Released: March 01, 2019

Consumer Action INSIDER - March 2019

Table of Contents

• What people are saying
• Did you know?
• Consumers prefer paper over electronic bills, notifications
• PACE home improvement loans: Borrowers beware!
• Hotline Chronicles: Unsubscribed, but the emails keep on coming
• Tzu Chi Foundation, Consumer Action combat Chinese senior scams
• Coalition Efforts: Pyramid schemes, prescription costs and paid leave
• CFPB Watch: Rolling back consumer protection rules and financial relief
• Class Action Database: Computer manufacturer’s “man-in-the-middle” mess
• About Consumer Action

What people are saying

Consumer Action presenter Ruth Susswein did a great job bringing a lot of educational resources and generating a lot of excitement about Consumer Action at the Business Development Roundtable for Maryland, Virginia and D.C. — Gail Sanders, Business Development Manager, Tower Federal Credit Union

Did you know?

Americans pay up to 65 percent more for drugs than citizens in other Western countries. Rising drug prices are due to a complex set of issues, but one big reason is "patent abuse" by drug companies aiming to extend their monopolies on brand-name, profit-center drugs with patents that are set to expire. In fact, 75 percent of all pharmaceutical patents granted between 2005 and 2015 were issued on old, previously patented medicines, not new drugs. The practice stops competition in its tracks and specifically blocks lower-cost, generic drugs from being brought to market. Consumer Action has joined the Coalition Against Patent Abuse (CAPA)—a new effort that we hope will highlight the issue and put pressure on those in power to stop this unfair practice.

Consumers prefer paper over electronic bills, notifications

In January Consumer Action reported the results of its survey of over 2,600 people, revealing that approximately three-quarters opted for bills and other communications to arrive by mail rather than email, apps, etc.

The survey asked consumers about nine types of bills and notifications. They chose paper over digital delivery a majority of the time. Specifically, their preferences for paper were as follows: medical bills (74%), property taxes (71%), motor vehicle renewals (69%), insurance (66%), utilities (63%), credit cards (61%), phone bills (56%), internet services (51%) and mortgages (45%).

“Our survey reveals that a whopping 68% of consumers prefer to receive important paperwork, such as their Social Security statements, through the mail,” pointed out Consumer Action’s Linda Sherry. “And for many older, disabled or lower-income consumers, these types of paper documents are not just an option, they’re a necessity. Those who are not tech-savvy, have difficulty using a computer or have no internet access at home find paper statements essential.”

Only when it came to privacy notices did consumers exhibit a slight (51%) preference for electronic over paper communications.

The survey also revealed that how consumers receive the bill impacts how likely they are to review the details. More than three-quarters (78%) of those who receive bills by mail said they review the transactions printed on paper statements. While, among those who receive bills electronically, less than half—only 43 percent—said they go online to review their transaction details.

“Failure to comb through the details of your utility, insurance or other bill can result in ongoing erroneous charges, scams, identity theft and other misinformation that could impact your credit,” Sherry added. “This is yet another reason why it’s critical for consumers to have access to paper billing that they can and will review.”

As one survey respondent put it: “No one should be forced to receive [bills and notices] electronically only, or to pay to receive proper notices and statements by mail.”

Unfortunately, more companies are moving toward paper-only billing and notifications, regardless of what consumers want.

As a member of the Keep Me Posted campaign, Consumer Action supports an individual’s right to choose between receiving important financial information online or in print and believes that paper should be the default.

For more on what consumers’ rights are in receiving a statement of their choice, see Consumer Action’s latest issue of Consumer Action News: Paper or digital?

Click here to view the full Consumer Action survey (which was conducted Nov. 7-27, 2018).

PACE home improvement loans: Borrowers beware!

In February, Consumer Action’s network affiliate Erika Toriz-Kurkjian, of the Los Angeles non-profit Haven Neighborhood Services, reached out to Consumer Action’s Audrey Perrott when she noticed an increase in consumer complaints regarding PACE loans and contractor fraud.

The PACE (Property Assessed Clean Energy) program is designed to help homeowners make energy-saving improvements to their homes without paying money upfront. Instead, the improvements are financed through PACE loans, which are paid through assessments placed on the consumer's property tax bill. It sounds like a dream come true for cash-strapped homeowners, but the dream has turned into a nightmare for many, since PACE loans have minimal underwriting guidelines and limited consumer protections.

Perrott pointed out that Haven’s PACE loan victims have all been Latino homeowners. None of the contractors completed the home improvement work that this population financed through the PACE program, and some of the homeowners now have foreclosures pending against them.

“PACE financing is often based on a borrower’s equity in their property and their mortgage and property tax payment history, not on their ability to repay the loan,” Perrott pointed out. “Consumers who cannot afford to repay PACE loans as lump sum payments through their tax bill stand to lose their homes.”

Surprisingly, there are no federal laws that regulate PACE loans. PACE loans are not covered by the Truth In Lending Act, Home Ownership and Equity Protection Act or the Fair Housing Act. Instead, the loans are regulated at the state level.

In California, homeowners lodged so many complaints about the unaffordability of PACE loans that lawmakers passed AB 1284 and AB 2063 to establish disclosure requirements and commonsense standards that require a PACE administrator to make a phone call to the consumer (before the loan is issued) to determine if they are able to comfortably handle the payments without defaulting.

Yet problems with PACE loans persist, leaving more consumers in danger of losing their homes. If you’re interested in pursuing a PACE loan, here’s what you should consider:

• Is the contractor who will perform the home improvements licensed?
• Do you have the ability to repay a large lump sum on your property tax bill?
• Do you understand that if you are unable to pay your full property tax bill (including the additional PACE amount) you may face foreclosure?
• Do you understand that if you have a reverse mortgage you may be at risk of losing your home if you fail to pay the property tax assessment associated with your PACE loan?
• Were you given copies of the home improvement contract and the financing contract before you were asked to sign them?
• Have you read the fine print in the loan disclosures?
• Do you understand the terms of the loan as explained by the contractor or sales agent?
• Do you know how much you will be required to pay on each property tax bill and for how long?
• Did a PACE administrator call you to reconfirm the terms with you? (Note: This is a requirement in some states, but not in all.)
• Are the proposed repairs actually eligible for coverage under the PACE loan program? (Typical repairs include: replacement of broken or failing heating and cooling systems and hot water heaters; air sealing and insulation; ENERGY STAR doors, windows and roofing; ENERGY STAR appliances; solar photovoltaic systems; and water conservation and resiliency measures [e.g., seismic retrofits and wind hazard protection].)
• Are you being encouraged to perform repairs or upgrades that you do not want or need?
• Did the contractor or PACE lender’s presentation sound too good to be true?
• Are you being pressured to make a quick decision?
• Do you really need to upgrade now, or can you wait and save up the money to pay for upgrades upfront?
• Are there free or low-cost programs that can provide the same upgrade?
• Was the work completed satisfactorily before you were asked to sign a completion certificate?

Here’s what to do if you believe you have been a victim of a predatory PACE loan and/or contractor fraud:

• Contact your local governing agencies (e.g., board of supervisors or district attorney).
• Contact state regulators (e.g., department of business oversight, contractor licensing board or state attorney general).
• Contact the home retention department of the financial institution that holds the note for the first mortgage on the home and see if they are able to negotiate a loan modification or refinance the loan.
• Contact your local legal aid organization or consider speaking with a private attorney through your local bar association referral service or the National Association of Consumer Advocates.

Hotline Chronicles: Unsubscribed, but the emails keep on coming

Unwanted commercial email—aka “spam”—can be annoying. Fortunately, legitimate companies provide an unsubscribe link. In the best cases, when you click on this link you are immediately removed from the email list. Willie* from the Los Angeles area, however, wrote Consumer Action’s hotline because she was dealing with a worst case scenario: Despite “unsubscribing” from a major surfing and skateboard retailer’s emails, over a month later the emails kept on coming!

Willie is not alone; our staff and hotline counselors have experienced the same thing. While people who unsubscribe are often warned it could take a while for the unsubscribe to “kick in,” longer than a month suggests that something has gone very wrong, and even that the company could be acting illegally.

The federal CAN-SPAM Act of 2003 outright prohibits sending emails to a recipient after an explicit response that the recipient does not want to continue receiving messages (“opt-out”). The Act also prohibits the inclusion of deceptive/misleading information within the body of the email and in the subject heading and requires identifying information (such as a return address) to be listed in email messages. Unfortunately, as an individual, you have no recourse to sue a company that does not abide by this federal Act and must rely on the Federal Trade Commission (FTC), your state attorney general (AG) or your internet service provider to police compliance. We advised Willie to report the company to her state AG and to the FTC by forwarding the complete email to .(JavaScript must be enabled to view this email address).

In addition to the federal CAN-SPAM Act, 37 states have laws regulating unsolicited electronic mail advertising. A limited number may allow state residents to sue if they receive unsolicited emails. Check out your state’s statutes here.

What else can an overwhelmed email user do? Many solutions have been developed to help control inbox clutter, including third-party services and extensions such as Boxbe, Unroll.Me and MailWasher (to name just a few). Your email provider or app (for example, Gmail or Apple Mail) likely provides techniques to filter out messages as well. Want more info? This Popular Science article offers “Five tips for blocking spam from your inbox.”

Many of us have been taught not to use the unsubscribe link if we are not sure who sent the email or why we are getting it (since it could be from a scammer, and what appears to be a harmless link could download malware to your computer). If you have no idea where the email originated or why you got it, forward it directly to the FTC. However, this advice can be ignored if the sender is a well-known company you have bought something from in the past (and nothing about the email—misspellings, for example—raises red flags). If you unsubscribe from such a company, keep a record of when you did so; if the emails don’t stop coming in a reasonable timeframe, send them along to the FTC.

To avoid the issue of unwanted commercial email, be careful when making purchases online—many of us fail to notice that an offer to send promotional emails is already checked off. You should un-check this box before making a purchase if you don’t want the emails.

Another tip: Since 2004, spam that contains sexually-oriented material must include the warning “SEXUALLY-EXPLICIT:” in the subject line or face fines for violations of federal law. You can file a complaint with the FTC if you get one without the required subject line text.

*Not this consumer’s real name

Tzu Chi Foundation, Consumer Action combat Chinese senior scams

After attending a Consumer Action train-the-trainer event in which Consumer Action’s Nelson Santiago discussed for-profit school scams, Shelley Wang of Tzu Chi Foundation approached Santiago and asked if Consumer Action could speak—in Chinese —about frauds and scams at one of the humanitarian organization’s Los Angeles-area service centers.

"I know just the person for the job," Santiago recalled telling Wang, and soon after introduced her to Consumer Action's very own media star and sought-after Chinese community educator Jamie Woo.

Woo was thrilled at the invitation to speak at Tzu Chi Foundation because of its decades-long reputation as a leading worldwide charity. Tzu Chi was founded in Taiwan in 1966 by the Taiwanese Buddhist Master Zheng Yan. The organization was originally led by a group of 30 housewives who raised funds for its work by selling crafts made by hand and saving money in makeshift "piggy banks" created out of sections of bamboo stalks. The organization has grown immensely, and today Tzu Chi boasts 10 million members in 47 countries.

In the United States, Tzu Chi Foundation's work has included providing assistance to people affected by natural disasters and major accidents, such as Hurricane Katrina and the California wildfires. Internationally, the group has provided on-the-ground assistance following earthquakes, tsunamis and other disasters affecting many countries, including China, Indonesia and Haiti. Relief has included providing drinking water, food (including an instant rice that can be prepared with hot or cold water), blankets made of recycled water bottles, and even mobile housing units and prepaid cards to disaster victims. In California, Tzu Chi's mobile dental clinic and health care clinic are very popular with low-income, uninsured consumers.

After planning the Tzu Chi presentation to coincide with her media work in Southern California during early December, Woo braved one of Los Angeles's coldest storms of the year (always headline news in those parts) to meet an eager group of senior citizen participants at Tzu Chi Foundation's center in El Monte.

During her presentation, Woo spoke on senior-specific scams and frauds. She explained how seniors can avoid becoming fraud victims by learning to recognize a scam when they see or hear it. One typical scam Woo discussed was the so-called "tour scam," where scammers persuade victims to travel to places like Hawaii before inundating them with high-pressure sales tactics, prompting them to buy property, land or merchandise.

Woo also described a case where a "senior support center" serving the Chinese community had requested monthly payments for future funeral expenses, without any written agreement or record. When the center shut down, seniors had little chance of recouping the funds they had contributed.

Woo emphasized that in some situations, unfamiliarity with a product or simply with how things work in the U.S. can lead to victimization. Woo shared a story about a consumer call she received on a radio show. The caller was ready to invest in Bitcoin based on the recommendation of an acquaintance. The caller, however, had no idea what Bitcoin was, did not understand it as an investment and didn't speak a word of English—a recipe for a bad outcome.

As for unfamiliarity with U.S. formalities, Woo explained that some people in the Chinese community don't understand the significance of signing their name to a document.

Woo explained to INSIDER that some Chinese seniors might not think a contract or other document they've signed is binding or legitimate if they haven't "stamped it" with their personalized seal or "chop stamp." They may be accustomed to such a stamp being required to legitimize formal, legally binding documents in their home country. (A chop stamp serves as a unique identifier, with the bearer’s name engraved in wood or jade.)

Tzu Chi workshop attendees appreciated the information Woo handed out, including Consumer Action's Chinese publications on identity theft, senior fraud, the California LifeLine program and a brochure detailing Consumer Action's multilingual education and advocacy work across the country. Woo also left participants with tips related to credit reports, credit scores and credit freezes; protecting personal information and data; avoiding telemarketers' calls; online safety and internet shopping; and more. Participants repeatedly asked Woo when she would be returning.

“I was glad for the opportunity to give my first Los Angeles-area presentation,” Woo said. “Being in a room with a large group of people—wide-eyed and ready to learn—is always a rewarding and humbling experience."

Coalition Efforts: Pyramid schemes, prescription costs and paid leave

Protect consumers, not pyramid-scheme businesses. Consumer Action joined advocates in urging the co-sponsors of the 2018 Anti-Pyramid Promotional Scheme Act to refrain from reintroducing the bill in the current 116th Congress. If this bill were to become law, it would eliminate the Federal Trade Commission’s authority to take action against all but the most blatant pyramid schemes, leaving millions of consumers vulnerable to fraud. Learn more.

The CREATES Act protects patients from outrageous prescription costs. When it comes to prescription medicines, patients win when companies innovate new cures and treatments. Patients also win when more affordable generic versions of those medicines enter the market. Consumer Action joined other health and consumer advocates and sent a letter to Congress to support the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act. The Act would allow drug makers to bring civil actions against patent holders that refuse to provide adequate samples of a product for testing so that a biosimilar or generic can be developed, which would give consumers access to less expensive medicines. Learn more.

Advocates ask for fairness in data-driven decisions. Big data has the potential to create racial and social inequalities, and make existing discrimination even worse. Consumer Action joined allies in a letter to leaders of Congressional judiciary and commerce committees asking the lawmakers to ensure that civil rights retain a fundamental place in the ongoing online privacy debate, hearings and legislation. The groups agree that online services should not be permitted to use consumer data to discriminate against protected classes or deny them opportunities in commerce, housing, employment and elsewhere. Learn more.

The time is now for a FAMILY bill to be passed. Consumer Action joined dozens of advocacy organizations in urging members of Congress to co-sponsor and advocate for swift and thorough consideration of the Family And Medical Insurance Leave (FAMILY) Act (HR 1185/S 463). The bills would create a national family and medical leave insurance program to help ensure that people who work can take the time they need to address serious health and caregiving needs. Learn more.

CFPB Watch: Rolling back consumer protection rules and financial relief

Kathy Kraninger’s first major action as director of the Consumer Financial Protection Bureau (CFPB) was an outright attack on consumer protection. Last month, Kraninger’s CFPB proposed gutting a commonsense payday rule that it had created under Obama-era leadership to put some brakes on predatory lending.

The CFPB is looking to repeal the heart of the rule, which mandates that payday, car title and other high-cost, short-term lenders must determine before issuing a loan if a borrower has the ability to repay the loan (without taking out more loans). Without a requirement to verify a borrower’s ability to repay, consumers often borrow more than they can repay, requiring them to take more loans to cover the debt. The Bureau also signaled it will delay the rule’s August 2019 start date until November 2020.

Consumers can let the CFPB know that they can’t afford this kind of “protection.” The CFPB is accepting comments until May 15, 2019, and you can send your message via email from our free Take Action Center.

Seeking relief for cheated consumers

Last month, the CFPB fined payday lender Enova International, Inc. $3.2 million for debiting bank accounts without borrower authorization. According to the Bureau’s consent order, “Enova extracted millions of dollars in unauthorized debits from consumers’ accounts.” What's more, borrowers were also hit with non-sufficient funds (NSF) fees when the unauthorized debits caused accounts to be overdrawn.

Although the payday lender was barred from debiting accounts without authorization and hit with a fine, the CFPB’s settlement doesn’t include financial relief for consumers, a disappointing result that is becoming all too common at the Bureau. In another recent case, the CFPB settled with Sterling Jewelers without requiring the company to provide financial restitution to the consumers it harmed, leaving consumers liable for insurance premiums they did not consent to.

Congresswoman Maxine Waters (D-CA), chair of the U.S. House Financial Services Committee, and Congressman Al Green (D-TX), chair of the subcommittee on Oversight and Investigations, sent a letter to the CFPB director seeking documents related to these recent “no-relief” settlements.

Reps. Waters and Green demanded answers as to why the Bureau is not authorizing refunds for those consumers it knows have been wronged. The Congressional letter pointed out that the CFPB had recovered nearly $12 billion in relief for harmed consumers in its first six years of existence under its former director, Richard Cordray.

“American consumers deserve a Consumer Bureau that will fight to recover their hard-earned money when they are cheated,” wrote the representatives, who expressed outrage that the Sterling Jewelers settlement, which carried a penalty of $10 million, provided no refunds to consumers for unwanted payment protection insurance even though the premiums generated $60 million in revenue for Sterling in 2016 alone.

Mortgage rule results are a win for consumers

Since 2014, the CFPB has required mortgage lenders to determine if a borrower has the ability to repay a loan before providing a mortgage. This is a critical part of the CFPB’s Ability-to-Repay and Qualified Mortgage (QM) rule. In 2014, the Bureau also issued its Mortgage Servicing rule, which added some other new protections for consumers.

Every five years, the Bureau is required to reassess its rules to ensure effectiveness. The results are in on both the QM and Mortgage Servicing rules, and the news is good.

The Bureau found that both have helped homeowners. There have been fewer foreclosures since the rules were implemented, and under the Mortgage Servicing rule, loans that become delinquent are less likely to end up in foreclosure and more likely to return to “current” status.

The CFPB estimated that without the rule, at least 26,000 borrowers would have ended up in foreclosure, and at least 127,000 would not have recovered within the three years it took them to do so. The Bureau added that a large number of consumers who completed loss mitigation (in 2015) were able to avoid foreclosure.

The Bureau also concluded that the ability-to-repay component of the QM rule helped prevent predatory lending by restricting loans that didn't document borrowers’ incomes and/or disclose the higher long-term interest on loans with initial low “teaser” rates, which often end in foreclosure.

“Given the clear success of the mortgage rule’s ability-to-repay standard, it’s incomprehensible that the CFPB now claims that the same reasonable standard should not apply to high-cost payday loans,” said Consumer Action’s deputy director of national priorities, Ruth Susswein.

Class Action Database: Computer manufacturer’s “man-in-the-middle” mess

Class action settlements involving soft drink maker Canada Dry and FedEx delivery service were among 10 new settlements added to the Consumer Action Class Action Database during February.

Of note this month is the class action settlement In re: Lenovo Adware Litigation. Plaintiffs filed a class action against computer maker Lenovo alleging that Lenovo and advertising company Superfish secretly installed software called VisualDiscovery on approximately 800,000 Lenovo laptops. Plaintiffs claimed that VisualDiscovery caused security and performance problems and violated user privacy (a charge that Lenovo previously settled with the FTC).

Specifically, VisualDiscovery inserted pop-up ads from Superfish’s retail partners onto users’ browsers. In delivering the ads to various websites, VisualDiscovery acted as a “man-in-the-middle” and was able to access the personal and financial information users transmitted through the sites (even those that were encrypted), compromising users’ online security protections in the process.

Lenovo denied all the allegations but agreed to an $8.3 million settlement to avoid the burden, expense and risk of continuing the lawsuit.

Consumers who bought certain Lenovo laptop models between Sept. 1, 2014, and Feb. 28, 2015, may be eligible for an estimated $40 cash payment.

The claims deadline is March 25, 2019.

About Consumer Action

Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.

Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and seven topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.

Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,000 community-based organizations. Outreach services include training and bulk mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.

Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulation and legislation by taking positions on dozens of bills at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.