PLEASE NOTE: This 1997 publication is not current, and should be used only as historical information.

Table of Contents

• Industry and lawmakers move to protect debit card users
• New credit reporting rules expand consumer rights
• How to get the most out of your HMO
• CA informs Bay Area Latinos
• CA's Annual Fundraiser
• Images from the fundraising party
• Inside Consumer Action - CA moves its S.F. office

Industry and lawmakers move to protect debit card users

Cards are 'convenient for consumers but also for crooks and swindlers'

The use of debit cards has skyrocketed-and along with the increase in business, fears about consumer liability for fraud have also grown. To allay these fears-and perhaps to fend off pending federal legislation for cardholders-two major purveyors of the cards, MasterCard and Visa, within days of each other this summer announced voluntary consumer protections.

"Since 1991, the number of debit card transactions has increased five-fold," said Cher McIntyre, director of advocacy for Consumer Action. "A quarter of the U.S. population are now cardholders. The voluntary efforts by the industry to protect consumers are welcome, but we urgently need regulations to ensure that the same protections that exist for credit card holders are extended to cover debit cards."

Mandatory disclosures needed

McIntyre noted that banks must be required to uniformly disclose the terms of debit card use, as they are with credit cards. "We need mandatory disclosures about fees and use requirements as well as available consumer protections."

U.S. Rep. Charles Schumer (D-NY) has introduced a bill that would limit consumer liability on debit cards. (Schumer was the force behind the disclosure box required on credit card solicitations.) In the Senate, Alphonse D'Amato (R-NY) asked the Federal Reserve to study the issue.

The Schumer bill, in committee at press time, would limit customer liability or fraudulent use of the card to $50. "These ATM cards are convenient for consumers and shoppers but they're also convenient for crooks and swindlers," said the congressman.

Debit cards look like credit cards but act like checks because money to cover purchases is deducted from your checking account. Many banks have automatically replaced their ATM cards with "check cards" that carry the MasterCard or Visa logo and work over the same electronic network developed by these large credit card companies.

Electronic transactions are governed by a different federal law than credit card charges.

Electronic transactions are governed by a different federal law than credit card charges. Regulation E, the electronic transfer rule, does not fully protect debit card users from fraudulent charges unless the cardholder reports the loss of the card in two business days. On the other hand, credit cardholders' losses are capped at $50 of fraudulent charges no matter when they are reported.

While banks are required to investigate fraudulent use of the cards, they are not required to credit victims' checking accounts for the lost amount while the investigation is pending.

Unlike ATM cards, no personal identification (PIN) is needed to use a debit card "off-line" at shops and restaurants-only for "point of sale," or "on-line"-transactions. This makes the cards attractive to thieves, who can copy the authorized signature on the back of the card and use it to finance a spending spree.

Industry response

MasterCard announced in early August that its 16 million debit card users will have immunity from losses if they report lost or stolen cards within one day, under most circumstances, and $50 maximum liability after that.

Visa announced its version two weeks later. Visa's member banks will assume all liability for lost or stolen debit cards if cardholders report the problem within two business days. After that, cardholders will be liable for a maximum of $50 for unauthorized charges.

Visa also announced that all fraud victims will get provisional credit within five days of notification to make up for lost funds due to unauthorized transactions.

Visa member banks will not send out unsolicited debit cards unless they protect cardholders by requiring that the cards be activated by phone before they are used.

Also this summer, Bank of America announced similar policies, stating that its debit card customers would not have to pay anything to cover losses from stolen cards. It also said it would provide provisional credit within 24 hours.

New credit reporting rules expand consumer rights

Consumers now have more control over the information contained in their credit reports, thanks to amended federal regulations that became effective in late September. The Fair Credit Reporting Act (FCRA) of 1970 was intended to promote accuracy, fairness, and privacy of information in credit reporting agency files. The amendments, six years in the making, give consumers new safeguards against inaccuracies that may cost them loans, jobs, credit cards and housing.

The amendments include two new enforcement features-that state agencies can bring actions to enforce the FCRA and that federal authorities can sue for up to $2,500 per "knowing violation." Other important changes include a provision that employers or potential employers must obtain written permission from employees or job applicants before checking credit reports.

The amended rules place new responsibilities on providers and users of credit information-not just the credit reporting agencies. The Federal Trade Commission estimates that there are about 500 sizable consumer credit bureaus in business nationwide. But the industry is dominated by several large companies-including Equifax, Experian (formerly TRW) and Trans Union-which provide most of the information to these smaller companies.

Credit reports contain information furnished by lenders. Credit bureaus compile this information and make it available to other lenders who wish to check how a consumer has handled credit in the past. Credit reports, which have been free to consumers who were turned down for credit, insurance or employment, are now also free to those who are turned down for a wider variety of services, including bank accounts and rental apartments.

For the first time, "furnishers" are liable for accuracy. Under the amended law, furnishers must:

• Not knowingly supply inaccurate data to credit bureaus.
• Correct inaccurate or incomplete consumer credit information they supply, and in some cases notify all national credit bureaus of their findings.
• Inform the credit bureau that the consumer has claimed the information being supplied is inaccurate.

The amendments allow 30 days to fix mistakes in credit reports. After completing an investigation into a disputed item, credit bureaus must provide the results in writing to the consumer within five days.

Now lenders such as banks, department stores and finance companies that make a mistake in reporting your credit history are obliged to take your complaint seriously and get to the bottom of the problem. When you dispute an item in your report, the credit bureau's investigation must consider "all relevant information" you provide. In the past, such investigations were often perfunctory and failed to remove inaccurate data disputed by consumers.

The amendment also requires that credit bureaus must make available toll-free lines with employees, not just recordings, during business hours. This number must be provided to you if you are turned down for credit, housing or employment because of information contained in your credit report.

Employers now have to obtain written permission before checking a job applicant's credit history. If the information results in your not being hired, you must be informed within 60 days and provided with the name of the credit bureau supplying the report.

Your rights

A credit bureau may not release your credit report to your employer, or a prospective employer, without your written consent.

Consumers have the following rights under the FCRA:

• You must be told if information in your file has been used against you. Anyone who uses information from a credit reporting agency to take action against you-such as denying an application for a bank account, credit, insurance, housing or employment-must give you the name, address, and phone number of the credit reporting agency that provided the report. You are entitled to a free report if you contact that credit bureau.
• You can find out what is in your file. A credit reporting agency must give you all the information in your file, and a list of everyone who has requested it recently. However, you are not entitled to a "credit score" that is based on information in your file. Such scores vary widely according to the scoring model that was used-many banks and financial institutions have their own scoring models and consider this information proprietary.
• You are also entitled to one free report a year if you certify that you are unemployed and plan to seek employment within 60 days; that you are on welfare, or that your report is inaccurate due to fraud.
• Access to your file is limited. A credit reporting agency may provide information about you only to those who have a need recognized by the law-usually to consider an application you have submitted to a creditor, insurer, employer, landlord, or other business.
• A credit bureau may not release your credit report to your employer, or a prospective employer, without your written consent.
• Credit reporting agencies are prohibited from providing consumer reports that contain medical information for employment purposes, or in connection with credit or insurance transactions, without your consent. If medical information is being sought in connection with employment, you must explicitly consent to the release of medical information, in addition to authorizing the employer to pull your credit report.
• You can stop a credit reporting agency from including you on lists for unsolicited credit and insurance offers. Many creditors and insurers use your credit report as the basis for sending you unsolicited offers of credit or insurance. Such offers must now include a toll-free number for you to call and tell the credit reporting agency if you want your name and address excluded in future. If you notify the credit reporting agency through the toll-free number, it must keep you off the lists for two years. If you request and complete a form provided by the credit bureau for this purpose, your name and address will be removed indefinitely.

Your right to legal action

Failure to comply with the FCRA can result in state or federal enforcement actions, as well as private lawsuits. In addition, anyone who "knowingly and willfully" obtains a consumer report under false pretenses may face criminal prosecution.

You can sue the credit bureau in state or federal court for violations of the FCRA. If you win, the defendant may have to pay damages and reimburse you for attorney fees. If you lose and the court finds that you "sued in bad faith," you or your attorney may have to pay the defendant's fees.

Contact your state or local consumer protection agency or attorney general to see if you there are state laws that additionally protect you against the misuse of your credit report.

Credit reporting: Who's who?

• Credit bureaus create and maintain credit reports for most adults who have had credit. These companies gather and sell information about you-such as where you work and live, if you pay your bills on time, and whether you've been sued, arrested, or have filed for bankruptcy. (If you've never had a loan or a credit card, you may not have a credit file.)
• Furnishers of information include your past and present creditors who provide information about your use of credit to the credit bureau.
• Users of information include potential and existing lenders and creditors, employers, landlords and other businesses. These companies can use your credit report in deciding whether to give you a credit card, loan, bank account or insurance policy, rent you an apartment or house, or hire you.
• You-the consumer. You have a right to see your credit report for free when you are denied credit, insurance, a bank account, a job or rental housing because of information contained in your credit report. You may have a copy of your credit report at any time if you pay a fee. (The most you can be charged is $8-a few states prohibit the charge altogether.)

How to get the most out of your HMO

It's Your Health: How to Get the Most Out of Your HMO," a free guide developed and written by Consumer Action, is the cornerstone of an educational campaign on health maintenance organizations (HMOs). The project, underwritten by PacifiCare Health Systems, began with a survey of consumer perceptions about health plans released this spring. Conducted by Yankelovich Partners, the survey identified areas of HMO coverage in which consumers need to be better informed and more sure of their rights.

Drawing on the survey's findings, CA developed the 16-page guide to give consumers the information they need to ask the right questions of their doctor and HMO and to take decisive, appropriate action when it comes to their health and their health plan. The guide covers typically available HMO coverage and how to handle quality-of-care issues as well as controversial areas of coverage, including emergency care, access to specialists, prescription drugs and chronic illnesses.

22% of the population depend on HMOs for their health care, and the numbers are rising every day.

"Fifty-nine million people, or 22% of the population, depend on HMOs for their health care and the numbers keep rising every day," said Ken McEldowney, CA executive director. "The Yankelovich survey revealed that only 13% of insured respondents felt they knew enough to get the full benefit of their health plan. Yet nine in ten agreed that getting the highest quality health care requires that people know how to use the system."

"The need for informed and engaged consumers is loud and clear," said Dr. Linda Lyons, senior vice president and chief medical officer at PacifiCare Health Systems. "Americans have a great appetite for information, but it has to be easily digestible. Consumer Action has succeeded in providing just that kind of information - clear, concise, and from a consumer's point of view."

Other elements of Consumer Action's "It's Your Health" campaign include:

• Translation of the English brochure into four languages: Chinese, Korean, Spanish and Vietnamese.
• Free, bulk distribution of the brochure through Consumer Action's national network of more than 3,000 community-based organizations (CBOs).
• A training manual in English designed to help CBO staff members answer questions raised by their clients who read the brochure.

"Getting the most out of your HMO depends on being your own advocate and standing up for your rights," said McEldowney. "You have a good shot at avoiding HMO problems if you do your homework about your coverage and the appeals process and work with your doctor to exercise your rights to their fullest."

We invite Consumer Action members to call (415) 777-9635 or (213) 624- 8327 to request their free copy of the brochure. Others may obtain a copy by sending a self-addressed, stamped (55¢) legal-sized envelope to Consumer Action-HMO, 717 Market St., Suite 310, San Francisco, CA 94103.

CA informs Bay Area Latinos

Consumer Action (CA) has teamed with Citibank to bring consumer advice to Bay Area Spanish-speakers via Teleguía, a local television programming guide.

Citibank, as part of its community outreach efforts, is paying for space in the publication to run a regular column on banking and finance topics written by CA's Nelson Santiago.

Santiago has contributed articles on the sale of investments at bank branches and preventing home equity loan fraud, among other topics.

Teleguía has been in print for 15 years, with a current circulation of 12,000 copies. It can be picked up for free at many Latino-owned businesses throughout the Bay Area. Besides listing Spanish-speaking programming, the guide carries articles on health, civic leadership and community issues.

Tony Salazar, Teleguia's publisher, said that gathering entertainment news for the guide is easy, but it is much more difficult to "find good, useful information that will empower members of the community."

José Arce, Citibank's director of community investment, said: "If you provide consumers with basic financial information, they become better consumers in general and, at the same time, become better banking customers."

CA's Annual Fundraiser

Record-breaking $28,000 raised by CA at June party

San Francisco Mayor Willie Brown is seen with members of We Are Family, from left, Cynthia Alexis, Agnes Morton and Tress Stewart. The S. F. organization was honored by Consumer Action at this year's party. (photo by Linda Sherry)

Consumer Action's June fundraiser netted $28,000 in contributions. In recent years, CA has raised about $16,000 each year in donations for the annual event. (See below for corporate and individual and community contributors.)

Corporate Contributors

Benefactors	Friends
American Express Company	Bank of America
American Savings Bank	Bell Atlantic
AT&T	California Cable TV Association
Chavez & Gertler, LLP	California Payphone Association
Edison Electric Institute	Jose Arce, Citibank
Great Western Bank	The Gas Company
Home Savings of America	GTE
Jenkins & Mulligan Attorneys	Kaiser Permanente
MCI Telecommunications	ValueStar, Inc.
Merrill Lynch & Co.
NationsBank
John Schweizer, Pacific Bell
Pacific Gas & Electric
Southern California Edison

Sponsors : Sprint.

"We are overwhelmed and very grateful for the response to this year's fundraising efforts," said CA's Executive Director Ken McEldowney. "We'd especially like to thank Molly Hopp and Jim Conran, two of our board members who helped us increase corporate donations this year."

The party was held on June 26 at Gabbiano's Restaurant in San Francisco. CA continued its longtime tradition of recognizing outstanding contributions on behalf of consumers with three awards honoring:

• The San Jose Mercury News "Action Line" column, which has been cutting red tape and exposing rip-offs for consumers since 1967. The award was accepted by Andy Bruno and Steven Chae, the reporters behind the "Action Line."
• The Privacy Rights Clearinghouse, a San Diego-based non-profit consumer organization which advocates for the protection and control of personal information in our increasingly technological society. The group's executive director, Beth Givens, flew in from San Diego to accept the award.
• We are Family, a project of the San Francisco Consortium for Elder Abuse Prevention, Goldman Institute on Aging. We are Family focuses on elder abuse in the African American community. S.F. Mayor Willie Brown presented the award on behalf of CA to We Are Family leadership group members Cynthia Alexis, Eugenia Burfict, Betty Hardy, Agnes Morton, Lisa Nerenberg, and Tress Stewart. (CA's Josephine Shaw chairs the leadership group.)

Individual & Community Contributors

Benefactors	Sponsors
Bank of Canton	Amervest Co.
Browning-Ferris Industries	Chris Bjorklund
Ed and Eleanore Perkins, Consumer Reports	Burston-Marsteller
Travel Letter	California Optometric Association
Helen Nelson, Consumer Research Foundation	Eugene Coleman
Jim Conran, Consumers First	Zelda R. Heffer
Experian	Sue Hestor
Beatrice Gendel	Patricia Sturdevant
Molly Hopp	The Sturdevant Law Firm
Walter McEldowney	Sherman Tung, Wings Advertising
J.B. Moore
Congresswoman Nancy Pelosi
Judith & Alfred Rosenberg
Steven Solomon, Esq.

Sponsors
Mark F. Anderson
Dennis A. Antenore
Amy Bach, Esq.
Al Borvice
Eric & Anna Alvarez Boyd
Marsha Cohen
Candace Acevedo, Consumer Credit Counseling Service of S.F.
Rosemary Shahan, Consumers for Auto Reliability and Safety (CARS)
Ellis and Jennifer Gans
John Geesman
Kayren Hudiburgh & Lester Zeidman, The Good Life Grocery
John Anthony, Graphmate Services
Kearns & West Inc.
Kemper Insurance Co.
The Pires Group
Hon. Louise H. Renne
Laurel F. Pallock, San Francisco District Attorney's Office
Otis Watson, Union Bank of California
United Copy Service
Lynn Victor
S. Chandler Visher, Esq.
Jonas Waxman

Images from the fundraising party

Consumer Action's annual fundraising party at Gabbiano's Restaurant in San Francisco on June 26 attracted supporters from near and far and raised an unprecedented $28,000.

Consumer Action honored Andy Bruno (left) and Steven Chae, who as reporters for the San Jose Mercury News "Action Line" column regularly bring the power of the media to bear in solving tough consumer problems.	CA board member Chris Bjorklund (right) is seen with Jim Stein, publisher of the Consumer ValueStar service rating guides.
GO consumer reporter Michael Finney of "7 on Your Side" (left) is seen with CA board member Patricia Sturdevant and consumer attorney Tom Jenkins.	Hernan Muirragui (left), staff assistant to Congresswoman Nancy Pelosi, with Rosemary Shahan of Consumers for Auto Safety and Reliability and consumer attorney Steve Solomon.
CA Community Consumer Advocate Josephine Shaw, who will leave the organization this fall after seven years, is seen with her husband, Rev. Clarence Shaw.	Beth Givens of the San Diego-based Privacy Rights Clearinghouse, speaks to the gathering after accepting an award from CA on behalf of her organization.
Peggy Haney (left) of American Express and Lisa Lang of Pacific Bell were on hand to represent their companies, both corporate donors to the event.	CA employees Eleanor Lefferts (left) and Julita Quario catch a breath of fresh air on the restaurant's patio.

Photos by Nelson Santiago & Linda Sherry.

Inside Consumer Action

CA moves its S.F. office

During the summer, CA learned that the rent would more than double at the office it had rented for the past eight years at 116 New Montgomery in San Francisco. A search committee viewed many sites before settling on two large suites at 717 Market Street. One suite includes CA's reception area and staff offices. The other provides offices for the lead poisoning prevention project (see below) and storage and work space for CA's mail room as well as a conference room.

New name for lead project

CA's Lead Poisoning Prevention Project has adopted a new name: The Healthy Children Organizing Project. According to Associate Director Caroline Mitchell, "the new name better reflects what we do."

The project helps low and moderate income communities of color to build their capacity to educate parents and other care givers about how to have healthy children. Director Neil Gendel said that this includes protecting children from all preventable diseases-not just lead poisoning.

A new baby

Guadalupe Aguilar, a community consumer advocate based at CA's office in Los Angeles, returned to work on Oct. 6 from maternity leave. A second son, Joaquin Ehecatl, was born to Aguilar and her husband Jesus Hernandez on Aug. 1.

Staff member to leave

Community Consumer Advocate Josephine Shaw will resign from Consumer Action at the end of October. Shaw has been with CA for seven years, and has been an active outreach worker in the African American, senior and disabled communities.

Recently, Shaw saw the culmination of two years' effort, when the S.F. Board of Supervisors finance committee recommended that the board adopt a deed recording fee to fund the investigation and prosecution of real estate fraud cases. Shaw had prompted San Francisco to implement the fee following the passage of a 1995 state law that allowed counties to charge up to $2 on each transaction.

Shaw will be director of education and outreach at the Decennium Network Inc., founded in 1990 by her husband, Rev. Clarence Shaw, president and CEO. The Decennium Network is a community development corporation, organized to rehabilitate existing housing for first-time home buyers and to provide an information clearinghouse.

Fighting home loan fraud

CA and Bet Tzedek-a Los Angeles advocacy group-are spearheading a coalition to address home equity loan fraud. Known as CAT (Consumer Advocates Together), the coalition will educate and alert consumers about scam artists who steal the equity in people's homes through high interest second loans and contractors' repair schemes.

Cher McIntyre, CA's director of advocacy, said that the participants would like to see severe penalties for home equity fraud scams.

"Home equity loan fraud is currently just a misdemeanor," said McIntyre. "Yet we see first hand the devastation it wreaks on consumers, especially seniors."

She said sophisticated scam artists know they'll be fined only a pittance. "They're back in business the next day under a new name, making it virtually impossible to shut them down."