Table of Contents

• What people are saying
• Did you know?
• Conference reveals how discrimination still harms communities of color
• Guide outlines new 2019-2020 California LifeLine income limits
• Hotline Chronicles: Cut the middleman out of vital records purchases
• No April fools to be found at last month’s Financial Education Week
• Coalition Efforts: Deceptive schools and dangerous emissions
• CFPB Watch: A disconcerting new direction, counting up consumer complaints
• Class Action Database: Ross pays for pumping up list prices
• About Consumer Action

What people are saying

Thank you for extending an invitation to me for your [Disaster Insurance and FEMA Assistance] train-the-trainers discussion in May. I am impressed by your overarching mission to educate the vulnerable and the underserved. — Robert Wallace, CFP, Financial Planning Association of Orange County

Did you know?

May 22 is the 10th anniversary of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. The game-changing CARD Act, which was passed by Congress during the Obama Administration and has since been enforced by the Consumer Financial Protection Bureau, has saved consumers billions of dollars in credit card fees and predatory “penalty rates,” despite industry predictions that it would kill the credit card market. Sadly, nearly half (47%) of consumers surveyed by CompareCards, a LendingTree company, said they’d never heard of the CARD Act. Now’s your chance to learn more about what the CARD Act has done (and continues to do) to protect consumers like you.

Conference reveals how discrimination still harms communities of color

Consumer Action was proud to co-sponsor the Understanding Segregation: Tools to Advance Access and Opportunity conference hosted by Fair Housing Advocates of Northern California on April 1 in San Rafael. The conference provided an opportunity for local stakeholders to come together to address pressing fair housing issues affecting communities of color both in the San Francisco Bay Area and nationwide. Consumer Action’s Audrey Perrott was in attendance.

“Fair Housing Advocates of Northern California provides a vital opportunity for advocates to have open forums to discuss racism, segregation and the racial wealth gap,” Perrott said. “Racism still persists in every institution in America. We must continue to work to provide increased economic opportunities and promote equal access to housing.”

The conference featured keynote addresses from Stephen Menendian, assistant director and director of research at the Haas Institute for a Fair and Inclusive Society at the University of California, Berkeley, and Lisa Rice, president and chief executive officer of the National Fair Housing Alliance (NFHA).

Menendian presented findings from the Haas Institute’s report Racial Segregation in the San Francisco Bay Area. The report reveals how segregation is embedded in American culture, even though America is growing in diversity. According to Menendian, 59 percent of black and white Americans would need to move into new neighborhoods to create integration in the U.S.

According to the report, segregation between white and Latino populations has risen dramatically since the 1970s, particularly in the San Francisco Bay Area, while segregation between white and Asian populations has also increased significantly since the 1980s. Black and white segregation and black and Latino segregation have decreased, however.

Menendian also discussed how the New Deal, Fair Housing Administration (FHA) and Veterans Administration (VA) programs were all designed to create wealth and homeownership for whites while marginalizing blacks and other people of color. Tens of millions of home mortgages were insured with federal subsidies—mortgages that were often denied to people of color. This phenomenon allowed whites to accrue wealth while others did not, and partly explains the wealth gap today. On average, white people now have $14 to every $1 black people have. This wealth is distributed through the system over time in different ways: Parents give money and gifts to their children, allowing them to put downpayments on homes or pay for college.

After Menendian summarized the overarching demographic data, Lisa Rice introduced the concept of “weaponized data” and how it impacts the underrepresented communities that advocates serve daily. Financial services and the housing industry often rely on computers, automated systems and algorithms to make choices about whom to offer home loans to and at what price, arguing that technology provides a better level of efficiency and that this is passed on to the consumer in lower costs.

The challenge, Rice said, is that the public, and even industry, believes that computer data is innocuous and that “computers are colorblind.” This is a dangerous notion, and, unfortunately, industries are building artificial intelligence (AI) systems and not asking the right questions about the data being fed into the system to “teach” the machines how to make decisions. Data inputs have the very real potential to cause and perpetuate bias. According to Rice, industry must consider where data is coming from, if it has been “scrubbed and cleaned” of existing errors and how it has been scrubbed and cleaned, before it is put into the system.

Rice pointed out that AI decision-making introduces a profound opportunity for the perpetuation of discrimination and inequalities at a massive level, particularly in the housing industry, as computers are now able to offer automated verification to process if a person is employed, their rental and banking information, their credit report and more. The data the computer has access to during the underwriting process determines how much “home” a consumer can buy and at what interest rate, which also impacts where they can buy.

Even seemingly innocuous data inputs can harm consumers. Rice provided the example of an address, which is one piece of data that exists in a computer system and is analyzed by AI during the underwriting process. An address is not just a fixed point on a map: Humans and computers (operating in accordance with the rules or algorithms that humans have designed for them) can know and/or infer a lot about a person based on an address. This includes the person’s income and whether they rent or own a home currently, their chance of graduating high school, if they have graduated from college, their credit score, how much wealth they’ve accumulated, and even their life expectancy and chance of contracting a deadly disease—all due in part to the highly racialized neighborhoods in which we live. Machines have been programmed to make inferences based on factors like whether an address is located in a neighborhood that is a food desert, a credit desert, an education desert, an area of economic growth or opportunity, or an area where police have a high level of engagement.

“It is important for stakeholders to understand the ramifications of segregation,” Perrott said. “Segregation is not just about groups of people living together by ethnic composition. It is also about a systemic lack of access to opportunity and resources, racial inequality, poor health outcomes and more.”

The conference concluded with a panel discussion on the racial wealth gap, remedies and reparations. Panelists included: Anne Price, president of the Insight Center for Community Economic Development; E.J. Toppin, a staff researcher at the Haas Institute for a Fair and Inclusive Society at UC Berkeley; and Christopher Elmendorf, a professor at the UC Davis School of Law.

Guide outlines new 2019-2020 California LifeLine income limits

Every June, the California LifeLine program, which provides subsidies to reduce the cost of telephone service for the state’s low-income households, adjusts its income eligibility limits. For the 2019-2020 program year, maximum qualifying incomes are increasing from $27,000 to $27,500 for one- or two-member households; from $31,300 to $31,900 for three-member households; and from $38,100 to $38,800 for four-member households. The income limits for larger households increased from $6,800 to $6,900 per each additional person over four in the home (add $6,900 per person to $38,800). Households can also qualify for the program based on enrollment in any one of more than a dozen public assistance programs.

Consumer Action updates its Connect to California LifeLine and Save! in late May each year to reflect the annual income adjustments and any other program changes going into effect. The guide provides consumers with details on the program’s service discounts, current eligibility requirements, the application process, and more, and is available for online reading or as a free PDF download in five languages—English, Spanish, Chinese, Korean and Vietnamese—from the Consumer Action website.

Consumer Action has been a staunch advocate for California LifeLine, actively educating consumers so that eligible households can take advantage of the program, and advocating for program protections and improvements.

Hotline Chronicles: Cut the middleman out of vital records purchases

Jody* from New Mexico contacted our hotline to complain about a company that charged her $47 for a “vital record application package.” The pricey package didn’t even include the vital record she was seeking, which she was told would cost an additional $35!

Vital records are important: Nowadays, for instance, motor vehicle departments and other businesses require official records with a raised, embossed seal, and do not accept photocopies. Consumers can obtain most birth, marriage and death records directly from the states, or from third parties that the states contract with to sell “official” copies. Unfortunately, Jody didn’t know this.

“I ordered a certified birth certificate for my husband from O.V.U.S. (Onlinevitalus) online because we lost his. After I provided a lot of his personal information and was charged $47, I received a reply saying that O.V.U.S. would be sending me a form to fill out and submit to the state with ‘my payment,’” Jody wrote. “This made me realize I had made a mistake, so I emailed them three times to ask what was up. But they didn’t answer, and they don’t have a phone number listed.”

We suggested that Jody dispute the charge with her bank or credit card depending on how she paid.

The firm’s website says: “O.V.U.S. (Onlinevitalus) charges $47 for its preparation package, which includes personalized instructions of how to request your vital record.” Apparently the state fee is paid separately with the application, although this is not clear in the way the site explains its services, which is how Jody was understandably confused.

Jody was lured into purchasing something she didn’t want or need, and to make matters worse, O.V.U.S. ignored her follow-up questions after her payment went through.

As it turns out, there are many companies that show up in a web search for state vital records, offering to help record seekers fill out an application only for a hefty sum. And the companies are far removed from the actual record keepers. When we ran a Google search, the first hit we got was Vital Records Now, which, in the fine print, states that it is “completely independent of any Vital Records Office or any other U.S. governing bodies.” Another site, Vital Records Online, offers “premium services, which allow for either an electronic download or a physical delivery of completely filled and signed application materials, and crucial submission instructions to the address of choice.” The site goes on to state that “after following the instructions provided by Vital Records Online, the applicant will place the completed application documents along with a check covering their state's application fee and a notarized letter [if required] into a mailing envelope, and mail the items to their state Health Department office.” Gee, thanks!

If you don’t feel like paying to have a completely unrelated third party fill out an application that you can easily fill out yourself, avoid the middleman by going directly to your applicable state health department. A list with links to each state can be found online at Healthfinder.gov. Once on the state site, look for information about applying for copies of birth, marriage or death records. If the department or contact is not obvious, call and ask how to order vital records. When you order vital records from a state, make sure to carefully review the identification requirements and whether you are eligible to order records for another person (for example, if you are an executor or a parent).

Note that states do charge fees for these records, and may offer, for an additional fee, to “expedite” your records request. (You’d have to pay these fees anyway, even if you used a middleman who charged you even more.)

Jody is not an isolated case. The Better Business Bureau (BBB) offers an article on “How to avoid birth certificate scams,” which advises consumers to:

• Go through official channels.
• Be wary of third-party sites: Non-governmental websites that promise to retrieve your birth certificate or other official documents for a fee are often scams.
• Guard your personal information carefully. If you need to request a document, be wary about submitting sensitive personal information online. Double check to make sure that you are on an official government website with a secure connection before submitting personal details.

*Not this consumer’s real name

No April fools to be found at last month’s Financial Education Week

Financial Education Week, or Semana Financiera, kicked off on April 1 at the Mexican Consulate’s office in San Francisco. Consumer Action participated in the event, co-organized by the consulate and Mission Asset Fund (MAF). (Consumer Action network members might recognize MAF as a fellow network member whose credit building tools were showcased at one of our national conferences and written about in Consumer Action News.)

Consumer Action Community Outreach Manager Nelson Santiago staffed an exhibit table at the consulate featuring some of Consumer Action’s most popular and newest publications, including those related to disaster insurance and Federal Emergency Management Agency (FEMA) assistance, micro business, banking and credit, and credit freezes. Santiago also made several short presentations to consulate visitors throughout the day.

“There were so many organizations providing valuable information for consumers on the exhibitor floor!” Santiago exclaimed. “I brought back much to share with our INSIDER readers, and will incorporate these excellent new resources into my regular outreach and education work.” (Santiago travels the country educating community-based organizations and service providers on how to best help their low-income and limited-English-speaking clients navigate the marketplace and improve their finances.)

One exhibitor, the Social Security Administration (SSA), alerted attendees to a rise in scam callers purporting to be from the SSA. The scammers have been asking consumers to reveal their Social Security numbers, bank account information and other personal information under the pretext of trying to “fix” issues with the consumers’ Social Security benefits. The scammers may claim the consumer is “in trouble” or that there is “suspicious” activity on their account. An SSA representative explained that consumers are sometimes lulled into trusting the scammer when the scammer provides a so-called “employee ID number.” The representative explained to Santiago that SSA never makes these types of calls, and its employees don’t have ID numbers.

A representative from Wells Fargo was among the exhibitors. In discussing some of the bank’s financial education resources, including its Hands on Banking curriculum, the rep explained to Santiago that the bank continues to offer secured credit cards to consumers regardless of whether they have Social Security numbers or Individual Taxpayer Identification Numbers (ITINs).

Visitors to the consulate also received information on starting and running a small business. One local provider, the Small Business Administration (SBA)-funded Renaissance Entrepreneurship Center, delivered information about small business classes offered throughout the Bay Area on topics ranging from writing a general business plan to running financial projections for a food-based business. Jon De Andrés Garay, a Renaissance programs fellow, explained that what holds most people back when they set out to start a business is a lack of information and a lack of self-confidence—an issue Renaissance regularly helps clients overcome.

Noah Brod, an SBA economic development specialist, also participated in the consulate event. He reminded Santiago that May 6-11 is San Francisco Small Business Week. The event provides attendees an opportunity to participate in workshops and network with one another. Brod noted that the Bay Area has a significant number of Mexican-owned businesses and that many who want to join the ranks of entrepreneurs contact the consulate for guidance in creating start-ups. Brod recommended Bay Area entrepreneurs (at all levels of experience) visit SBA.gov for local resources.

In addition, Consumer Action’s own, newly-revised, Micro Business: Preparing for success resource is available for download and bulk order in five languages (English, Korean, Vietnamese, Chinese and Spanish). Upon viewing the resource, Brod deemed it “accessible, well designed and clear.” Check it out!

Coalition Efforts: Deceptive schools and dangerous emissions

PROTECT students from predatory for-profit schools. Consumer Action and 55 other advocacy organizations signed a letter in support of the PROTECT Students Act of 2019, which would safeguard students, including vulnerable veterans and servicemembers, from predatory for-profit colleges and ensure that higher education meets the needs of hardworking students. The legislation is timelier than ever, as the U.S. Department of Education under the current administration continues to systematically dismantle existing regulations protecting students from the sham schools. Learn more.

Arbitration in America hurts consumers. In advance of the Senate Judiciary Committee hearing entitled “Arbitration in America,” advocates warn that arbitration is a rigged system that leaves little recourse for wronged employees and consumers. When consumers sign contracts for cell phones, credit cards or many other products and services, they usually sign away their future right to justice through forced arbitration clauses in the fine print. These clauses mandate that legal disagreements that arise between the consumer and company be “resolved” not before a judge and jury, but in a private forum. The disagreements must be settled by an arbitrator, who frequently rules in favor of the company, no matter how much it has wronged the consumer/employee. Consumer Action supports the Forced Arbitration Injustice Repeal (FAIR) Act to end the practice. Learn more.

Is Mercedes-Benz cheating us out of clean air? Mercedes-Benz stands accused of installing cheater devices in its diesel vehicles to evade U.S. emissions laws at the expense of consumers and the environment. The devices have resulted in the automaker’s BlueTEC diesel vehicles spewing dangerously high levels of nitrogen oxide emissions into the air (far exceeding what is legal under U.S. federal and state regulations). Consumer Action joined advocates in urging Congress to help hold Mercedes accountable. Learn more.

CFPB Watch: A disconcerting new direction, counting up consumer complaints

Kathy Kraninger gave her first speech as director of the Consumer Financial Protection Bureau (CFPB) at the Bipartisan Policy Center in Washington, D.C., in April. We were alarmed to hear Kraninger voice an overall vision for the CFPB that appeared antithetical to its core function of “enforcing federal consumer financial laws.” Kraninger stated that she was concerned with the CFPBs’ role in creating a “regulatory burden” for the companies under its supervision. She conveyed her intent to focus the Bureau on “prevention of harm” through consumer education, while limiting its powerful examination and enforcement tools to “purposeful” uses.

“Given Director Kraninger’s announced focus on education over consumer protection, consumer advocates are determined to educate the new director about the need for robust Bureau oversight and enforcement to hold financial companies accountable for harmful practices,” Consumer Action’s Deputy Director for National Priorities Ruth Susswein said.

To reinforce her focus on financial education, Kraninger explained the Bureau’s Start Small, Save Up campaign to urge Americans to build emergency savings.

At the April meeting, Kraninger also laid out how, in the weeks ahead, the Bureau will propose a rule affecting debt collectors. The rule will address:

• Limiting the number of debt collection calls consumers can receive each week;
• Collectors’ right to contact consumers by email and text message; and
• Collectors’ duty to provide better information for consumers to identify debts.

In a recent phone meeting with consumer advocates, Kraninger recounted rules that the CFPB is working on revising or creating. These include:

• The payday loan rule (announced under the last administration), which the current Bureau has proposed delaying and gutting. Kraninger’s CFPB is proposing to eliminate the rule’s “ability to repay” requirement, the commonsense “backbone” of the rule that would compel lenders to evaluate whether borrowers can afford to pay back high-cost loans (before they are issued.)
• A rule that Congress has told the CFPB to create to regulate controversial PACE (Property Assessed Clean Energy) loans, after homeowners have reported widespread harm due to the loans’ lax underwriting standards. Congress has directed the agency to incorporate an “ability to repay” standard.

CFPB’s annual report outlines consumer complaints nationwide

The Consumer Bureau’s annual report on consumer complaints reveals that the public’s top complaints haven’t changed: Credit reporting is again number one, followed by debt collection.

Nearly 83 percent of the credit reporting complaints revolved around incorrect information listed in consumers’ credit files. In 50 percent of these complaints, consumers reported that the erroneous information listed in their credit report belonged to someone else. Nearly a quarter of the time (23%) consumers reported problems with the credit bureaus’ error investigations. Consumers added that, in the vast majority of these complaints (around three quarters), the credit bureaus did not end up fixing the errors in their reports.

Meanwhile, close to half (44%) of the consumer debt collection complaints were related to the collection of debts that were not owed by the individuals being sought. Consumers also complained that collection notices did not provide enough information to recognize the debts they were accused of owing; collections were based on debts they had already paid or had discharged in bankruptcy; and many of the debts incurred were due to identity theft.

Mortgage and credit card complaints tied for the third-highest category in the CFPB’s annual complaints report.

Consumers contacted the Bureau about mortgage payments that were not recorded after a change in mortgage servicer; inexplicably higher escrow account debt and undeserved mortgage-related fees (such as late fees); unjustified loan modification denials; and repeated servicer requests for documents already provided by the borrower.

The overall number of debt collection and mortgage complaints decreased from previous years. The Bureau also tracks complaints about student loans, money transfers, prepaid cards, personal and auto loans, credit repair, checking accounts, payday loans and more.

The report revealed how different populations are impacted by different financial issues; servicemembers’ top complaints pertained to credit reports (38%), while older consumers most frequently reported debt collection concerns (23%).

According to the report, consumers with prepaid card complaints and checking/savings account disputes saw the most financial relief (21% of the time), while those with mortgages and payday loan problems saw the least (3% of the time). Overall, consumers received non-monetary relief (such as a corrected credit report or an end to unwanted debt collection calls) only 12 percent of the time.

Three-quarters of the time consumers received an explanation from the financial company as to why they did not resolve the consumer’s complaint. These explanations ranged from detailing how consumers did not meet a payment deadline, to a standard written explanation of a credit bureau’s dispute process.

While individual resolutions remain exceedingly low, Consumer Action urges consumers to continue to file complaints (and urges the Bureau to keep the complaints public) to help warn others about corporate malfeasance. The complaints also assist the Bureau in investigating illegal behavior at companies under its purview.

Class Action Database: Ross pays for pumping up list prices

A class action settlement involving automaker Subaru and its defective engine bearings was among 11 new settlements added to the Consumer Action Class Action Database during April.

Of note this month is the class action settlement Jacobo, et al., v. Ross Stores, Inc.

The plaintiffs filed a class action alleging that the discount department store Ross misleadingly labeled the prices of its merchandise. Ross’s sale items would feature “lower” listed prices positioned next to “Compare At” higher retail prices. Plaintiffs claim that the higher retail prices were designed to make consumers believe that their Ross purchases were bargains, when, in fact, they were not. For example, plaintiffs purchased a pair of women’s Forever Link Patricia wedge pump shoes for Ross’s sale price of $17.99 (listed next to its “Compare At” price of $65). Plaintiffs allege that other retailers were not selling the shoes at this inflated $65 price (after finding a brick-and-mortar Sears store that sold the shoes for between $19.79 and $21.99, and an Amazon.com listing between $14.60 and $28.99).

Ross denied the allegations but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

You are part of the class if you purchased items with a Ross “Compare At” price tag between June 20, 2011, and now and did not receive a credit or refund. The $4.8 million settlement will provide merchandise credit to class members for use in any Ross store.

The claims deadline is May 31, 2019.

About Consumer Action

Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.

Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and seven topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.

Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,000 community-based organizations. Outreach services include training and free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.

Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulation and legislation by taking positions on dozens of bills at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.