Friday, April 23, 2010

BaltSun: Legislators offer consumers a mixed bag

Liz Kay reports: Maryland residents gained a few more protections against predatory financial practices, such as refund anticipation loans and foreclosure during the 2010 General Assembly session.

But legislators punted on other issues. For instance, they decided to study whether to regulate debt settlement companies and revisit the issue during the next session — leaving customers at risk in the meantime, said Marceline White, executive director of the Maryland Consumer Rights Coalition.

Read more here.


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Debt-settlement firms misled consumers, GAO report says

Ylan Mui reports: A government investigation into the burgeoning debt-settlement industry has found that many firms misled consumers by claiming to be affiliated with federal stimulus programs and exaggerating their ability to reduce consumers' loans. Read full article here. And you can read MCRC's report on debt settlement here.


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Wednesday, April 21, 2010

Consumer Rights Coalition? Not so much

The payday lending industry -- the people who argue that 600%-interest-rate loans for poor people are a good idea -- are behind a new group called the Consumer Rights Coalition. There's a maddeningly fascinating piece on The Huffington Post today about the group writing an op-ed in The Hill without anyone disclosing who's behind the group.
It's an open assault on the very idea of consumer protection regulation in finance, but before I go after the substance of the argument, I want to talk about who is making the argument. The post's author is a woman named Gerri Guzman, who heads an organization called the Consumer Rights Coalition, which boasts of having 115,000 concerned members who want to ensure access to "all forms of credit." Neither Guzman nor The Hill disclose the source of the CRC's funding. The CRC is a fake consumer group funded by the financial industry.
This is truly outrageous.


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Tuesday, April 20, 2010

Del. Sue Hecht retiring

Del. Hecht announced yesterday that she will retire at the end of her term. Hecht has been a great advocate for consumers and in 2009 was named MCRC's Legislator of the Year.

Read more in the Frederick News Post.


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Monday, April 19, 2010

Free advice before siginging that mortgage

Diane Cipollone of Civil Justice was on WYPR this morning discussing a program that gives consumers free legal advice before buying a home or doing a home refinance. Civil Justice executive director, Phillip Robinson, is on MCRC's board of directors.

Civil Justice is piloting a new statewide program, the Maryland Mortgage Fraud Prevention Project (MFP), which aims to help prevent mortgage fraud by ensuring Maryland homebuyers are signing documents in line with the type of loan they expect. To ensure transactions are in the best interest of homeowners and lenders, first-time homebuyers and those seeking mortgage refinancing are encouraged to seek legal advice prior to signing their purchase contracts and loan documents. By providing homeowners with the access to legal review services prior to signing their mortgage documents, homebuyers can avoid obtaining a mortgage that could place them at risk of foreclosure.


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Sunday, April 18, 2010

MCRC's General Assembly Roundup

Lawmakers took several steps forward in protecting consumers from predatory financial products and mitigating foreclosures. However, the General Assembly stalled on several fronts, including making auto insurance more attainable for low-income and working families, regulating debt settlement, and ensuring affordable utility rates for families that need assistance. Maryland legislators also failed to take steps to increase consumer protections and provide needed enforcement measures. Read more:


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Friday, April 16, 2010

MCRC legislative priorities featured in BBJ

Gary Haber reports: In a General Assembly session that was billed as being all about “jobs, jobs, jobs,” Maryland consumers scored some major victories.

Consumers won the right to demand mediation in foreclosure cases and get greater disclosure before taking out a tax-refund anticipation loan. Lawmakers also tightened restrictions on payday lenders, another priority for consumer groups.


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Thursday, April 15, 2010

Obama Administration Seeks Public Input on Reform of the Housing Finance System

The Obama Administration released questions for public comment on the future of the housing finance system, including Fannie Mae and Freddie Mac, and the overall role of the federal government in housing policy. The questions have been designed to generate input from a wide variety of constituents, including market participants, industry groups, academic experts, and consumer and community organizations. The questions will also be published in a Federal Register notice requesting public comments, and information on the process for submitting comments will be included in that notice.

"A well-functioning housing finance system is critical to the long term stability of the housing market," said Treasury Secretary Tim Geithner. "Hearing from a wide variety of perspectives as we embark on this process is an important part of establishing a more stable and sound housing finance system for the American people."

Read more:


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Wednesday, April 14, 2010

One Last Place to Get Fleeced on a Mortgage

The New York Times has an interesting story today about consumers getting ripped off by firms that promise to help save their homes.


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Monday, April 12, 2010

Sun reports on payday lending legislation

Eileen Ambrose reports: Maryland is on the verge of once more making it harder for payday lenders — especially over the Internet — to offer high-priced loans in the state.

The General Assembly overwhelmingly approved legislation to prevent payday lenders from getting around Maryland's interest rate cap on small consumer loans. Gov. Martin O'Malley is expected to sign it into law, which would kick in Oct. 1.,0,2759475.story


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Paul Krugman: What's the matter with Geogia?

"As we look for ways to prevent future financial crises, many questions should be asked. Here’s one you may not have heard: What’s the matter with Georgia?

I’m not sure how many people know that Georgia leads the nation in bank failures, accounting for 37 of the 206 banks seized by the Federal Deposit Insurance Corporation since the beginning of 2008. These bank failures are a symptom of deeper problems: arguably, no other state has suffered as badly from banks gone wild."


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Thursday, April 8, 2010

Urge senators to support installment payments for car insurance

The Maryland General Assembly has approved higher auto insurance premiums, which will make it more expensive for low-income families to buy insurance. Today, the Senate Finance Committee will vote on SB 401, which would change the way low-income people pay for their insurance through the Maryland Auto Insurance Fund (MAIF). Currently, users must make a large lump-sum payment in order to get coverage. SB 401 would allow them to instead pay via monthly installments.

Now that lawmakers have made insurance more expensive, isn't it only fair to make it easier for low-income Marylanders to pay for that coverage?

Contact Members of the Senate Finance Committee today and ask them to vote in favor of SB 401!


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2010 Census Job Scams

Scam artists follow the headlines, and news about the tough job market gives them a ready supply of job seekers to swindle. The good news is that the federal government is hiring. In fact, the U.S. Census Bureau is recruiting hundreds of thousands of temporary, part-time 2010 census takers to work in their own communities.

But some fraud artists are making false statements to job seekers about the availability of census taker positions and other federal job opportunities, and improperly charging fees to assist job seekers in finding jobs. These scam artists advertise online and in the classified sections of newspapers, offering — for a fee — to help job hunters find and apply for federal jobs. Some fraudulent companies even try to confuse consumers by using names that sound official — like the “U.S. Agency for Career Advancement.”

Read more here:


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Wednesday, April 7, 2010

Illinois legislature moving toward strong regulation of debt settlement

The Illinois House has passed legislation that would cap advance fees on debt settlement at $50 and limit overall fees to 15% of the debt settled -- which is what legislation offered up this year in Maryland would also have done.

The Maryland House Economic Matters Committee will vote soon on whether the matter should be referred to a working group, of which MCRC would be a member. We urge consumers to tell their delegates to support the working group.


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Payday lending bill gets nod from lawmakers

Gary Haber of the Baltimore Business Journal reports: Legislation that would end a practice that opponents say allows payday lenders to bypass Maryland’s interest rate cap on short-term loans has been passed by both chambers of the General Assembly and now awaits Gov. Martin O’Malley’s signature. Read more: Md. lawmakers OK payday lending limits - Baltimore Business Journal

Closing the payday-lending loophole was one of MCRC's legislative priorities for 2010.


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Tuesday, April 6, 2010

Senate moves debt settlement bill to study phase

The Senate agreed by acclimation today to move SB 701 to an interim study phase. MCRC has been formally named to the study to represent consumers.

“While of course we would have preferred passage of a strong bill, MCRC is glad that the Senate recognizes the need to protect consumers and to pass meaningful regulations,” said MCRC Executive Director Marceline White. “We look forward to participating in the study and to helping bring a good bill forward in the next session. We are also hopeful that the FTC will issue new rules this spring that will address some of these important issues.”

The Federal Trade Commission is considering new rules that would, among other things, ban advance fees in debt settlement. For more information about the proposed FTC rules, go here:


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Consumer Protection Signs Settlement Agreement with Air Duct Cleaning Firm Regarding Deceptive Sales Practices

Kudos to MCRC board member Eric Friedman, director of OCP!

The Montgomery County Office of Consumer Protection (OCP) has entered into a settlement agreement with an air duct cleaning firm to provide refunds to consumers and make substantial changes to its advertising, services and contracts. OCP also notified or reached agreements with seven other duct cleaning firms and two direct mail advertising firms regarding deceptive advertising. Read more here.


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Monday, April 5, 2010

Help ensure that consumer-protection bills make it through the General Assembly

As the session winds down (or careens madly to a close), there are a number of consumer-related bills that may pass in the next few days. Please contact your Senator or Delegate to ensure that the Maryland General Assembly acts to prevent financial abuse and promote consumers’ interests this session.

1. HB 379-Transparency in Consumer Arbitration

Most corporations now require mandatory arbitration clauses, which means that the consumer waives the right to sue or participate in a class action suit. Instead, all legal claims are submitted to and decided by an arbitrator. It is difficult to buy a car, get insurance, or even receive medical treatment without signing a mandatory arbitration clause. Yet, consumers have virtually no information about the individuals and organizations that perform arbitrations. HB 379 will provide much needed sunshine into this murky process by providing consumers with information about the individuals and groups that perform arbitrations for companies. This will level the playing field by providing consumers with the same information about arbitration firms as corporation.

HB 379 has passed the House and will be heard in Senate Finance tomorrow.
Please contact members of the Senate Finance Committee and urge them to pass HB 379.

2. SB 701 Debt Settlement

The Senate Finance Committee has recommended that an interim working group be established to determine the best way to regulate the debt settlement industry. MCRC has been named to the study, along with the Attorney General's office, the Commissioner of Financial Regulation's office, and members of the debt settlement industry. The motion to establish the group was passed by Senate Finance.
The motion to establish a debt settlement working group will be voted on by the Senate tomorrow. Please contact your Senator and ask them to support this initiative!

3. SB 907/HB 1199 Motor Vehicles-Salvage-Standards and Requirements

The bill is an effort to improve the standards for total loss reporting for salvage vehicles. Unfortunately, as drafted the bills would have negative unintended consequences for consumers and law enforcement officials. The bill contains a number of loopholes that would inadvertently make it easier for Marylanders to unknowingly purchase a rebuilt wreck or flood-damaged car. Specifically, the bill requires insurance companies and other to disregard "nonstructural damage," which includes the cost of repairing electrical systems, braking, and steering. Consequently, flood-damaged cars that have electrical (but nonstructural) damages would not receive a salvage certificate and consumers would not know how badly the vehicle was damaged.

The bill is in the Senate Judicial Proceedings Committee.
MCRC is recommending a working group to close these loopholes and improve standards for total loss reporting. Please contact Senators on Judicial Proceedings and urge them to oppose SB 907/HB 1199 and instead support the establishment of a working group on the issue.


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Friday, April 2, 2010

Urge your senator to support HB 379 - transparency in arbitration

This important legislation regarding transparency in arbitration has already passed the House and will having a hearing April 6 in the Senate Finance Committee. Please tell your senator that you support this important legislation.

MCRC's testimony follows:
Within the past fifteen years, corporations have moved towards requiring consumers to submit all legal claims to mandatory arbitration rather than having their day in court. Mandatory arbitration means that the consumer waives the right to sue or participate in a class action suit. The practice of mandatory arbitration has grown in every segment of the marketplace-home sales contracts, insurance companies, car rental companies, and car dealers.

Many employers now require employees to submit all claims (wage and hour, civil rights) to binding arbitration. When seeking medical treatment, patients are often required to sign mandatory arbitration clauses before receiving care. HMOs as well as hospitals use these clauses.

In short, mandatory arbitration binds the ways in which consumers seek redress with their employer, their health care provider, and with vendors who sell goods and services. Yet, consumers have virtually no access to information about the arbitrations and the groups that perform arbitration.

This lack of information represents a market failure. Without access to information about arbitration firms and individual arbitrators, the consumer has no way to determine whether mandatory arbitration would resolve any claims in an unbiased manner.

Corporations often contract with private arbitration firms and individual arbitrators to settle disputes. Not surprisingly, the firms and individuals develop close working relationships. Using California data, Public Citizen found that 90 percent of cases were funneled to about two dozen arbitrators. Another study by Center for Responsible Lending showed that the heavy repeat arbitrators were much more likely to rule for the lender.

The relationship between arbitrators and the firms that hire them call into question the fundamental fairness of mandatory arbitration.

Providing consumers with basic information about arbitration firms and individuals helps to level the playing field a bit. Corporations that require mandatory arbitration have this information available to them. Consumers should have the access to the same information as firms including: how many consumer arbitrations has an arbitrator handled, how often did the company prevail, the consumer, what was the average award, how many class arbitrations allowed, etc.

HB 379 will provide much needed transparency for consumers regarding mandatory arbitration. It is an important initiative to rectify a market failure by providing needed information to consumers to inform their decisions.
MCRC urges the Committee to issue a favorable report on HB 379 to provide consumers with the important information they need to inform their decision-making.

Respectfully submitted, 

Marceline White
Executive Director, MCRC


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Urge Senate to Oppose Increased Auto Premiums for Low-Income Marylanders

MCRC partner Job Opportunities Task Force has an important message about a proposal to increase car-insurance premiums. We urge you to join us in contacting legislators to oppose this bill.

IMMEDIATE ACTION NEEDED: Urge Senate to Oppose Increased Auto Premiums for Low-Income Marylanders

HB 825 seeks to increase the amount of insurance that vehicle owners must carry to protect others in case of an accident. The result will be higher premiums for 200,000 Marylanders - many of whom are low-income individuals - who currently carry the minimum liability insurance required by law.

Policyholders could see increases ranging from $60 for vehicles on the lower Eastern Shore to $300 in Baltimore. Low-income Baltimore City residents already pay some of the highest rates in the state, and a rate hike of such magnitude would be unmanageable.

HB 825 will put auto insurance out of reach for vulnerable residents who are already struggling to make ends meet in this economy. For Maryland's low-wage workforce, the ability to drive is critical. Outcomes are better for workers who are able to drive, and therefore access the full labor market.

HB 825 passed the House with a 97-36 vote and was jointly assigned to the Senate Finance and Judicial Proceedings Committees. It has passed Finance with a 6-5 vote. A vote is expected Monday from Judicial Proceedings. Please contact members of the Judicial Proceedings Committee and urge them to OPPOSE HB 825.


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Should A Company's Hand-Picked Arbitrator Get to Decide Whether It's Fair for the Company to Hand Pick the Arbitrator?

Deepak Gupta writes: Even prominent arbitrators agree: Decisions about whether arbitration clauses in the consumer and employment context are unconscionable shouldn't be left entirely in the hands of arbitrators themselves. Instead, courts must be able to step in and prevent abuses.

That’s the upshot of an amicus brief filed yesterday by 23 nationally prominent professional arbitrators and arbitration scholars in Rent-A-Center v. Jackson, a case that will be argued before the U.S. Supreme Court on April 26. Read more here.


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