Released: September 30, 2019

Consumer Action INSIDER - October 2019

Table of Contents

• What people are saying
• Did you know?
• Ring, ring! Verizon and Consumer Action partner to combat robocalls
• Consumer Action joins advisory council to fight insurance fraud
• Hotline Chronicles: Landlord won’t return security deposit
• More low-income households can now get online for $10 (or less)
• ‘Rescan’ to regain access to your favorite over-the-air TV stations
• Coalition Efforts: Vehicle data, robocalls and mortgage standards
• CFPB Watch: Financial innovation versus consumer protection
• Class Action Database: Consumers cash in over erroneous credit reports
• About Consumer Action

What people are saying

The Consumer Action and Verizon robocall briefing was very organized and informative. I learned a lot of useful information that I can share with my clients and utilize myself. — Alex Whisnant, Housing Counselor, Central American Resource Center

Did you know?

Facial recognition surveillance programs identify the wrong person up to 98 percent of the time. These errors have real-world impacts, including harassment, wrongful imprisonment and deportation. More and more, police and government agencies (not to mention retailers attempting to identify shoplifters) are using this invasive technology to monitor us everywhere we go, target vulnerable populations for arrest, and deport immigrant families. Facial recognition has been found to be inaccurate and to systematically misidentify women and people of color, putting them at higher risk of being falsely imprisoned or worse. Consumer Action has joined nearly 30 organizations in a grassroots effort to convince lawmakers to ban law enforcement use of facial recognition. Join us!

Ring, ring! Verizon and Consumer Action partner to combat robocalls

In September, Consumer Action partnered with Verizon to host a briefing on combatting the relentless robocalls plaguing Americans—47 billion robocalls were made last year alone! (Robocalls are automated telephone calls that deliver prerecorded messages to consumers’ landline or cell phones.)

CTIA, an association representing the wireless communications industry, donated space for the event in its airy, modern downtown Washington, D.C., offices. The briefing was geared toward community-based organizations who work with low-income and vulnerable consumers (including immigrants and families with limited English proficiency).

Consumer Action’s Ruth Susswein and Verizon General Counsel Chris Oatway presented at the lunchtime event. Susswein kicked off the presentation by pointing out that, unless a consumer has explicitly consented to the calls, robocalls are generally prohibited under the federal Telephone Consumer Protection Act (TCPA). While some robocalls may be desirable (e.g., phone calls from your child’s school announcing it is closed due to snow), over half are scams. Many calls are seeking to collect on debts—including from consumers who don’t owe any money!

Susswein went on to outline ways Congress is fighting back against robocalls, including:

• The TRACED (Telephone Robocall Abuse Criminal Enforcement and Deterrence) Act, which would require call authentication, extend the time for the Federal Communications Commission (FCC) to act against robocallers, and increase FCC fines to $10,000 per call;
• The Stopping Bad Robocalls Act, which would (among other things) also require call authentication (by carriers) at no charge to consumers; and
• The RoboCOP Act, which would require free call blocking, verify Caller ID, and allow the government to better enforce the Do Not Call Act and enact tougher penalties on robocallers who violate the law (including issuing prison time).

Susswein also detailed how “STIR/SHAKEN” caller ID/verification technology will keep more “spoofed calls” from reaching consumers. Spoofed calls look like they’re originating from a legitimate number, but they aren’t. (It was noted that Verizon began deploying the technology, recommended by the FCC, in March).

Finally, Susswein outlined the many ways consumers can block robocalls, including through call blocking apps like Nomorobo and by using blocking and alerts enabled by carriers for their customers. Susswein pointed out that CTIA’s website is a valuable resource for more information on blocking robocalls, including what steps each of the major wireless carriers is taking to prevent/address the calls.

“Do not pick up the phone!” remains the number one recommendation when it comes to robocalls, said Susswein, who recommended consumers keep their phones on “Do Not Disturb” mode and only answer or call back numbers they recognize, or those that leave a legitimate voicemail. She also told attendees to advise their clients to report robocalls to the FCC and Federal Trade Commission (FTC) and to join the National Do Not Call Registry.

Oatway spoke about the complex route a robocall (particularly one that is spoofed) has to travel, from the point the call is made (where the call should be stopped immediately, but often still slips through) to network-based blocking services and on to the wireless carriers (who offer call-blocking/filtering tools as well), before that call can reach a customer.

Oatway also spoke on how the telecomm industry can partner together to help fight the calls; use technology through laws like STIR/SHAKEN to filter calls; and use traceback technology and partnerships with apps like YouMail (which has created an accessible, public database of robocall numbers, which it also helps consumers block) and law enforcement to identify the sources of illegal calls.

“Consumer Action is grateful to Verizon for making this robocall briefing possible, particularly at this time in history when consumers are receiving more of these dangerous calls than ever before, and many are losing hundreds, and even thousands, of dollars per call,” said Ken McEldowney, Consumer Action’s executive director.

The event came on the heels of the release of Consumer Action’s latest edition of its Consumer Action News quarterly newsletter, titled The Robocall Scourge. The newsletter gives readers in-depth information on robocalls, including a wide variety of tools to combat the harassment.

Consumer Action joins advisory council to fight insurance fraud

Early this summer, Consumer Action staffers Linda Williams and Nelson Santiago attended the inaugural meeting of the Insurance Consumer Protection Advisory Council. The office of the San Diego district attorney (DA) organized the new group, bringing together local and national representatives from the insurance, labor, employment, law enforcement and consumer advocacy fields to identify new ways to reduce insurance fraud.

The half-day meeting provided an opportunity to discuss and learn more about recent insurance fraud cases and efforts to prevent fraud. As Santiago explained to INSIDER, there are many types of insurance fraud and many kinds of perpetrators; anti-fraud efforts target more than consumer claims—they also concentrate on fraud executed by employers, health care providers and others.

Santiago, whose work at Consumer Action focuses in large part on consumer education, was excited to hear about the DA's extensive education efforts to prevent and discourage consumers from getting involved in insurance fraud in the first place, which not only keeps consumers out of jail, but can help control the prices consumers pay for insurance. According to the DA's office, insurance fraud costs U.S. consumers $80 billon per year, amounting to a hidden tax of about $700 per year on the cost of goods and services.

During the meeting, the DA's office described how its efforts to deter insurance fraud through public awareness campaigns have helped reduce the problem for a fraction of the cost of prosecuting. In a Journal of Insurance Fraud article distributed at the meeting, Chief Deputy District Attorney Dominic Dugo, one of the meeting organizers, detailed how one DA public awareness campaign focused on deterring workers compensation fraud.

The article describes how consumers and employers are often unaware that workers compensation fraud has serious penalties: It's a felony punishable by up to five years in prison! As Dugo also pointed out, “Certain individuals will commit workers comp fraud because of an economic downturn or an opportunity to make ‘easy’ money. We target this group of potential defrauders with public awareness campaigns” that show them the perils that await those who are caught. It was noted that the campaign helped level out growth rates for the fraud.

During a discussion on ways to further improve outreach efforts, Consumer Action's Linda Williams suggested that more avenues be explored for getting the message out to the community, such as reaching out to churches and grassroots organizations. “We need to educate the community by making information more community-friendly. Know your audience,” Williams said.

Meeting participants acknowledged that although public awareness efforts can be effective, not all fraudsters can be deterred, and prosecution is still important. Prosecutors spent part of the June meeting discussing recent high-profile cases and providing examples of insurance frauds. One case, involving provider fraud, and dubbed Operation Backlash, was jointly investigated and prosecuted by the San Diego DA, U.S. Attorney General, FBI and California Department of Insurance. The massive “kickback” scheme involved dozens of marketers, doctors, lawyers and medical service providers who conspired to bilk the California workers compensation system out of approximately $200 million by buying and selling “patients” and filing claims under their names.

Another case, against Good Neighbor Services (GNS) janitorial company, was an example of premium fraud by an employer. GNS, a company providing cleaning staff to major hotels in the San Diego area (including Hilton, Hyatt, Four Seasons and Ritz Carlton properties), avoided paying millions in workers compensation and unemployment insurance premiums, as well as millions in payroll taxes, by lying about how many people it employed. GNS was charged with placing worker health and well-being at risk and gaining an unfair competitive advantage.

“Hopefully, our partnership with the Insurance Consumer Protection Advisory Council to get the word out about insurance fraud will discourage someone from committing it, or encourage them to report it,” said Santiago.

Hotline Chronicles: Landlord won’t return security deposit

Many tenants have trouble getting their security deposit refunded when the lease ends and they move out. Alejandro*, a Florida resident, emailed Consumer Action’s hotline team with a complaint: His landlord would not return his security deposit because the walls were no longer painted white (as they were when he moved in). Alejandro argued that the landlord’s decision was unfair because the apartment was in terrible condition when he moved in—and he had photos to prove it.

Our hotline counselor replied to Alejandro with information on Florida's landlord and tenant laws. She also provided resources on how to sue the landlord in small claims court.

One thing stood out to our counselor about Alejandro’s complaint: His landlord told him orally that he wouldn’t get the money back because of the paint job. This is unacceptable: Under most state laws, the landlord has to provide an itemized statement about how the deposit was applied (such as toward back rent, repairs, cleaning, outstanding utility bills, etc.) as well as receipts for any work done. Some states require that this statement be given to tenants before the repairs are made.

While it can be extremely difficult for tenants to get a security deposit back if landlords dig in their heels, there are some things tenants can do from the get-go to make it more likely the money will be returned when they move out.

• Tenants are not responsible for normal wear and tear: The refrigerator motor dying or the dryer breaking down, for instance, are responsibilities of the landlord. However, if your cat urinated repeatedly on the wall-to-wall carpet, or you had a wild party and one of your guests punched a hole in the wall, it’s on you to cover the cost of repairs or replacement—or lose your security deposit. If damages exceed your deposit, you might even be sued by your landlord.
• Take photos of the unit when you move in, with a date stamp, and keep them somewhere where you can easily access them when your lease ends.
• “Last month’s rent” is just that—do not assume you can pay the last month’s rent out of your security deposit unless you were specifically given permission by the landlord. However, if you did give the landlord an upfront payment of your last month’s rent when you moved in, you are not required to make another payment for the last month.
• If your lease requires advance notice to your landlord when you plan to move out, make sure you provide a written notice within this time frame (such as 30 or 45 days prior to your move-out date).
• Make sure the rental unit is left “broom clean” and that any obvious issues, such as holes in the wall caused by you and your guests, or pet stains on the carpet, are thoroughly fixed and cleaned. Take photos of the space after it has been cleaned.
• Make sure you provide a forwarding address to your landlord. Some state laws hold that landlords do not have to return deposits if they don’t know where to send the money. If you don’t receive the refund you’re expecting, keep following up with the landlord until he or she sends a written, itemized statement detailing why your money is not being returned.
• If your landlord is delaying your refund, not sending you the required information or ignoring your calls, send a “demand letter” asking for the return of your security deposit, citing state law where applicable, and stating that you will take the matter to small claims court if necessary. This will help protect your rights if you decide to pursue the matter in small claims court.

Here are two helpful resources from legal rights publisher NOLO:

• State-by-state chart of deadlines for returning security deposits
• State list of small claims court dollar limits

More low-income households can now get online for $10 (or less)

Consumer Action has updated its low-income broadband consumer education materials to reflect an August announcement from Comcast that the company is expanding the eligibility criteria for its Internet Essentials program.

In 2016, Consumer Action partnered with Comcast to create a free educational guide that instructs consumers who can’t afford a standard monthly service plan on the options they have for high-speed home internet connections. Getting Up to Speed: Broadband internet for low-income households lays out the many benefits of broadband internet and gives an overview of available low-income broadband adoption programs that can help households get online for $10 or less per month.

With Comcast’s recent change, an estimated 3 million additional low-income households are eligible for the Internet Essentials program. According to the company, this expansion doubles the total number of previously eligible households, and includes many people with disabilities and seniors.

“The Internet is arguably the most important technological innovation in history, and it is unacceptable that we live in a country where millions of families and individuals are missing out on this life-changing resource,” Comcast noted in an Aug. 6 press release.

“High-speed internet at home is a modern necessity—without it, children fall behind in their education and adults miss out on job, social networking and other opportunities,” Ken McEldowney, executive director of Consumer Action, said. “We’re pleased that Comcast has expanded its eligibility criteria and that we can play a role in spreading the word and getting more U.S. households connected.”

Those who wish to apply to the program can click here. Low-income applicants will need to show that they are participating in one of at least a dozen different government assistance programs, including: Medicaid, HUD/Section8 (public housing assistance), the National School Lunch Program (NSLP), Head Start, the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Low Income Home Energy Assistance Program (LIHEAP), Tribal assistance, Pell Grant (federal college financial aid), Women, Infants, and Children (WIC), and veterans (VA) pension.

• Consumer Action’s free Getting Up to Speed guide is available on our website in mobile-friendly and printer-ready PDF formats, in both English and Spanish.
• A free packet of companion flyers, in English, provides detailed descriptions of specific programs that offer low-income households affordable access to the internet, including: Comcast’s Internet Essentials, Access from AT&T, Spectrum Internet Assist, those offered via the non-profits EveryoneOn and PCs for People, and the federal Lifeline.

‘Rescan’ to regain access to your favorite over-the-air TV stations

Consumer Action has joined the National Association of Broadcasters (NAB) to spread the word about the Federal Communications Commission (FCC) reallocation of broadcast TV airways to make room for wireless internet services. NAB has created the website TVAnswers.org to address the somewhat complex issue, but in a nutshell, there’s only so much space on the airwaves to broadcast both TV stations and wireless internet, and the FCC recently sold some of that space (which had belonged to the TV sector) to internet companies.

The FCC says that nearly 1,000 TV stations individually will have to make the move to new frequencies (between 2018 and 2020 or so) to make room for the wireless internet services, and that this will impact more than 72 million U.S. television viewers who get local TV for free (using either an indoor or outdoor antenna).

So, what can boob-tube viewers with antennas do to continue accessing their favorite local news, entertainment or sports stations? It’s actually simpler than you’d think. First: If your TV is connected to cable or satellite service, you don’t need to do anything. If not, you need to “rescan” your TV (and because the stations are moving to new frequencies at different times, you may need to rescan more than once).

Rescanning your available over-the-air channels requires no new equipment. According to NAB, you just: “Select ‘scan’ or ‘autotune’ from your TV or converter box control menu to start the scanning process. You can usually find instructions by pressing the ‘set-up’ or ‘menu’ buttons on your television or digital antenna remote control.... After you rescan your TV set, the channel number you used to go to for your local TV station will remain the same.”

If you’re having trouble rescanning, first consult your TV owner's manual for how to run a channel scan. You can also reach out to your TV or converter box manufacturer’s customer service number. Need more help? Contact the FCC’s hotline between 8 a.m. and 1 a.m. ET at 888-CALLFCC (225-5322). Select option 6 to speak to a representative.

Coalition Efforts: Vehicle data, robocalls and mortgage standards

Vehicle owners should have control over their vehicle’s data. Consumer Action signed on to a comment letter to Congress penned by the U.S. Vehicle Data Access Coalition. The letter supports bipartisan and bicameral autonomous vehicle legislation that would reaffirm and codify a motor vehicle owner’s right to access and control the data generated by his or her vehicle. As automobiles increasingly incorporate the technology to track a driver’s location, save certain settings (including the driver’s “home” location), and connect to and download smartphone settings, texts and emails, consumer advocates and other stakeholders have started addressing vehicle owners’ unique privacy concerns. Learn more.

A never-ending scourge of unwanted robocalls plagues Americans. As consumers continue to be overwhelmed with unwanted robocalls, advocates are urging the Federal Communications Commission (FCC) to go beyond its initial proposal to rein in the calls by requiring phone companies to implement caller-ID authentication technology, opt-out tools for scam calls, and opt-in call-blocking tools for other unwanted calls. (Read the advocates’ letter to the FCC, and learn more about robocalls in the latest issue of Consumer Action News: The Robocall Scourge.)

Revamping the ‘qualified mortgage’ standard will harm vulnerable consumers. The Consumer Financial Protection Bureau (CFPB) has proposed changes to the definition of a “qualified mortgage” (QM) that could, if approved, cut off adequate access to mortgage credit by borrowers who are self-employed or who work in non-traditional jobs (and fail to conform to traditional QM borrowing standards). As a result, a large swath of potential borrowers would be frozen out of the housing market, including those with low incomes, people of color, and many individuals carrying student debt. Learn more.

CFPB Watch: Financial innovation versus consumer protection

The Consumer Financial Protection Bureau (CFPB) issued several new policies last month that are intended to foster financial innovation. Some of the policies have been controversial among consumer rights groups because they allow corporations to develop and test new financial products and services while exempt from CFPB legal or regulatory action for failing to adhere to consumer protection rules and laws.

The CFPB’s three new policies consist of the “no-action” letter policy, the FinTech sandbox policy and the trial disclosures policy. The Bureau believes that the new “streamlined” processes created under the policies will benefit both companies and consumers.

“Innovation drives competition, which can lower prices and offer consumers more and better products and services. New products and services can expand financial options, especially to unbanked and underbanked households,” CFPB director Kathy Kraninger said.

Consumer groups, however, are concerned that the new policies give companies impunity to harm consumers, even if they offer risky or bad financial products or services. Such policies—created by the very agency designed to protect consumers—might violate consumer protection laws.

For example, the Bureau’s “no-action” letter policy will allow HUD-approved housing counselors to receive fees from mortgage lenders when counselors refer business to them. The CFPB said the new policy should increase funding for non-profit housing counseling agencies. The Bureau’s new policy means that it will not take regulatory or enforcement action when counselors participate in this type of financial arrangement where lenders pay. Critics argue that the policy in general is ripe for conflicts-of-interest.

Disaster guide for reverse mortgages

In the wake of Hurricane Dorian, the CFPB has released a four-page guide to help reverse mortgage holders understand their obligations while recovering from a natural disaster.

The guide is designed for homeowners with a home equity conversion mortgage (HECM), the most common type of reverse mortgage. It advises borrowers to quickly file an insurance claim in the event of a natural disaster, document the damage with photos, and alert their reverse mortgage lender.

It also spells out reverse mortgage borrowers’ obligation to keep their homes in good repair. HECM borrowers are required to occupy their homes and continue to pay property taxes and insurance in order to not run afoul of lender rules. This may be unrealistic in the event of a catastrophe, so the guide explains how best to communicate with lenders, tax collectors and other stakeholders if a catastrophic disaster makes a dwelling uninhabitable.

The Bureau also offers general tips on how to collaborate with insurance companies post-disaster, advice for those facing foreclosure, and resources for borrowers who need housing counseling services.

Credit card use, costs up for cardholders, issuers

Consumers have more than doubled their spending on credit cards since 2015, according to the CFPB’s latest report on the state of the credit card market. Credit card balances continue to grow, but not as rapidly as purchases, according to the 2019 report, which covers 2017-2018 credit card activity.

The average amount of credit card debt for consumers with lower credit scores is rising faster than for those with higher scores, and the number of consumers making late payments has increased, as have delinquency and charge-off rates (balances that the companies write off due to non-payment).

The total cost of credit has risen in the last two years, mostly due to small increases in the prime rate set by the Federal Reserve. Changes in the prime rate cause variable credit card interest rates to move up or down, depending on whether the Fed hikes or lowers the prime rate. Annual fees have been increasing as well, with an average fee of $80 in 2018. (However, there are plenty of cards without annual fees.)

Cardholders have increased their use of rewards cards, which are costlier for card issuers to administer, and these costs are typically passed on to cardholders. The costs of balance transfers and cash advances have remained the same.

The report reveals that card issuers have lowered the number of debt collection calls they make each day, and, compared to the previous two years, have agreed to settle more outstanding balances using for-profit debt settlement companies. The CFPB report notes, however, that card issuers say they offer the same settlements to consumers who approach them directly as they do to for-profit settlement companies, so it’s not necessary to get involved with a third party.

The report also highlights industry trends: More consumers are applying for credit on their mobile devices (particularly consumers with lower credit scores). Card companies are relying more on computer-based artificial intelligence and machine learning programs to manage risk and expand access to credit for those without traditional credit scores. The Bureau warns, however, that card companies must closely monitor the use of these new technologies to avoid unintended consumer consequences and discrimination.

The CFPB’s biannual credit card reports are required under the CARD (Credit Card Accountability Responsibility and Disclosure) Act of 2009. The CARD Act, which Consumer Action worked to help pass, was responsible for reducing and eliminating certain credit card fees and for banning retroactive interest rates (dramatic rate hikes applied to previous purchases). The law has saved consumers an estimated $12 billion a year, which translates into well over $100 billion in total savings over the decade since its passage.

Class Action Database: Consumers cash in over erroneous credit reports

A class action settlement involving fashion retailer Hot Topic’s unsolicited telemarketing texts was among nine new settlements added to the Consumer Action Class Action Database during September.

Of note this month is a proposed settlement involving TransUnion, which has been accused of listing certain invalid customer debts on consumer credit reports.

The plaintiffs filed a class action suit against the credit reporting agency alleging violation of the Fair Credit Reporting Act. Plaintiffs claim that TransUnion illegally reported the collection accounts of two predatory lenders—CashCall and the now-defunct Western Sky—on their credit reports. The online lenders provided high-cost loans, with interest rates of up to 343%, but several states have passed laws that make these types of abusive payday loans unenforceable or void.

If the loans had been voided, consumers would not have owed money, and TransUnion’s reporting of the loans was inappropriate. Plaintiffs allege that by reporting the illegal loans as collectable debt on their credit reports, TransUnion hurt their credit scores. TransUnion denied the allegations but agreed to a settlement.

You are part of the class if, in one or more inquiries dated after Oct. 12, 2016, your TransUnion credit file listed a collection account for a loan issued by CashCall or Western Sky. At the time of the inquiry, you also must have lived in one of these states: AL, AZ, AR, CA, CT, FL, GA, ID, IL, KS, MD, MN, NY, OR, RI, SD, VA or WV.

The settlement provides a $100 cash payment to class members. California class members must submit a claim to receive the payment; non-California class members will automatically receive it.

The claims deadline is Nov. 2, 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.