Released: February 01, 2024

 
 

Consumer Action INSIDER - February 2024

 

What people are saying

"Today's [Saving and Investing for Long-term Prosperity] workshop was very informative and I especially appreciated the portion that described how brokers are different from investment advisers and financial planners. I feel that having this workshop organized by Consumer Action gave me confidence that the information was honest and balanced." —Lena Robinson (view our webinars and videos on our YouTube channel)

Make 2024 the year to reduce annual energy costs

By Monica Steinisch

Since receiving an education and outreach grant from Pacific Gas and Electric (PG&E) in 2022, Consumer Action has been spreading the word about the company’s financial assistance programs and resources that help eligible PG&E customers save energy and money and better manage their utility expenses.

The start of a new year is the perfect opportunity to find out if you qualify for one or more of these programs:

Energy affordability is an issue for many households, particularly as extreme weather events become more frequent. Yet many consumers never apply for energy assistance programs because they are either unaware of them or think they do not qualify.

We encourage our readers in California's PG&E service area to visit PG&E’s program pages (linked above) or Consumer Action's energy savings project page for information and to start an application. 

For readers outside of PG&E's service area, we recommend that you ask your utility company about assistance programs, or that you get in touch with your state's utility regulator to learn about local energy assistance and energy discount programs.

Register for Tuesday's webinar on avoiding foreclosure!

By Monica Steinisch

There are just a few days left to register for Consumer Action’s Feb. 6 virtual train-the-trainer on avoiding foreclosure.

There are many reasons why homeowners might find themselves facing foreclosure—a job loss, an illness, major repairs with no emergency fund to tap, financial setbacks from the COVID-19 pandemic, etc. Whatever the reason, homeowners armed with information about the foreclosure process and where to get help stand the best chance of saving their homes.

The panel of speakers for our Helping Homeowners Avoid Foreclosure webinar will include Andrea Bopp Stark, senior attorney with the National Consumer Law Center (NCLC); Stacey Tutt, Homeowner Assistance Fund coordinator and senior staff attorney with the National Housing Law Project (NHLP); and Araceli Jimenez, a HUD-certified housing and financial counselor with Administration of Resources and Choices (ARC).

Among the topics they’ll cover are the mortgage delinquency and foreclosure process; foreclosure prevention options; ways to mitigate the negative consequences when keeping the home is not feasible or desirable; an update on currently available homeowner relief or assistance programs; how HUD-certified housing counselors can help; and when consumers should seek help from an attorney.

While the 90-minute webinar (10:00 PT/1:00 ET) will be geared to community-based organization staff, interested consumers are welcome to attend. Registration is open here. (Accredited Financial Counselors [AFC] can earn 1.5 CEUs for attending.)

Helping Homeowners Avoid Foreclosure is being presented through an AHEAD economic development grant from the Federal Home Loan Bank of San Francisco and member institution Desert Financial Credit Union. The grant supports Consumer Action’s ongoing work to expand homeownership access and security. (We first wrote about the grant in the July 2023 issue of Consumer Action INSIDER.)

Also part of the project is the publication of Housing Help: Next steps and resources when you’re at risk of foreclosure. This reader-friendly guide for struggling homeowners is available for free download in English and Spanish.

Do you qualify for the Earned Income Tax Credit? Find out here

By Monica Steinisch

The IRS began accepting tax returns this week, and, as we do every year, Consumer Action has updated Get Credit for Your Hard Work, our guide to the Earned Income Tax Credit (EITC). 

Widely considered the federal government’s most effective antipoverty program, the EITC puts money back into the pockets of qualifying low- and moderate-income workers when they file their tax returns. Qualifying workers can get the money even if they don’t owe any taxes—but they must file in order to claim the credit (even if their income is so low that they normally would not file a tax return). With EITC credits ranging from $600 for childless filers to $7,430 for filers with three or more children during the 2023 tax year, the 20% of eligible workers who fail to file and claim the credit are leaving a lot on the table.

Get Credit for Your Hard Work provides all the crucial information consumers need to file for the EITC, as well as resources for tax filing assistance. 

The publication for the 2023 tax year (tax returns due in April) is available for free download in English, Spanish, Chinese, Vietnamese and Korean here.

Community educators are encouraged to distribute the publication or the webpage link to their clients and community members. For reference, the average amount of EITC received nationwide in tax year 2022 was about $2,541—enough to make a real impact on workers’ financial wellbeing through the opportunity to increase their savings, reduce debt, or make needed home and auto repairs.

Coalition Efforts

By Monica Steinisch

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

Requiring "best interest" investment advice. Consumer Action joined dozens of other consumer advocacy organizations in a letter to the U.S. Department of Labor (DOL) strongly supporting the agency’s proposed rule that would strengthen protections for retirement investors who seek professional investment advice. Many investors turn to professional investment advisors looking for unbiased help making investment decisions for their retirement accounts. However, because of loopholes in the regulatory definition of who is considered a fiduciary under the Employee Retirement Income Security Act (ERISA) of 1974, some financial professionals may steer investors into products and services that maximize the advisor’s or firm’s profits but are not in the best interest of the investor. The DOL’s proposed rule would close the current regulatory loopholes by, among other things, applying fiduciary standards to rollover recommendations, advice given to employers who sponsor 401(k) plans, and insurance products and other investments not currently covered, and by prohibiting the use of fine print legal disclaimers that allow firms to avoid ERISA fiduciary status. Read the letter here.

The home insurance crisis. Consumer Action is one of the advocacy organizations endorsing the Incorporating National Support for Unprecedented Risks and Emergencies (INSURE) Act, introduced by Representative Adam Schiff (D-CA) as a step toward stabilizing the home insurance market while ensuring vulnerable communities are not excluded from coverage. Insurers have responded to higher loss risks and conditions in the reinsurance market by imposing huge premium hikes and refusing to write new policies for homeowners. The INSURE Act would create a federal catastrophic reinsurance program to insulate consumers from unrestrained cost increases by offering insurers a transparent, fairly priced public reinsurance alternative for the worst climate-driven catastrophes. The INSURE Act is a critical step toward ensuring that homeowners and communities have access to affordable and accessible coverage. Read the letter here.

CFPB Watch

By Ruth Susswein

The CFPB and 11 states have voided student loan borrowers’ income share agreements with the company Prehired.

The agencies charged Prehired and its affiliates with trapping students in illegal loans, making bogus job placement claims, and applying abusive debt collection tactics when borrowers couldn’t pay.

Prehired lured students into its training program for entry level software sales positions with promises of “six-figure salaries” and “a job guarantee,” according to the CFPB. The company provided students with financing for the cost of its 12-week online program through income share agreements—loans in which students receive education funding in exchange for a portion of their post-graduation salary. Prehired allegedly told students that they would “pay nothing” until they got a high-income job, but in fact buried the loan’s true terms, which required repayment even without employment.

Prehired misled students, hiding key loan details about the amount borrowed and the interest rate charged, and “tricked” consumers into converting their income share loan into a revised “settlement agreement” that required borrowers to make payments even if the “guaranteed” job never materialized, said the Bureau.

The CFPB and the states (California, Delaware, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, South Carolina, Virginia, Washington and Wisconsin) ordered Prehired to:

  • Cancel all outstanding income share loans (valued at $27 million);
  • Refund $4.2 million to student borrowers; and 
  • Permanently shutter its training program and cease offering income share loans.

The Consumer Bureau seeks to reduce inaccuracies in background check reports

The CFPB is working to protect renters and employees from losing out on housing and jobs with two new advisory opinions for companies providing tenant screening reports and employee background checks.

By law, consumer reporting bureaus must have “reasonable procedures” to ensure “maximum possible accuracy” of the information in the reports they sell. The CFPB says that means consumer reporting companies should:

  • Prevent expunged, sealed or duplicative information from appearing in a background report. 
  • Share disposition (outcome) information for legal actions. For example, if the report indicates that the person was arrested or that their landlord attempted to evict them, but the charges were dismissed or the landlord lost the eviction case, both pieces of information should be in the report. 

The Bureau’s second opinion says credit bureaus should disclose all information in a credit file when consumers request it—and in the format that users (those who purchase the reports) see it.

The Bureau is also advising that the original source and any third-party sources of information (such as LexisNexis) be disclosed to consumers to help them resolve errors.

CFPB proposes a 'haircut' for junk overdraft fees

In its new proposal, the CFPB is giving big banks an option: Either treat their hefty overdraft fees like a loan, or switch to charging just a nominal fee for the overdraft.

The CFPB is proposing to slash overdraft fees to a “reasonable” amount that would cover the cost of providing short-term credit. They are proposing a fee of $3, $6, $7 or $14 per overdraft.  Currently, most fees run $35 per overdraft.

While some big banks (Citi and Capital One) have (wisely) eliminated this junk fee, and others (Bank of America) have reduced it, many others continue to make much of their profit from financially strapped consumers who overdraw their accounts frequently. (Eighty percent of overdraft fees are paid for by 9% of customers, according to the CFPB.)

Banks began by offering overdraft services as a courtesy to their customers, but the fees they eventually started charging grew into a huge profit center, harming those who can least afford it. With the proposed rule, the Bureau is saying that if a bank or credit union wants to profit off of customers’ financial hardship, they can, but then our credit laws (such as the Truth in Lending Act) would apply. Under these laws, the banks, like other lenders, would have to disclose the cost of the overdraft fee as an annual percentage rate (APR)—just like credit card issuers do—and would have to evaluate the customer’s ability to repay the loan. 

The proposed overdraft rule would apply only to the largest financial institutions. 

The Bureau is seeking feedback. Read the agency’s overdraft rule fact sheet here. You can weigh in, by April 1, by sending an email to .(JavaScript must be enabled to view this email address) with Docket No. CFPB-2024-0002 in the subject line. 

The Bureau has also proposed to ban bounced check/non-sufficient funds (NSF) fees for payments that are instantly declined when a consumer taps, clicks or swipes. This ban would apply to debit card, ATM and some person-to-person (P2P) transactions.

Class Action Database: Verizon settlement calls for $100 million payment

By Monica Steinisch

Among recent settlements added to the Consumer Action Class Action Database is the $2 million Panera Bread Company agreed to pay to settle allegations that the company misrepresented its delivery fees and menu prices for delivery orders. If you placed an order for delivery on the Panera app and/or the Panera website between Oct. 1, 2020, and Aug. 31, 2021, you may be eligible for payment. The deadline for claims is June 10, 2024. 

Of note is the $100 million settlement Verizon will pay to settle allegations that the company’s representations and advertisements regarding the price of its post-paid wireless service plans were misleading because the prices did not include the "Administrative Charge," and that Verizon implemented, charged and increased the Administrative Charge in a deceptive and unfair manner. If you are a current or prior post-paid Verizon wireless customer and you were charged an “Administrative Charge” and/or an “Administrative and Telco Recovery Charge” between Jan. 1, 2016, and Nov. 8, 2023, you may be eligible for payment. 

Class members should have received a settlement notice by mail or email that contains a unique code for filing a claim. If you don’t have your notice, you can still submit a claim here. The deadline for claims is April 15, 2024. 

About Consumer Action

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. 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. 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 dissemination 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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