving a lot on the table. For reference, the average amount of EITC received nationwide in 2019 was about $2,476—enough to make a real impact on workers’ financial wellbeing through the opportunity to increase their savings, reduce debt, or make needed home and auto repairs.

Just announced: The U.S. coronavirus relief package announced on Dec. 20 includes a “lookback” provision that will allow low-income workers to apply their 2019 earned income to their 2020 tax returns for the purposes of calculating the EITC or Additional Child Tax Credit (ACTC). For both these credits, the more you earn (while still remaining below the maximum), the higher your credit. However, millions of qualifying workers lost their jobs and had lower incomes in 2020 due to pandemic-related business closures. The lookback measure will allow filers to receive a credit in line with their normal earnings level, rather than be penalized with a lower credit on top of reduced earnings. However, Neighborhood Trust Financial Partners cautions that it will be up to taxpayers to actively “opt in” to the lookback provision (it won’t automatically occur). With millions of filers set to turn to online tax filing services for the first time due to the pandemic, it is more important than ever to spread the word and ensure filers know to check this option, if applicable!

Get Credit for Your Hard Work provides all the crucial information consumers need to file for the EITC, as well as where to get more information or tax filing assistance.

The IRS will begin accepting e-filed tax returns on Feb. 12 (originally reported as Jan. 25, but the IRS announced a delay on Jan. 15), with returns due by April 15. Refunds due for returns claiming EITC or the Child Tax Credit (CTC) may be delayed until early March (originally expected in late February, but pushed back because of the delay), giving the IRS time to verify the credits. Nevertheless, the agency recommends that consumers file their returns as early as possible to prevent fraud. Learn more about the filing and refund timeline here.

Follow your refund on the IRS’s Where’s My Refund? webpage or the IRS2Go app.

Consumer Action will join hundreds of other organizations in promoting the Earned Income Tax Credit on EITC Awareness Day, which this year falls on Jan. 29 (always on the last Friday in January). The event is a national effort to increase awareness of the EITC (as well as the Child Tax Credit, the Additional Child Tax Credit and the American Opportunity Tax Credit); motivate workers to find out if they qualify; and steer low-income filers to free tax prep assistance. If you work with an organization that would like to help get the word out, visit the IRS website to search for updated EITC outreach tools in January.

Navigating children's and teens' mental health, privacy in a pandemic

In response to nationwide school closures, ramped-up use of online schooling, and rising stress levels among families working and learning under one roof, Consumer Action invited four experts in children’s privacy and psychology to speak at its timely Nov. 17 webinar: “The Impact of COVID-19 on the Mental Health of Children and Adolescents, and How to Protect Children’s Privacy Online.” A recording of the free webinar can be viewed here.

Speakers included Jamie D. Aten, Ph.D., founder and executive director of the Humanitarian Disaster Institute (and author of such articles as “How to talk to your kids about COVID 19”); Ariel Fox Johnson, Common Sense Media’s senior counsel for policy and privacy; Dr. A. Paul Kurkjian, M.D., a California-based board-certified adult and child psychiatrist specializing in anxiety and mood disorders; and Consumer Reports privacy researcher Bill Fitzgerald.

Dr. Aten began the webinar by explaining that, even before the pandemic struck, teens and children were reporting record-breaking levels of isolation and loneliness, in no small part due to the prevalence of social media. (Dr. Kurkjian reiterated this point later in the webinar when he cited the significant increases in suicide among teens who spent five hours or more online per day, versus one hour.)

Despite experiencing pandemic-induced stressors themselves, parents are instrumental in helping their kids cope, Dr. Aten reassured listeners—as long as those parents make sure that they’re engaging in self-care. “If we’re feeling highly anxious or extremely depressed or just really overwhelmed, our children, in many ways, are like a sponge, and they’re going to pick up on that and absorb that stress from us.”

Parents should be honest with their children—to a point—outlining the precautions we all need to take (e.g., wear masks) in age-appropriate terms, while reassuring them that caregivers and schools are doing everything possible to keep them safe. In difficult times, adults are often quick to point out negative or troubling behavior, Dr. Aten explained, but it’s critical that parents spend more time than ever pointing out their children’s character strengths and good coping skills.

A major way to protect children is to limit and monitor their media exposure. Aten recommended parents read his organization’s free report “Helping Children Cope with Traumatic Events,” since it also contains useful tips on how to talk about online safety steps with children (e.g., never talk to strangers). Providing children with normalcy and routine (including continuity of learning, if possible), as well as regular family check-ins when parents can talk about controlling online activities, is also important.

Common Sense Media’s Fox Johnson pointed out that privacy should be a family value, and cautioned that parents, too, must be careful about what they share online with regard to both their children and their children’s classmates. Adults also bear the responsibility of learning about available parental controls to minimize distractions and data collection, including in schools, via the many new, untested data-sucking apps designed to ascertain children’s “health.” And parents must be aware of whether any classes are being recorded or monitored.

“Some of the more popular services [in play now] require a student to do a video scan of the room that they’re sitting and working in before they take an exam…exposing other family members to surveillance,” Consumer Reports’ Fitzgerald explained.

Parents can learn more about their child’s educational platforms by asking school administrators questions such as “Who reviewed the privacy and security practices of the vendor you’re using?” and “Are the apps that you’re telling students to download peer-reviewed and evidence driven?”

When it comes to navigating this brave new world, sometimes the best solution doesn’t come from technology, as Fox Johnson pointed out, but from limiting our use of it and not expecting tech to be a “magic bullet” solution. This is particularly true since the federal laws designed to protect children’s privacy are woefully outdated and inadequate, especially when it comes to online vendors collecting and sharing users’ data for commercial purposes.

“Don’t expect privacy tools to do much,” Fitzgerald cautioned. “The human conversations we have with people about technology are often our most effective tools in making sure that we use it well and [in] establishing norms around privacy.”

Earlier this year, when it became clear that the coronavirus pandemic would profoundly affect our lives, raising daunting challenges for consumers across the country, Consumer Action launched our COVID-19 Educational Project, made possible with major funding from Wells Fargo and additional support from AT&T, Bank of America, Capital One, JPMorgan Chase & Co. and Square.

The project includes a library of fact sheets and webinars, covering everything from your housing rights if you or your family members contract COVID or face eviction from job losses, to estate planning in the event of your death, as well as a regularly updated resource guide to help you deal with the challenges of pandemic-related job loss, housing and food insecurity, health care, debt repayment and more.

Hotline Chronicles: A surprise $1,500 bill for a 'free' COVID test

Marta* from Florida wrote to Consumer Action’s hotline with a complaint about a local hospital’s COVID-19 testing charges. Marta reported that she had called the hospital in advance and specifically asked if she could get a free test, at which point she was told that she could. Spoiler alert: She couldn’t!

“I asked again when I got to the emergency room about the cost, just to make sure, because I do not have health insurance,” Marta wrote. “They assured me that the test was free and mentioned nothing more.”

A few days later, Marta’s husband went in to the same hospital for a test. Both learned they were infected with coronavirus.

“A week after my test, I received a bill for $1,500 from the hospital,” Marta lamented.

A couple of days later, a bill for the same amount arrived for her husband’s test.

“This is sad,” Marta wrote. “I am upset that this hospital would mislead us.”

Unfortunately, such stories are widespread. New laws, passed since the pandemic began, require that public and private health insurers cover coronavirus tests at no additional cost to patients—in other words, the patients’ deductibles and copayments do not apply.

If insured patients are billed for coronavirus tests, they should appeal the charges with their health insurance companies; if that fails, to state insurance regulators.

However, the laws can be confusing, especially for uninsured patients. What’s not communicated to many of them is that they will be charged full price for tests unless they can find free or reduced-cost ones through their state, if it has chosen to cover test costs through Medicaid or health department budgets. In Marta’s case, because she and her husband lack insurance, it appears they should have avoided a hospital and sought out a state testing site. (Click here to find community-based testing sites near you.)

However, because they were told the test would be free, we suggested they:

  • Try to negotiate with the hospital for a payment waiver, pointing out that different staff members told them, on two occasions, that there would be no cost for the tests.
  • File a complaint with the Florida Agency for Health Care Administration, which regulates hospitals in the state.

We also suggested the couple visit Florida’s Affordable Care Act (Obamacare) online marketplace to learn if they are eligible either for reduced-cost health insurance via Medicaid or for government premium subsidies. (Florida, like many other states, has an ongoing special enrollment period for Covid-19-impacted consumers.)

To learn about health insurance options and special COVID-related enrollment periods in other states, start with the federal marketplace, at HealthCare.gov.

Coalition Efforts: Protection from debt collectors, lenders, Big Tech

It’s critical that the CFPB uphold strong lending protections for all consumers. In order to protect consumers from discrimination and provide access to safe and responsible credit products with fair terms, we and our allies, last month, submitted comments to the Consumer Financial Protection Bureau (CFPB) in support of the Equal Credit Opportunity Act (ECOA). Under the ECOA, it is illegal to discriminate against a borrower “on the basis of race, color, religion, national origin, sex, marital status or age in credit transactions.” Advocates urged the Bureau (currently governed by Trump-appointed leadership) to take no action that would weaken this critical regulatory measure, so that all consumers and communities are protected from discrimination in the lending industry (e.g., when pursuing a mortgage, small business loan, etc.). Learn more.

Safeguard limited-English speakers from harmful, illegal debt collection practices. A coalition of consumer, civil and human rights, labor, community and legal services organizations wrote to the CFPB to voice concerns with its approach to consumers with limited English proficiency (LEP) in its recently finalized debt collection rule. There are many misconceptions about debt collection laws that are heightened by language barriers, leaving LEP consumers vulnerable to harassment and exploitation. These consumers need clear information about the debt collection process and the details around the debt they allegedly owe in order to understand (among other things) if the debt is, in fact, theirs; if and when they are required to pay it; and/or if a collector’s behavior is abusive and, therefore, illegal. Providing enhanced language access is a critical and essential step the CFPB can take to uphold its mission to enforce consumer rights for all, say advocates. Learn more.

Biden administration urged to reject Big Tech cabinet appointments. Consumer and privacy advocates urged President-elect Joe Biden to avoid appointing representatives from tech giants like Amazon, Apple, Facebook and Google to his cabinet. The companies’ practices, particularly in regard to predatory consumer data harvesting, represent serious threats to privacy and, ultimately, to the economic wellbeing of every American. Advocates warned that representatives from these companies should not hold positions of power within our government. Instead, they urged Biden to assemble a team that will represent working Americans and not the Big Tech companies that financially profit by exploiting them. Learn more.

California legislators urged to make significant investments in public broadband. One in eight California families are without internet access, and nearly one million school-aged children in the state have no connection. This lack of access is creating additional hardships during a crisis when connectivity is more essential than ever (e.g., to attend classes remotely or to apply for a new job after experiencing pandemic-related job loss). Consumer Action recently joined advocates in urging California legislators to support a state bill titled "Broadband for All" (SB 4), which would enable local governments to make a massive billion-dollar investment in public infrastructure by unlocking the bond market for their communities. We believe the bill would help underserved individuals and families immensely during this challenging time. Learn more.

CFPB Watch: Nationstar, LendUp settle wrongs; right to 'innovate'

The Consumer Financial Protection Bureau (CFPB), attorneys general from all 50 states, the District of Columbia, and 48 state bank regulators all have settled multiple lawsuits with the nation’s largest non-bank mortgage servicer, Nationstar (also known as Mr. Cooper Home Loans), for failing 40,000 borrowers and, in some cases, causing homeowner foreclosures.

Regulators charged the mortgage servicer with failing to honor home loan modification agreements struck with struggling borrowers. From 2012 to 2016, Nationstar is accused of a variety of egregious offenses, including (but not limited to):

  • Foreclosing on borrowers despite loan agreements in which they promised not to do so;
  • Wrongfully increasing homeowners’ previously agreed-upon modified monthly mortgage payments;
  • Failing to properly process borrowers’ loan modification applications;
  • Failing to terminate borrowers’ costly private mortgage insurance (PMI);
  • Failing to send borrowers’ property tax payments in; and
  • Failing to review and respond to borrower complaints.

If the court accepts the government settlement offers, Nationstar will be required to pay a total of approximately $85 million to more than 40,000 wronged consumers.

Many borrowers have already received funds from the $57.7 million that the company was forced to pay in financial relief. Nearly $16 million has yet to be disbursed to harmed consumers, however. Nationstar/Mr. Cooper will also be required to pay a $1.5 million penalty to the CFPB.

Some borrowers will receive $250 from the settlements, while others who wrongly lost their homes to foreclosure are expected to (or did) receive a mere $840.

A settlement administrator will contact eligible borrowers to facilitate direct payment in 2021, once the settlement has been finalized. Borrowers who want to be reconsidered for a loan modification must contact Nationstar/Mr. Cooper directly.

Bureau advice, and no action

The Bureau has put considerable energy, in recent years, into providing regulatory flexibility for financial technology (FinTech) firms offering innovative products or services to customers whose access to credit is limited. To this end, the CFPB has been issuing what are called “no-action” letters to companies that seek to try out new FinTech lending approaches without fear of regulatory scrutiny. For instance, the CFPB recently issued such a letter to FinTech lender Upstart for its nontraditional credit underwriting decisions. The letter assures Upstart that, for the next three years, the Bureau will not scrutinize its use of artificial intelligence (AI) to decide who is eligible for credit and at what interest rate. (Opponents of AI charge that automated systems continue to propagate systemic racial biases.)

In general, consumer advocates oppose speedy access to innovative products without agency oversight, for fear that it puts consumers at risk of financial harm. (Think back to the risky lending days before the 2008 foreclosure crisis!) FinTech firms, meanwhile, fear that their novel product offerings may be perceived as unfair or deceptive by regulators.

The Bureau recently adopted a new advisory opinion policy to clear up any ambiguities for companies that are unclear on their regulatory obligations. The Bureau’s first formal advice was directed at companies trying to offer an affordable, innovative solution to those consumers who find it difficult to make ends meet until the next paycheck. Some employers had made “earned wage access” products available to their staff, to help them avoid resorting to predatory payday loans (which can carry 300% and higher annual interest rates). Earned wage access services allow employees to take an advance on future paychecks.

What these companies wanted to know from the CFPB was: Is this early access to an individual’s earned wages considered credit or a loan? Depending on which, certain laws would apply.

Using its new advisory opinion policy, the Bureau concluded that earned wage access products are not considered credit because the funds are merely allowing employees to use their own money—previously earned wages—early.

Advisory opinions will be available for public review here as the Bureau issues additional ones.

CFPB sues LendUp

The CFPB has sued online lender LendUp for violating the Military Lending Act, which caps interest rates for most loans made to active duty military members and their families at 36%. LendUp is accused of charging higher rates on more than 4,000 loans.

The Bureau also alleges that LendUp did not provide all necessary disclosures, and illegally required servicemembers to settle disputes through mandatory arbitration.

LendUp told the Military Times that it self-reported its violations to the Bureau, has returned all interest and fees to affected borrowers, and has corrected inaccurate delinquency information on borrowers’ credit reports. The case, which was filed in December 2020, is pending.

Class Action Database: Capital One’s cash withdrawn over ATM fees

A class action settlement involving automaker BMW’s timing chain was among seven new settlements added to the Consumer Action Class Action Database during December.

Of note this month is the class action Figueroa v. Capital One, N.A.

Plaintiffs allege that Capital One breached its contract with accountholders by deceptively and unfairly collecting out-of-network ATM fees. For example, plaintiff used an out-of-network ATM to check his account balance and withdraw $20. There was no warning that any fees would apply before he completed the transaction. The ATM owner charged one fee of $3 for the cash withdrawal, and Capital One charged an out-of-network fee of $2 for the balance inquiry and another $2 for the cash withdrawal. As a result, plaintiff was charged $7 in fees for a $20 cash withdrawal.

Plaintiffs claim that the Capital One accountholder agreement stated that a balance inquiry is not a transaction, and only transactions would incur fees. Plaintiffs alleged that, despite the agreement, Capital One collected a balance inquiry fee when the accountholder merely checked his account balance at an out-of-network ATM.

Capital One denied the allegations but agreed to a $13 million settlement to end the lawsuit.

The settlement class members are defined as current and former Capital One accountholders who were charged an out-of-network balance inquiry fee during the class period:

  • April 6, 2008 to June 30, 2020, for accounts established in Louisiana
  • April 6, 2012 to June 30, 2020, for accounts established in Connecticut, New York and New Jersey
  • April 6, 2013 to June 30, 2020, for accounts established in Virginia
  • April 6, 2014 to June 30, 2020, for accounts established in Texas
  • April 6, 2015 to June 30, 2020, for accounts established in Delaware, Washington, D.C., and Maryland

If the settlement is approved, class members will automatically receive a payment or account credit.

The final approval hearing is on Jan. 11, 2021.

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 more than 6,000 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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