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Released: March 01, 2016
Consumer Action INSIDER - March 2016
Table of Contents
- What people are saying
- Did you know?
- Avoiding scams in our communities
- Recommendations for a new student complaint database
- Hotline Chronicles: You can’t always count on a verbal agreement
- EU-US event focuses on trade agreements
- Online safety trainings held in Philly, Oakland
- There’s cash to be won in DASH for the STASH
- Coalition Efforts: Fighting against fraud and pushing for privacy
- CFPB Watch: Millions to minority car buyers; low-risk checking accounts
- Class Action Database: Keep out of my credit report
- About Consumer Action
What people are saying
Thank you so much for your information [about Internet Essentials low-cost broadband]. I really appreciate it…and so do my kids! After learning about the program, I found out that we qualify! — Teresa Bernal, Wasco, CA
Did you know?
Many mobile apps available at online app stores can access data that’s not related to the purpose of the app. When you download an app, it might ask permission to access information on your device, like contacts, photos, the device’s location, or even your financial or health information. Before you download an app, carefully read what it wants and decide whether it really needs access to the information it’s asking for. If it doesn’t, investigate other similar apps. For more information, check out the Federal Trade Commission’s Understanding Mobile Apps.
Avoiding scams in our communities
Last month, New America Media (NAM) and the Federal Trade Commission (FTC) held a news briefing geared toward ethnic media outlets. The briefing addressed spotting and avoiding scams in ethnic communities. In addition to inviting the media, NAM and the FTC asked law enforcement officials, community advocates (including Consumer Action) and consumers to participate in the discussion.
The panelists included Rose Chan of Consumer Action and members of the FTC, the California Department of Justice, the East Bay Community Law Center and Housing and Economic Rights Advocates (HERA). The FTC and the California Department of Justice opened up the discussion by providing an overview of the ongoing and completed legal proceedings they’ve engaged in against various businesses that they believe have misled and defrauded consumers. The agencies have taken action, for instance, against private for-profit schools that misrepresented the value of their advanced degree programs and job prospects for graduating students.
HERA went on to disclose the fact that foreclosure scams are an increasingly problematic, ongoing issue within ethnic communities, with scammers using public information to target already struggling homeowners.
The East Bay Community Law Center then shared an affinity fraud incident involving payments for a bogus product, where the consumer did her research but the local agent still managed to take her money for said product.
Chan, Consumer Action’s consumer advice coordinator, discussed scams perpetrated on the Chinese community (often successful due to language barriers). Many Chinese consumers, for instance, have complained to Consumer Action that a wireless service provider was offering free cell phones on the streets of San Francisco’s Chinatown without disclosing the fact that if the consumer signed up for an account, any existing residential landline discount they were receiving through the California or federal Lifeline programs would transfer to the cell phone account and would no longer be available for the landline. If the consumer then decided to switch back to using their Lifeline discount for their home phone, they would be forced to pay a cancellation fee on the wireless service and an additional conversion fee (for moving from an undiscounted service back to the Lifeline service).
The event drummed up lots of media interest. In addition to the mainstream media outlets in attendance, journalists from Latino, Chinese, Korean, Filipino, South Asian and Pacific Islander communities showed up. Panelists gave one-on-one interviews to the various media outlets to spread awareness of the scams and encourage consumers to notify law enforcement officials of any fraud.
Recommendations for a new student complaint database
Where do you go to fix things if you are a student with federal student loans but you’re being charged too much, your credit report does not reflect your on-time payments or other errors are occurring with your federal loan? As part of President Obama’s Student Aid Bill of Rights, the U.S. Department of Education (ED) announced that it will launch a new Federal Student Aid (FSA) complaint system in July (referred to as the Enterprise Complaint System, or ECS).
Consumer Action, along with 50 other advocacy organizations, applauded the president’s decision to see to it that the ED deal with borrower complaints regarding schools, federal loans and other types of financial aid. Consumer Action also provided suggestions to the ED to encourage it to build a complete, transparent and useful tool that will benefit borrowers. In a letter to the ED, we recommended that:
1. Complaint resolutions be meaningful: Complaint resolution does not mean simply documenting borrower problems for the ED’s records or providing policymakers with feedback. Examples of meaningful resolutions include: elimination of unfair penalties and fees; reimbursement of unfair penalties and fees collected; corrections to credit reports; corrections to student loan balance records; etc.
2. The primary goal of the complaint database should be increased school and contractor accountability so that loan problems can be settled and students and their families can make informed decisions about their educations and finances. We want “responsive student feedback,” which means ensuring that each party involved in the loan process (school, servicer, lender, collector, FSA and ED) is responsible for resolving borrower complaints.
3. The system incorporates well-defined timelines for actions, deadlines and resolutions. We recommended, for example, that each phase of the complaint process be spelled out in a step-by-step format so that student loan borrowers know what they can expect from each party, with a clear timeline for response and resolution.
4. The database should be designed as a publicly searchable complaint tracking system. Consumers value a user-friendly, searchable system that can be used to analyze performance by contractors or schools.
5. The database smoothly connects with other federal agencies such as the Consumer Financial Protection Bureau (CFPB) or the Federal Trade Commission (FTC). These other agencies also handle consumer complaints and can step in and respond if, for instance, a consumer mistakenly submits a private student loan complaint (which is the purview of the CFPB) to the ED.
6. Complaint referrals should be transferred automatically to the relevant government agency. Complaints or reports of suspicious activity should be referred directly and seamlessly to that regulator.
7. Complaints should not be considered “closed” until they are resolved with the consumer. Complaints should not only be resolved in a timely manner, the ED should give special attention to problems where consumers remain dissatisfied.
8. The complaint tool should be smartphone friendly and explanations pertaining to the tool should be easy for all to understand, including those with limited English-speaking skills.
Consumer Action plans to remain involved as the ED builds this much-needed tool to help consumers effectively resolve federal student loan complaints.
If you are having problems with your federal or private student loans, don’t wait to find help—contact the Department of Education (for federal loans) or the Consumer Financial Protection Bureau (for private loans).
The Department of Education Ombudsman can be reached at 877-557-2575, or you can fill out a complaint form online.
The Consumer Financial Protection Bureau can be reached at 855-411-2372, or you can fill out a complaint form online.
Hotline Chronicles: You can’t always count on a verbal agreement
Jamie* was ticked off when he told the seller of a car he wanted to buy that he would take it, but when he came back with the money, the car’s owner had sold it to someone else. “I thought we had a verbal agreement,” Jamie wrote to our hotline. “Do I have any legal recourse?”
We advised Jamie that it would be difficult to prove his claim, but that if he wished to pursue the matter, he should consult an attorney.
On the face of it, an oral agreement does carry legal weight in many circumstances. But the difficult part is proving that you had an agreement in the first place. This is easily solved by getting all agreements in writing (which, nowadays, could include email correspondence).
Under state law, certain contracts (often seen to carry a high risk of fraud) must be in writing or they are unenforceable. These include:
- Real estate sales;
- Agreements that would take a significant amount of time to complete (typically a year or more);
- Marriage or prenuptial agreements; and
- With exceptions, contracts for the sale of items worth more than a certain amount of money (this differs by state).
If the other party is unwilling to put the agreement in writing, it may be a red flag that the person doesn’t intend to honor it. Or it may be a sign of fraud. If you have something to lose, get all agreements in writing and walk away if the other party won’t cooperate.
Here are some resources that explain the difficulties inherent in oral agreements:
- Ten Tips for Making Solid Business Agreements and Contracts at the Nolo Press website
- Are Oral Contracts Enforceable? by Stephanie Rabiner Esq. at the FindLaw website
- Understanding Issues in Oral Contracts at the “For Dummies” website
*Not this consumer’s real name.
EU-US event focuses on trade agreements
The Transatlantic Consumer Dialogue (TACD) membership is composed of U.S. and European Union (EU) consumer organizations that develop joint policy recommendations to promote the consumer interest. Consumer Action’s Linda Sherry attended the 16th TACD Annual Forum, which focused on trade agreements and the use of a concept known as “precautionary principle.” When an activity raises threats of harm to health, welfare or the environment, this principle holds that precautionary measures should be taken even if data or science can’t fully prove the cause and effect. “It’s a ‘better safe than sorry’ approach that is more widely used in European policymaking than in the U.S.,” explained Sherry.
The forum hosted three plenary sessions and four thematic roundtables. An armchair discussion between EU Trade Commissioner Cecilia Malmström and Ira Rheingold of the National Association of Consumer Advocates (NACA) addressed the EU’s proposed Investment Court System (ICS) to replace the contentious investor-state dispute settlement (ISDS), which grants investors (which tend to be corporations) the right to use dispute settlement proceedings against foreign governments.
According to Pubic Citizen, also a member of TACD, ISDS is “among the most dangerous but least known parts of today’s ‘trade’ agreements, [granting] extraordinary new rights and privileges...to foreign corporations and investors that formally prioritize corporate rights over the right of governments to regulate and...govern their own affairs.” The event sparked a lively debate in person and on social media and trended on Twitter that day in Belgium via hashtag #TACDFORUM. The archived tweets can be found on Storify.
The opening session featured Commissioner Malmström, U.S. Federal Trade Commissioner Julie Brill and BEUC’s Director General and EU co-chair of TACD, Monique Goyens. (BEUC stands for Bureau Européen des Unions de Consommateurs, an umbrella consumer group representing 40 consumer organizations from 31 countries.)
In her opening remarks, Commissioner Malmström highlighted the fact that the precautionary principle is a key tool in European policymaking. She noted that the current trade agreement negotiation (the Transatlantic Trade and Investment Partnership, or TTIP) could allow for a better implementation of the precautionary principle and intensify regulatory cooperation with U.S. authorities.
FTC Commissioner Brill talked about reconciling the precautionary principle with the cost-benefit analysis approach that is more common in the U.S. Brill said that “in the U.S. and Europe, discussions of the precautionary principle tend to be framed in terms of a battle with the cost-benefit framework,” but added that the two are not incompatible and in fact seek to achieve similar aims.
BEUC’s Goyens said: “Scientific data is vital to rule making, but we must be critical of science that is one-sided and privately funded.”
Following the opening keynotes, Commissioner Malmström participated in a short debate with Ira Rheingold of NACA on the EU’s proposed Investment Court System—a reformed approach to investment protection and investment dispute resolution in the TTIP that would replace the controversial ISDS. Rheingold said that while the European Commission’s efforts to reform ISDS are appreciated, there is no reason to include a system in TTIP for investors to challenge government regulation, as both the EU and the U.S. have robust court systems that are well equipped to protect investors.
Last month, TACD launched a position paper in response to the EU’s ICS proposal outlining main reasons for concern.
Later that day, Deputy U.S. Trade Representative and U.S. Ambassador and Permanent Representative to the World Trade Organization Michael Punke addressed the audience. President Barack Obama is hugely supportive of TTIP, and Ambassador Punke toed the party line about the favorable impact of the trade agreement. In response to the generally unfavorable view of consumer advocates (that the U.S. is too secretive about pending trade negotiations), Punke said that “an element of secrecy” is inherent in trade negotiations. In response, representatives of consumer groups strongly argued that without access to consolidated texts, it is impossible for consumers to engage with the government and provide feedback on issues that could strongly affect consumer and other protections.
The day’s final session featured Ignacio Garcia Bercero, the EU’s chief TTIP negotiator, Ed Mierzwinski of U.S. PIRG (also a TACD member) and Klaus Müller of the Federation of German Consumer Organisations among others. Garcia Bercero said that not weakening and, if possible, increasing the level of consumer protection would be key to a fair and balanced TTIP. Mierzwinski, who serves as TACD’s U.S. co-chair, differed in view when he stated: “Consumers need TTIP like a fish needs a bicycle.”
To learn more about the activities of TACD, visit www.tacd.org. The group will hold its next forum in Washington, DC.
Online safety trainings held in Philly, Oakland
We rely on the Internet for so much these days, from shopping to banking to socializing and entertainment, but there can be risks when so much of our personal information is at stake. As part of an ongoing project to educate consumers about online safety, Consumer Action visited Oakland, CA and Philadelphia, PA last month to present our "Put a Lock on It: Protecting your online privacy" educational module. The module was developed by Consumer Action in partnership with Google, and was presented at the trainings jointly by Consumer Action outreach and training managers Linda Williams and Nelson Santiago.
Put a Lock on It focuses on providing Internet users with the knowledge to keep themselves and their families safe while taking advantage of the many benefits of being online. Topics include securing online accounts and mobile apps, shopping and banking safely on a computer or mobile device, preserving privacy while using social media, and avoiding unwelcome content and communications.
Linda Williams kicked off the presentation by asking attendees what several seemingly random items, including a box of cookies and a package of goldfish-shaped crackers, had to do with digital safety and privacy. Participants discussed in groups how the items might be connected and then shared their thoughts. One group talked about how the goldfish crackers reminded them of online phishing email scams. Another group talked about how the box of cookies served as a reminder of the tracking cookies that advertisers use to follow people around online. "Cookies—they’re like when you're shopping for purple underwear," said the spokesperson for a group that was clearly enjoying the activity, "other websites you visit later will keep showing you ads for purple underwear."
The training included a session on effective ways to teach adults about online safety. Emphasizing the importance of taking into account different learning styles, Williams encouraged participants to include in their future workshops materials to engage all types of learners, from visual to kinesthetic to auditory. She also reminded participants to take the time to explain upfront what attendees will gain from listening. "Adult learners are often tuned into the WII-FM radio station," Williams joked. "They want to know, 'What's in it for me?'" She stressed that if trainers take the time explain how and why a workshop will be relevant, they will be more successful in sharing key information.
Santiago then went on to introduce participants to the classroom activities embedded in the Put a Lock on It lesson plan. "One of the goals of the training," Santiago explained, "is to have participants become familiar with the module's activities, and to start thinking about how they will use them in their own workshops." The activities include an exercise on how to spot phishing scams (which featured authentic phishing emails that could fool many a consumer). Another activity put together several hypothetical social media posts that class participants could analyze to decide whether or not the post was a smart idea with regard to online safety/protecting one's reputation.
Santiago also provided participants with a list of practical resources that they could share with clients to help them stay safe online. Resources include technical step-by-step instructions on activities like securing a home network, as well as concrete recommendations for selecting effective anti-malware software and finding the best programs to help reduce unwanted marketing. The resource sheet also includes links (when available) to Spanish language materials, advice specific to families with children, and guidance to help prevent and remedy ID theft resulting from online fraud.
There’s cash to be won in DASH for the STASH
Calling all community-based organizations! A new partnership between Consumer Action and the non-profit Investor Protection Institute (IPI) offers you the opportunity to give your clients a fun, engaging way to learn some investment basics. Sites in Alaska, California, Connecticut, the District of Columbia, Florida, Illinois, Iowa, Kentucky, Missouri, Nebraska, New Mexico, South Carolina and Virginia can participate in DASH for the STASH. The program is co-sponsored at the state level by those states’ securities administrators.
There is no charge for community-based organizations to participate in this program. In 2016, the DASH for the STASH program will, for the first time, be available in Chinese and Spanish.
Host sites will receive posters with quiz questions. In order to participate, groups must hang a set of four informational posters along with a poster of contest rules (provided free) in public areas where their clients will see them. To enter, participants can capture the QR code on the poster with their smartphones or enter a URL from the poster into a computer browser to answer the questions featured on the posters. Participants could win a $1,000 contribution to an IRA.
The program runs from March 15 to May 15, 2016. Groups can include it in an event they’ve already planned or hold it as part of Financial Literacy Month this April. And clients aren’t the only ones who can enter the contest: Group staff and guests are also welcome to join.
Soon after the program concludes on May 15, the winner will be notified. The participating location with the most DASH participants in its state will receive a $100 contribution to be used for investor education and protection purposes. Click here for more information about the DASH.
Coalition Efforts: Fighting against fraud and pushing for privacy
“VW bailout” bill is bad business for consumers. While the Department of Justice and the Environmental Protection Agency are suing Volkswagen for knowingly cheating on emissions tests of its “clean” diesel vehicles, politicians in Washington, DC are trying to pass a bill that would shield Volkswagen from class-action lawsuits filed on behalf of the nearly 500,000 car owners who were defrauded by the company. HR 1927 would not only prevent VW owners from seeking justice, but, if passed, could cripple all class-action lawsuits against big corporations. Learn more.
TSA’s unlawful screening of airline passengers. The Transportation Security Administration (TSA) announced a change to its screening process, requiring some travelers to go through body scanners even if they ask to get a full-body pat-down instead. Currently, passengers undergoing screening can decline using the body scanners (known as Advanced Imaging Technologies) in favor of the pat-downs (administered by TSA agents). Under the new mandate, however, not everyone can opt for the pat-down procedure. Privacy advocates cite grave concerns over the update, arguing that travelers within the U.S. are now being subject to unlawful searches. Learn more.
Calling on the FCC to establish online privacy rules. Consumer groups are calling on the Federal Communications Commission (FCC) to extend strong privacy protections to broadband customers. The signers, which include the American Civil Liberties Union (ACLU), Electronic Frontier Foundation (EFF), Free Press, Public Citizen and Public Knowledge, also encouraged the agency to work in coordination with the FCC to safeguard users against the unauthorized sharing of their online data. Consumer Action joined 58 U.S. digital rights, consumer advocacy and privacy organizations in submitting a letter to FCC Chairman Tom Wheeler. The letter urges the FCC to start a rulemaking process that would bar broadband providers from sharing the data they’ve collected on their customers’ online activities with other companies or organizations without the customer’s consent. The groups also want the FCC to establish rules that would hold providers responsible if customer data is compromised due to a preventable data breach. Learn more.
In favor of stronger consumer fraud protections. In a letter to U.S. House Rules Committee Chairman Congressman Pete Sessions (R-TX) and Ranking Member Congresswoman Louise Slaughter (D-NY), Consumer Action joined its coalition allies in strong opposition to the Financial Institution Customer Protection Act of 2015 (HR 766), introduced by Congressman Blaine Luetkemeyer (R-MO). If passed, the bill would hamper critical Department of Justice and banking regulator efforts to detect fraud and money laundering, putting consumers and financial institutions at risk of serious financial loss. Learn more.
CFPB Watch: Millions to minority car buyers; low-risk checking accounts
Minority car buyers who unknowingly paid more for auto loans from Ally Financial Inc. and Ally Bank began receiving settlement checks this month. Eighty million dollars will be distributed to those affected.
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) ordered Ally to pay $80 million in damages for discriminatory auto lending pricing. Unbeknownst to many customers, car dealers are allowed to charge extra interest on auto loans (the practice is called a “dealer markup”). From 2011 through 2013, Ally allowed dealers to mark up prices on auto loans that resulted in charging African-American, Hispanic and Asian and Pacific Islander borrowers higher interest rates for no justifiable reason. Ally was also ordered to pay another $39 million to minority borrowers who were overcharged in 2014.
Borrowers who are entitled to a payment but haven’t received one should contact the Ally settlement administrator (Heffler Claims Group) at 844-271-4780.
Crackdown reaps restitution for Toyota customers
Minority auto loan borrowers will also receive up to $21.9 million from Toyota Motor Credit Corporation for allowing car dealers to charge higher interest rates on car loans to African-American and Asian and Pacific Islander borrowers “without regard to their creditworthiness,” according to the CFPB and DOJ. The discrimination occurred between 2011 and 2016.
Toyota is also changing its pricing policies to reduce auto dealer discretion. Although Toyota had allowed dealers to raise interest rates by as much as 2.5 percent, the CFPB said that its investigation did not find that Toyota intentionally discriminated against customers, rather that the auto manufacturer’s policy resulted in unfair outcomes. Last year the CFPB and DOJ took similar action against Honda and Fifth Third Bank for discriminatory pricing practices, returning $24 million and $18 million respectively to harmed minority consumers.
Monthly complaint snapshot
Each month the CFPB releases a snapshot of the complaints it receives and features a particular consumer financial services problem. Their latest report focuses on several financial services, including debt settlement, check cashing, money orders and credit repair. Consumers with complaints about these services have reported being charged excessive upfront fees by debt settlement and credit repair companies, as well as experiencing advanced payment scams and error resolution problems when using money orders.
CFPB on the road again
When he spoke at a Louisville, KY CFPB field hearing this month, Bureau Director Richard Cordray asked big banks to help consumers avoid overdrafts and the costly fees that go with them, specifically requesting that bankers better serve unbanked consumers with low-risk checking, prepaid and savings accounts.
Many large banks already offer no-overdraft accounts, said Cordray, but “too few have...marketed them as much as they do their other products.”
Cordray praised “the work being done nationally by the Bank On movement, and [today] specifically by Bank On Louisville, which is a coalition that includes Louisville Metro, a number of banks and credit unions, and non-profit partners.” The Bureau is also asking banks and credit unions to check the accuracy of their records regarding account closures. Inaccurate account closure information can prevent consumers from opening an account elsewhere if a check verification service such as ChexSystems lists the account as having been involuntarily closed by a bank.
The CFPB has created sample letters for consumers to use if they’ve been denied an account because of such an error. For help in selecting a low-risk checking or prepaid card account, the Bureau has created a guide that offers consumers tips on what questions to ask to avoid hefty fees and overdrafts.
Class Action Database: Keep out of my credit report
Another notable class action added was Duncan v. JPMorgan Chase Bank, N.A. The plaintiffs filed the class action against Chase, alleging that the bank had improperly accessed their information after they had ended their business relationships. Chase denied the allegations but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.
The lawsuit alleged that Chase conducted account review inquiries with credit reporting bureaus after the consumers closed their Chase accounts.
You are eligible to join the class if you are a former Chase borrower whose credit reports showed an account review inquiry by Chase between Oct. 16, 2009 and Oct. 16, 2014, after the account was closed with a zero balance or discharged in bankruptcy or the property secured by the account was foreclosed on, sold or transferred to a third party.
The claims deadline is March 23, 2016.
About Consumer Action
Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.
Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and nine topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.
Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,000 community-based organizations. Outreach services include training and free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.
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