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Consumer Action INSIDER - September 2022

What people are saying

Congratulations on 50 years! Your articles have made me more attentive to the kinds of scams & scammers out there; the importance of self-protection online and on the phone; and the aspects of my life that could make me an attractive mark. Your writers and editors offer clear, informative prose. And your descriptions of the latest scams, how to respond to them, and where to report them are invaluable. Thank you!!

—PG, Portland, OR, via Consumer Action feedback survey

Did you know?

The U.S. Department of Transportation (DOT) is seeking comment on a proposal to strengthen its “longstanding interpretation” of its rules when airlines or ticket agents (such as online platforms like Expedia, Priceline, Travelocity, etc.) refuse to provide refunds to ticket buyers after flights are cancelled or passengers are subjected to significant changes in their itineraries. “Significant” would mean a departure/arrival delay of at least three hours for domestic flights, or at least six hours for international flights. Travelers would also be entitled to a refund in the case of routing changes, new connections, or aircraft switches that cause a “significant downgrade” in amenities or other features. The DOT proposes to require U.S. and foreign air carriers and ticket agents to provide refunds (instead of travel vouchers or credits) if the companies received significant financial assistance from taxpayers during public health emergencies, such as the COVID-19 pandemic. You can comment at the Regulations.gov website (docket number DOT-OST-2022-0089).

Nasdaq Foundation funds investor education initiative

By Audrey Perrott

The Nasdaq Foundation has awarded Consumer Action a grant to fund an investment literacy and engagement project geared to women and BIPOC consumers. The project entails creating investor education resources, hosting a webinar series, and offering financial capability programming to help close the racial and gender investing gaps and improve the financial health of diverse consumers.

According to Pew Research Center, more than half of American households have investments in the stock market. However, there are stark disparities when you look at participation by race. A majority (61%) of white households own some stock, compared with 31% of Black and 28% of Hispanic households. Median investments vary as well. Among whites, the median is about $51,000. By comparison, the median for Black families is $12,000, and for Hispanic families, it is just under $11,000.

Prosperity Now’s The Road to Zero Wealth predicts that median Black household wealth will hit $0 in 2053 and median Latino household wealth will hit $0 in 2073. In order to change this trajectory, we need to provide investor education to consumers of color and encourage investing in the stock market to build wealth.

The investing gap between the genders is equally concerning. A 2021 NerdWallet survey found that less than half of women in the U.S. (48%) invest in the stock market. Other key findings from the survey include that women are less likely than men to have learned how to choose investments (69% of women, compared to 83% of men); women are more likely than men to delegate management of their portfolio (66% of women, compared to 55% of men); and anxiety and confusion are more prevalent emotions in women than men when thinking about investing (29% of women, compared to 22% of men, report feeling anxious, and 23% of women, compared to 17% of men, feel confused).

In the United States, women have a life expectancy of 81 and men have a life expectancy of 76. With more years of life to fund, and inadequate levels of savings, it is imperative that women receive investment education and start investing in the stock market.

Consumer Action is pleased to collaborate with the Nasdaq Foundation on this vital initiative, under which we will provide an investor education series for community-based organizations, educate women and BIPOC consumers on safe and sound investing, and encourage consumers to open investment accounts and make regular contributions.

Hotline Chronicles: Disappearing airline tickets

By Linda Sherry

François,* a Colorado resident, wrote to Consumer Action about a frustrating experience that occurred after he purchased round-trip United Airlines tickets for his family on the Booking.com website. Third-party booking sites are online travel agencies, or ticket agents. These companies are middlemen between travelers, airlines and hotels, and in the case of a problem, consumers are told they should contact the online companies directly to resolve any issues. For the Colorado family, this was a futile exercise.

François said that “about 24 hours prior to the flight I received an email saying that everything was okay.” François showed up at the airport with four family members three hours before their flight. A United Airlines agent told François that no tickets could be found for his party.

François called Booking.com. “I spent hours talking to agents who could not give me or the United Airlines agent a sufficient explanation as to why we were not on that flight.” After “hours on hold,” he was told by Booking.com that they had put his family on a priority list for a rebooking when seats became available. “I spent hours at the airport with my kids and my wife as we spent more money on food and drinks as we waited for an answer. I finally gave up and went home the following day hoping to get an answer soon.”

At home, François said, he kept calling and was repeatedly transferred to new people, when one agent blamed him for the mistake because he was a “no show” and had missed the flight. “I was livid and told the agent that I had receipts to prove that I was at the airport 3 hours and 40 minutes prior to my flight.” The issue remained unresolved. We advised François to submit a complaint to the U.S. Department of Transportation (DOT), which accepts and follows through on complaints from passengers who booked their travel through airlines or via third-party ticket agents. Often, the DOT is able to resolve the complaints.

While most third-party bookings are seamless, travelers who buy tickets often find they must go to the airlines afterward to buy specific reserved seating if they want it. We recommend checking with the airlines a couple days after making a third-party booking to ensure your ticket has been placed in the airline’s system. Also, take screenshots of each step of the booking process so that you have evidence of your completed purchase.

In choosing a booking site, read online reviews about them before making your reservations. Remember that third-party sites do not always offer fares from low-cost airlines, like Southwest. We found this Frommer’s guide to be helpful.

*Not this consumer’s real name

Facebook class action claims deadline approaching!

As visitors to Consumer Action’s Class Action Database have seen, Facebook agreed, earlier this year, to pay $90 million to settle litigation over the company’s practice of collecting data from Facebook users who visited non-Facebook websites. If you had a Facebook profile and visited non-Facebook websites that displayed the Facebook “Like” button between April 22, 2010, and September 26, 2011, you may be eligible for cash payment—but time to file a claim is running out. If you believe you’re eligible but haven’t been contacted directly via email, you can file a claim online by Sept. 22. Visit the settlement webpage to learn more.

And keep an eye on our Class Action Database for information—when it becomes available—about eligibility and filing a claim in the $37.5 million settlement reached last week by Meta (owner of Facebook) in a case alleging that the company violated users’ privacy by tracking their movements through their smartphones without permission and then using the information to send them targeted advertising. The class in this recent settlement is people who used Facebook after Jan. 30, 2015. It has not yet been determined how much each claimant will be paid or when checks will go out; a final settlement approval hearing is scheduled for Oct. 27.

Project educates consumers about smartphone warranties

By Monica Steinisch

Smartphones are complex, costly mini-computers (Apple’s top-of-the-line iPhone has a price tag of over a thousand dollars!), and a warranty is vital protection against defects that impact the phone’s functionality or longevity. With funding from the Rose Foundation for Communities and the Environment, Consumer Action is making sure that buyers and owners of the devices understand how warranties work, are aware of their warranty rights and know how to make a claim in case their smartphone malfunctions.

Consumer Action kicked off the project with an online survey (via SurveyMonkey, from April 27 to May 17) to learn how much consumers know about their smartphone warranties, how many had purchased an extended warranty, how satisfied they were with their devices, and what they do when they run into problems. While virtually all new, and many used, phones come with a manufacturer’s warranty, nearly one-third (29%) of the 619 survey respondents said they didn’t know if their phones came with a warranty. Nearly two-thirds of smartphone-owning respondents were aware they had a warranty but didn’t know how to file a claim, and three-quarters (75%) didn’t know where to complain if their product warranty claim wasn’t resolved satisfactorily. The findings show there is a great potential for unnecessary financial loss, and a clear need for education to help consumers understand their warranty rights and options.

To fill that need, we recently published “Smartphone warranties: Understanding and exercising your rights.” The guide is designed to help smartphone buyers make wise choices—for example, by checking the device’s warranty terms and product reviews before purchase and thinking twice before paying for an extended warranty or phone insurance. It provides smartphone owners with information about their warranty rights under the law, how to file a claim, and what to do if they are dissatisfied with how their claim is handled. For those who want just the key points, an abridged version of the guide is available, titled “What to know about smartphone warranties.” Both can be downloaded from the Consumer Action website for free. The full-length guide will be translated into Spanish and Chinese in October.

On Aug. 30, Consumer Action hosted “Smartphone Warranties and Consumer Right-to-Repair Issues: What every phone owner should know,” a free 90-minute webinar covering the information in the guide. The webinar also covered the “right to repair”—a movement to pass legislation requiring electronics manufacturers to provide the needed diagnostic/repair information and parts to product owners and independent repair shops. (Many companies discourage or prevent consumers from repairing their devices independently by withholding the needed manuals, parts or tools.) Learn more and support the effort here. If you missed the webinar, you can watch it on Consumer Action’s YouTube channel.

Joining Consumer Action’s Outreach staff, Nelson Santiago and Linda Williams, were guest presenters Kaveh Waddell, deputy editor for the Consumer Reports Digital Lab; Nandita Sampath, a policy analyst at Consumer Reports; and Kathleen Daffan, assistant director in the Federal Trade Commission's Division of Marketing Practices. Look for a story about the webinar, including highlights from the presentations, in the next issue of the INSIDER newsletter.

“We appreciate the Rose Foundation for Communities and the Environment again putting its confidence in Consumer Action’s proficiency in designing a cost-effective consumer education project, successfully reaching the target populations, and delivering unbiased, accurate information in an accessible way,” said Ken McEldowney, Consumer Action’s executive director. “With 85% of Americans owning a smartphone, and 15% of adults being reliant on their smartphone for internet access, the vast majority of U.S. households can benefit from a better understanding of how their devices are—or can be—protected and how to get the repair or replacement they’re entitled to.”

Spreading the word about the Affordable Connectivity Program

By Nelson Santiago

The back-to-school period is a great time for parents to double-check that their families have access to the internet service they’ll need. Consumer Action wants to remind readers that, under the Affordable Connectivity Program (ACP), low- and moderate-income households are eligible to receive an internet service discount of up to $30 per month (up to $75 for residents of Tribal lands) and a one-time discount of as much as $100 for a computer or tablet (unless they already received this benefit through the former Emergency Broadband Benefit program). To inform our network partners about program benefits, eligibility requirements and the enrollment process, Consumer Action offered a train-the-trainer webinar on June 21. Guest speakers not only described the nuts and bolts of the ACP, but also discussed the "digital divide" that makes the program so vital for families without broadband, and presented educational partnership opportunities for community-based organizations.

Amina Fazlullah, the senior director of equity policy at Common Sense, talked about the "excitement and relief" that the federal ACP brings those who have been working on digital divide issues and advocating on behalf of low-income consumers. "It's incredible to have a federal program that offers relief to consumers and is long-term," she said, noting that the cost of connecting to the internet is taking up a larger portion of everyone's budget. Several statistics Fazlullah cited show that a major digital divide persists in all 50 states. She urged participants to help ensure that their eligible clients enroll in the program, explaining that if consumers don't sign up, Congress could decide to cut funding next time it comes up for consideration. Learn more about Common Sense's recent efforts to create awareness of the Affordable Connectivity Program (ACP) here.

Keyla Hernandez-Ulloa, an associate chief of the Consumer Affairs and Outreach Division of the Federal Communications Commission (FCC), discussed the transition from last year's temporary pandemic-era Emergency Broadband Benefit (EBB) program to the new Affordable Connectivity Program. Hernandez-Ulloa explained that, although the EBB monthly discount was higher (up to $50, or up to $75 for Tribal lands) than the ACP discount (up to $30, or up to $75 for Tribal lands), the ACP is a longer-term program. She noted that the EBB received $3.2 billion in federal funding while the ACP received $14.2 billion. Hernandez-Ulloa also walked participants through the ACP eligibility guidelines, which include that household incomes be at or below 200% of the federal poverty guidelines or that applicants participate in specific assistance programs, receive specific federal benefits, or be the recipient of a Pell Grant. Find the FCC's Outreach Toolkit here.

To learn more, including how the ACP program complements the Lifeline telephone discount program when consumers qualify for both the ACP and Lifeline, check out Consumer Action’s "Lifeline and the Affordable Connectivity Program" fact sheet (Spanish, Chinese, Vietnamese and Korean translations available). For more on low-cost broadband plans, read our “Getting Up to Speed” fact sheet (also available in Spanish) and the companion “Low-income Broadband Plans” directory.

If you missed the webinar, you can watch the recording here. The recording also includes information about educational outreach partnership programs with Common Sense and the FCC.

(Note: If you are helping a consumer who needs a paper application, available in English and Spanish, you can provide them this link.)

To receive an invitation to Consumer Action's upcoming webinars on the ACP, which will include information about recently announced federal community education grant opportunities and additional information about broadband benefits on Tribal lands, send an email to .(JavaScript must be enabled to view this email address).

Webinar explores role of homeownership in wealth creation

By Linda Williams

It is rewarding to build your own wealth. And often, it is even more fulfilling to pass on that wealth to your heirs. While there are many ways to build wealth, including investing in stocks and bonds, purchasing a home is one of the most effective ways to build wealth over time and be in a position to pass wealth down to successive generations.

Consumer Action hosted a webinar on July 12 that focused on homeownership as a catalyst for wealth-building for low-income families and households of color. Carl Windom, an accredited financial counselor and financial coach serving as a Freddie Mac consultant; Kristin Wong, a financial analyst on the mortgage team at the Consumer Financial Protection Bureau (CFPB); and Jeremy Montanti, the executive director of the Housing Foundation of America, joined Consumer Action's outreach team to share their expertise on building wealth through homeownership.

Windom kicked off the presentations by explaining why homeownership is crucial to building wealth, and also why Black families have not purchased homes at the same rate as their white counterparts. Among the reasons for the racial homeownership gap are barriers to affordable home loans, exclusionary housing policies and practices, gentrification and a dwindling housing supply. Among Windom’s advice for building wealth: earn more than you spend, make a financial plan, pay yourself first, give every dollar you earn a purpose, start to save and invest early, keep your money invested (buy and hold), and diversify (don't put all your eggs in one basket).

Wong presented the CFPB's tools and resources for homebuyers, and then walked the audience through the home buying process. She told the audience that it's always a good idea to check credit reports and scores, even if you're years away from shopping for a home, but added that you should check your credit reports and scores as quickly as possible if you're planning to buy a home soon. This is especially true for communities of color. (The CFPB found that consumers in majority Black and Hispanic neighborhoods, as well as younger consumers and those with low credit scores, are far more likely to have disputes appear on their credit reports due to inaccurate credit reporting.) She also provided attendees with a link where prospective homebuyers can sign up for a two-week email "Get Homebuyer Ready" boot camp.

Montanti gave the audience an overview of the role of housing counselors in both the home buying process and in foreclosure prevention. Housing counselors are trained to advise and counsel homebuyers and homeowners, and this includes helping homebuyers review their monthly budget and credit reports and assisting them in determining affordability and becoming mortgage-ready. Montanti told the audience that the biggest obstacle for prospective homeowners is the inability to accumulate a downpayment.

More than 300 staff members of community-based organizations attended the webinar. If you would like to view this or any of our many other webinars, visit Consumer Action’s YouTube channel.

Coalition Efforts: Curb abusive overdraft fees, telemarketing misconduct and investment greenwashing

By Monica Steinisch

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

Addressing abusive overdraft fees would greatly benefit the most vulnerable consumers. Consumer Action joined more than 90 of its allies in voicing support for the Overdraft Protection Act of 2021 (HR 4277). The long-standing bill, drafted by Congresswoman Carolyn Maloney (D-NY), is a crucial step toward ending excessive overdraft fees. These fees can be financially devastating, disproportionately impacting the most vulnerable account holders, including Black and Latino communities. In addition to contributing to household financial insecurity, the cycle of fees can push consumers out of the banking system entirely and into expensive alternative banking products. This legislation would, among other things, require that overdraft fees be "reasonable and proportional" to the cost to the institution of processing the transaction; limit the number of overdraft fees institutions can charge to one per month and six per year; prohibit overdraft fees on any transaction that results from a debit hold placed on an account that exceeds the actual dollar value of the transaction; and prohibit institutions from reordering transactions to maximize fees. (The bill was passed by the House a few days later, on July 28.) Learn more.

Community Reinvestment Act should be made race- and climate-conscious. Consumer Action joined 25 allies in a letter urging the Comptroller of the Currency, the Federal Reserve System board of governors and the FDIC to make key changes to the Community Reinvestment Act (CRA) under a proposed update. While the CRA was intended to address the harms caused by redlining and financial discrimination, the racial wealth gap has actually grown since its passage. The signatories say it is increasingly apparent that banks must use their power to mitigate the impacts of climate change and promote housing stability. As such, included in the organizations’ “asks” are that the CRA adopt a race-conscious approach, that climate-related eligible activities under the CRA be expanded, and that CRA exams be designed so as not to condone or support housing displacement. Learn more.

Telemarketing Sales Rule should be strengthened to prevent continued misconduct. Consumer Action joined a dozen partner organizations in submitting comments to the Federal Trade Commission (FTC) regarding two proposed sets of changes to the Telemarketing Sales Rule (TSR), which protects consumers from telemarketing fraud. One set of comments addresses recordkeeping requirements for telemarketers, calls to donors, and misrepresentations during telemarketing calls directed to businesses. The second set of comments addresses, among other things, requiring adequate warning before “free trials” automatically become paid subscriptions, prohibiting peer-to-peer and cryptocurrency payment methods in telemarketing transactions due to consumer refund difficulties, and applying the TSR to text messages. These comments to the FTC, along with other efforts by the organizations, aim to help shield consumers from relentless robocalls, unwelcome telemarketing efforts and phone-based scams. Learn more.

Prevent investment fund greenwashing, increase transparency. Consumer Action was one of 97 advocacy organizations that urged the Securities and Exchange Commission (SEC) to adopt stricter standards for the quickly growing “environmental, social and governance (ESG)” category of investment funds. The groups contend that many financial institutions use the ESG framework to position their funds as committed to social justice and environmental protection in order to attract the growing number of investors who choose investments that reflect their values, but fail to live up to those claims. For example, currently, some funds that purport to be climate-friendly actually invest billions in fossil fuels. To prevent greenwashing and increase transparency, the coalition recommended that the SEC, among other things, require that funds using labels such as “ESG,” “Sustainable” or “Green” describe how they define those terms and strategies, including what impacts they seek to achieve. The groups also recommended that disclosure be strengthened for ESG funds that invest in corporations doing business with the prison system or with firms that police low-income and BIPOC communities. Learn more.

CFPB Watch: Penalties for redlining and fake accounts; states empowered to fight eviction

By Ruth Susswein

Trident Mortgage will pay $24.4 million for deliberately discriminating against minority homebuyers and homeowners in the greater Philadelphia area.

The Consumer Financial Protection Bureau (CFPB), the U.S. Department of Justice (DOJ) and three state attorneys general (Pennsylvania, New Jersey and Delaware) announced a settlement with the nonbank mortgage lender for redlining.

Trident was sued for:

  • intentionally discouraging minority applicants from applying for home purchase and refinance loans,
  • purposefully ignoring minority consumers in marketing campaigns, and
  • evading loan sales to non-white clientele in 51 of its 53 offices.

“This settlement is a stark reminder that redlining is not a problem from a bygone era. Trident’s unlawful redlining activity denied communities of color equal access to residential mortgages, stripped them of the opportunity to build wealth and devalued properties in their neighborhoods,” said Kristen Clarke, assistant attorney general for the Civil Rights Division at the DOJ.

As part of the redlining settlement, Trident Mortgage will create an $18.4 million loan subsidy program (through a separate lender) to increase access to credit for minority borrowers in minority-majority neighborhoods in the Philadelphia area. The funds can be used to subsidize closing costs, downpayments or private mortgage insurance (PMI) premiums.

Trident was also fined $4 million to be deposited in the CFPB Civil Penalty Fund to assist victims. The mortgage lender must also spend $2 million on advertising to generate applications from redlined areas.

CFPB rule says states can prevent unnecessary homelessness

The Bureau recently released a rule clarifying that states can protect their residents from credit and tenant screening report abuses by using their own fair credit reporting laws.

That means, for example, that a state can decide that eviction filings that do not result in a formal court ruling (a judgment) against a tenant can be banned from a renter’s tenant screening report. According to the National Consumer Law Center, the CFPB’s interpretative rule gives each state the authority to decide what information can be listed in these influential credit and tenant screening reports. The ability to banish inconclusive information from these reports can protect renters from the harm of being locked out of the rental market simply because they were threatened with eviction.

U.S. Bank opened bogus accounts

The Consumer Bureau hit U.S. Bank with a $37.5 million fine for opening fake bank accounts. U.S. Bank illegally opened checking and savings accounts, credit cards and lines of credit without customer permission, according to the Bureau.

“For over a decade, U.S. Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” said CFPB Director Rohit Chopra.

The Bureau says it uncovered specific evidence that U.S. Bank imposed sales goals on employees that led them to open unauthorized accounts simply to meet these goals.

In addition to opening unwanted accounts, the Bureau said U.S. Bank harmed customers by damaging their credit profiles, charging them unnecessary fees and exploiting their personal data.

Wells Fargo paid $4 billion in fines and penalties after similar fake account allegations by the Bureau and other regulators in 2016. The CFPB also has a fake account case pending against Fifth Third Bank.

U.S. Bank, the country’s fifth largest bank, is also required to return all illegally charged fees and costs to consumers, plus interest.

Class Action Database: Enfamil maker’s claims are a formula for trouble

By Monica Steinisch

A class action settlement involving Toyota and allegations that its 2010-2015 Prius and 2012-2017 Prius V vehicles were equipped with defective inverters that failed prematurely was among the new settlements added to the Consumer Action Class Action Database during August.

Of note this month is a class action against Mead-Johnson & Company, maker of the Enfamil brand of baby formula products. As part of the settlement agreement in this lawsuit, the company has agreed to pay $8.4 million to consumers who purchased any of more than a half-dozen Enfamil-branded products between Jan. 1, 2017, and June 23, 2022. The suit alleged that Mead-Johnson deceptively packaged and labeled these products as being able to make a specific number of liquid ounce bottles of formula but fell short of the promised number of servings.

Consumers with proof-of-purchase can get $3 per unit, up to $45 per household. Consumers without proof-of-purchase can get $3 per unit, up to a total of $15 per household. (Consumers cannot submit claims under both categories.)

Mead-Johnson will also make changes to the way it labels these products.

The claims deadline is Oct. 31, 2022. For more information about the suit and settlement, click here.

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Consumer Action is a nonprofit organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights both in the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.

Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, 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 6,500 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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