Released: October 01, 2015

Consumer Action INSIDER - October 2015

Table of Contents

• What people are saying
• Did you know?
• The high cost of discriminatory auto lending
• Long-term care: The mirror has two faces
• Hotline Chronicles: The truth about prescription discount cards
• California consumer advocates drive out bad auto bill
• MoneyWi$e webinars teach about credit and identity theft
• Celebrate with us! Consumer Action’s 44th anniversary
• Coalition Efforts: Health insurance, prison privatization and whistleblowers
• CFPB Watch: Credit reports, mortgages and rogue debt collectors
• Class Action Database: Not so Charming Charlie
• About Consumer Action

What people are saying

Five stars. The ONE place that I have found that truly IS on the side of the CONSUMER!! There is no hidden agenda here, only TRUTH. — Kelly Dickey via Facebook.com/consumeraction

Did you know?

In May, the three largest credit reporting agencies (CRAs)—Equifax, Experian and TransUnion—agreed as part of a nationwide joint settlement with 31 state attorneys general (AGs) to change the way medical debt is reported on credit reports. Under the settlement, CRAs can’t place medical debts on credit reports for six months after collectors report them to the CRAs. This will give consumers time to resolve debts with their health insurers if necessary. Learn more about the settlement at the Idaho AG’s website.

The high cost of discriminatory auto lending

Picture this: You’re sitting in the car salesman’s office ready to sign on the dotted line for a car loan. The dealership was advertising low interest rates for qualified buyers. But the rate quoted on your loan agreement is quite a bit higher. “This is the rate you qualify for,” the dealer says.

You might not know if you are being offered a reasonable interest rate given your credit history. This means you might be a sitting duck for the interest rate manipulation known as “dealer markup”—when dealers tack on one to three percentage points to the rate you qualify for with the lender. This means consumers pay thousands of dollars in unfounded costs over the life of an auto loan. Believe it or not, this is legal—but it’s highly deceptive and disproportionally impacts minority borrowers regardless of their credit histories.

Dealers are free to do this because the government does not regulate them like it does banks. Both banks and nonbanks finance auto loans. The Consumer Financial Protection Bureau (CFPB) supervises large banks that make auto loans and will soon assume supervision authority over larger participants of the nonbank auto finance market. The Bureau and the Department of Justice also have brought enforcement actions against Ally Bank and Honda Finance Corporation for auto lending discrimination.

Auto lenders are fighting against Bureau regulation, and members of Congress are helping them do it, particularly through a bill in Congress—the Reforming CFPB Indirect Auto Financing Guidance Act (HR 1737)—that would stop the Bureau from taking action against discriminatory lending.

Consumer Action attended a briefing hosted by Congressmen Keith Ellison’s office (D-MN) and the Center for Responsible Lending (CRL). The event was held to rally friendly House members and advocates to fight HR 1737. CRL led a panel of advocates who explained why dealer-arranged financing is often discriminatory and how it impacts consumers. CRL has conducted valuable research to document the discrimination.

Panelists said that:

• Dealer markups on loans made in 2009 are estimated to cost consumers an additional $25+ billion over the life of the loans.
• A series of lawsuits filed against the largest U.S. auto insurance companies in the 1990s exposed how borrowers of color were twice as likely to have their loans marked up. They also paid markups twice as large as similarly situated white borrowers with similar credit ratings.

“For at least the past two decades, financial services regulators have known about discrimination in the auto finance marketplace,” said Chris Kukla, CRL’s senior vice president. “The CFPB is the first and only regulator to directly address this discrimination. Of course many in the auto industry are pushing back. HR 1737 represents the latest in a series of efforts by industry and some in Congress to undermine the CFPB’s noble efforts to create real and lasting change for the most vulnerable of consumers.”

Consumer Action encourages consumers to get involved. If you don’t approve of discriminatory lending and you want to ensure the CFPB can protect consumers, let your lawmakers know by sending a message to Congress using our Take Action Center.

Long-term care: The mirror has two faces

I’m stroking my mother’s hair as Justin Timberlake’s song “Mirrors” plays in my head. I unconsciously tune out the words coming from the hospital social worker’s mouth as the lyrics circle through my mind: “'Cause I don't wanna lose you now. I'm looking right at the other half of me…It's like you're my mirror, my mirror staring back at me.”

My 93-year-old mother’s recent bout with blood clots in her lungs has weakened the Iron Lady, and the social worker is giving me two options for her future: a nursing home or 24-hour care in her own home. I look at my mom, and she whispers, “Linda, you promised me I can stay in my home until the end.”

I ask the social worker if she can give me an estimate of the cost of the in-home care. She tells me that the cost varies depending on the agency you select to provide the care. Then she asks me a question that causes my mind to spin around like Dorothy on her trip to Oz: “Does your mom have long-term care insurance?”

I can feel a thousand hands trying to pick my pocket as I muddle through the agencies that provide 24-hour, in-home care services. Contrary to popular belief, neither Medicare nor Obamacare will cover the cost for long-term custodial care, which includes assistance with bathing, dressing, cooking and other critical day-to-day life activities. This kind of insurance doesn’t come cheap, and like my mom, this is a type of insurance I’ve never thought to purchase.

According to insurance company Genworth Financial, the annual cost for in-home care in the small town where my mother lives is $40,452. It would cost $42,960 per year to send my mom to an assisted living facility and $60,255 annually for a semi-private room in a nursing home. Although there are state programs that might assist with the cost, even if my mother qualifies it can take up to six months to get assistance. In the interim, my savings would be exhausted.

A June USA Today article revealed that baby boomers in their Medicare years (65+) are, on average, sicker than their predecessors, while they are living longer. This leaves them to grapple with diseases like diabetes, asthma, high blood pressure, cholesterol and Alzheimer’s for years, sometimes decades. Neither the medical system nor most seniors are financially prepared for the costs.

Long-term care (LTC) refers to the help that people with chronic illnesses, disabilities or other conditions need on a daily basis over an extended period. According to AARP, this type of help can range from assistance with simple activities like bathing, dressing and eating to skilled care provided by nurses, therapists or other professionals. To help cover potential long-term care expenses that employer-sponsored HMO or PPO plans will not cover, or to bridge the limited services covered by Medicare, you can buy long-term care insurance. Experts disagree as to whether buying long-term care insurance is worth it.

LTC insurance costs less if you buy it when you’re younger and in good health. If you’re older and have health issues, the cost is prohibitively high. AARP cautions that it doesn’t make sense for people having difficulty making ends meet to spend thousands of dollars a year for a long-term care policy. Premiums often increase over time. If you find yourself no longer able to afford the premium, you could lose all the money you’ve invested so far.

How to select a long-term care policy

According to the American Association for Long-Term Insurance (AALTCI), consumers can purchase a policy through an insurance agent or broker. Before you start the application process, figure out how much you will be able to pay out-of-pocket for your care and how much you'd like the insurance to cover. If the cost of a nursing home in your area is $200 a day, you might choose a policy that pays a daily benefit of $120 and pay the rest with savings and/or Social Security benefits. This allows you to pay a smaller premium than you would for a policy covering $200 per day.

Couples have the option of "shared benefit" riders that let them both draw from their identical separate policies. For example, two four-year shared-benefit plans with the same daily benefits and a shared benefit rider can provide eight years of coverage that either spouse can tap even if one dies before the other.

You also need to determine how long you are willing to pay out of your own pocket for your care before your LTC policy kicks in—30, 60, 90 or 180 days. This is known as the elimination period.

You should consider paying extra for an inflation rider to help keep pace with the rising cost of care; however, adding a rider increases your premium. For example, adding an inflation rider that provides a compounded 5 percent increase of your benefit amount could potentially boost your premium by as much as 80 percent.

It’s not a bad idea to get an early start and buy the insurance while you’re relatively young and healthy. A plan that pays $3,000 a month for four years with a 5 percent compound inflation option and a 60-day elimination period might cost $2,815 a year for a healthy 57-year-old man. At 62, the same policy might cost $3,248 a year. "After 60, insurers figure we're like cars: Our parts are older, start to break down and cost more to fix," said Owen Malcolm, managing director of Atlanta’s United Capital Financial Advisers. But there might be a downside to buying a policy in your 50s: You could end up paying premiums—including future price hikes—for decades while never collecting a dime in benefits.

Some employers offer group LTC policies or make individual policies available at group rates, which is great, especially if you’re over 60. The AALTCI says employer-offered LTC insurance would almost always be your best deal if you have health issues and would be ineligible for coverage on an individual basis or would be “rated” and required to pay higher rates for substandard health. If you’re in relatively good health, a nonsmoker and married (or living with a partner), you’re more likely to pay more for employer-offered coverage than you would for identical protection purchased on an individual basis. Comparison-shopping is especially important—you might find lower rates for the same policy, or even better coverage for less money.

However, according to Bankrate.com, the best-kept secrets in LTC insurance are state-qualified LTC insurance plans. Partnership-qualified (PQ) plans are offered to state residents through state governments and private insurance companies. They look much like standard LTC policies with one important difference: asset protection. These programs set minimum requirements for private insurance policies that allow you to keep a preselected amount of assets even if your care costs exceed your coverage. This could allow you to protect a part of your assets for your spouse to live on (or to leave to your heirs) while still qualifying for Medicaid once your long term care insurance benefit runs out. To qualify for Medicaid under usual circumstances, you would have to “spend down” all but $2,000 of your assets paying for long term care before you would be eligible for Medicaid.

Purchasers of PQ policies earn one dollar of “Medicaid asset disregard” for every dollar of insurance coverage paid to them. Here's an example (as offered by Bankrate.com): Tom purchased a PQ policy worth $100,000. Years later, he went on to claim and receive benefits to the lifetime maximum of $150,000 (adjusted for inflation). When he applies for Medicaid, he will be allowed to keep $152,000 in assets, provided he meets the other Medicaid requirements. The “Medicaid asset disregard” amount is on top of the $2,000 Medicaid beneficiaries are allowed to keep. (Click here to learn more about PQ policies in your state.)

Shop around to find the best policy

When shopping for a policy, don’t choose solely among what’s offered by a single insurance agent or broker. Different brokers and agents represent different companies—consult with more than one. Make sure the professional is licensed to sell insurance in your state, check the company’s reliability rating and get all promises in writing. Pass the proposals by your legal representative or a knowledgeable family member or friend.

The California Partnership for Long-Term Care suggests that when shopping for a policy you ask your agent or broker the following questions:

• What physical conditions may be excluded or limit the benefits of my policy?
• Under what conditions can the company cancel my policy?
• Will benefits be paid if I’m living out of state or abroad?
• How long will benefits last?
• How long is the waiting period before the benefits start?

Is long-term care insurance worth it?

When considering long-term care insurance, the elephant in the room is whether it’s worth paying the money now for a benefit you might never need (or use all of). The 10th edition of NOLO’s Long-Term Care: How to Plan & Pay for It advises consumers to consider three essentials when purchasing LTC insurance:

1. LTC is added security, not an investment. The odds are small that you will actually need and collect benefits for long enough to justify the cost of premiums. With that being said, if you can afford a good policy, it can provide you and your family with extra security against the relatively small but real possibility of high long-term care costs.
2. Benefits (from an LTC policy) are for way down the road. Fifty percent of all claims on LTC policies are not made until the insured are in their 80s. Another 40 percent of claims are made by people in their 70s. This means that if you’re a middle-aged person when you buy LTC insurance, you’re protecting against a situation that could be 20 or 30 years away. You’ll have to be able to afford the premiums for all of those years or you risk losing all that you’ve paid so far. Also, a policy with good inflation protection is vital so that if and when you finally claim the benefits, they will cover the current costs of care.
3. You won’t be on the street without it. LTC insurance is about helping you save your assets, not about keeping you from being tossed into the street. For people who run low on funds, Medicaid pays the full cost of nursing home care. But long-term care insurance can figure into your estate plan because it can help preserve significant assets that you would like to leave to your heirs.

According to NOLO.com, LTC insurance is a gamble, and an expensive one at that. Costs can be curbed, however, since most LTC policies sold today are “tax-qualified.” This means that if you itemize deductions and have medical costs in excess of 10 percent of your adjusted gross income (7.5 percent for taxpayers 65 and older through 2016), you can deduct the LTC insurance premiums on your income tax return. Not necessarily all of your premium costs are deductible, however; the annual amount is limited based on your age. Ask your tax preparer if you would qualify.

It’s personal

When considering LTC insurance, let your own personal situation—income, support system, local cost of care and the importance of staying in your own home—be your guide. My mother’s needs were immediate but they’ve given me a mirror in which to see my own dotage and preview a time when my children will be faced with the issues I’m wrestling with. Like mom, I don't have long-term care insurance or savings earmarked for health care. Being stuck with the costs or decisions about my health care is not a legacy that I want to leave my children and grandchildren.

As I educate myself about these issues, it’s dawned on me that my children might want to contribute to the cost of my LTC premium ($5,000+ annually) rather than be saddled with $50,000+ per year if I eventually need in-home health care. So, I am rolling the dice and purchasing an LTC policy with an inflation rider. Using my mother’s situation as an example, I’m planning for long-term care should I ever need it.

Luckily for me, my mother, the Iron Lady, bounced back after two weeks of 24-hour care, and I fired the health aides. According to my mom, her caregivers couldn’t cook or clean, broke her treasured knick-knacks, and ate more of her groceries than she did. So, keep in mind that even with the best insurance, you or your loved ones may not get the kind of care they’re expecting—but that’s a totally different issue.

About the author: Linda Williams, our outreach and training manager, aggressively pursues Consumer Action’s mission to ensure that all individuals, regardless of their income level, are able to learn about their rights as consumers.

Hotline Chronicles: The truth about prescription discount cards

A New York City senior’s eyes were wide open when it came to a nefarious business model designed to harvest personal information with offers of prescription drug discounts.

Consumer Action recently waded into the murky waters of “prescription discount cards” and found false promises, smoke and mirrors and skullduggery. Sharmain*, a senior from New York City, called our hotline about a company that had contacted her after she filled out a survey online. The caller told her she was eligible for drug discounts and “free” medical equipment. Her caution won out, and she decided to do some due diligence on the calling company, USA Health Initiatives.

Sharmain told Consumer Action that she called the Better Business Bureau in New York City and was given no information or advice about USA Health Initiatives.

A simple Google search allowed us to find the company online. It offers a “free prescription drug card” and urges visitors to “Enroll Now” via a web form. Its privacy policy includes, among other statements: “We use your contact information to call, email or send you information about our company and promotional material from our partners.” The policy also states: “You may opt-out of receiving communications from us and unsubscribe from our database by calling, mailing or emailing us.” However, when Consumer Action called the number provided, we were placed on an interminable hold (we finally hung up).

So are these cards worth the paper they are printed on? Unfortunately, no. Most of them are simply a way for “lead generators” to gather information about people that is then sold to direct marketers and telemarketers. Lead generators often use surveys, free offers or sweepstakes to collect such information.

This company isn’t the only one promoting “free prescription drug cards.” The cards are sent out to millions of people, often unsolicited. Typically they offer discounts of “up to” some amount, such as 75 or 85 percent.

While Sharmain says the BBB offered her little assistance, we noticed that a company with a similar business model, Script Relief LLC, was found by the New York City BBB to have “failed to resolve underlying cause(s) of a pattern of complaints.”

Some consumers posting on Angie’s List—an online database that displays customer reviews of companies and services—also noted unauthorized recurring charges on their credit cards after presenting their free prescription cards at pharmacies.

Free prescription drug cards also form the basis of unrelated “work at home” scams in which individuals are recruited to “sell” these cards by signing up new members. One site urges prospective recruits: “You can ask friends and family to help you distribute cards and get paid for their efforts, while they earn extra income for themselves.”

In researching this business model, we came across an informative video created by Todd Pendergraft, D.Ph., a pharmacist with Broken Arrow Family Drug in Oklahoma. Pendergraft explains how these cards work, concluding that “the money they make comes from the sale of your personal data.” The video is worth watching for his explanation of what happens when a customer presents one of these cards. In a nutshell, once you give them the card, the pharmacy runs it through their systems and, in doing so, provides even more personal information (your name, birthdate, address) to the lead generators.

“When you use one of these cards, and a pharmacy submits the claim, now they know who you are, what you take and what your disease is. This data is golden,” said Pendergraft. The “discounts” come from a complex system of customer higher co-payments or payments to discounters from drug companies in exchange for information.

“Believe me, if you have insurance, you are not saving any money by using these cards,” said the pharmacist, who offers an annual membership-based drug discount plan through his independently owned pharmacy (for those not covered by insurance, Medicaid or Medicare). He also pointed out that his own independent pharmacy charges as little as $5.99 for generic prescriptions for in-house club members, and some large chain retailers offer them for as low as $4—whether or not you have health insurance or a prescription drug plan.

Sharmain was a savvy consumer—the free drug prescription card was one pill she was too smart to swallow.

Learn more: Are prescription drug cards in the mail a trick or treat?

*Not this consumer’s real name

California consumer advocates drive out bad auto bill

Last month, Consumer Action, working with our friends at Consumers for Auto Reliability and Safety (CARS), helped defeat California state bill AB 516, introduced by state Assemblymember Kevin Mullin (D-San Mateo), which would require the Department of Motor Vehicles to establish a temporary license plate program so all vehicles sold in California receive a “temp tag” at the point of sale. The bill would have harmed low-income drivers in order to enrich auto dealerships.

“AB 516 was a textbook example of big business taking from vulnerable consumers to fatten their pockets,” said Consumer Action’s Joe Ridout. “The auto industry went so far as to propose raising the documentation, or ‘doc,’ fee from $80 to $95 and introducing a new $2 junk fee they called a ‘transaction fee.’ Many consumers aren’t aware, but even at its current $80, the California doc fee has tripled in the past 30 years while the cost to dealerships to process the paperwork has dropped.”

A key component of the bill involved changing how the state would deal with the paper license plates with a dealer's logo that drivers use while their permanent plates are being processed by the DMV. The generic plates pose problems on many levels. For one, law enforcement and toll authorities often cannot identify to whom they belong. And consumers face severe penalties if they fail to display permanent plates after 90 days (even when the delay is due to dealer or DMV error). But AB 516 ignored the simplest solution to this problem: to issue permanent plates on the spot when the car is sold, as is the case in some states, such as Virginia. It would instead have mandated that the state continue to issue temporary plates while offering no protections to those who failed to receive their new plates in time.

Due to the diligence and teamwork of the consumer advocates, Assemblymember Mullin ultimately withdrew the bad bill from a vote in the state Senate, ending its chance of passing this legislative session.

MoneyWi$e webinars teach about credit and identity theft

Two informative web-based trainings developed by Consumer Action under its Moneywi$e financial literacy partnership sponsored by Capital One recently provided community-based organizations with the tools to help clients and members stay up-to-date on the latest advancements in credit reporting and the many guises of the fast-growing crime of identity theft.

Rod Griffin, director of public education at Experian, joined Consumer Action’s Nelson Santiago and Audrey Perrott last month for the credit discussion. Consumer Action trainer Linda Williams led the identity theft webinar.

The credit reporting landscape

The credit webinar kicked off with a presentation by Santiago about the three major credit reporting agencies (CRAs): Equifax, Experian and TransUnion. He covered what these CRAs, report and how consumers can get free credit reports each year from AnnualCreditReport.com.

The audience of 69 community-based organizations was shown a sample credit report that they might use to help consumers understand how to interpret their own reports.

Santiago explained the importance of having good credit, from the more obvious reasons, like buying a home or refinancing an automobile, to the perhaps less obvious ones, like qualifying for auto insurance or getting a job (employers are checking credit reports more often before hiring, a practice that many consumer advocates oppose). Nelson used some startling examples to argue the need for good credit, stating that “someone with poor credit might end up paying two to four times more for auto insurance. A recent Consumer Reports article revealed that a poor credit score could do even more harm to your insurance rates then driving under the influence!”

Santiago cautioned those with poor credit (or no credit history) to avoid the pitfalls of credit repair scams. In order to establish better credit, he advised going to a local company for a small loan, using a co-signer with established credit or getting a secured credit card. Nelson added that consumers must make sure to pay all bills promptly, as late payments on credit cards and loans hurt your score.

Griffin then spoke about Experian’s new website, which makes it easier for consumers to order a credit report, report identity theft or dispute an error online. He also talked about new developments in credit reporting. For instance, if consumers pay off their collections accounts, those accounts will no longer be included in their credit score. (Unpaid collections debt is still included, but this is a big step up from the days when paid collections debt could wreak havoc on your score.)

Finally, Griffin outlined the top factors that contribute to stellar, mediocre or poor credit. He said Experian conducted a survey that found that people with excellent credit have what’s known as low “utilization” (i.e., they have a low total outstanding balance compared to their total credit limit), made payments on time and kept their credit lines open longer then those with poor credit. We’ll be posting this webinar on our YouTube page in the near future and will let you know when it’s available.

For more information, check out Consumer Action’s handy guides to building and keeping good credit and improving your credit.

Identity theft

Sixty community educators, counselors and advocates from 27 states tuned in for the MoneyWi$e Changing Faces of Identity Theft webinar.

Consumer Action trainer Linda Williams, who led the webinar, spoke about how identity (ID) theft occurs and addressed its impact on consumers. Also offered were resources to help with prevention, detection and cleanup. In order to better educate participants, Williams used the MoneyWi$e ID Theft & Account Fraud module and five easy-to-print ID theft fact sheets developed by Consumer Action’s outreach and training team.

According to a Javelin Strategy report, identity thieves stole $16 billion from 12.7 million Americans in 2014. New victims appear every two seconds.

Williams discussed the many “faces” of ID theft: medical ID theft, child ID theft, criminal ID theft and “true name” ID theft. True name fraud occurs when an identity thief uses a victim's personal information to open new accounts. Also discussed were practices like “ghosting” (taking on the identity of a deceased person) and synthetic ID theft (when thieves create new identities either by combining real and fake identifying information to establish new accounts with fictional identities or by creating a brand new identity from fake or inaccurate information).

Five interactive polls were conducted during the webinar to gauge participants’ knowledge about identity theft. Viewers responded “true” or “false” to statements such as “Criminal ID theft is a non-credit identity theft crime.” The challenging exercise encouraged participants to confront any misperceptions and deeply analyze the complicated nature of ID theft.

In order to combat ID theft, Consumer Action recommends that consumers not use the same password for all accounts; change passwords every six months; cover their hand when entering PIN number at the ATM; choose and use apps wisely; monitor mail; check bank statements regularly; and check their credit and specialty reports. As the event wrapped up, several resources were provided to help consumers prevent, detect and clean up identity theft.

Feedback from the event was overwhelmingly positive, with webinar participant Jennifer Ford-Cooper exclaiming, “This was a phenomenal and interactive webinar! The best I’ve attended thus far!”

A complete list of additional non-profit and government resources is available for download in Consumer Action’s MoneyWi$e ID Theft & Account Fraud PowerPoint training slides.

The ID theft event marked the third MoneyWi$e webinar co-hosted by Consumer Action and Capital One this year. Past webinars may be viewed on Consumer Action’s YouTube channel. For more information on the MoneyWi$e project, click here.

Celebrate with us! Consumer Action’s 44th anniversary

To mark our 44th anniversary, Consumer Action will celebrate with our annual awards reception on Oct. 20 in Washington, DC. The theme of the celebration will be “common ground”—a nod to our work with diverse communities, private sector players, coalitions, and lawmakers on both sides of the aisle. Common ground is not only a powerful concept for connecting the struggles and issues of divergent groups, it is an effective tool in advocating for consumer rights.

It is our wish that all consumers be treated with dignity—free to make financial and marketplace choices unburdened by injustice and deception. By planting the seeds of hope and prosperity in common ground, we give consumers—particularly those who lack a voice—a better chance of flourishing. While individual stakeholders may not agree on the exact roads we take to arrive at a fairer marketplace, we believe that every stakeholder deserves respect, assistance, empathy and compassion as we fight together for consumer rights.

We invite you to join us to celebrate our longstanding culture of collaboration and to honor this year’s “Consumer Excellence” awardees: Kenneth Feinberg, a well-known attorney with the DC firm of Feinberg Rozen who specializes in mediation and alternative dispute resolution; the Center for Public Integrity, an investigative news organization whose mission it is to help preserve the public trust in public and private institutions by revealing abuses of power and corruption; and the Center for Financial Services Innovation, which offers increased access to higher-quality products and practices to improve the financial health of Americans.

For more information on how to attend or sponsor the event, click here. Event sponsors (both corporate and individual) will receive tickets to the 44th annual awards reception. Even if you cannot attend, your contribution will enable us to expand the education and advocacy work that we do throughout the country on behalf of underserved consumers and communities. Your support is much appreciated (and tax deductible).

Coalition Efforts: Health insurance, prison privatization and whistleblowers

Consumer Action joined allies on a number of fronts, opposing proposed mergers among health insurers, supporting bills to ban private prisons and exonerate whistleblowers, objecting to politically charged policy riders added during the Congressional appropriations process and coming out against a bill that would risk damaging the credit scores of millions of low-income consumers.

Keep health insurance markets competitive. In a letter signed by nine interested organizations to the Senate subcommittee, consumer groups stated that they believe proposed mergers between Anthem and Cigna and Aetna and Humana pose a threat of substantial harm to millions of consumers by reducing the number of major health insurers. Consumer Action joined advocates in urging the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights to investigate the mergers and the impact consolidation would have on the healthcare market. Learn more and read the letter.

End the private prison racket and other detention abuses. Consumer Action and allies lent support to legislation by Senator Bernie Sanders (I-VT.), Rep. Raúl M. Grijalva (D-AZ), Rep. Keith Ellison (D-MN) and Rep. Bobby L. Rush (D-IL) that would ban private prisons, reinstate the federal parole system and eliminate quotas for the number of immigrants held in detention. Under the plan, the federal government would have three years to end its practice of using private companies to keep people behind bars. The ban would also apply to state and local governments, which have increasingly turned to private contractors in a bid to save money. Learn more.

Whistleblowers deserve protections. Consumer Action joined more 40 advocate organizations in asking President Barack Obama to pardon National Security Agency whistleblower and fugitive Edward Snowden and to endorse S 794, legislation introduced by Sen. Claire McCaskill (D-MO) that would restore whistleblower protections for intelligence community contractors. Learn more and read the letter.

Policy riders threaten public safeguards, hijack budget process. A coalition of 178 groups is urging President Barack Obama and members of Congress to oppose any federal appropriations bill that contains unrelated ideological and politically charged policy riders. Often added by partisans in Congress, these riders jeopardize policies that restrain Wall Street abuses; guarantee clean air, food and water; ensure safe consumer products and continued access to vital health care services; keep homes and workplaces safe; prevent consumer rip-offs; and hold big corporations accountable for wrongdoing. Learn more and read the letter.

‘Full file’ credit reporting could harm low-income consumers’ credit standing. Consumer advocates wrote to Congress in opposition of HR 3035, the Credit Access and Inclusion Act of 2015. This legislation, say advocates, would preempt state utility regulatory and legislative authority, risk damaging the credit scores of millions of low-income consumers and conflict with long-standing state utility regulatory consumer protections. Learn more and read the letter.

CFPB Watch: Credit reports, mortgages and rogue debt collectors

In our regular CFPB Watch feature, we detail recent actions taken by the Consumer Financial Protection Bureau to protect consumers. This month’s roundup highlights the Bureau’s efforts to provide the public with timely data on credit report errors; its new “Know Before Your Owe” program to help consumers navigate the tricky world of mortgages; and two regulatory actions against debt buyers.

Consumers are increasingly complaining to the CFPB about errors on their credit reports. The Bureau has seen a 45 percent jump in credit reporting complaints in the last year, making it the third most reported problem after debt collection.

More than three in four of these consumers are complaining about incorrect information appearing in their record, such as debts already paid or debts not yet due. This wrong information hurts consumers’ credit scores, which impacts their ability to get a loan, insurance or even a job.

“Whether a consumer is trying to get a mortgage, apply for a student loan or buy a car, credit reports are fundamentally important in allowing people to access their financial goals,” said CFPB Director Richard Cordray. “As we see a rise in the number of consumers complaining about this issue, the Bureau will continue to work to ensure that credit reports are fair, accurate and readily available to all consumers.”

Complaint data comes from the CFPB’s monthly complaints snapshot report, which can be viewed here.

The Bureau also interviewed a diverse set of consumers to better understand people’s perspective on credit scores and credit reports. The research found that some are frustrated and confused not only by how to check credit reports and credit scores, but also by how best to improve them. The CFPB sees this as an opportunity to improve consumers’ outcomes through targeted financial education.

Know Before You Owe. The CFPB has been working to make the information that potential borrowers receive when they apply for a mortgage much more understandable. Its “Know Before You Owe” toolkit helps borrowers decide how much they can afford to spend on a mortgage, how to compare mortgage options and how to choose among several loan offers.

This week, the entire process will get easier, as mortgage lenders are required as of Oct. 3 to provide consumers with greatly improved Loan Estimate and Closing Disclosure forms. These forms are meant to help consumers compare estimated costs with actual costs prior to closing.

Further simplifying things, the “Owning a Home” section of the CFPB’s site breaks the complex mortgage process down into digestible sections, including a homebuyer’s closing checklist, a tool to compare mortgage rates, definitions of mortgage terms, and a step-by-step guide to the mortgage process.

Consumers can also enter their ZIP code to receive a list of local HUD-approved housing counselors.

Refunds for illegal debt collection tactics. The country’s two largest debt buyers have agreed to no longer try to collect debts from consumers that they “knew or should have known” were inaccurate or unverifiable, according to the CFPB. The CFPB found Encore Capital Group (and its subsidiaries) and Portfolio Recovery Associates guilty of (often falsely) suing consumers nationwide to win quick default judgments from state courts without any intention of proving that the (often bogus) debts were really owed. The debt collection firms automatically won the cases when consumers, who were not properly notified, didn’t show up in court to defend themselves.

According to the CFPB, the companies presented borrowers with time-limited offers to settle debts that were too old to sue over and filed false reports in court, swearing they had reviewed original loan documents when they had not. The CFPB said the firms often knew that the amounts owed were not reliable.

When consumers disputed debts, Encore often disregarded the disputes or illegally required consumers to provide “proof” before opening up an investigation. Encore also was accused of harassing consumers with as many as 20 collection calls in a two-day period. Portfolio, meanwhile, misled consumers into agreeing to accept auto-dialed calls to their cell phones.

Encore must pay $42 million to consumers for misrepresenting collections and Portfolio must refund $19 million for its illegal behavior. Both will pay fines to the CFPB as well.

Additionally, both companies have been ordered to stop collecting on the $128 million in debts that they could not validate and to dismiss all related lawsuits.

Going forward, both debt collection companies must have documents to prove that the debts they collect on are accurate and enforceable. They must also provide consumers with the amount owed and the name of the original creditor before threatening to sue.

Class Action Database: Not so Charming Charlie

Consumer Action added six new cases to its Class Action Database in September. Two involve privacy laws in California:

• Butler v. Charming Charlie Inc. Plaintiffs filed a class action suit regarding the recording of personal identification information during credit card transactions at Charming Charlie retail stores in California. Plaintiffs allege that the request for and recording of addresses and/or telephone numbers during a credit card transaction for purposes other than shipping, delivery or special order violate California privacy laws. Charming Charlie denied all the allegations but agreed to a settlement to avoid continuing the lawsuit. Consumers who made a credit card transaction and whose information was recorded between July 9, 2013 and July 29, 2015 may be eligible for a voucher of $20. The claims deadline is Oct. 12, 2015.
• McCabe, Simpson and Sarabia v. Six Continents Hotels, Inc. Plaintiffs claimed that Six Continents Hotels, Inc. violated California law by recording telephone calls without informing them or obtaining consent. The defendant denied all allegations but agreed to a settlement to avoid continuing the lawsuit. The $11.7 million settlement covers California residents who, between March 1, 2011 and July 18, 2012, called the following hotels (owned by Six Continents Hotels, Inc.) on a toll-free telephone number and spoke with a hotel representative: Priority Club Rewards, Holiday Inn, Holiday Inn Express, Crowne Plaza Hotels and Resorts, Intercontinental Hotels and Resorts, Staybridge Suites, Candlewood Suites and Hotel Indigo. Class members are eligible to receive approximately $100 cash. The claims deadline is Dec. 14, 2015.

Class action settlements involving StarKist Co. (canned tuna) and True Religion Apparel, Inc. (“Made in USA” labels only) were also among the new cases added to the Consumer Action Class Action Database during September.

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 nine 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 just above 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.