Consumer Action INSIDER - February 2018

Table of Contents

 

What people are saying

Thank you for your good information. I read your SCAM GRAM, and am amazed to see listed the many scams that I have been subjected to on my phone. Your articles are a good warning and have stopped me from giving out personal information.SCAM GRAM reader

Did you know?

The Centers for Medicare & Medicaid Services (CMS) is removing Social Security numbers from Medicare cards to protect beneficiaries from medical identity theft. CMS says the change also will prevent fraud and safeguard taxpayer dollars. The new cards will be mailed this spring, assigning each recipient a new Medicare Beneficiary Identifier made up of random letters and numbers. This will be used instead of a Social Security number to identify beneficiaries and pay for medical services covered by Medicare. Medicare cards contain sensitive personal information and should be shared only with trusted medical providers and insurers. Learn more at the CMS website.

Train-the-Trainer: Vocational and job training schools

In late December in downtown Los Angeles, community agencies gathered for a train-the-trainer event featuring Consumer Action’s "Finding the Right Job Training School" module. For Consumer Action trainers Linda Williams and Nelson Santiago, the well-attended event held at the Omni Hotel in the Bunker Hill neighborhood, rounded out another successful year of community-based trainings.

Finding the Right Job Training School was developed for community educators to use in helping students and job seekers get the best vocational training without exposing themselves to for-profit school fraud or unmanageable debt. It covers such topics as what the options are for pursuing job training (including the benefits of community colleges), what to consider before enrolling in a trade school and how to pay for school.

Consumer Action's trainers secured a guest speaker from the U.S. Department of Labor’s Office of Apprenticeship. Arthur Page spoke on apprenticeships, including ways to find these earn-while-you-learn programs, the application and selection process, and even programs for high school students, active duty servicemembers and inmates in correctional institutions. Page provided a link to the Department of Labor's apprenticeship sponsor database [https://oa.doleta.gov/bat.cfm], which ApprenticeshipUSA sponsors and state-by-state information. (California-specific resources are the Department of Industrial Relations and the Employment Development Department’s Eligible Training Provider List.)

Williams included in her discussion some startling findings: A 2016 National Bureau of Economic Research (NBER) study found that students who attended for-profit colleges would have been better off, in terms of annual earnings, not going to school, or attending a community college instead. The findings were based on an analysis of 567,000 students who attended for-profit schools from 2006 to 2008. More than 80 percent of the students carried student loan debt. See "A popular college investment promised students a career, but didn’t pay off" (Washington Post) and "Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data" (NBER).

Williams explained to participants that mentioning relevant research findings in trainings is an effective strategy for engaging learners. She added that when participants prepare workshops for clients, they also should try to find some real consumer stories to put a face on the numbers. They might find these stories in their own community or in news articles. The goal would be to find stories about consumers their clients can relate to (e.g., similar ages, ethnicities, educational pursuits, etc.).

Santiago emphasized the importance of background reading before giving community training presentations. He recommended that participants think about the questions they might get and be prepared to point learners to the right resources to learn more. To help presenters prepare, Santiago provided an extensive list of resources. His suggestions include weblinks to more information about comparing schools, veterans educational benefits, student loan repayment and more. Santiago explained, for example, that participants might not plan to talk extensively about taxes and loan forgiveness but can point their learners to two articles by Student Loan Hero: "Surprise! Here’s When You’ll Owe Taxes on Student Loan Forgiveness (and When You Won’t)" and "You Need to Know How Student Loan Forgiveness Is Taxed."

He also recommended Consumer Action’s Finding the Right Job Training School Reference/Resource Sheet, which can be downloaded for free from our website.

Williams and Santiago are preparing for the next “Finding the Right Job Training School” training, to take place in San Diego in March. The team will introduce participants to the module, and they say they plan to bring information on the latest developments on the topic.

Innovative agency meets broader financial needs of consumers

Long-term Consumer Action network partner Housing and Economic Rights Advocates (HERA) aims to ensure that all low- and moderate-income California residents, particularly those most vulnerable, are able to live a safe, healthy financial life, free of discrimination and other abuses.

Before 2010, HERA staff worked in the trenches on predatory mortgage problems and foreclosure prevention. In 2010, the agency expanded its scope of services to include a plethora of other household financial concerns. Now, its staff covers student loan problems, credit card debt, automobile financing, alternative energy scams, payday loans, bail bonds, credit reporting problems, and a vast array of other credit and debt issues affecting the poorest of residents as well as those with moderate income. HERA continues to promote homeowner protections, which go beyond mortgage-related concerns. The staff is focused on proactively helping consumers understand how debt and credit affect their lives, and not just on solving problems after they happen.

In late December, HERA’s executive director, Maeve Elise Brown, contacted Consumer Action’s associate director of outreach and training, Audrey Perrott, to share exciting news about HERA’s plans to scale the agency to offer more services and enlarge its footprint with two new offices. Perrot (AP) took the opportunity to ask Brown (MB) some questions.

AP: When did you expand to offer estate planning and financial management services?

MB: In 2017, I introduced estate planning to HERA's menu of services. I had been anxious to do this for some years, as I recognized this was a huge gap in services for the public. I see it as being intimately related to addressing the racial and gender wealth gap in our state (which is also a national problem).

AP:Is the estate planning offered exclusively to low-to-moderate income consumers?

MB: Our estate planning service, like all of our other services, is available to both moderate-income and low-income residents.

AP: Is there an income ceiling for the estate planning services?

MB: Our sliding scale applies only to the estate planning services, and it is very generous, so that, for example, a single person could have an income of $25,000 per year and still get a complete estate plan for free. The scale creeps upward from there. We are currently providing the services only in California. We also offer estate planning workshops, which are free! We love sharing information with the public about what an estate plan is, and how it helps. Our two estate planning attorneys bring estate planning as well as probate court experience, though we are not offering probate-related services at this time.

AP: Please tell us about your agency’s unique language capacity and in-language printed materials and web content?

MB: Our staff speaks Spanish, Portuguese, French and Korean, and we use interpreters for the many other languages spoken by our clients. Most of our printed materials are available in six languages on the HERA website and our Money Happy companion website.

AP: How long have you partnered with Consumer Action?

MB: We have had a strong connection to your organization since I first opened our doors in 2005. We have presented at and attended Consumer Action educational events over the years. HERA staffers presented at two housing and two debt collection train-the-trainer events hosted by Consumer Action.

AP: What topics does HERA staff train on most frequently?

MB: Access to credit and improving credit are huge concerns for residents across the state, from our reentry clients to clients living in shelters, to clients who have moderate incomes. Addressing how to pay for college and how to handle already incurred student loan debt also are tremendously popular topics.

AP: When did HERA enter the FinTech (financial technology) arena?

MB: In our modern financial services world, low- and moderate-income residents interact with and are affected by FinTech services. HERA's support helps them navigate this arena of services, and we work on the policy front to protect residents from possible abuses, as well as to preserve opportunities. I served on the CFPB's Consumer Advisory Board for five years and was chair in my final year of service. FinTech was a topic of significant discussion and great concern to us.

(Editorial note: HERA clients are using the FinTech tools SaverLife, Digit and Lending Circles. However, client usage is limited.)

HERA offers EARN’s SaverLife as a resource to our clients, but it is underutilized. We hope to increase use and are exploring approaches. Digit is very useful for some clients.

AP: Is there anything else that you would like to tell us about HERA or the work that you are doing in California?

MB: We are about to open our first Southern California office, based on the significant demand and need for our services, and plan to open an office in Central California, as well, in 2018.

AP: Are there any best practices that you would like to share in terms of community education, program development, capacity building or reassessing mission to keep pace with the growing needs of your clients?

MB: HERA is highly flexible, so that we are responsive to the shifting needs of low- and moderate-income residents in real time, as those shifts occur. At the same time, the shifts we make remain within the framework of our mission [to assist vulnerable consumers live safe, healthy financial lives, free of discrimination and other abuses].

To learn more about HERA, visit the organization’s website.

Hotline Chronicles: ‘Tis the tax scam season

Wim* from Sacramento wrote to the Consumer Action hotline to complain about a company that kept sending him emails asking for personal information, including his Social Security number. The tax preparation company, hardly a household name, operates a number of websites according to the Better Business Bureau, which has received complaints about the business.

Wim says, “I have never done business with PastYearTax [dot] com. There is no address, contact phone number or way to unsubscribe. I don't want someone else to give them their personal information by mistake. I have emailed to ask them several times to stop emailing me but it continues.”

This could be a glitch, but it appears more likely that this company (or someone using its name) is “phishing” for personal information—the lack of a response after repeated complaints is pretty telling. Wim is correct in saying that the only way provided on the website to contact the company is by email. All this gets us thinking it’s a good time to discuss how to protect yourself from tax scams.

First thing to know: The Internal Revenue Service (IRS) doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. Representatives might (but rarely) come to your door in person. If an IRS representative visits you, he or she must provide two forms of official credentials: a “pocket commission” and an “HSPD-12 card.” HSPD-12 is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. You have the right to see and independently verify these credentials.

IRS collection employees may call or come to a home or business unannounced to collect a tax debt. But they will not demand that you make an immediate payment to a source other than the U.S. Treasury. (Learn more about private collectors authorized by the IRS.)

Nonetheless, thousands of people have lost millions of dollars and their personal information to tax scams. Even businesses and payroll service providers have been scammed into giving away employees’ personal tax information.

Be alert to bogus phone calls, emails and text messages urging you to provide personal information. Unsolicited email claiming to be from the IRS or asking for personal tax information should be reported to the IRS at .(JavaScript must be enabled to view this email address).

Keep your past years’ returns and other important personal information in a secure place in your home. Information on your return can be used to file a fraudulent tax return in your name and claim your refund. Learn steps you can take to avoid tax-related identity theft.

Be very careful when choosing a tax return preparer. You should use as much care as you would in choosing a doctor or a lawyer. Even if someone else (even a professional) prepares your return, you are responsible for all the information provided on the tax return. Review your prepared return closely and ask questions if something seems wrong or you don’t recognize some of the information.

Here is a rundown from the IRS of tax scams to avoid.

*Not this consumer’s real name

CFPB Watch: Rapid dismantling of agency from within

Since the Consumer Financial Protection Bureau’s (CFPB) first director, Richard Cordray, stepped down in late November, a battle has been brewing over who should temporarily run the agency until a new director is confirmed by Congress. For now, the director of the Office of Management and Budget (OMB), Mick Mulvaney, is acting as director of the CFPB.

Mulvaney has been outspoken in his opposition to the consumer watchdog agency, saying that the Bureau is too powerful, overly regulates banks and credit unions, and harms the ability of corporations to provide accessible financial products and loans. He has sought to slash the CFPB’s authority over financial firms and rein in its rules. “The structure of the CFPB is just fundamentally flawed,” Mulvaney said in a November interview in The Hill shortly after taking control at the agency. He said he planned to “try and limit as much as we can what the CFPB does to sort of interfere with capitalism and with the financial services market.”

In recent weeks, Mulvaney, wearing two hats, as head of both the OMB and the Bureau, appears to be bent on weakening the consumer bureau from within. In less than two months, he has frozen rules and rulemakings and ordered a review of the CFPB’s investigations and pending enforcement lawsuits. Most recently, Mulvaney has announced that he will revisit many of the enforcement, supervision, rulemaking, market monitoring and education activities in search of “evidence” that the Bureau is “fulfilling its proper and appropriate functions to best protect consumers.”

Mulvaney has slowed to a trickle the release of payments from the Bureau’s Civil Relief fund that reimburses victims of financial crimes when a violating company doesn’t have the funds to compensate harmed consumers.

He is also eyeing ways to gut or even kill the new payday and auto title loan rule designed under Cordray’s watch. The rule would require lenders to consider if borrowers were financially able to repay these high-cost, short-term loans. (Congress has also introduced legislation to repeal the rule.) Consumer Action and hundreds of other organizations have supported the payday rule to help protect borrowers from the debt traps posed by payday and auto title loans. The rule’s future is now unclear—it was expected to take effect in August 2019.

The Cordray-led CFPB reportedly was preparing to file suit against the bank Santander for overcharging consumers on car loans and for requiring unnecessary guaranteed auto protection (GAP) insurance. GAP is optional insurance coverage added to collision coverage, designed to pay the difference between what you owe on your car loan and what your insurance company would pay if the car were totaled in an accident. To date, no suit nor plans for a Santander suit have been filed.

In December, the Bureau announced it would reconsider parts of its Cordray-era Home Mortgage Data Disclosure Act (HMDA) rule, including the criteria used to determine if a mortgage lender must report the data to the government and, if so, what types. Mulvaney also delayed the CFPB’s prepaid card rule and is expected to significantly rewrite it.

The acting director has refocused the Bureau’s mission statement from protecting consumers from unfair financial practices to “identifying and addressing outdated, unnecessary or unduly burdensome regulations.”

Recently, Mulvaney left many people shaking their heads in disbelief when he told the Federal Reserve that he wanted no new funding for the agency and opted instead to spend down its emergency reserve funds.

The list of items that will be reconsidered, delayed, rolled back or discarded is likely to grow. “That’s just sad,” said Consumer Action’s Linda Sherry. “Consumers have overwhelmingly supported the CFPB’s mission and efforts to protect consumers.” In its first six years, the Bureau has returned $12 billion to 29 million aggrieved consumers.

The time has come for us to protect the consumer bureau before it is fully dismantled. If this quiet storm disturbs you as much as it does us, contact your senators and representatives using Consumer Action’s Take Action tool. Also contact the White House to say you expect the Bureau to continue to rein in bad business practices and hold financial services corporations accountable to customers. If you need a good example of its impact, you need look no further than the Bureau’s $100 million fine of Wells Fargo in the aftermath of years of allowing its employees to open unauthorized accounts in order to collect commissions.

Class Action Database: Jammin’ ADT home security systems

Two telephone-related cases—against debt collection firm IC System Inc. and FRHI Hotels & Resorts (Fairmont, Raffles and Swissôtel)—were among 13 new settlements added to the Consumer Action Class Action Database during January. IC System, headquartered near St. Paul, MN, is alleged to have placed collection calls to consumers’ cell phones without prior permission in violation of the federal Telephone Consumer Protection Act. FRHI, which answered calls to Fairmont Hotel and Resorts toll­-free numbers, was charged with violating California laws that prohibit the recording of telephone calls without notice to callers or consent.

Of note this month is class action settlement Edenborough v. The ADT Corporation and ADT, LLC d/b/a ADT Security Services. Plaintiffs filed a class action against ADT alleging that ADT failed to disclose a vulnerability of the wireless signals in its residential security systems to evasion or jamming by electronic devices. Plaintiffs claim that ADT knew that the use of unencrypted wireless signals was a vulnerability that unauthorized third parties, such as hackers, could use to disable or circumvent ADT home security systems. The alleged vulnerability was brought to ADT’s attention in 2014 in an article in Forbes magazine, titled "How Your Security System Could Be Hacked To Spy On You."

ADT denied the allegations but, as many firms do, agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

You are part of the class if you entered into an ADT contract or had ADT (or an ADT dealer) install a residential security system that included a wireless peripheral sensor between Nov. 13, 2009, and Aug. 15, 2016.

The settlement provides a $16 million settlement fund that provides for payment amounts based on the dates that class members first entered into an ADT residential security contract or installation:

  • Class members who signed an ADT contract between Nov. 13, 2009, and July 23, 2014, may be eligible for a $15 payment.
  • Class members who signed an ADT contract between July 24, 2014, and Aug. 15, 2016, may be eligible for a $45 payment.

The payment amount may be adjusted higher or lower based on the number of valid claims. The claims deadline is Feb. 28, 2018.

Bookmark the Class Action Database in your favorite browser. We are adding new cases weekly.

Coalition Efforts: Unfriendly skies, deceptive ticket sales and more

Aviation and passenger advocates oppose air traffic control privatization. Consumer Action joined aviation and passenger advocates in a Dec. 5 press release stating renewed opposition to the big-airline plan to take over air traffic control after yet another high profile “glitch” in December. The American Airlines pilots were somehow scheduled to leave on vacation in the last two weeks of December although there were no other pilots available to operate scheduled flights, resulting in thousands of flight cancellations during the holiday travel period.

Urge Washington State not to ban telemedicine for eyewear prescription renewals. Consumer Action joined Americans for Vision Care Innovation in a letter to Washington State legislators opposing any state bans on "ocular telemedicine"—online vision tests that are useful for eyewear prescription renewals.

Save retirement rule, advocacy groups urge lawmakers. Consumer Action joined its allies in the Save Our Retirement coalition in a Jan. 16 letter to Congressional leadership objecting to an effort to roll back Department of Labor (DOL) fiduciary protections through a rider on the current spending bill.

Bill would set back consumer rights in debt collection. Advocates wrote to the House Financial Services Committee on Jan. 16 to oppose a bill (HR 4550) that would exempt attorneys and law firms engaged in litigation from the Fair Debt Collection Practices Act (FDCPA).

Third-party ticket websites may be harming consumers. Consumer Action joined others in a Nov. 29 letter to the Federal Trade Commission pointing to ticket-selling websites that appear to be misrepresenting their affiliation with official box offices, engaging in price-gouging and causing consumer confusion.

To learn more about our activities with our allies, visit our Coalition Efforts page.

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.