Released: May 01, 2020

Consumer Action INSIDER - May 2020

• What people are saying
• Did you know?
• New COVID-19 resource guide helps consumers survive financial fallout
• A webinar on financial health and technology
• Hotline Chronicles: Cancelling recurring payments can take effort
• Consumer Action survey found most respondents are saving for retirement
• CFPB Watch: Coping with COVID
• Coalition Efforts: Standing up for consumers during the pandemic
• Class Action Database: Chipotle settles GMO ingredients case
• About Consumer Action

What people are saying

I wanted to drop…a quick line to thank you for the amazingly comprehensive [FinTech webinar] presentation to our [First Founder’s Accelerator] cohort last week. [It] clarified so many questions I had surrounding financial health, especially for those at the bottom of the financial pyramid. —Mark Kennedy, First Founder’s Accelerator

Did you know?

During the coronavirus pandemic, state attorneys general have urged large online sales platforms (like Amazon, Craigslist, eBay, Facebook and Walmart) to take action to stop price gouging and work with state and territorial attorneys general to enforce laws against the practice. Curious about your state’s price gouging laws? The National Association of Attorneys General (NAAG) has created a page with links to information for each state. In addition, the page features a link to file a complaint with your state attorney general’s office.

New COVID-19 resource guide helps consumers survive financial fallout

While the coronavirus pandemic has affected everyone in the U.S. in some way, it has struck some much harder than others. For millions of working Americans, the virus doesn’t mean just the possibility of getting sick or being cut off from loved ones (which is bad enough), it also means reduced work hours or unemployment, and all the challenges and problems that come with a sudden loss of income.

Federal and state governments, various agencies, non-profits and some corporations have enacted legislation, established programs or implemented policies designed to help households stay afloat financially until the economy reopens.

To ensure that everyone who needs support can take advantage of the help available to them, Consumer Action has compiled a free online guide to the various types of assistance being offered or, as with the “economic impact” payments, automatically provided. The guide is available in both English and Spanish.

Resources are broken down by category (Employment/workers, Food and meals, Housing, Financial services, etc.), with details about the type of aid, who is eligible, steps (if any) for receiving the assistance, and where to get more information.

Some of the assistance, such as the CARES Act (stimulus) payments, paid sick leave, augmented unemployment insurance benefits, and cash grants for workers in particular industries, puts dollars directly into consumers’ pockets. Other forms of assistance help in less direct, but still critical, ways, like the extension to file and pay income taxes, moratoriums on evictions and foreclosures, and interest-free/penalty-free payment suspension (on things like credit cards, auto loans and student loans).

While the resource is aimed mainly at workers and small business owners who find themselves in financial straits due to the crisis, it also includes general coronavirus-related consumer information, such as travelers’ refund rights and how to avoid coronavirus-related scams.

“Most Americans will need some sort of assistance to weather this crisis, particularly low-wage employees, those without paid sick leave, gig workers, the newly unemployed, and the 40% of households without enough savings to cover a $400 expense,” said Ken McEldowney, Consumer Action’s executive director. “We’re committed to making consumers aware of the different types of help available to them so that they can continue to care for themselves and their families and come out of this economic shutdown as whole as possible.”

To help spread the word about the free resource guide, Consumer Action is asking that people share the guide via social media and via email/texts with their own networks—friends, family, coworkers, employees, communities, clients and constituents. (You can share the guide to your social media accounts directly from our website.)

We are also requesting donations to help fund the continual revisions needed to reflect the frequent changes in coronavirus-related assistance programs and policies.

Please visit our Support page for information about donating or becoming a member. Businesses interested in supporting or expanding this effort, or in sponsoring a new consumer education project, can call (510-333-4886) or email (.(JavaScript must be enabled to view this email address)) our executive director to discuss opportunities.

A webinar on financial health and technology

During a 12-week “boot camp,” First Founder’s Accelerator of Wilmington, Delaware, trains entrepreneurs from underrepresented populations to develop FinTech solutions that help improve the financial health of diverse communities and build a more inclusive startup ecosystem. The program includes a combination of in-person and virtual education sessions at which innovators are mentored to gain expertise and grow as innovative problem solvers. Cohort members gain hands-on experience by designing solutions for real problems.

Last month Audrey Perrott, Consumer Action’s director of strategic partnerships, facilitated a webinar and served as a virtual mentor to educate the current First Founder’s Accelerator cohort about financial health, financial technology and privacy rights. Microbusiness owners from Delaware, California, Pennsylvania and Africa joined the virtual mentoring session to learn about how to measure financial health; the benefits and risks of using financial technology; best practices for integrating financial technology into existing financial counseling and coaching programs; barriers that prevent low- and moderate-income and underrepresented consumers from using technology; privacy laws in California and Delaware; and where to obtain additional information about compliance with disability access law, immigrant concerns and more.

Garry Johnson III, First Founder’s founder and director, thanked Perrott for participating. “Our cohort of entrepreneurs from around the country found immense value in the insights Audrey provided and now are even more motivated to push forward in developing FinTech solutions to help improve the financial health of their communities.” He noted that the presentation was especially helpful in providing guidance about how to create solutions that leverage technology for good while working in the best interests of needy consumers.

Perrott noted that it had been a great opportunity to educate underrepresented small business owners about financial health and technology and the unique needs of the consumers that Consumer Action serves. Typically, she said, companies build “products first, and the needs of underrepresented consumers only are considered when the product is either in pre-production or commercialized. I want to make sure we can help low- and moderate-income and other underrepresented consumers and innovators gain knowledge, skills and confidence to improve financial capability and consider needs of underrepresented consumers at the basic concept stage.”

Perrott credited a Wells Fargo Foundation grant for allowing Consumer Action to support the integration of FinTech tools into financial inclusion programs via financial training, webinars and mini-grants that assist community organizations in helping low-income and limited-English-proficient consumers improve their financial health.

Hotline Chronicles: Cancelling recurring payments can take effort

You can’t go to the gym because it’s closed due to the coronavirus. And you lost your job, so the last thing you need is the closed gym (or other companies) taking payments directly out of your bank account. The COVID-19 pandemic has thrust companies that collect their customers’ monthly or periodic bill through “recurring payments” into the limelight with widespread complaints, to our own hotline and elsewhere, that it can be difficult to cancel recurring payments without extraordinary efforts.

Consumers can’t even reach customer service at some companies. Others are refusing to freeze automatic subscription and membership renewals despite being closed, instead saying that they will apply the payments to extend the subscriptions and memberships when they reopen. As workers across the country face layoffs, furloughs and reduced hours, this sort of response appears tone-deaf to many consumers.

Brenda* from Wisconsin voiced the frustration of many consumers in an email to our hotline: “By law we are not allowed to go to the gym, due to COVID-19....however, my payment was taken for the month of April, which was to be the last month of my membership. I contacted the owner, and was basically laughed at because he said I should have taken care of this before the payment was taken. He refused to refund the money, saying: ‘It's not my fault you didn't catch this before payment was taken, I don't give refunds.’”

Recurring automatic debit payments work differently than the recurring bill-pay feature offered by your bank. With automatic debits, you give your permission to the company to take the payments from your bank account when a payment is due. With recurring bill-pay, you give permission to your bank or credit union to send the payments (electronically or via check) to the company.

Federal law does provide you the right to stop a company from taking recurring automatic debit payments from your account, even if you previously allowed them, if, for example, you decide to cancel a membership or service or you want to pay a different way. (Of course, completely cancelling payments you agreed to under contract, such as for cable TV or the gym, might result in an early termination fee, so make sure you know the terms you agreed to when cancelling a service.) If you cancel an automatic payment on a loan, your mortgage or your rent, you still have to make payments in another way or face default, foreclosure or eviction. (You may be able to delay your mortgage payments if your income was impacted by the coronavirus pandemic. Visit the Consumer Financial Protection Bureau, or CFPB, for more information.)

To cancel recurring automatic debit payments, first attempt to call the company. If you can’t get through, try “chat” or email if these are available. State that you are “revoking” permission for the company to take automatic payments out of your bank account. Then let your bank know you wish to "revoke authorization" for the company to take automatic payments from your account. If you can’t reach your bank, search its website or “google” to learn if there is an online form offered by your bank that will allow you to make the change.

If you find that the company continues to debit your bank account, contact your bank and give it a “stop payment order” for the debit. You can give the order in person (at a branch), over the phone (assuming you can reach someone) or in writing—by email, if available, or post. Keep a copy of all documentation for future reference.

Most banks charge a fee for a stop payment order, so first try to work with the company to stop the payments.

If you see a payment that was made after you revoked authorization, tell your bank or credit union immediately. Federal law gives you the right to dispute and get your money back for any unauthorized transfers from your account, as long as you tell your bank in time—generally three days or more before the next debit is scheduled to be taken from your account.

If all else fails, or the company refuses to refund a payment it took during the coronavirus pandemic, submit a complaint to the CFPB online or by phone at 855-411-CFPB (2372).

Consumer Action survey found most respondents are saving for retirement

Studies completed in recent years indicate that the typical American worker has no retirement savings, and 40% of those already in retirement rely solely on Social Security. However, among the 926 people who took Consumer Action’s recent online Retirement Savings Survey, the picture was rosier: The vast majority (82%) of those who participated said they have been saving for retirement. (The survey was conducted using the online surveying tool SurveyMonkey, from Feb. 4-12, prior to the coronavirus outbreak and the resulting turbulence in financial markets worldwide.)

Other survey findings:

• Close to two-thirds (62.4%) said they’ve saved funds through an employer-sponsored retirement plan, such as a 401(k), 403(b), 457 plan, SEP-IRA, SIMPLE IRA, etc.
• Half (50.5%) said they have stashed savings in an individual retirement account (IRA), and more than one-third (38%) report having retirement funds available because of a pension plan.
• When asked about their confidence level based on their retirement savings so far, 53.5% of those surveyed said they feel that they will have enough for retirement.
• Survey respondents skewed older, with 83% stating they were age 51 and above and a full 40% saying they were between 61 and 70.

Click here to see the survey data.

“We are relieved to learn that so many of the consumers we reached were, at that point, not alarmed about their financial future, although we are concerned about the survey takers who told us that conditions beyond their control, such as poor health, disability and limited income, have forced them to delay or ignore saving money for their senior years,” said Linda Sherry, Consumer Action’s director of national priorities.

However, Sherry said, it must be noted that the survey captured investor sentiment at what might have been a recent high point. “Now that we find ourselves in financial crisis caused by the COVID-19 outbreak, survey takers’ outlook might have worsened, and the vulnerable are even more exposed to financial hardship.”

Obstacles to saving

In open-ended questions, a number of respondents told Consumer Action that they were forced to retire early due to a medical problem or disability. According to the Employee Benefit Research Institute, about 43% of retirees retire earlier than they expect. Other consumers told us they worry about the effect unexpected future medical costs could have on their retirement plans.

Nearly half of respondents (45%) told Consumer Action that they don’t earn enough to save. Another 32% said they have non-mortgage debt that takes precedence over retirement savings; 15% identified their non-mortgage debts as being student loans. Others left comments saying that saving for retirement has had to take a back seat to funding college tuition, paying for home repairs, or helping support adult children, grandchildren and parents. Still others admit to not prioritizing retirement savings or to starting too late in life.

Finding a way forward

The latest issue of Consumer Action News—Saving for Retirement—offers a rundown on retirement savings options and tips on how to avoid retirement pitfalls.

In the issue, we also report on:

• The life-long financial gains for those who can afford to wait until age 70 to claim Social Security benefits. Beneficiaries who reach full retirement age at 67 and delay receiving payment until 70 would get an extra 24% each month for the rest of their lives.
• Efforts being made nationally, and in some states, to help prevent those headed toward retirement from falling into financial crisis. In late 2019, Congress passed the SECURE (Setting Every Community Up for Retirement Enhancement) Act to, among other things, encourage small businesses to automatically enroll employees in a company retirement savings plan and allow part-time employees to participate in their employer's 401(k) plan.
• Programs in a growing number of states that require small to mid-size employers without retirement plans to promote employee participation in their state's automated savings plan. California, Connecticut, Illinois, Maryland, New Jersey and Oregon have these mandated programs.

CFPB Watch: Coping with COVID

The CFPB has issued a rule to help consumers get COVID-19 relief payments more quickly by allowing the payments to go onto prepaid cards. The Bureau hopes this will speed delivery of stimulus payments to unbanked consumers.

For the CFPB’s information about stimulus payments, click here.

The Bureau also announced a joint decision by federal regulators to temporarily relax appraisal rules so that mortgage loan funds can keep flowing to home buyers. The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Comptroller of the Currency (OCC), National Credit Union Administration (NCUA) and the CFPB are allowing appraisals, in certain instances, to be deferred for 120 days (through the end of the year) and permitting appraisers to rely on exterior-only and electronic evaluations.

Mortgage relief

Some homeowners who can’t afford their mortgage payments may have options. The Consumer Financial Protection Bureau spells out the protections offered under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. If your mortgage is backed by the federal government, you are eligible for forbearance, which allows you to postpone your payment without penalty for at least 180 days. There will be no added fees, interest or negative marks on your credit record for delaying mortgage payments during this period. This CFPB guide explains which mortgages qualify.

Important: Consumers must contact their mortgage servicer to receive relief; help will not be automatic.

The Bureau’s guide also explains that renters might be eligible for temporary rent relief if their landlord’s mortgage is federally backed. For student borrowers, the CARES Act allows borrowers to suspend payments on most federal student loans through Sept. 30.

The CFPB and the Federal Housing Finance Agency (FHFA) have announced that they will work together to share mortgage servicing information. FHFA will provide the Bureau with data on forbearances (postponed mortgage payments) and loan modifications so that the CFPB can monitor the market, and the Bureau will share servicing complaint information with FHFA. Consumers with problems receiving a mortgage forbearance, or who have other servicing issues, can file a complaint with the CFPB.

The CFPB has warned consumers and financial caregivers to be on guard against scammers who offer to run errands but run off with your money instead.

The Bureau is encouraging lenders to provide small-dollar loans to consumers without setting any caps on the interest rates charged on such loans. In addition it has offered credit bureaus and lenders flexibility in reporting and resolving consumer disputes. The additional 'flexiblity' for industry has met with criticism by lawmakers, consumer advocates and the founding director of the CFPB, who object to the Bureau’s leniency with companies while not ensuring that consumers are protected.

‘Favors for banks’ but not families

Democratic Senators Sherrod Brown (D-OH), Brian Schatz (D-HI), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA) and Jack Reed (D-RI) wrote to CFPB Director Kathy Kraninger: “In the face of this pandemic, the CFPB is needed now more than ever to protect and mitigate the financial harm being inflicted on American families…Instead of taking bold action to protect consumers, the CFPB under your leadership has used this pandemic as an opportunity to protect big banks, payday lenders, debt collectors, and other corporate interests.”

Among other recommendations, the senators pressed Kraninger to prevent damage to consumers’ credit scores by directing lenders to use a disaster code that would notify other lenders that recent financial hardships were due to the coronavirus crisis.

Cordray urges Bureau to take the lead

Former CFPB Director Richard Cordray has urged his GOP-appointed successor to help consumers avoid foreclosure, eviction and auto repossession with “vigorous oversight” of debt collectors; to rely on the Bureau’s complaint process to alert the agency to current problems and troubling marketplace trends; and to make public any warning signs evident in the complaint data.

Click here for a list of the Bureau’s full array of coronavirus tips and resources.

Coalition Efforts: Standing up for consumers during the pandemic

HUD, do more to protect older reverse mortgage borrowers. Advocates sent a letter to the U.S. Department of Housing and Urban Development (HUD) seeking stronger protections for reverse mortgage borrowers in response to the COVID-19 pandemic. The agency announced a 60-day halt to foreclosures on all properties with FHA-insured mortgages, but advocates say this timeframe falls short in light of projections of the long-term impact of this crisis. Learn more.

Call for stronger regulations on rent-to-own stores. With limited or no access to credit and savings, low-income consumers often turn to rent-to-own (RTO) stores for big-ticket items like appliances. RTO stores notoriously charge customers two to three times more than traditional stores for the same items, leading to more purchase defaults and a debt trap for consumers. Coalition members joined together in urging the Federal Trade Commission to do more to protect low-income communities from predatory practices by the $8.2 billion a year RTO industry. Learn more.

Insurers, make coronavirus tests and treatment free to patients. Americans have been urged to seek medical help if they are showing symptoms of COVID-19, but out-of-pocket costs could put insured patients into serious medical debt or, worse, deter them from seeking treatment at all, causing undue suffering—even death—and exacerbating the pandemic. A coalition of more than 80 advocacy groups call on health insurers to waive all patient fees for care associated with COVID-19, including copays and deductibles. Learn more.

Don’t rush autonomous vehicle legislation through Congress. During this time of national emergency, Congress should be focusing on ensuring the health and financial wellbeing of Americans, not rushing forward with inadequate driverless vehicle legislation that puts the interests of the auto industry and tech companies ahead of people’s safety. Yet, House Republicans have recently called for the revival of an autonomous vehicle bill (arguing that self-driving vehicles can be part of the COVID-19 response). In a letter to Congress, consumer-focused advocates urged lawmakers to reject attempts to attach driverless car legislation to must-pass relief bills, including packages that address the ongoing COVID-19 crisis. Learn more.

Class Action Database: Chipotle settles GMO ingredients case

A class action against The Children’s Place over deceptive advertising of sale prices was among 15 new settlements added to the Consumer Action Class Action Database in April. The Children’s Place agreed to provide class members with vouchers that offer rebates or a percentage off on purchases at the company’s brick-and-mortar and online stores. You must file a claim form to get the vouchers.

Heads up for Chipotle fans that a settlement has been reached in Schneider v. Chipotle Mexican Grill, Inc., targeting Chipotle’s 2015-2016 claims that it uses only non-GMO ingredients. The lawsuit alleged that its “non-GMO” claims were misleading and deceptive because reasonable consumers would think it didn’t serve food from animals raised on GMOs or genetically engineered feed. However, Chipotle served meat and dairy products (such as chicken, steak, pork, cheese and sour cream) from poultry and livestock that were raised on GMO feed and soft drinks containing syrup from GMO corn. The case alleged the restaurant chain violated the California Consumer Legal Remedies Act, California’s False Advertising Law, California’s Unfair Competition Law, the Maryland Consumer Protection Act, New York’s Consumer Protection Statute and New York’s False Advertising Law (among other laws).

Chipotle denies the allegations but agreed to a $6.5 million settlement to be distributed to class members who bought food and/or drinks at Chipotle between April 27, 2015 and June 30, 2016. The claims deadline is May 30, 2020.

About Consumer Action

Consumer Action is a non-profit 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.

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.