Released: March 01, 2022

Consumer Action INSIDER - March 2022

• What people are saying
• Did you know?
• Consumer Action hosts webinar on housing insecurity in America
• Hotline Chronicles: Ouch! Deodorant is a little too ‘spicy’
• Coalition Efforts: Advocates urge FinTech startup bank charter rejection and advise Congress to prioritize affordable housing
• CFPB Watch: CFPB wants your worst ‘junk fee’ example; eases access to complaint details
• Class Action Database: Wells Fargo sued for flouting Bankruptcy Code
• About Consumer Action

What people are saying

"[TV financial programs are] just not the same as having this extraordinary live, in real time, experience* with these obviously extremely knowledgeable and experienced and trustworthy folks from Consumer Action. They are like a warm and comforting blanket giving hope and inspiration in what could seem like a cold and daunting and confusing financial world." —Cary Feher, Columbia, MD

*Consumer Action’s webinar "Kitchen Table Economics: Dealing with debt and debt collection"

Did you know?

The Consumer Financial Protection Bureau (CFPB) is examining unnecessary (and predatory) “junk” fees charged by banks and financial companies, and it’s asking consumers to provide examples of unjustified fees they’ve been charged. Not sure what a “junk fee” is? Here are a couple of examples provided by the CFPB: (1) hotels and concert spaces that advertise one price and later tack on generally unadvertised, surprise “resort fees” and “service fees” to customer bills; and (2) fees for financial transactions that purportedly cover individual expenses, such as mortgage paperwork processing, but often greatly exceed the actual cost of providing the service. Add your comments and examples here before the deadline, March 31, 2022.

Consumer Action hosts webinar on housing insecurity in America

By Linda Williams

Housing insecurity is an umbrella term that encompasses several dimensions of housing problems consumers may experience, including unaffordability, inadequate safety and quality, and housing loss. Housing insecurity doesn’t mean that a household is homeless or on the cusp of homelessness; the term is more expansive, encompassing people who are behind on their rent or mortgage payments or who have low confidence in their ability to make their housing payments.

Eviction and foreclosure can impact consumers far beyond the immediate loss of a home, pushing them into poverty and homelessness, disrupting education and employment, impacting credit, hindering their future ability to obtain decent housing, and spurring a host of health problems.

As pandemic-specific protections lapsed, leaving consumers with overdue housing payments and looming foreclosures and evictions, Consumer Action hosted a webinar on Nov. 17 to bring attention to the huge number of households that are housing insecure due to the economic fallout from the pandemic.

Michela Zonta, a senior policy analyst for the Center for American Progress, joined Tara Roche, a policy analyst for The Pew Charitable Trusts; Sarah Bolling Mancini, staff attorney for the National Consumer Law Center; Carl Windom, financial counselor and financial coach serving as a Freddie Mac consultant; and Sarah Saadian, senior vice president of public policy at the National Low Income Housing Coalition to shed light on housing insecurity in America post-COVID-19 and to discuss solutions to the affordable housing crisis.

Zonta provided an overview of the history of housing insecurity. She outlined some past reasons, such as rapid population growth due to immigration, inadequate new housing construction, and persistent discrimination and racial segregation.

Low-cost manufactured homes are among the lower-cost housing options, but the industry is not without risk for consumers. Tara Roche discussed the challenges buyers face when purchasing manufactured homes—such as the lack of small mortgage availability, alternative financing challenges, and contract and land ownership issues. Roche explained that it is hard to obtain a mortgage loan for $150,000 or less from mainstream lenders, so consumers are turning to alternative, often predatory, financing to purchase homes.

Sarah Bolling Mancini has assisted consumers who purchased homes using predatory alternative financing to obtain some relief. She explained that clear ownership is one of the main differences between a traditional purchase money mortgage and a “contract for deed” transaction, which typically involves the seller holding on to the property deed until all installment payments are made in full. By contrast, In a purchase money mortgage, the buyer is provided with a mortgage and deed at closing.

Carl Windom told the audience that homeowners who are not in foreclosure and who have good credit might want to consider refinancing their homes to manage debt, get out of an alternative financing arrangement, reduce their interest rate, and boost their financial wellness. Home equity can be a significant contributor to overall wealth creation, especially for people without the means to invest in other assets, he said. Windom provided an overview of the refinance process that included factors consumers should consider to determine if refinancing is suitable for their financial situations.

When asked if there is help on the way for the millions of consumers who need housing relief, Sarah Saadian pointed to the Build Back Better Act. If passed, it will invest $150 billion in affordable housing. This historic housing investment would include $25 billion to expand rental assistance; $65 billion to preserve public housing for more than 2 million residents; and $15 billion through the national Housing Trust Fund to build or preserve 150,000 homes for people with the greatest need.

When the story of the pandemic is finally written, it will tell how a health crisis created a business crisis, and then a job crisis, and, ultimately, a housing crisis.

Have you missed any of our webinars? Click here to view them now.

Hotline Chronicles: Ouch! Deodorant is a little too ‘spicy’

By Linda Sherry

Karmen* from California wrote to the Consumer Action hotline about an Old Spice deodorant product that, after applying, felt like “chemical burns underneath my armpits.” In researching Karmen’s complaint, we learned that it can be quite common to be sensitive (or allergic) to any or all of the ingredients in commercial deodorant products. Our advice is to immediately stop using a product if its use causes irritation or pain in the area where it was applied and attempt to return it to the place you purchased it for a refund.

It’s a good idea to use a search engine to check product recalls, especially when you suffer a painful reaction after using them. In doing so, we learned that on Nov. 23, 2021, Procter and Gamble (P&G) voluntarily recalled some Old Spice and Secret antiperspirants and other personal care products due to the presence of a harmful chemical, benzene, and has offered refunds. (These may not include the exact product Karmen had been using.)

Whether you find a recall or not, contact the maker of the product as soon as possible and let it know about the issue, even if you secured a refund from the retailer. (In this case, you can contact the manufacturer of Old Spice products here.) Most reputable retailers and/or manufacturing companies will offer a refund or replacement product.

Even if you are satisfied with the manufacturer’s response, consider making a report about the product to the U.S. Food and Drug Administration (FDA). To report adverse reactions or quality problems to the FDA’s MedWatch Adverse Event Reporting program, download this form online or request a hard copy by calling 800-332-1088.

Reportedly, fragrances are the most common skin irritant in deodorants and antiperspirants. Preservatives such as parabens or propylene glycol prevent the growth of bacteria but can also cause allergic reactions and irritation. Other potentially irritating ingredients in personal care products include vitamin E and lanolin. Prevention magazine featured an article last year that runs down some common ingredients that may cause allergic reactions and suggests some dermatologist-recommended products for users with sensitivities.

*Not this consumer’s real name

Coalition Efforts: Advocates urge FinTech startup bank charter rejection and advise Congress to prioritize affordable housing

By Alegra Howard

Consumer Action and its allies recently called on policymakers and regulators about these important issues:

Time for income-driven repayment reform for student loan borrowers. More than 100 diverse advocacy organizations sent a letter to the Biden administration, calling on U.S. Secretary of Education Miguel Cardona to reform broken, dysfunctional income-driven repayment (IDR) programs with the creation of an IDR restoration project or waiver. While student loan cancellation under IDR has been possible since 2016, just 32 borrowers have ever successfully had their loans cancelled. At the same time, over 4.4 million borrowers have been in repayment for 20 years or longer, despite theoretically being able to access forgiveness via IDR. Learn more.

CFPB must stand up for patients and stop Big Pharma rip-offs. As the Senate considered the terms of a reconfigured reconciliation package, 91 organizations representing patients, consumers, seniors, unions, small businesses, large employers, physicians and disease advocacy groups sent a letter to all 50 Senate Democrats urging them to take immediate action to advance a reconciliation package that includes measures needed to lower prescription drug prices in the Build Back Better Act (BBB). Drug pricing reform is not controversial—it is the most popular element of BBB. Over 80% of Americans support it—Democrats, Republicans and Independents alike. Learn more.

Regulators should reject FinTech startup’s bank charter application. Advocates called upon federal banking regulators to reject a worrisome and inadequate bank charter application recently filed by Figure Bank, National Association, a financial technology (FinTech) startup. The coalition warns that the FinTech company’s bank application is silent about core issues of honesty, transparency and sustainability. Federal banking regulators are the public’s first line of defense, said the group, and they have a duty to protect the public from investors who are more interested in lining their own pockets than in helping their customers and communities build wealth. Learn more.

Congress needs to prioritize affordable housing. In a letter addressed to members of Democratic leadership, Consumer Action joined other advocates in emphasizing the beneficial impact that fair and affordable housing and homeownership have on the economy and the financial health of those in vulnerable communities. The advocates urged Congress to support full funding for the production of and opportunity for affordable housing in every state as part of any future budget reconciliation bill. Learn more.

CFPB Watch: Bureau wants your worst ‘junk fee’ example; eases access to complaint details

By Ruth Susswein

Have you been hit with a hidden fee that left you feeling confused or angry? CFPB Director Rohit Chopra calls the back-end fees that are sprung on us in so many everyday transactions “exploitative junk fees.” He’s talking about surcharges tacked on to concert and theater tickets, resort fees at hotels, order processing fees, loan servicing fees, balance inquiry fees, inactivity fees, paper statement fees, title fees, bank penalty fees, and many more such charges. The CFPB says these junk fees “far exceed the marginal cost of the service they purport to cover,” and are “not meaningfully avoidable or negotiable.”

The Bureau is asking consumers to tell it about fees from their bank, credit union, credit card issuer, mortgage lender, or other financial services provider when they’ve been charged:

• For things that they thought were included in the base price,
• Fees that were unexpected or unreasonably high, or
• A fee for which the purpose was unclear or unfair.

The Consumer Bureau is scrutinizing junk fees that may be unfair because they are not revealed upfront, mislead consumers into believing they are paying far less for a product or service, and make it impossible to fairly compare prices among providers.

If you want to weigh in, submit your junk fee examples by April 11 to the CFPB online or email your most irritating junk fee experience to .(JavaScript must be enabled to view this email address) (and include "Docket No. CFPB 2022-0003” in the subject line). Be aware that your name and comments will become part of the public record. You can also file a complaint with the CFPB.

CFPB casts skeptical eye on overdraft fees

The Bureau also has called out banks for their overreliance on costly overdraft and non-sufficient funds (NSF) fees. Overdraft fees are a big profit center for some large financial institutions, but they tend to harm people who are already financially vulnerable. Some of the biggest banks have reacted by reducing—even eliminating—these fees this year. Capital One and Ally have abolished overdraft fees if customers cover overdrafts within a set time period; Bank of America will reduce its overdraft fee from $35 to $10 in May; and Citi will become the largest bank to eliminate overdraft fees when it scraps the charges this summer. Others (Regions, Truist, U.S. Bank and Wells Fargo) have purged their NSF fees. You can compare bank penalty fees here.

Overdrafts are used by some banking customers who can’t make it to their next paycheck as a very high-cost short-term loan. Some lenders are finally addressing the problem head on by offering affordable small-dollar loans to help fill the credit gap and replace reliance on overdrafts to make ends meet between paydays. (Learn more at Pew.)

Access returns to complaint details

During the Trump administration, when CFPB leadership focused on industry concerns rather than protecting consumers, Consumer Action and other advocates fought to ensure that the Bureau’s complaint information remained public. (Complaint data warns others of potential trouble and helps to hold companies accountable.) We won that battle; however, the details of those complaints were buried in the database where they were hard to retrieve unless you knew where to look for them. Now, fortunately, the CFPB put easy access to complaint details high on its to-do list. You can go to ConsumerFinance.gov, click on Consumer Complaint Database under the Consumer Education tab, click on the Read complaints link, and review the problems others have encountered with particular companies and about specific issues (credit reports, mortgages, debt collection, etc.). The current CFPB has put “consumer” back in its title. Way to go!

Class Action Database: Wells Fargo sued for flouting Bankruptcy Code

By Rose Chan

A class action settlement involving timing chain defects on Jaguar Land Rover LR4 and Range Rover Sport vehicles was among eight new settlements added to the Consumer Action Class Action Database during February.

 

Of note this month is the settlement of the class action Ajasa v. Wells Fargo Bank, N.A. Plaintiffs filed a class action against Wells Fargo claiming that the bank violated the Bankruptcy Code by failing to report customers’ discharged debts to the credit reporting agencies.

Bankruptcy is a federal court process that can help consumers eliminate overwhelming debts or establish a plan to repay them. When the bankruptcy court discharges a debt, it means that the creditor can no longer force the debtor to pay.

Plaintiffs alleged that Wells Fargo’s refusal to update their credit reports with the discharged debt adversely affected their ability to obtain credit, housing or employment. If discharged debt is reported as “past due,” it implies that the debt is still active, and damages the consumer’s credit score. Furthermore, plaintiffs claimed that when they asked Wells Fargo to correct the inaccurate information, Wells Fargo refused unless the plaintiffs paid the debt already discharged by the court.

Wells Fargo denied the allegations but agreed to a $3 million settlement to end the lawsuit.

You are part of the class if Wells Fargo charged off and sold your credit card, direct auto, HELOC, or personal line account(s) to a collection agency on or after Jan. 1, 2009, and the account was discharged in Chapter 7 bankruptcy before March 16, 2020.

The claims deadline is March 21, 2022.

About Consumer Action

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Consumer Action is a nonprofit 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 both in 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 more. 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. Our in-language media outreach allows us to share scam alerts and other timely consumer news with a wide non-English-speaking audience.

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 6,500 community-based organizations. Outreach services include in-person and web-based 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.