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Consumer Action INSIDER - October 2020

What people are saying

Some pretty cool stuff [happening]…Helping to lead a webinar on the connection between COVID-19 and domestic violence for Consumer Action, a national org doing some great work. —Maclen Stanley, Maclen Stanley Law

Did you know

If you are a homeowner experiencing financial hardship during the pandemic, you may be eligible to defer your mortgage payments for a time. A federal law provides protections for homeowners with federally or government-sponsored enterprise (GSE)-backed mortgages (i.e., those issued by agencies like the Federal Housing Administration, U.S. Department of Veterans Affairs, U.S. Department of Agriculture, and Fannie Mae or Freddie Mac). Your options depend on the specific agency that owns or backs your mortgage. The Consumer Financial Protection Bureau explains mortgage relief opportunities here.

Lost your job in the pandemic? You’re not alone

In light of the unprecedented level of job loss since the onset of the COVID-19 pandemic, Consumer Action invited two experts from the Georgetown University Center on Education and the Workforce to speak at its Sept. 9 webinar: “Tracking the COVID-19 Economic Devastation: Workers facing job losses, and education and training strategies for recovery.”

Martin Van Der Werf, associate director for the Center’s Editorial and Postsecondary Policy department, and Emma Wenzinger, the Center’s strategic communications specialist, discussed the latest research on how the pandemic has affected the workforce, who has lost jobs, and who has been hurt the most, economically, by the layoffs. They also offered information on continuing education and training opportunities and strategies for transitioning into a new job.

To give the audience a sense of how large the job loss has been during the pandemic, Van Der Werf pointed out that 800,000 jobs were lost during the worst months of the 2008-2009 economic/housing crisis and recession, while more than 20 million jobs were lost in a single month during the pandemic-caused recession!

Wenzinger explained how the recent historic job losses have hurt the most vulnerable people in the community. While this has happened with just about every economic downturn, this recession is unique in that it affects women workers more than their male counterparts. Those most affected typically have the lowest incomes, lowest level of educational attainment, part-time jobs, and/or jobs at businesses that are vulnerable to sudden changes brought on by outside factors. Black people, Latinos, women (particularly those with children or those working in childcare), and adults without bachelor’s degrees have borne the brunt of the job loss this time around. Wenzinger explained that women have accounted for a higher share of job losses than men across all levels of education, and showed that 51% of women were not working in May and June, as compared to 43% of men.

"And that’s a big gap,” Wenzinger explained, “especially because in January, women hit the milestone of holding a majority of payroll jobs in the U.S. workforce. In other words, women slightly outnumbered men in the workforce shortly before the pandemic, but that has quickly changed.”

In May, women were four times more likely than men who were not working to report that they were not working specifically so that they could care for children who were not in school or daycare.

Worse news yet: Van Der Werf said that of 23 million jobs lost from January through June, more than half have not returned, and are not expected to fully return before 2024. To get back into the workforce sooner, Van Der Werf added, many workers are going to have to pursue additional training and education.

“But when you hear that, don't be too intimidated,” he reassured participants, explaining that more education does not necessarily mean acquiring a bachelor’s degree. “There are lots of opportunities in the workforce with credentials such as associate degrees and certificates.”

After highlighting how workers with more education are less likely to have lost their jobs during the recession, Van Der Werf and Wenzinger went on to describe some of the education and training strategies that can lead to a good job, including associate degrees from community colleges, dual-enrollment programs to help those enrolled in high school obtain associate degrees, apprenticeships and certificates. Typically, these take less time to complete and are less expensive than bachelor's degrees. Some associate degrees, such as those in engineering, protective services, IT and health sciences, even lead to higher salaries, on average, than many bachelor's degrees. Van Der Werf recommended jobseekers contact their local American Job Center to learn more about training and job opportunities.

Participants also heard about the risks presented by for-profit colleges, which typically advertise on TV and should be avoided because they saddle students with loads of debt for often worthless degrees. Van Der Werf added that his employer, the Georgetown University Center on Education and the Workforce, offered a helpful “return on investment” database of more than 4,500 U.S. colleges and universities to help would-be students estimate their income after graduating with a certificate or other degree from various programs/schools and approximately how much they’re likely to have to pay back in student loans.

During an extensive Q&A session, Van Der Werf offered many practical tips. One suggestion for older workers who’ve lost jobs or are having trouble finding a new job: Consider obtaining a credential from an educational institution or certification body to show that you are continuing to advance in relevant job skills. For additional tips on free or low-cost ways to develop new job skills, as well as loads of information on available certificates and degree programs (and even professional advice on how to handle job loss), Consumer Action recommends its new "Coping with COVID-19: Making a job or career transition" fact sheet.

Consumer Action’s “Tracking the COVID-19 Economic Devastation” is part of Consumer Action's 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.

Financial health measurement: A barometer of consumer finances

Financial health measurement helps gauge how consumers are doing financially during a given period of time. It can help consumers take account of their finances and it assists practitioners in designing programs around the needs of their clients, evaluate the effectiveness of programs and demonstrate impact. In August, Consumer Action’s Audrey Perrott shared insights into Consumer Action’s financial health measurement journey using the Financial Health Network’s FinHealth Score® Toolkit at the Financial Health Network’s “Orienting Around Financial Health” virtual meeting. The Financial Health Network works to improve consumers’ finances by bringing together financial services providers and private and public organizations.

The virtual meeting featured presentations from Consumer Action, Servus Credit Union’s manager of member and market insights, Justine Adams, and Doxo’s vice president of marketing and consumer services, Jim Kreyenhagen. Each presenter provided a perspective on best practices in financial health measurement, strategies to effectively implement a financial health measurement program and tips for solving challenges.

Consumer Action and Servus Credit Union are 2020 Financial Health Leaders with the Financial Health Network. The Financial Health Leaders program spotlights network members at the forefront of financial health and promotes their work as an example for others.

“It is an honor to be recognized amongst our peers as a Financial Health Leader, and a privilege to share our insights, implementation strategies and potential challenges with others,” noted Perrott.

Consumer Action is not a new adopter of financial health measurements. Through educational mini-grants with network partners and educational partners, we have been measuring consumers’ financial health—particularly low-income, financially vulnerable consumers—for nine years. Initially, we created in-house surveys that were deployed in paper format to consumers. In 2019, we adopted the use of the Financial Health Network’s FinHealth Score Toolkit survey in our financial technology (FinTech) education and distribution pilot. As the Financial Health Network explains, “Unlike narrow metrics like credit scores, [the] financial health [that the FinHealth survey measures] considers whether individuals are spending, saving, borrowing, and planning in a way that will either contribute to, or detract from, their resilience in the face of unexpected events and ability to thrive in the long term.”

“We digitized the survey, and required the financial coaches participating in our FinTech program to take it alongside consumers,” Perrott said. “We have continued to use the survey in subsequent pilots because it has enabled us to compare the financial health of our consumers against national, regional and local benchmarks. During the pandemic, we have had to pivot and deploy the survey in a number of new ways to make it more accessible to the vulnerable consumers we serve.”

Perrott shared Consumer Action’s approach to financial health measurement and detailed how we’ve been able to use the FinHealth Score Toolkit survey, coaching tools and technology to improve the financial health of the consumers and service providers participating in our pilots. Key insights include the importance of: knowing your audience; anticipating barriers (e.g., language differences); being realistic about the staff time needed to engage in financial health measurement and understanding the time needed for consumers to participate; ensuring appropriate access to technology; deploying your survey in ways most convenient for your clients (consumers); being willing to pivot, if necessary; and sharing findings (internally and externally) with key stakeholders.

Since 2019, Consumer Action has participated in four FinTech education and distribution pilots with 19 sites. We have trained more than 150 community-based organization (CBO) staff on financial health and technology. Nearly 2,200 consumers have been served to date by our financial health and technology education and distribution programs.

Hotline Chronicles: Knowledge is power

Consumer Action hears from thousands of consumers each year who have complaints with businesses and products, but who don’t know where to turn to resolve these problems. Occasionally we’ll tell a friend what we do professionally, and, lo and behold, it turns out that the friend has a thorny consumer issue. This happened to Consumer Action hotline counselor Ricardo (Rick) Perez, whose California-based buddy shared a story about his less-than-two-year-old malfunctioning TV. Rick’s friend happened to ask if Rick knew where he could get the TV repaired. The friend was taking the repair route after the TV’s manufacturer told him the TV warranty had expired and no replacement parts were available.

Wait a minute, said Rick, a TV shouldn’t stop working so quickly—at the very least the company should be able to provide parts to fix it. And just like that, Rick told his friend that California’s “lemon” law—which most people think is just to protect new-car buyers from being stuck with faulty vehicles—is also a powerful weapon for fighting electronic “lemons” like TVs or computers. Under this law, officially called the Song-Beverly Consumer Warranty Act, manufacturers of most household electronic goods costing more than $100 have to provide spare parts for up to seven years, regardless of warranty status. If the company fails to provide a repair part, consumers are well within their rights to demand a replacement device.

Armed with this information, Rick’s pal sent the company the pertinent section of the Song-Beverly Consumer Warranty Act (Section 1793.03), and guess what: The company informed him in short order that a new TV was on its way. When the TV arrived, Rick’s friend shared the good news.

Most people would offer to buy their friend a beer or two. Rick’s friend went further: He made a $50 donation to Consumer Action!

Learn more here about the Song-Beverly Consumer Warranty Act, aka California’s Lemon Law.

But what if you don’t live in California? In addition to state lemon laws, which mostly apply to new and, in some cases, used vehicles, the federal Magnuson-Moss Warranty Act of 1975 (sometimes referred to as the country’s “appliance lemon law”) was designed to ensure that manufacturers honor their warranties no matter where in the U.S. covered products are purchased.

Magnuson-Moss applies to express and implied warranties on most consumer products. Express warranties are specific promises made regarding repair and/or replacement and are usually in writing. Implied warranties, which don’t have to be in writing, hold manufacturers responsible for ensuring that their products work as promised. With both types of warranty, the manufacturer is responsible (within a certain time frame) for correcting any defects in the products, or for replacing them if they can’t be fixed.

If you’d like to learn what your state lemon law covers, check out this list from the Better Business Bureau. The Federal Trade Commission also offers this helpful article about warranties. If you can’t locate specifics about whether your state has product warranty laws that apply to products other than vehicles, contact your state attorney general’s office.

If you purchase a pricey product that fails a lot sooner than you’d expect, don’t just throw it in the landfill. Know and stand up for your rights (regardless of who you know); our free “How to Complain” guide will help make you an expert.

*Not this consumer’s real name

Coalition Efforts: Protecting students, genetic data privacy and generic drug access

States need “bills of rights” to protect student loan borrowers. Consumer Action joined a coalition of over 50 organizations in support of the Student Loan Borrower Bill of Rights in Massachusetts. (We’ve also supported a similar effort that recently passed the California legislature.) Even prior to the current pandemic, student loan borrowers were suffering at the hands of a predatory student loan servicing industry that has seemingly misled them to increase its profits. Now, with the increased financial instability brought on by the pandemic, it’s more important than ever that borrowers are informed of their rights and protected by strong consumer guidelines. Learn more.

California can stop companies from selling consumers’ genetic testing information. Help could be on the way for California consumers using direct-to-consumer genetic testing services (through companies like Ancestry and 23andMe) thanks to SB 980, a bill that was recently approved by the state legislature with strong bipartisan support. If signed into law by Governor Gavin Newsom, the bill would provide strong privacy and security protections to govern the deeply personal data collected by the companies. SB 980 would require all companies selling Californians genetic testing services to make their privacy policies clear and to obtain consumers’ consent for the collection, use and disclosure of their data. Learn more.

Patients deserve access to affordable prescription drugs. The U.S. Food and Drug Administration (FDA) recently sought input for improvements to its generic drug approval process, including for its approval of “complex” generic drugs (i.e., those with complex active ingredients and/or routes of delivery). Consumer and patient advocates have responded, stressing the importance of implementing policies that increase competition among drug companies, lower costs, and reduce barriers to generic prescription drugs (fewer than half of which are commercially available due to schemes like rebate walls and restrictive formulary guidelines). Advocates say it’s time Americans have greater access to more affordable generic medicines. Learn more.

CFPB Watch: Relief for remittances, ITT Tech debt, and future college costs

Consumers who used money transfer services through Sigue Corporation (or its subsidiaries, SGS Corporation and GroupEx Corporation) may be entitled to a refund. The California-based remittance company has agreed to pay approximately $100,000 in refunds to consumers who did not receive them after funds from a remittance (money sent overseas) was not made available when promised.

Sigue also failed to notify consumers of the outcome of investigations after the consumers had complained to the company about errors in remittance transactions. As part of the resulting settlement with the Consumer Financial Protection Bureau (CFPB), Sigue also will pay a $300,000 penalty.

Another money transfer company, Trans-Fast Remittance LLC (which operates in 30 states), also failed to resolve money transfer errors—this time after misleading consumers in advertisements about the speed of its remittances. The Bureau recently fined Transfast $1.6 million for not providing refunds to customers, not properly responding to cancelled transfers, and engaging in deceptive acts and practices. Unfortunately, the Bureau, in this case, did not require financial relief for consumers.

Under the Trump administration, the Bureau, in most settlements, has been reluctant to require financial relief for consumers.

Recently, the Bureau also took the unusual step of releasing a public service announcement to alert consumers who were harmed by the Siringoringo Law Firm, Stephen Lyster Siringoringo, Clausen & Cobb Management Company, Inc. and Joshua Cobb that they may be eligible for restitution. The Bureau had sued the law firm and its associates for illegally charging upfront fees on home loan modifications and for misrepresenting the loan modifications that homeowners would receive.

In the Siringoringo case, in order to obtain a refund, consumers who paid a fee to the law firm from July 22, 2011 through July 26, 2013 must file a claim. For details click here or call 855-963-0389 to have a claims form mailed to you. Claims must be submitted online or mailed before Dec. 31, 2020 to:

CFPB v. Siringoringo
Civil Penalty Fund Third-Party Administrator
P.O. Box 3474
Portland, OR 97208-3474

ITT Tech student debt forgiven

Former students of the now defunct ITT Technical Institute (ITT Tech) finally will see their student loan debts forgiven! More than $330 million in private student loan debts will be expunged for approximately 35,000 students who were steered into predatory loans by ITT Tech.

The CFPB and 48 state attorneys general reached a settlement in September with Deutsche Bank and PEAKS Trust, the owner and manager of the ITT loans, to cancel all outstanding ITT Tech student balances.

According to the Bureau, ITT Tech and PEAKS pressured students to sign up for high-cost student loans knowing that the borrowers did not understand the loan terms, could not afford the loans and were very likely to default. About 80% of the loans ended up in default.

Borrowers who are eligible for loan forgiveness will be notified by their loan servicers and will not have to do anything to receive relief. PEAKS is also required to ask credit bureaus to delete information on ITT Tech loans from borrowers’ credit reports.

Financial inTuition

The Consumer Bureau has created a new podcast called Financial inTuition. The free resource is designed to help students and parents prepare for paying for one of the most expensive investments they will ever make: a college education.

The podcast covers tips on “financing your future, managing money as a young adult, understanding and protecting your credit record, and repaying student loan debt.”

Class Action Database: Predatory lender gets caught in its own scheme

A class action settlement involving Apple Powerbeats 2 was among seven new settlements added to the Consumer Action Class Action Database during September.

Of note this month is the class action settlement in the Solomon, et al. v. American Web Loan, Inc., et al. case.

The plaintiffs filed a class action against the online payday lender American Web Loan, Inc./AWL, Inc./Clear Creek Lending (collectively, AWL). AWL illegally issued high-cost, short-term loans with annual interest rates of more than 700%! Plaintiffs claimed that AWL did not disclose these high interest rates before loan approval, nor did it disclose its loan repayment schedules, finance charges, or the totals that would be due. These terms were only disclosed after it issued the loans to borrowers. For example, after AWL deposited a $500 loan in one plaintiff’s bank account, the company then informed the borrower of a finance charge of $1,543.16 and a total payment (the amount due if paid as scheduled) of $2,043.16.

Several states have passed laws that make these types of abusive payday loans unenforceable or void. AWL did not have a license to lend in any one state, but, like many payday lenders, the company claimed that its loans were legal regardless of state law because its interest rates and terms were “authorized” under federal Native American tribal law (in this case, the Otoe-Missouria tribe). This legally dubious tribal “loophole” is one that Consumer Action argues could be closed with the passage of a strong national interest rate cap bill, like the Veterans and Consumers Fair Credit Act, which would cap rates at 36% across the board.

The class action lawsuit argued that AWL “is not a legitimate arm of the tribe, and tribal sovereign immunity does not shield American Web Loan or any other defendants from liability in connection with the unlawful online payday lending scheme.”

AWL agreed to a $141 million settlement, while denying the allegations.

The settlement will provide eligible class members with $65 million in cash payment and $76 million in the cancellation of 45,305 loans, along with the removal of any negative credit events resulting from this “debt trap” caused by the company’s exorbitantly high interest rates.

You are part of the class if, between Feb. 10, 2010 and June 26, 2020, you obtained a loan from AWL. Class members who obtained a loan in the approximately two-year time span between Feb. 10, 2010 and Dec. 31, 2011 must, however, “demonstrate their eligibility” for payment by submitting a claim form and supporting documents by the deadline.

The claims deadline is Nov. 3, 2020.

About Consumer Action

Consumer Action is a nonprofit 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 more. 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. 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 6,000 community-based organizations. Outreach services include in-person and web-based 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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