Consumer Action INSIDER - May 2022

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Appreciate your work! [I] always read articles to stay ahead of the gamers...fingers crossed. Thank you! —Jackie, SCAM GRAM reader, Scottsdale, AZ

Did you know?

Email is not a private means of communication. Your messages can be intercepted and read anywhere in transit, or reconstructed and read off of backup devices—even long after they were sent. According to the Nolo legal website, “If you're sending email at work, your boss can legally monitor it, and if your company becomes involved in a lawsuit, your adversary has the legal right to review it. If you send email from home, anonymous hackers can intercept it, and if you are suspected of a crime, law enforcement officials with a warrant can seize your electronic correspondence. Even your Internet service provider may legally be able to scrutinize your email.” So, while email might be just fine for many communications, it seems wise to ask yourself if you’d care if anyone read an email before you hit send. And consider having a separate personal email account for your personal business—using your work email for personal correspondence (even if allowed by your employer) could lead to problems. Learn more at Nolo.

Using FinTech and coaching to improve financial wellness

By Audrey Perrott

Consumer Action launched two financial health and technology programs in 2020 and 2021 with support from the Federal Home Loan Bank of San Francisco, Desert Credit Union and Capital One. The programs included mini-grants for four nonprofit partners in Arizona and Texas to provide financial coaching or counseling, distribute Consumer Action’s FinTech guide, measure changes in financial health, and distribute FinTech tools that help individuals to address a specific financial health need (e.g., saving, planning, spending or borrowing). The Capital One project included a matched savings component.

The mini-grantees included Greater Phoenix Urban League (GPUL), Administration of Resource and Choices (ARC) of Tucson, Easter Seals of Greater Houston (ESGH), and Catholic Charities Dallas (CCD). All told, Consumer Action served nearly 200 clients and nonprofit staff through these two projects.

In the Arizona project, community-based organization (CBO) staff completed intake and prepared budgets for all 114 clients. The average FinHealth score for the 123 individuals was 43, which is considered to be on the lower end of financially coping. The project yielded an adoption (or take-up) rate of 41% (the percentage of clients who downloaded and used a financial app). The tools used include Esusu, EveryDollar, Albert, CreditWise, Mint and SaverLife. The majority of the clients signed up for Esusu, EveryDollar, Mint and CreditWise. Twenty-one clients signed up for tools that help you save. The average amount saved was $345.63. The rest of the consumers signed up for tools that helped them budget and monitor credit. Consumers who used Esusu had, on average, a credit score increase of 34 points. (At a point in the project, both Arizona agencies had to redirect their efforts to addressing the crisis housing needs of their clients.)

As in Arizona, the Texas CBO staff completed intake and prepared budgets for all clients. The average FinHealth score for the 76 individuals was 51, which is considered financially coping. The tools offered were CreditSmart Essential, CreditSmart Homebuyer U, CreditWise, Digit, EveryDollar, Mint and SaverLife, though participants also used various other financial services apps (such as those offered by their banks and other financial services companies). The majority of clients used CreditWise, EveryDollar and SaverLife. The take-up rate at the three-month mark was 53%; it was nearly 92% at seven months, when additional staff members were trained to support their clients in using the various FinTech tools. Forty-four clients saved an average of $1,085.48. Thirty-four clients received a savings match of $100, five clients received $50, and four clients received $25.

Consumer Action is pleased with the outcomes of both projects, and will continue this important work. We are grateful to our network partners for their collaboration, and to our sponsors, Federal Home Loan Bank of San Francisco, Desert Credit Union and Capital One, for their generous support. Without them, we could not have undertaken this worthwhile project.

If you are interested in collaborating with Consumer Action on a FinTech innovation project or supporting our financial capability and/or consumer education programs, please contact Consumer Action’s executive director, .(JavaScript must be enabled to view this email address), or .(JavaScript must be enabled to view this email address), director of strategic partnerships.

Hotline Chronicles: Where’s my refund?

By Linda Sherry

Mom Charmaine,* who lives in Texas, got her taxes done by a large firm in Dallas, paying more than $2,000 for preparation because she felt it would be a complicated year for tax credits (with 2021’s higher child credits, pandemic funds, Earned Income Tax Credit, etc.). The firm she hired works with a company called the Santa Barbara Tax Group, owned by Green Dot, that is a middleman for many tax preparers, receiving tax prep customers’ refunds and distributing them after the tax preparer’s charges are deducted. Charmaine’s refund was more than $14,000 after the prep fees. She asked to have the refund sent to her Chime mobile banking app savings account, but the deposit was rejected by Chime because it exceeded the app’s maximum deposit limits.

The rejected deposit was kicked back to the Santa Barbara Tax Group, which then sent a check to her tax preparer. All good, until the preparer noticed language on the check noting that it was “not valid if over the amount of $10,000.” The tax preparer sent the check back to Santa Barbara Tax Group, asking for it to be split into two checks. Santa Barbara Tax Group confirmed it had mailed two checks on March 9 and advised Charmaine and her tax preparer to allow 7-10 business days for the check to arrive. But on March 31, Charmaine contacted Consumer Action’s hotline to ask how she could address the situation because the check hadn’t shown up.

A few days earlier, Charmaine had filed a complaint with the Better Business Bureau against Santa Barbara Tax Group about the delay. When she attempted to speak with Santa Barbara Tax Group’s customer service team, she said she was told they could not speak with her because she had filed a Better Business Bureau complaint.

Consumer Action’s hotline provided Charmaine with contact information for her own state’s banking regulator as well as the banking regulator in California, where Santa Barbara Tax Group (and parent Green Dot) is based. We also provided contact information for the federal Consumer Financial Protection Bureau (CFPB), which accepts complaints about financial products. While we are confident that Charmaine will receive her refund eventually, we share her frustration that a refund issued electronically on Feb. 22 should have been delayed to this point. And, it is appalling that, because Charmaine filed a complaint with the Better Business Bureau, she was told by Santa Barbara Tax Group employees that they could not speak to her. (She also emailed a slew of Santa Barbara Tax Group employees—she showed us the email addresses—who never bothered to reply.)

It isn’t only Charmaine who has had issues with Santa Barbara Tax Group: Complaints online can be found at the Better Business Bureau and other online sites, here and here.

Charmaine’s case raises some important points:

  • Wherever you bank, be aware of account deposit limits, which can vary by the type of deposit that will be made, and by the type of account (checking, savings, etc.). Mobile check deposits typically have one limit, while wire and ACH (Automated Clearing House network) deposits may have other limits. Before providing an account number to the Internal Revenue Service (IRS) for your direct deposit, ask your account provider about limits, if any.
  • Charmaine was charged more than $2,000 for tax preparation, which is very high—the cost nationally is less than $400. We advised Charmain to shop around and compare fees for tax preparation services next year.
  • Santa Barbara Tax Group also funds “tax advances” (rapid advance loans, or RALs) for tax prep customers. Charmaine said her tax preparer applied for one on her behalf this year but it was not approved, which might be a good thing. Consumer Action advises taxpayers not to pay for RALs to access their own money a bit earlier—this is not only because of the fees associated with RALs, but if something goes wrong with your refund, you could end up in an expensive long-term loan.
  • Instead of receiving a large refund when you file your taxes (which many experts say is unnecessarily loaning money—interest-free!—to the U.S. government), adjust your withholding for 2022 and get more money in each paycheck. The IRS offers an online Tax Withholding Estimator to help you do this. To change the amount withheld, fill out Form W-4 and submit it to your employer.
  • Companies are ill-advised to sideline consumers who have submitted complaints. Being able to complain about poor treatment levels the playing field between consumers and large companies. Often, a tweet or other social media post will get the attention of companies and help solve consumer complaints. The CFPB recently warned financial firms it regulates that they will face consequences for manipulating or suppressing consumer reviews.

For more tips on getting your consumer complaints resolved, check out Consumer Action’s How to Complain.

*Not this consumer’s real name

Webinar explores impact of COVID on small businesses

By Linda Williams

To shed light on the ways COVID-19 has impacted the small business landscape in the U.S. and to better understand what recovery for these businesses will look like, Consumer Action hosted a webinar: “From Relief to Recovery: COVID-19 and the Impact on Small Businesses.” Joining Consumer Action’s outreach team were Rhett Buttle, the founder of Public Private Strategies and senior fellow at the Aspen Institute; Dr. Janelle Williams, a senior adviser on the Federal Reserve Bank of Atlanta’s community and economic development team; and Mary Hirt, a research analyst also with the Federal Reserve Bank of Atlanta.

After the hosts broke the ice with a short true-and-false quiz (which included the true statement that 80% of small businesses reported pandemic-related challenges that impacted their finances), Buttle opened his presentation by explaining that, while there are signs across the country that customers are returning, there are gaps in understanding what small business owners are experiencing and whether the emerging recovery will be evenly distributed. Referencing a recent survey, Buttle summarized that addressing the demand for small dollar financing and the bias and barriers to capital for entrepreneurs of color will be imperative for enabling recovery.

The Federal Reserve Banking system, in collaboration with business and civic organizations in communities across the United States, created the Small Business Credit Survey in 2021. Dr. Williams and Hirt both contributed to the creation of the report. They provided the audience with background on the methodology, and highlighted key findings, including that the pandemic continues to have a significant impact on small businesses, with 57% of them reporting being in fair or poor financial condition at this stage of the pandemic.

Although most small business owners are optimistic about recovery, they are not out of the woods, and recovery will not be equal.

You can watch this and other Consumer Action webinars on our YouTube channel. Find additional COVID-related webinars (and other materials) at our COVID-19 Educational Project webpage.

Coalition Efforts: More privacy for kids online, and regulation of 'Buy Now, Pay Later' credit

By Alegra Howard

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

‘Buy Now, Pay Later’ not always the best deal for consumers. Consumer Action joined public interest organizations in submitting a letter to the Consumer Financial Protection Bureau (CFPB) concerning Buy Now, Pay Later (BNPL) credit products. The groups are alarmed by the lack of regulation of this credit product, which is exploding in use, and they urged the CFPB to view BNPL products as credit cards (which are covered by the Truth in Lending Act [TILA]), to start supervision of this market, and to look out for practices that harm consumers. Learn more.

Advocates urge Congress to pass kids’ online safety reform. In a letter to Congress, coalition groups urged legislators to provide protections for kids and teens online. Advocates warn that the business model of the internet as we know it today isn’t healthy for children. Among their questionable practices, Big Tech companies prioritize continued engagement and data collection over taking offline breaks, encourage kids to share their sensitive data to get more “likes,” and expose young people to predators online. Learn more.

It’s time for income-driven repayment reform. Today, a group of 116 diverse advocacy organizations sent a letter to the Biden administration calling on U.S. Secretary of Education Miguel Cardona to reform dysfunctional income-driven repayment (IDR) programs and fulfill the promise of IDR. 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 after 20 years. Learn more.

Protect the rights of 45 million contact lens consumers. In a letter to Congress, advocates urged legislators to oppose the so-called Contact Lens Prescription Verification Modernization Act (S 1784 and HR 3353). The bills aim to undo almost two decades of protections for contact lens consumers, would drive up prices, and would reduce choice for contact lens consumers. Learn more.

CFPB Watch: Bureau holds repeat offenders and loan servicers accountable

By Ruth Susswein

In March, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra warned of a coming crackdown on repeat offenders. In heading up the CFPB, Chopra has shown steely determination to hold companies—and their corporate executives—accountable for recurring wrongdoing.

“Many large institutions see the law as mere expenses on their income statement…Repeated offenses, whether it's for the same exact offense or more malfeasance in different business lines, is par for the course for many dominant firms, including big banks, Big Tech, Big Pharma, and more,” said CFPB Director Chopra.

Chopra has been calling out what he considers financial offenses, and has recently warned that making restitution to consumers and paying fines was no longer sufficient for firms that repeatedly violate the law (or agency order). Companies have begun to take notice.

In response to the CFPB’s scrutiny of abusive overdraft fees, banks began to reduce—even eliminate—the fees. Chopra then successfully used his bully pulpit to help limit medical debt reporting. His recent attention to the issue influenced the Big Three credit bureaus to remove paid medical debts from credit reports, delay posting medical debts for one year, and not report debts under $500, starting this July.

Now he’s turned his sights on TransUnion. The CFPB says it’s suing the credit bureau (and a top executive) for continuing to deceptively market its credit products and flout the terms of a 2017 order. That year, TransUnion paid consumers nearly $14 million for allegedly misleading them into making recurring payments. The CFPB order required the credit bureau to warn consumers that lenders were unlikely to use TransUnion’s score when making actual lending decisions. TransUnion also was required to get customers’ express consent to charge them recurring credit monitoring fees and to provide an easy way to cancel. The Bureau says it warned TransUnion in 2019 and 2020 that they continued to violate the agency’s order.

“TransUnion used an array of dark patterns to trick people into recurring payments and to make it difficult to cancel them,” said the CFPB.

The Bureau also charged TransUnion with deceiving people into providing credit card information to verify their identity while, instead, allegedly signing them up for recurring monthly charges. TransUnion said it considers each of the allegations “meritless.”

CFPB fines student loan servicer for misleading borrowers

The Bureau fined Edfinancial Services $1 million for wrongly telling borrowers that they couldn’t qualify for federal student loan relief through the Public Service Loan Forgiveness (PSLF) program. Under PSLF, government workers, military members, teachers, first responders and some nonprofits can have their student loan balances forgiven after 10 years of qualifying payments.

The Bureau says Edfinancial was telling borrowers that their Federal Family Education Loan Program (FFELP) payments were not eligible for Public Service Loan Forgiveness. In fact, FFELP loans can be consolidated into Direct Loans; then the loan payments are eligible for PSLF forgiveness.

Since October 2021, the Department of Education (ED) has granted a waiver allowing “any past payment on a federal student loan by a borrower working in public service to count toward PSLF, regardless of payment plan, loan type, or whether the payment was made in full or on time.”

Note: To qualify, borrowers must consolidate their loans into a Direct Loan and apply for PSLF before Oct. 31, 2022.

The CFPB has ordered Edfinancial to contact all of its FFELP borrowers before October to alert them to the opportunity to apply for PSLF loan forgiveness by the deadline. The Bureau and ED have warned loan servicers that they are on the lookout for others who may be misleading borrowers.

Class Action Database: Banking on ATM fees

By Rose Chan

A class action settlement over a CaptureRx data breach was among 13 new settlements added to the Consumer Action Class Action Database during April.

Of note this month is the class action Mackmin v. Visa Inc., et al (“et al” includes Mastercard and three major banks). The banks have agreed to a settlement, while Visa and Mastercard opted to defend themselves in court.

Plaintiffs filed a class action alleging that the five payment card issuers—Visa, Mastercard, Bank of America, JPMorgan and Wells Fargo—violated antitrust laws by conspiring to fix the amounts of their ATM access fees, which plaintiffs allege resulted in consumers paying higher fees than they should have when conducting a “foreign” ATM transaction (one conducted at a different bank than issued the payment card). For example, the plaintiff used his Bank of America ATM card at a Wells Fargo ATM and was charged an inflated ATM access fee. Plaintiffs claimed that without this “non-compete” agreement in place, they would have paid lower ATM fees.

Bank of America, JPMorgan and Wells Fargo deny the allegations but agreed to a settlement to end the lawsuit.

The settlement fund provides $26.4 million from Bank of America, $20.8 million from Wells Fargo, and $19.5 million from JPMorgan.

You are part of the class if you paid an “unreimbursed” ATM access fee for a foreign ATM transaction made in the U.S. between Oct. 1, 2007, and Nov. 21, 2021. (Many banks “reimburse” customers for foreign ATM fees as an account perk—these customers are not eligible to file claims.)

The claims deadline is May 11, 2022.

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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.

 

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