Released: December 01, 2020

Consumer Action INSIDER - December 2020

• What people are saying
• Did you know?
• The enduring impact of racism on your finances
• Using FinTech to manage money? You need to watch this
• Hotline Chronicles: What does your ‘tenant report’ say about you?
• Funder brings Consumer Action’s FinTech education to Arizona
• Coalition Efforts: Deregulation during the worst possible time
• CFPB Watch: Pausing mortgage payments and ‘reorganizing’ attempts
• Class Action Database: 1-800 Contacts sees the error of its ways?
• About Consumer Action

What people are saying

It has been a pleasure to partner with Consumer Action and work alongside you--thank you for your continued support throughout the pilot program. Even with some of the challenges we faced due to the coronavirus pandemic, I have to say that FinTech is an excellent resource to add to the work Delhi Center does in ensuring our community continues to climb up the ladder of economic well-being. —Nancy De León, Case Manager, Delhi Center

Did you know?

Microplastics pollute our wildlife, rivers, oceans, beaches...and even our bodies! These tiny bits of plastic infiltrate the environment from a variety of sources, including garbage, manufacturing byproducts and consumer products. Progress has been made, however, in reducing microplastics: "Microbeads" are particles of microplastic that used to be popular in beauty products (think exfoliating face scrubs), but have recently been phased out due to their impact on fish and other wildlife. Unfortunately, microbeads are still used to create glitter (even "biodegradable" glitter). And single-use plastics (e.g., bottled water) are often created with microplastics that ultimately break down into a toxic stew. Put your purchasing power to work by avoiding these types of plastic pollutants whenever possible. (You can download the app Beat the Microbead to check for microplastics in common products.)

The enduring impact of racism on your finances

In an era of “alternative facts” and the ongoing systemic persecution of Black Americans, Consumer Action felt it critical to dedicate our Fall 2020 Consumer Action News to the impact of race on personal finances. The latest free quarterly newsletter examines the areas of individual and household finances most affected by entrenched racism—from car and student loans to mortgages and auto insurance. In each area, Consumer Action explores leading proposals for dismantling these barriers to financial inclusion.

For generations (and to today), institutional racism has denied people of color access to the economic and educational systems that are, in our nation, the very building blocks of financial advancement. Upon returning from fighting in World War II, for example, white working-class and middle-income Americans were eligible to acquire mortgages in nice neighborhoods through federal loan programs, while Black Americans were systematically excluded from these opportunities (by their own government!).

The Impact of race on personal finances begins by addressing housing discrimination and redlining, a discriminatory U.S. government-mandated mortgage lending practice prevalent in the 1930s, ‘40s and ‘50s that left prospective Black homebuyers without access to credit to purchase homes and begin building wealth. For decades, Black and other minority consumers were barred from borrowing money to buy homes in neighborhoods that were deemed “hazardous” by government appraisers. Based on government maps that delineated non-white neighborhoods in red, the Federal Housing Administration (FHA) refused to insure mortgages in or near Black communities for fear that properties in those locations were too “risky” to finance. This practice of “redlining” effectively excluded many Black buyers from homeownership (and wealth building)—even if they could afford a loan.

Redlining has had serious ramifications—to this day impacting access to education as well as other opportunities. Without family financial support, Black students borrow up to twice as much, on average, as white students for college, and are less likely to graduate. Without a degree, workers typically earn smaller salaries that result in meager savings, which further limits the intergenerational transfer of wealth for Black families.

Even the car sales and auto insurance industries are rife with discriminatory pricing practices. Black male secret shoppers have been systematically quoted higher prices (more than twice the average car-dealer markup) than those offered to white male testers at car dealerships. And, despite the fact that discrimination based on race is technically illegal in every state, automobile insurers continue to charge Black drivers higher premiums to insure their vehicles than they do white drivers. Of course, lack of reliable, affordable transportation significantly narrows the path to better paying jobs and financial opportunity.

Being denied the opportunity to build a strong, secure financial future has lasting effects. In 2019, the average Black family had less than 15% of the financial cushion that white families had. Black households accumulated $24,100 in wealth versus $188,200 for the average white household, according to the Federal Reserve.

And today, the same neighborhoods that were intentionally deprived of loans and financial opportunities are linked to higher risks of poor outcomes from COVID-19.

The impact of systemic racism is undeniable. Today, a majority of Americans are prepared to recognize and address at least some of the enduring consequences of this unequal and unjust system from a policy perspective, with some making the case for cash reparations.

Proposals to help expand financial access and narrow the racial wealth gap include commitments by some of the nation’s biggest banks to invest in new mortgages and home refinancing, small business loans, personal lines of credit, and affordable rental housing in communities of color. Others are proposing new credit scoring models that reflect rent payments and bank transactions to help lower-income consumers build healthy credit scores and gain access to mortgages and safe rentals.

In addition, the federal government can take steps to reduce discriminatory and predatory lending by, for instance, reinstating borrowers’ payday loan protections, which were rescinded under Trump-appointed CFPB leadership. Learn more in the Impact of race on personal finances newsletter, available here.

Using FinTech to manage money? You need to watch this

Consumer Action recently announced that we will be distributing videos (in both English and Spanish) to low- and moderate-income (LMI) consumers on how to use financial technology (FinTech) to improve financial health. The helpful and timely videos are available for free viewing on Consumer Action’s website and YouTube channel.

“The pandemic has forced community groups to pivot and offer their clients financial education in virtual settings,” said Consumer Action’s director of strategic partnerships, Audrey Perrott. “And many of those clients are now using FinTech to monitor and manage their finances. We saw this enormous need to provide financial coaches with another tool to complement their online counseling services—a tool that will help consumers navigate this new technology.”

The short videos are based on Consumer Action’s Improving your financial health with FinTech: A beginner’s guide to personal finance apps fact sheet. They introduce consumers to the types of available FinTech (e.g., internet and app-based) tools, and describe how these tools can help users set financial goals, track spending, save money, send money, pay bills, and more. The videos also instruct consumers on what to consider when choosing an app and how to stay safe when using FinTech. The videos were produced by BridgingApps, a program of Consumer Action affiliate Easter Seals of Greater Houston.

“Easter Seals of Greater Houston and BridgingApps are honored to be working with Consumer Action and the Wells Fargo Foundation by contributing our expertise in digital technology, tools and financial education to enable our community, and especially those struggling financially, to achieve their financial goals,” said CEO Elise Hough.

In 2018, Consumer Action received support from Wells Fargo for a pilot program to distribute FinTech tools and educational resources to LMI consumers in two markets, and to measure the subsequent improvements in users’ financial health (specifically in the areas of spending, saving, planning and borrowing). Last year, the Wells Fargo Foundation awarded Consumer Action a grant of $275,000 to scale the integration of FinTech into financial inclusion programs using trainings, webinars and mini-grants to assist community organizations in educating financial coaches about financial health and technology; distributing financial technology tools to LMI consumers; helping LMI consumers improve their financial health through the use of FinTech tools; and measuring changes in financial health. In addition to developing our FinTech educational videos, the grant has also allowed us to translate our FinTech fact sheet into Spanish; introduce financial health and technology to 410 consumers and 21 nonprofit staffers at various project sites across the U.S.; and distribute valuable FinTech tools to financially vulnerable people.

At a time when 37% of American families lack enough savings to cover a $400 emergency with cash or cash equivalents, Consumer Action is working to combat the negative impact of financial shocks on people’s lives by using a human-centered design approach to introduce consumers and nonprofit staff members (e.g., financial coaches) across the U.S. to the FinTech tools that can benefit them. This approach allows our program partners to select the appropriate apps/tools for consumers at each of our project sites based on the common financial needs identified by program participants. We will share project results in a final impact report at the end of the year. For more information, click here.

Hotline Chronicles: What does your ‘tenant report’ say about you?

A tenant history report is one of a variety of “specialty consumer reports” that compile specific information about consumers. Jorge,* a longtime renter from Oregon, contacted Consumer Action’s hotline to ask how he could obtain a copy of his own report. He would be seeking a new apartment, and wanted to know what potential landlords might find when checking his tenant history report.

Tenant, or rental, history reports list previous addresses, rental payment history, evictions and other information obtained from previous landlords and public records. It pays to know that managers of multi-unit buildings are more likely to request your tenant history report than the landlord of a single-family home or just a few units. However, “mom-and-pop” landlords have access to tenant screening reports too.

In any case, no party should ever order your tenant history report without your knowledge and consent. Prospective landlords are required to obtain your authorization in writing, usually on a consent form that is provided with the rental application, and typically will ask you to pay for the screening with a check or money order. It’s legal in most states to charge prospective tenants a fee for the report; any fee should be reasonably related to this cost, however—$30 to $50 is common—and landlords should give you a receipt for your payment. Unfortunately, you will not get this fee refunded, even if the landlord decides not to rent to you. You might wonder if you can take your own report to each landlord and avoid the separate fee charged by each place you apply. According to the legal website Nolo, federal law does not require landlords to accept an applicant’s copy, but it doesn’t hurt to ask.

If your application is rejected based on a tenant screening or credit report, the landlord must give you the name and address of the agency that reported the negative information. You can follow up with that agency to dispute any inaccurate information.

You can request a free copy of your tenant history report from any number of tenant screening companies—you’re entitled to one free copy of each report once every 12 months. Frequently, you may find there is nothing on file about you, even though you have rented in the past. You are also eligible for a free annual report from any other credit or specialty reporting company.

Because the information you provide to obtain your report becomes part of the agency’s database, even if you were not in the database before your request, and because the request process may require you to copy documents and mail in a request form, it makes sense to only order your report before you apply to rent a home. Allow enough time—at least a couple of months before your move—to correct inaccurate information or include an explanation about unfavorable content if necessary.

Consumer Action provided Jorge with a copy of our fact sheet Specialty reports: The consumer reports you’ve never heard of, which explains how companies use a variety of these reports (similar to credit reports) to evaluate consumers’ past behaviors and “predict” the future—from how likely you are to be a good employee, to your chances of becoming ill or filing an insurance claim. We also sent Jorge a link to the Consumer Financial Protection Bureau’s list of consumer reporting companies, which includes a section on tenant screening firms and how to contact them.

* Not this consumer's real name

Funder brings Consumer Action’s FinTech education to Arizona

In September, the Federal Home Loan Bank of San Francisco awarded $3.5 million in grants to 97 nonprofits through its 2020 Access to Housing and Economic Assistance for Development (AHEAD) program. The grants, delivered by FHLBank San Francisco member financial institutions to nonprofits in Arizona, California and Nevada, are aimed at providing both immediate and long-term pandemic relief and boosting economic development in lower-income communities.

Consumer Action was among the 97 nonprofits to receive a grant to support financial education and the scaling of our financial technology (FinTech) innovation initiatives to Arizona. The grant will be delivered by FHLBank San Francisco member, and Consumer Action long-term partner, Desert Federal Credit Union.

“We are pleased to collaborate with Desert Federal Credit Union on this initiative,” said Consumer Action’s director of strategic partnerships, Audrey Perrott. “We have worked with the credit union for more than a decade, delivering in-person financial education training to direct-service providers and other stakeholders.”

Consumer Action works to combat the pervasive impact of financial setbacks on the lives of low- and moderate-income (LMI), limited-English-speaking and other underrepresented consumers. Currently, Consumer Action is introducing FinTech tools to these consumers and the nonprofit staff members who work with them at various sites throughout the country, based on the financial needs identified by each agency and its clients.

Consumer Action and program participants (including financial coaches and counselors) will integrate the FinTech tools, along with our educational resources, into existing financial capability programs. We also will distribute FinTech tools directly to LMI consumers and guide them in using the tools to improve their financial health. In order to reach an even greater number of vulnerable consumers, Consumer Action has translated its FinTech guide guide into Spanish, Chinese, Vietnamese and Korean and recently, with a non-profit partner, developed a FinTech video in English and Spanish.

Throughout the project, Consumer Action’s network partners will provide financial coaching, measure changes in participants’ financial health, and collect other critical savings and credit reporting data.

Coalition Efforts: Deregulation during the worst possible time

Allies urge CFPB director not to weaken Bureau’s enforcement arm. A coalition of more than 80 consumer and civil rights groups urged Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger to abandon an "October surprise" Bureau reorganization that she had proposed just before the presidential election. Instead of strengthening the arm of the CFPB that holds predatory financial institutions accountable, Kraninger’s proposal would drastically weaken its authority, independence and, ultimately, effectiveness, leaving consumers vulnerable and defenseless to corporate wrongdoing during an already financially stressful time. (As of this writing, the Bureau has announced it will not be moving forward with the harmful structural changes. See our CFPB Watch for the latest.) Learn more.

Education secretary urged to extend loan suspension. Over 70 community, civil rights, consumer, and student advocacy organizations urged U.S. Education Secretary Betsy DeVos to extend an existing suspension of payments on federal student loans through September 2021. A current suspension is set to expire on Dec. 31. If the Education Department does not grant the extension, borrowers could find it harder than ever to make ends meet as they are thrown back into repayment or forced collections while the economy continues to suffer during an out-of-control pandemic. As the letter points out: “Recent graduates are likely facing permanent negative effects on their lifetime income and wealth accumulation as a result of graduating into a historic recession, and they will have a particularly hard time making payments in the worst job market since 2008.” Learn more.

Phone, internet users must retain basic privacy rights. Consumer Action joined over a dozen privacy advocacy groups in urging the Federal Communications Commission (FCC) to uphold basic privacy protections for internet and phone users during the pandemic. The agency is attempting to throw out a consumer-friendly rule that has required telecom and other companies to respect the privacy of customers with regards to their Customer Proprietary Network Information (CPNI). CPNI data includes such information as who you’re calling and how long the conversation lasted. The FCC rule requires that an officer at wireless and telephone service providers, like Verizon, AT&T and T-Mobile, certify that the company complies with the CPNI privacy requirements, including that they seek customer consent before using data for non-service-related purposes. Advocates say it would be highly inappropriate for the FCC to eliminate or weaken these valuable protections, particularly during the pandemic. They point out that the COVID-19 crisis has made telecom privacy protections even more essential, as people are more reliant than ever on their phones. Learn more.

Studies expose systemic racism in insurance industry. Now what? Consumer Action joined a coalition of consumer and community activists in submitting comments to the National Association of Insurance Commissioners' Special Committee on Race and Insurance, urging it to focus efforts on creating tools to help states and insurers identify and combat systemic racism in insurance. Years of studies have revealed elements of insurance-related racism—in pricing, placements of agents, redlining, etc. (The fall 2020 issue of Consumer Action News delved into the issue of racism in the auto insurance industry.) Sadly, advocates point out that systemic racism is not found in just a few elements of insurance; it casts its shadow across all aspects of the industry, and, therefore, must be confronted in a systematic and holistic manner. Learn more.

CFPB Watch: Pausing mortgage payments and ‘reorganizing’ attempts

In these difficult economic times, approximately half a million homeowners are behind (delinquent) on their mortgage payments and have not requested a forbearance to postpone these payments. Unfortunately, these homeowners have not requested a forbearance to postpone their payments. The Consumer Financial Protection Bureau (CFPB) is providing helpful information on how to seek relief.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress in March, in response to the pandemic, requires servicers of mortgages backed or funded by the federal government (or a government-sponsored entity) to give eligible homeowners a chance to pause payments and catch up when their finances improve. Most mortgage servicers not covered by the CARES Act are now offering these or other delayed payment options. The catch? The homeowner must request the forbearance from their mortgage servicer (the company they send their payments to each month) in order to get it. Here’s more from the Consumer Financial Protection Bureau (CFPB) on how mortgage forbearance works. You can also watch a recently-posted Bureau video that spells out the process to protect your home.

Not sure which company services your mortgage, or if it’s backed or funded by a government agency (i.e., Fannie Mae, Freddie Mac, FHA, VA or the USDA)? Take the first step to determining this at the CFPB’s website.

The Bureau also spells out questions that homeowners should ask when requesting a forbearance, such as:

• Will I be charged interest on my postponed payments during forbearance?
• What happens at the end of the forbearance period?
• What if I still can’t pay my mortgage when the forbearance ends?

Important: The deadline to request forbearance for some home loans is Dec. 31, but don't wait: Contact your servicer today. You also can get in touch with a HUD-approved housing counselor to help you sort through your options.

If you have already postponed your payment and still are in no position to pay, you should be eligible for an extension (of up to six months) of paused payments. Contact your servicer to request this.

When it comes time to pay back the postponed mortgage payments, you will not have to repay it all at once. You can set up a payment plan, and may be able to adjust your loan terms or add the postponed amount to the end of the mortgage.

Click here to access information in Spanish, Chinese, Vietnamese, Korean and Tagalog.

Homeowners aren’t the only ones guaranteed certain protections under the CARES Act; renter protections from eviction last through Dec. 31 (and this date may be extended). Click here for information (in six languages).

The CFPB ‘shuffle’

After announcing, shortly before the presidential election, that she would reorganize the CFPB’s Supervision (oversight), Enforcement (lawsuits) and Fair Lending (SEFL) wing in a way that would have significantly weakened the Bureau’s ability to hold harmful financial institutions accountable, CFPB Director Kathy Kraninger appears to have changed course.

According to media reports, CFPB leadership recently alerted the Bureau’s staff that it would not be moving ahead with the department shuffle, which was expected to debilitate its enforcement division by requiring its attorneys—for the first time in the agency’s history—to obtain permission to open an investigation into a financial firm.

During her tenure, Kraninger has focused her attention on consumer education rather than using the enforcement division’s ability to investigate corporate wrongdoing and, ultimately, bring lawsuits against companies accused of harming their customers. The Bureau’s enforcement division was responsible for much of the $12 billion returned to about 30 million wronged consumers under Obama-appointed leadership; however, little relief has been returned under Trump-appointed leadership. Scores of consumer and civil rights advocates (including Consumer Action) had urged the director to abandon the plan to reorganize the agency. The advocates’ letter included a quote from an industry law firm that stated that the planned restructuring would amount “to the single most effective effort by the CFPB to weaken its own enforcement arm since the Trump administration took over.”

Senator Sherrod Brown (D-OH), who had called for Kraninger to back off, applauded the reversal of the ill-conceived plan.

“It is entirely inappropriate for an outgoing administration to weaken the Bureau’s ability to hold financial institutions accountable,” Brown pointed out. “At this point, new CFPB leadership under President Biden should determine the future direction of the agency.”

This summer, the Supreme Court (in Seila Law LLC v. Consumer Financial Protection Bureau) ruled that the president has the authority to fire the CFPB director “at will” instead of “for cause.” President-elect Biden is expected to replace Kraninger early in his term, which will allow the CFPB to return to its mission of protecting consumers from unfair, deceptive and abusive practices—a mission that the Bureau has purposefully veered away from under industry-friendly Trump-appointed leadership.

Class Action Database: 1-800 Contacts sees the error of its ways?

A class action settlement alleging that Big Fish online casino games violated gambling and consumer protection laws was among seven new settlements added to the Consumer Action Class Action Database during November.

Of note this month is the class action settlement in Thompson v. 1-800 Contacts, Inc.

The plaintiffs filed a class action alleging that 1-800 Contacts—the largest online retailer of contact lenses in the U.S.—along with its business partners Walgreens, Vision Direct, Arlington Contact Lens Services, Inc. (AC Lens), National Vision, Inc. and Luxottica violated antitrust laws by agreeing to not compete with other sellers in online advertising, which plaintiffs alleged resulted in consumers paying higher prices for contact lenses.

The defendants allegedly agreed to adopt certain “negative keywords” in their paid online advertising campaigns, which would lead a search engine, such as Google or Bing, to yield certain results (and exclude others) when a consumer searched for terms related to purchasing contact lenses. These keywords would block what should have been competitors’ advertisements from popping up in the searches. For example, if a consumer included “1-800 Contacts” with another search term, the search results would not include paid ads for other online “competing” contact lens retailers, such as Walgreens or Vision Direct.

Plaintiffs alleged that the companies’ negative keyword agreement prevented consumers from becoming aware of identical products (to the ones they were searching for) that may have been available at lower prices from other online contact lens retailers. As a result, plaintiffs argued, they paid higher than necessary prices for their contact lenses.

Interestingly, in 2016 the Federal Trade Commission (FTC) brought a similar suit against 1-800 Contacts and 14 other online retailers for agreeing to work together to financially benefit from the use of…you guessed it, negative keywords!

Despite all this, the defendants denied the allegations but agreed to a $40 million settlement to end the lawsuit.

You are part of the class (and eligible for cash payment) only if you bought contact lenses online from:

• 1-800 Contacts between Jan. 1, 2004 and Sept. 12, 2019;
• Vision Direct or Walgreens between Jan. 1, 2004 and Sept. 12, 2019;
• Arlington Contact Lens Services, Inc. (AC Lens) or National Vision, Inc. between March 10, 2010 and Sept. 19, 2017; or
• Luxottica between Dec. 31, 2013 and July 5, 2019.

Hurry, because the claims deadline is Dec. 4, 2020!

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 more than 6,000 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.