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Consumer Action INSIDER - July 2021

What people are saying

In a world where we are constantly being overwhelmed with information, Consumer Action helps to clear away the excess to give a clearer understanding.

—JM, Boston consumer, via Consumer Action feedback survey

Did you know?

The first monthly payments of the expanded advance Child Tax Credit enacted as part of the American Rescue Plan Act will be made on July 15. Eligible families will receive up to $300 per month for each child under 6 and up to $250 per month each for kids aged 6-17. Roughly 39 million households—covering 88% of children—will receive automatic monthly payments. Eligible taxpayers should file their 2020 tax return if they have not done so—no further action is necessary. Learn more.

New publications arm consumers against pandemic-related schemes

Scam artists, identity thieves and fraudsters are always looking for ways to con people out of their money or their sensitive personal information; a crisis like COVID-19 makes it even easier for hucksters to exploit trusting people. In response to the wave of scams and frauds that came along with the pandemic, Consumer Action has published two new fact sheets aimed at helping consumers protect their money and their sensitive personal information.

The first publication, “Avoid pandemic-related ID theft and account fraud,” identifies some of the most prominent pandemic-related schemes aimed at getting into consumers’ existing accounts or opening new ones in victims’ names. It also offers tips for safeguarding personal and account data, explains how to detect fraud and ID theft, and outlines the steps to take if you discover fraudulent activity.

Many of the schemes that cropped up during the pandemic were aimed at stealing consumers’ benefits, including unemployment and stimulus payments, while others were attempts to uncover personal information to be used to commit financial fraud. The perpetrators have been successful largely because they exploit consumers’ distress, confusion, hope and need during a crisis, often posing as someone who is able to provide pandemic-related aid or assistance (such as eviction prevention services or vaccinations).

The second publication, “Steering clear of pandemic-related scams,” similarly focuses on attempts to exploit the pandemic at the expense of unsuspecting consumers. Trending scams included bogus work-at-home offers; the sale of non-existent toys, cars, and even puppies, along with messages regarding phony package deliveries and pending refunds; and the sale of counterfeit or nonexistent COVID preventives and cures. The fact sheet also provides tips for spotting and avoiding a scam, and explains where to report scam attempts.

“When it comes to scams, identity theft and account fraud, time is of the essence. Being able to spot a con or suspicious activity early on helps you to avoid becoming a victim or limit the damage,” points out Consumer Action’s Linda Sherry. “Consumers who read these publications will be better armed to protect themselves, during the pandemic and beyond.”

Both fact sheets were funded by the Wells Fargo Foundation, through its support of Consumer Action’s COVID-19 Educational Project, and are available at no charge to consumers and community-based organizations. There are six more fact sheets available in the Coping with COVID-19 series; all can be found by clicking on “Fact Sheets” on the COVID-19 Educational Project page. From the project page, site visitors also can access the regularly updated COVID-19 Resource Guide, which provides information about public and private resources available to help consumers deal with the fallout from the pandemic, and the 16 pandemic-related webinars presented since the start of the crisis last year.

Helping people to manage medical expenses and debt

In May, Consumer Action teamed up with the Financial Empowerment Center (FEC) at Prince George's Community College in Largo, Maryland, to discuss medical debt—how it starts, strategies to manage medical expenses, and programs that help pay medical bills. The FEC hosts weekly virtual empowerment hours to increase financial capability among students and community members. It also offers financial counseling, free access to credit reports, tax preparation and small business coaching.

Attendees from Maryland and Washington, D.C., heard Consumer Action’s director of strategic partnerships, Audrey Perrott, give an overview of medical debt and available resources to help cover healthcare expenses and debt. The interactive presentation included videos and learning checkpoints to ensure attendees understood the resources discussed and increased their knowledge during the presentation.

Perrott discussed six public resources (the Health Insurance Marketplace, the Maryland Health Benefit Exchange, the Maryland Children’s Health Program, Medicaid, Social Security Disability Insurance and Supplemental Security Income) as well as a wide range of private and nonprofit programs to help consumers with healthcare and medical debt. Perrott noted that under the Affordable Care Act (ACA), nonprofit hospitals must offer charity care to maintain their nonprofit status with the Internal Revenue Service, and some states have passed their own laws requiring healthcare providers to offer charity care. In addition, some for-profit hospitals offer need-based programs that provide a similar type of assistance.

There also are more than 375 prescription assistance programs (PAPs) to help consumers afford needed medications, with each drug company establishing its own rules and eligibility guidelines. (View the online PAP directory.) Perrott also discussed programs through religious and other nonprofit organizations that pay for medical care, expenses or delinquent debt. One of these nonprofits, RIP Medical Debt, uses donor funds to pay off the delinquent debt of those at or near the poverty level. The organization recognizes that many, if not most, consumers drowning in medical debt are in that situation not because of poor decision-making, but because of a broken healthcare system.

Perrott moved on to the impact of medical debt on credit. Medical debt is not typically reported unless it is in collections, and there is a 180-day waiting period before a collection account is added to a consumer’s credit report, giving the consumer time to resolve or dispute the bill. She explained that newer scoring models, such as FICO 9 and VantageScore 3.0 and 4.0, give less weight to unpaid medical collections than other collection accounts.

Webinar attendees received some assessment questions to consider when faced with medical debt, so that they do not simply avoid the debt and allow it to ruin their credit.

“Medical debt is a huge problem that plagues low- and moderate-income and underserved communities, with individuals and families forced to make difficult decisions daily regarding health care that may negatively impact their health or their credit for many years,” said Perrott. “It is my sincere hope that attendees will use the resources to manage their health expenses and debt or help others to do so.”

Hotline Chronicles: Can I use my security deposit to pay rent?

Enrique,* who lives in Southern California, called Consumer Action’s hotline to ask if he could use his security deposit to pay the final month’s rent before moving out of his apartment.

A “security deposit” is meant to protect the landlord from nonpayment of rent, breach of the lease terms, or damage to the rental unit, common areas, major appliances or furnishings. So, the best course is to pay your last month’s rent and make sure the apartment is “broom clean” and in good condition before you leave. Then you should get your security deposit back in full.

The California man said he couldn’t find a copy of his rental paperwork because he had lived in the apartment for decades, so he was unsure what he had paid upfront. We advised Enrique to contact the person or company he pays his rent to and ask for a copy of his original lease agreement.

We advised him that, generally, security deposits cannot be used to pay the last month’s rent unless the landlord specifically agrees to allow it. If he specifically paid the first and last month’s rent and a security deposit, he may be able to avoid paying the last month’s rent. But problems could arise if Enrique waited too long to notify the landlord of his plans to leave (for example, if his lease requires 60-day notice and he told the landlord only 30 days beforehand). Know that you could be sued by your landlord for breaching the terms of your rental agreement.

Our counselors provided Enrique with some referrals to local fair housing organizations so that he could speak to someone with knowledge of the local laws and requirements where he lives. (Find a fair housing organization near you using this directory.)

It's not uncommon for states to regulate how much landlords can collect, how they must hold security funds, if they must pay the tenant interest on the deposit, and when the funds must be returned. This is important information for renters because some states and municipalities prohibit landlords from asking for more than two months’ rent upfront, and impose fines on landlords that demand more. Your state might spell out the tenant’s right to be present when the landlord inspects the rental and whether you, the tenant, need to specifically request this walk-through and how you must ask for it (for example, in a written letter sent by certified mail).

If you’ve kept the rental in good condition, the landlord is required to give you back your security deposit. It’s possible your landlord will find some fault with the place as an excuse to keep your deposit. In such a case, if you do not agree you caused any damage, you have the option to sue the landlord in small claims court.

More information

Tenant-landlord laws vary by state. Learn more about your state’s laws using these resources:

*Not this consumer’s real name

Webinar explores impact of COVID-19 on retirement savings

Before the pandemic, saving for retirement was, for some folks, like learning a new dance from a TikTok video: It looked easy, but getting it down was challenging. Then COVID-19 hit, and millions (especially women) found themselves out of work as businesses were forced to close. Surviving day to day became the new dance to learn, and saving for retirement took a back seat.

In this changed economy, 27% of workers have less than $25,000 in savings, 46% have less than $100,000, and 21% of workers haven’t started to save, said Richard Eisenberg, managing editor at Next Avenue.

Eisenberg was one of three speakers at Consumer Action’s May 20 webinar, “The Impact of COVID-19 on Retirement Savings,” presented as part of our COVID-19 Educational Project. Vickie Elisa, financial literacy educator for the Women's Institute for a Secure Retirement, and Dana Pollard, managing director of investments at Wells Fargo Advisors, joined Eisenberg in explaining the importance of consumers staying on track with retirement savings, or getting back on track as they recover from a loss of income due to COVID-19.

Despite the figures, the 2021 Retirement Confidence Survey, conducted in January by the Employee Benefit Research Institute, reveals that consumers are confident about having enough money to live comfortably in retirement, with 72% of workers feeling confident (a three-point increase from 2020). As to whether their confidence is realistic, Eisenberg told the audience it depends on whom you ask. For some consumers, saving money on travel and entertainment during COVID helped to increase their retirement savings, but for other consumers, the loss of jobs and income made saving for retirement a distant memory. It’s the same old story, said Eisenberg, of the “haves and have nots.”

Elisa encouraged the audience to ask themselves why women need to think about retirement differently than men? She explained that at age 65, there are 5.8 million more women than men. When you look at seniors 85 or older, 67% are women, and this group, referred to as the “oldest old,” is expected to double or even triple over the next 30 years. The most important fact about these women, pointed out Elisa, is that they are most likely to end up in poverty, even if they were not poor when they were employed. Elisa then provided tips that anyone can use to improve their financial future. She stressed the importance of taking part in financial decisions with a partner or spouse; avoiding debt; and making the most of job-related benefits by putting enough into a workplace retirement plan each pay period to get the maximum employer match and carefully selecting from the plan investment options.

Pollard had a simple message for the audience: Take a look at your own situation and let it inform your decisions. She said that because, generally speaking, we’re going to live a long time, it is going to take more assets than most people can fathom to live comfortably in retirement. Key steps to preparing for retirement include figuring out how much it costs you to live now and potentially in retirement, reducing debt, funding an emergency savings account (to keep you from having to take on debt to handle emergency expenses), and investing some of your assets based on the advice of a reputable financial planner so that your savings can beat inflation.

The retirement savings webinar, funded by the Wells Fargo Foundation and led by Consumer Action’s Outreach team, drew 160 attendees; it can now be viewed on demand on Consumer Action’s YouTube channel.

Coalition Efforts: Protecting FinTech users, retirement savers, postal customers

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

FinTech users deserve strong data use protections. Groups sent a joint letter to the Consumer Financial Protection Bureau (CFPB) asking the agency for strong rules to ensure that consumers are protected when their account data is shared with, accessed by or used by third parties, such as financial technology (FinTech) mobile apps and account aggregation services. Specifically, the groups asked the CFPB to protect the ability of consumers to make decisions on when and how to stop sharing information; exercise supervisory authority over data aggregators; ensure strong protections under the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, and the Fair Credit Reporting Act; and put in place any guardrails necessary to ensure that consumers benefit, and are not harmed, when they authorize third parties to access their financial services accounts. Learn more.

Protect retirement savers from risky private equity investments. Consumer Action joined allies in a letter to the Department of Labor (DoL) asking the department to ensure that “defined contribution plan fiduciaries”—those responsible for ensuring that employer-based retirement plans feature safe and appropriate investments—undertake balanced consideration of the benefits and risks before they allow private equity funds to be offered to retirees. In order to protect investors, advocates recommended that the DoL closely examine the potential risks and rewards of private equity investments; warn plan sponsor fiduciaries that, where they lack the financial knowledge to assess the appropriateness of the investments, they must obtain disinterested advice from a fiduciary with the requisite expertise, or refrain from offering the investments; and study the extent to which funds with private equity exposure have been added to retirement plan offerings. Learn more.

Groups contest major postage increase planned by USPS. In response to the U.S. Postal Service’s (USPS) proposed postage price increase, a coalition of trade associations and public and private companies joined Consumer Action in urging members of the Senate Committee on Homeland Security to oppose the plan to hike USPS postage prices for most mail. Without action from Congress, the newest rate increase of nearly 7% for most mail and nearly 9% for charities and other nonprofits, magazines, newspapers and catalogs will be compounded in future years. The coalition also called on legislators to direct a new review of the postal rate-setting system before the increases take effect. Learn more.

Comprehensive privacy protections needed at home before transatlantic deal is passed. Consumer Action joined over 20 organizations in urging the Biden administration to pause negotiations on a new transatlantic data transfer agreement until Congress passes comprehensive privacy legislation and reforms surveillance laws. Advocacy groups said that the failure of the U.S. Congress to pass meaningful privacy protections for personal data is the reason that a growing number of countries are raising concerns about trans-border data flows to the U.S. The groups point out that until the U.S. ensures privacy protections for personal data, concerns of foreign governments about data transfers to our country will remain, and any data flow agreements with other countries could be invalidated. Learn more.

CFPB Watch: Emergency rental help resources, and money back for those who invested in Driver loans

As the ban on evictions during the COVID-19 crisis prepares to come to a close (now July 31), the Consumer Financial Protection Bureau (CFPB) is working to get the word out to tenants that funds are available to help repay back rent and utilities that accumulated during the pandemic. Money is also available for future rent, to avoid eviction from a house, apartment or mobile home. The CFPB has prepared an emergency rental assistance webpage covering how to apply for emergency rental assistance, what the funds cover, how to prove you’re eligible for financial relief, and more.

While the funds are federal, distribution of the money is via the locally run rental assistance programs. To find a program near you, search the National Low Income Housing Coalition’s database here. Consumers can also check out the U.S. Treasury’s rental assistance list.

Fraud protection: Let’s get technical

The CFPB has released a set of frequently asked questions (FAQs) related to fraudulent and erroneous transactions on your debit card account. For instance, the Bureau explains how a consumer is not legally responsible for a transaction where the consumer was fraudulently induced into sharing her account information. The Bureau states that a financial institution cannot require a consumer to file a police report or other documents before opening up an investigation into a reported error or unauthorized transaction.

While the guidance does get technical, if you’re looking for brief responses to important questions about liability for financial transactions online and by mobile device, this FAQ page is a good place to start.

Consumers finally may be in the driver’s seat

The CFPB has settled charges against ultra-high-cost lender Driver Loan, LLC that should put $1 million back in consumers’ pockets. The Bureau says that Driver Loan offered predatory, short-term loans to drivers of rideshare companies, and funded them with other consumers’ deposits.

“Driver Loan deceived consumers on both sides of its business model. The company deceived depositors seeking a safe rate of return, while deceiving ride-share workers about the cost of its 900% APR loans,” said CFPB Acting Director David Uejio.

Consumers were told that their deposits would have a “fixed and guaranteed” 15% annual percentage yield in FDIC-insured accounts, according to the Bureau. None of the assurances were true. The Bureau also accuses Driver of hiding its 900% interest rates on $100-$500 loans required to be repaid in 15 days.

Under the settlement, in addition to returning consumers’ deposits—plus interest—the high-cost lender would be banned from taking future deposits and making deceptive claims, and would pay a $100,000 penalty to the CFPB.

Cycle of debt

More than half (52%) of the borrowers who took out a high-cost payday loan in 2019 repeated that behavior in 2020, according to new CFPB survey results.

Using credit bureau data, the Making Ends Meet survey reaffirms previous findings that consumers who use payday loans frequently roll over these loans or take out a new loan shortly after repaying one. Of those who used “alternative financial products” (payday, auto title and pawn loans) in the previous six months, 63% still owed on a payday loan at the time of the survey. The survey found at least one bright spot: In June 2020, the share of consumers who still owed money on a payday loan fell by nearly one-quarter, suggesting that many consumers had repaid their loans.

Class Action Database: TikTok back in hot water for violating children’s privacy

A class action settlement involving a data breach at Drizly was among 10 new settlements added to the Consumer Action Class Action Database during June.

Of note this month is the class action T.K., et al. v. Bytedance Technology Co., Ltd. et al.

Plaintiffs alleged that Bytedance Technology Co., Ltd., Musical.ly, Inc., Musical.ly the Cayman Islands Corporation, and TikTok violated the Children’s Online Privacy Protection Act (COPPA), the Video Privacy Protection Act and state privacy laws. COPPA forbids companies from collecting the personally identifiable information of children under the age of 13 without the parents’ verifiable consent. Personally identifiable information includes names, physical addresses, email addresses, usernames, a child’s image or voice, online contact information, geolocation information, etc.

Musical.ly (now known as TikTok) had previously settled Federal Trade Commission (FTC) charges in 2019 for illegally collecting personal information from children.

Plaintiffs claim that the defendants allowed children to easily create an account on the Musical.ly app without parental consent. To create an account, users provided their first and last names, email addresses, phone numbers, profile pictures, and short profiles. Additionally, the account’s privacy features were disabled by default. The app also collected geolocation information and had a feature called “my city,” where the users could find other users within a 50-mile radius. The defendants also sold access to the collected personal data to third-party advertisers who bought advertising space on the Musical.ly app.

The defendants denied the allegations but agreed to a $1 million settlement to end the lawsuit.

Class members are all U.S. residents who registered for or used the Musical.ly and/or TikTok app while they were under age 13, as well as their parents and/or legal guardians. Class members must have registered for or used these services before the as-yet-to-be-determined “Effective Date” of the court’s approval of the settlement. (The Court has scheduled a Final Approval Hearing on Aug. 31, 2021.)

The claims deadline is July 24, 2021.

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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 6,000 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.

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