Released: November 30, 2017

Consumer Action INSIDER - December 2017

Table of Contents

• What people are saying
• Did you know?
• Consumer Action’s 2017 National Consumer Empowerment Conference
• A hidden gem for housing professionals
• Hotline Chronicles: Knock-off bag is a teachable moment
• Latest annual report reflects challenges of new political climate
• Coalition Efforts: Fair mortgages, servicemember protections, data privacy
• CFPB Watch: The director resigns, deceptive debt and costly auto loans
• Class Action Database: A stain on furniture store’s record
• About Consumer Action

 

What people are saying

I want to thank you again for the opportunity to attend your National Consumer Empowerment Conference. It was wonderful. I was able to network with colleagues I may have never met otherwise and learn of so many things about to affect my clients. — Christine Op’t Hof, Catholic Charities USA HUD Housing Counselor

Did you know?

Many homeowners with mortgages are eligible for HARP, the Home Affordable Refinance Program. The Federal Housing Finance Agency (FHFA) program can help these homeowners reduce their mortgage payments considerably when they refinance. In an effort to approve more refinance applications, the FHFA has made it so that HARP now requires less documentation. The basic eligibility requirements are: you are current on your mortgage, the home is your primary residence, your loan is owned by Freddie Mac or Fannie Mae and it was originated before May 31, 2009. Learn more and use the eligibility tools available at HARP.gov to determine if you can refinance your home loan. The program ends on Dec. 31, 2018.

Consumer Action’s 2017 National Consumer Empowerment Conference

Last month, credit, housing and financial counselors from non-profits and community-based organizations (CBOs) across the country gathered in Chicago for Consumer Action’s 8th annual National Consumer Empowerment Conference.

The conference kicked off with a frank assessment by the attending national consumer advocacy groups, including Public Citizen and the Center for American Progress, about the many consumer protections at risk in what has become a new era of deregulation. Advocates lamented recently repealed pro-consumer initiatives like the Federal Communications Commission’s (FCC) rule on internet privacy (which would have given the public some control over access to their online data) and the Consumer Financial Protection Bureau’s (CFPB) rule on forced arbitration (which would have allowed consumers to band together to sue a company accused of wrongdoing). The panel also pointed out other protections (regarding student loan repayment, net neutrality and retirement advice) that remain in a state of limbo as federal agencies debate their fate. Advocates advised participants to encourage consumers to call their congressional representatives to voice their concerns about the ongoing loss of consumer protections and to hold lawmakers accountable. (You can use Consumer Action’s Take Action tool to contact your reps.)

The conference then turned to controversial energy efficiency loans. Attendees heard stories of elderly long-term homeowners who qualified automatically for unaffordable Property Assessed Clean Energy (PACE) program loans that brought them to the brink of foreclosure. PACE loans are used to install insulated windows and solar panels and are repaid as an assessment on a homeowner’s property tax bill. There is hope when advocates work to control PACE loans in their state: Realtors, lenders and consumer advocates joined together to pass much-needed legislation in California this year to require that lenders disclose PACE loan costs upfront, consider borrowers’ ability to repay the loans and clearly explain how loans are financed.

Another session described the challenges surrounding the “gig” economy, a growing labor market offering short-term contract or freelance work as opposed to permanent jobs. Approximately one-third of workers are part of the gig economy these days (getting work through companies—“platforms”—like Uber, etc.), with 16 percent operating full-time as so-called independent contractors. While there are pros to working in the gig economy (like flexible scheduling), these workers can suffer from a lack of employer-paid benefits. Presenters promoted the idea of “portable” workers’ compensation or other benefits that travel with a worker to different jobs.

Additional sessions included one hosted by privacy advocate Pam Dixon, who warned of a “modern form of redlining” that occurs when unregulated aggregated risk scores are created about consumers based on where and what they’ve purchased over time using their credit cards. Dixon says these scores draw conclusions about us related to our race, religion, marital status and census tracts. She recommended that we regain some control over our data profiles by opting out of data sharing where possible. See the World Privacy Forum’s Top 10 Opt Outs list.

Another panel included an America Saves representative discussing the campaign to get young people into the habit of saving for expected and emergency expenses by partnering with employers to set up automated savings plans. Participants also heard about how autos with unrepaired safety defects can still legally be advertised as “safe” or “certified” and sold to consumers without repair. (Check for safety defects at SaferCar.gov before buying your next used car.)

The highlight of the conference came as day one wrapped up, with attendees breaking into teams to present their “wow and how” moments—key takeaways from the day’s sessions that wowed them, with thoughts on how they would present the information to their communities. CBOs drew pictures, designed learning games, created skits and entertained each other with new financial warnings and tips.

This year, two top members of the CFPB presented at the conference. The head of the Office of Servicemember Affairs shared some just-in-time tools that the agency created to help financially vulnerable servicemembers avoid being bilked. These included the Bureau’s online financial education comic book, Misadventures in Money Management. Another CFPB representative explained how essential consumers’ financial complaints are to the Bureau’s mission and informed attendees about some key enhancements to its complaint process (such as its new feedback survey, which asks consumers if a company has addressed their complaints and gives them space to explain if a firm did what it said it would do).

Day two of the conference included a session on organizations’ successes in improving access to credit for low-to-moderate income consumers. Two advocates explained how their organizations used the Community Reinvestment Act (CRA) to negotiate with lenders to provide new loans, bank branches and small business investments to meet the credit needs of local communities. Attendees also learned how consumers can “trick themselves into saving” with some of the latest apps that encourage budgeting and good financial habits using FinTech tools; and how “earn and learn” apprenticeship programs can help people earn associate’s degrees—and salaries—while gaining on-the-job learning experience from companies that benefit by reducing their hiring costs. Companies cover apprentices’ college costs, too. (Learn more here.)

Consumer Action appreciates the corporate sponsors, including Citi, TracFone, 1-800 Contacts, JPMorgan Chase, Microsoft, Comcast NBCUniversal, American Express, Enterprise, Walmart and Wells Fargo, whose donations allow CBOs to attend the National Consumer Empowerment Conference at no cost.

A hidden gem for housing professionals

Non-profit housing counseling agencies and other community groups sometimes struggle to fund professional development training for staff and volunteers. Staff are often limited in what types of educational opportunities they can pursue, while agencies find themselves asking how they can augment core staff learning in the most cost effective way. One valuable resource that could help consumer advocates navigate this dilemma is the Counselor’s Corner on the U.S. Department of Housing and Urban Development (HUD) Exchange website. Our staff recently discovered the helpful resource after attending a Counselor’s Corner webinar on disaster preparedness and recovery.

The Counselor’s Corner is a free one-stop shop of tools and resources for housing counseling professionals. We uncovered webinars, training videos and tutorials on the site, which provides industry updates and helps housing counselors to make informed decisions. Some of the topics discussed on the site and in online learning events include pre-purchase counseling, homeownership preservation and financial capability.

Consumer Action’s Audrey Perrott points to a valuable disaster preparedness resource she discovered in October while attending a Counselor’s Corner webinar, Disaster Road to Recovery. The session provided a comprehensive look into pre-disaster preparedness and post-disaster management in the event of hurricanes, floods and other natural disasters. It also outlined the types of responses that could be expected from major stakeholders in the event of a disaster, from individual homeowners to local and federal government. After the webinar, the Counselor’s Corner team sent out the webinar recording, a disaster preparedness resource guide, a link to the Federal Emergency Management Agency (FEMA) rumor control website for Hurricane Irma and the link to a Community Emergency Response Team training offered by Ready.gov. As with all natural disasters, scammers quickly go to work to exploit victims (particularly those looking to file home insurance claims or pay for home improvements), which makes it necessary for counselors, case managers and community advocates to be ready to counter the misinformation and direct disaster victims to appropriate community resources—something that the Counselor’s Corner prepares us to do.

Hotline Chronicles: Knock-off bag is a teachable moment

Juliana* contacted our hotline about a seller of counterfeit handbags who was claiming the bags were made by the luxury manufacturer Coach. Unfortunately, Juliana had fallen for the sales pitch. After receiving the bag she purchased and spotting it as a fake, she attempted to return it, only to be told that even if she sent it back at her own expense, the seller would deduct a “10% bank fee, 30% handling fee and 10% shipping fee.”

We advised her to dispute the charges on the credit card used to make the purchase and to report the seller to her state’s consumer protection authorities. (Find yours here.) The FBI also accepts complaints about counterfeit sellers at its Internet Crime Complaint Center.

Juliana’s story presents an opportunity to discuss a much larger problem—counterfeit goods. According to the International Trademark Association, $460 billion worth of counterfeit goods were bought and sold last year. The association says that the “quality” of fakes has gotten so good that many people can’t tell the difference. Its UnReal campaign aims to educate young people about the issue, telling them about how these goods often are made in sweatshops that exploit workers and fund organized crime and terrorism. And of course, counterfeit products harm brand reputation and rip off consumers who believe they are purchasing the real thing.

Even more alarming, counterfeit goods can contain dangerous elements, such as lead, skin-irritating nickel and even radioactive materials that endanger consumer safety. Sunglasses without UV protection and counterfeit “Viagra” containing potentially harmful substances are other examples of the types of fake products that can pose health threats to buyers.

According to the International Trademark Association, “counterfeiting is the manufacture, import, export, distribution and sale of consumer goods that are not genuine but are branded to look identical to an authentic product. Counterfeiting also includes merely affixing the trademark or logo of a well-known consumer brand onto a product, even though it is not a direct copy.” Counterfeit goods include clothing, footwear, jewelry, purses, toiletries, home care products, food, alcohol, medications, cigarettes, electronic equipment and parts, airplane and car parts, movies, music and toys. Some brands that are counterfeited frequently include Burberry scarves; Lacoste shirts; Polo sweatshirts; Coach, Gucci and Louis Vuitton handbags; Ugg boots; and Nike sneakers.

How can you tell a fake? For one thing, if the price for a “luxury” item (complete with fancy logo) seems too good to be true, it probably is. Counterfeit trademarked items may be sold on copycat websites designed to look like the company that produces them, on websites claiming to possess bargain or retail-priced products, and at street vendors. Beware of so-called luxury goods being sold at flea markets or on social media.

If the real deal matters to you, make an effort to buy brand-name products directly from the brand owner’s official website or from well-known department stores. Websites often use tricky names to confuse consumers looking for luxury brands. Coach offers education on these types of schemes, listing, for example, the following “lookalike” website URLs that have been used to sell counterfeits: Coachoutletfactory(dot)com, Coachbags(dot)biz and Coachoutletsbags(dot)com. Remember that it’s easy for scammers to use content and images that they stole from company websites on bogus sites. Coach accepts tips about counterfeits at 877-788-7656 or .(JavaScript must be enabled to view this email address).

If you buy a fake, don’t try to resell it. You could open yourself up to criminal prosecution. And if someone tells you that counterfeiting is a “victimless” crime, just think of Juliana, and everyone else in the counterfeit goods pipeline—from the product designers to the workers to consumers like you—who are all taken advantage of by the counterfeit industry.

*Not this consumer’s real name

Latest annual report reflects challenges of new political climate

Each fall, Consumer Action chronicles the previous fiscal year’s advocacy efforts, educational and outreach activities, consumer engagement work, fundraising endeavors and more in our annual report. Our newest report, covering the period April 1, 2016 through March 31, 2017, is available for download now.

The report reflects both the great progress that we, along with our allies, achieved during the last year of the Obama presidency, as well as the unexpected challenges we took on as a new, pro-deregulation administration occupied the Oval Office in the second half of the fiscal year. Months before inauguration day, with the fate of many consumer protections already sealed, we began the crucial work of identifying what would likely be in the administration’s crosshairs and strategizing our defense with coalition partners. From protecting the privacy of internet service provider (ISP) customers and promoting expanded protections for prepaid debit card users to pushing for greater language access for borrowers and defending consumer class actions, the advocacy section of the report highlights our efforts to hold the ground that had been gained nationally and in our home state of California.

As the report reflects, anti-consumer sentiments in Washington didn’t hamper our educational, publishing and consumer engagement activities. The 2016-2017 fiscal year saw our outreach staff visit eight cities and train hundreds of community organization staff on the most effective use of our consumer education materials. Our trainers reached hundreds more through a series of webinars—an educational avenue we are embracing more each year. New publications produced by our editorial team covered topics of importance to consumers, including how to evaluate your insurance coverage, get connected with low-cost broadband internet service, shop safely online and find the right job training school. In addition, we updated a number of our most popular publications, ensuring that our growing library remains current. Among the many statistics in the report is the fact that Consumer Action filled 1,382 requests from community-based organizations for 392,897 free, printed copies of our multilingual publications, with many thousands more being downloaded directly by consumers from our websites.

Our annual report also includes:

• Department activities (from outreach to advocacy to administration)
• Recaps of our 7th annual National Consumer Empowerment Conference and our 45th annual Consumer Excellence Awards anniversary celebration
• A rundown of amicus briefs we filed in legal cases of importance to the consumer interest
• Media, website and social media activities and milestones
• Complaint hotline and class action database statistics
• Profiles of two employees, Vickie Tse and Alegra Howard
• Spotlights on two of our valued community partners, DebtHelper and Cornell Cooperative Extension
• Lists of donors/supporters, educational partners, court awards, coalition partners, board members and staff
• Financials

“It hasn’t been an easy year, but it’s been a productive and rewarding one,” noted Ken McEldowney, Consumer Action’s executive director for nearly four decades. “While our annual report recognizes and recounts the work of our staff, partners and supporters, it’s impossible to put into words how invaluable their contributions have been to our organizational success and the larger cause. Moving forward, we are only strengthening our resolve and our work to combat the growing attacks on consumer protections.”

Coalition Efforts: Fair mortgages, servicemember protections, data privacy

Strengthen fair mortgage lending, don’t weaken it. Advocacy groups, led by the National Community Reinvestment Coalition, are opposing legislation that would exempt many mortgage lenders from critical reporting requirements mandated in the Home Mortgage Disclosure Act (HMDA). The legislation would allow those lenders that originated fewer than 1,000 home loans in each of two preceding years to avoid reporting loan details to regulators. In a letter to members of the U.S. House of Representatives, the advocacy groups noted that, “The stark disparities in access to mortgage credit and the continued struggle for economic recovery in the communities hit hardest by the financial crisis call for a strengthening of our nation’s fair lending laws, specifically HMDA, not a weakening of them.” HMDA data exists to provide the government with critical information on whether or not eligible borrowers are receiving equitable access to mortgage credit regardless of their color, gender, etc. Regulators lacked this data a decade ago (when the housing crisis hit) and advocates argue that now is “not the time to limit the nation’s ability to adequately assess the reasons for restricted credit access for underserved borrowers.” Learn more.

Updated protections needed to protect servicemembers from financial predators. Consumer Action has joined the National Consumer Law Center and other groups in a letter to the U.S. House and Senate Committees on Armed Services urging updated rules to protect servicemembers from predatory business practices. The letter points out that the Consumer Financial Protection Bureau (CFPB) has documented many instances of debt collectors harassing members of the armed forces, including threatening to contact commanding officers in order to coerce payment. Years ago, the Department of Defense (DOD) issued policy directives governing how members of the armed services must comply with debt collectors. However, these policies are nearly a decade old and do not reflect current federal consumer legal protections. The advocacy groups urged the committee to direct the DOD to review and update its policies in order to protect the financial health of servicemembers and their families. Learn more.

Data “protection” bill does just the opposite. Following the massive Equifax breach that exposed personal information about millions of American consumers, members of Congress began to devise new legislation to protect consumers. Consumer Action joined the National Consumer Law Center and other groups in a letter pointing out that one seemingly well-intentioned effort would, however, actually weaken consumer protections. The Credit Access and Inclusion Act (HR 435) would reduce utility customers’ and tenants’ control over their own personal information by overriding stronger state and federal privacy protections. Specifically, the rule would amend the Fair Credit Reporting Act to permit utility companies and landlords to furnish consumers’ payment information to a credit bureau or other consumer reporting agency without regard to existing state laws that require consumer consent before the entities can share that information. Learn more.

CFPB Watch: The director resigns, deceptive debt and costly auto loans

Consumers have lost one of their biggest allies: The Consumer Financial Protection Bureau’s first and only director, Richard Cordray, announced his resignation last month. (It’s rumored he will run for governor of Ohio.) Over the last six years leading the CFPB, Cordray steered it toward his goal of helping to create a marketplace “where prices are clear up front, risks are visible, nothing is buried in fine print and everyone plays by the rules.”

Cordray’s contributions to the agency and to consumers cannot be overstated: Under his leadership, the CFPB returned $12 billion to 29 million individuals. He and the Bureau helped to rebuild a broken mortgage market by improving home lending, servicing and disclosures. Cordray also made meaningful improvements in the credit reporting, debt collection and student lending markets (to name just a few). In addition, he created a first-class public complaint process at the CFPB, which has not only helped to hold companies more accountable but has also made the market fairer for consumers.

With Cordray’s departure, we expect consumer protection will not be the focus of his replacement, Mick Mulvaney, appointed late last month by President Trump. The Trump administration makes no secret of its goal to foster an “anti-regulatory” environment for banks and corporations.

And Mulvaney has never been shy about his disdain for the Bureau. A former member of Congress (R-SC), Mulvaney was serving as Trump’s Office of Management and Budget (OMB) director, a position that he has held on to (as of this writing) despite his appointment to lead the financial watchdog agency he has called a “joke in a sick, sad kind of way.” Mulvaney has pledged that under new leadership, the CFPB will be “dramatically different” and has already instituted a 30-day hiring and policymaking freeze at the Bureau.

Consumer Action thanks Richard Cordray—one of our 2016 Consumer Excellence Award recipients—for his efforts on behalf of consumers and his judicious enforcement actions and rulemakings. He will be greatly missed by those who care about economic justice.

Debt settlement deceptions

The CFPB has sued the country’s largest provider of debt settlement services, Freedom Debt Relief. The company is accused of charging consumers to settle their debts without providing the service as promised, misleading consumers about its fees and services and requiring some customers to negotiate deals on their own in order to get out of debt. The CFPB also asserts that the debt settlement company failed to clearly inform consumers that they were entitled to get refunds of their funds on account if they left the program. The CFPB is seeking restitution for consumers, fines for Freedom Debt Relief and a halt to the company’s alleged deceptions.

Free credit scores

Thanks to the CFPB, many credit card companies and other lenders are giving you free access to your credit score. If you’ve received a free copy of your score, the CFPB wants to know how you accessed it, which company supplied it and if you found it helpful to learn your score.

This is part of a Bureau effort to build awareness about free credit score access and to ensure the accuracy of the credit reports that they’re derived from. The CFPB has updated its list of free credit score providers. You can offer your feedback to the CFPB by Jan. 12, 2018.

The disadvantages of long-term auto loans

Close to half (42%) of all new auto loans made in the last year have a six-year or longer repayment term, according to CFPB research. This is a significant increase from 26 percent in 2009. Consumers are also borrowing more money on six-year loans—$25,000 on average versus $20,000 for a five-year loan. The CFPB found that those taking out six-year loans tend to have much lower credit scores.

The Bureau warns that longer-term auto loans are riskier for borrowers because they are typically more expensive to repay and have higher rates of default. The CFPB cautions that since, on average, consumers own their cars for about six and half years, borrowers who opt to take out these longer loans may end up owing money on a car they have to sell or that is inoperable for some reason.

Check out the CFPB’s helpful resources on shopping for an auto loan for help in understanding the full costs of buying a car, various loan options and what items are negotiable (before closing the deal).

Class Action Database: A stain on furniture store’s record

Class action settlements involving SolarCity and ADT were among seven new settlements added to the Consumer Action Class Action Database during November.

Of note this month is the class action settlement Hankinson v. RTG Furniture Corp., dba Rooms To Go.

The plaintiffs filed a class action against the furniture store Rooms To Go regarding the sale and fulfillment of its ForceField Protection Plans. The plaintiffs, who paid to add the ForceField stain protectant to the leather or fabric upholstered furniture they purchased, allege that Rooms To Go did not professionally apply the protectant as promised.

Rooms to Go denied the allegations but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

You are part of the class if you purchased one or more ForceField Protection Plans during applicable dates (class periods). The class period for purchases made in-store is based on the state where you purchased the plan. The class period for purchases made online is based on the state where you currently reside. See page 4, section 8 here for the list of class periods by state.

Class members are eligible to choose either:

(A) A check for up to 10 percent of the total amount paid for the ForceField Protection Plans; or

(B) A merchandise voucher for up to 45 percent of the total amount paid for the ForceField Protection Plans (up to a maximum amount of $125).

If total claims for the checks exceed $13.5 million, each check claim amount will be reduced.

The claims deadline is Jan. 15, 2018.

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 free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.

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.