Saturday, July 31, 2010

Nightmare arbitration story

This video tells the story of a man who purchased a car that, he realized later, had flood damage and is unsafe to drive. Because of the forced arbitration clause buried in his contract, he's been waiting three years for justice.

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Friday, July 30, 2010

Direct deposit of Social Security checks leaves seniors vulnerable

NCLC has released a new report: "Runaway Bandwagon: How the Government's Push for Direct Deposit of Social Security Exposes Seniors to Predatory Bank Loans," available at http://www.nclc.org/images/pdf/pr-reports/runaway-bandwagon.pdf.

It was also featured in a Wall Street Journal article, "Treasury Draws Fire on Paperless Social Security Checks," available here.

The report looks at how Treasury's push to require all recipients of Social Security and other benefits to receive payments by direct deposit by 2013 will expose many seniors to predatory payday loans made by banks.

The focus is on account advance products (aka "bank payday loans") – which can have APRs as high as 1,800% – that some banks offer to customers with checking accounts or prepaid debit cards that get regular direct deposits of benefits or other sources of income. Banks help themselves to funds directly from customers’ accounts to repay loan principal and fees, so that these loans closely resemble both fee-based overdraft programs and typical payday loans.

The report calls on Treasury to take responsibility for ensuring that all accounts into which benefits are direct deposited are safe so that the direct deposit push doesn't result in seniors and other beneficiaries being bled of vital subsistence resources.

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Senate panel approves Bloom Raskin for Fed board

Sarah Bloom Raskin, who was named MCRC's Consumer Advocate of the Year in 2009, moved a step closer to joining the Federal Reserve Board.

http://www.baltimoresun.com/business/sns-ap-us-fed-nominees,0,357784.story

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Thursday, July 29, 2010

Foreclosure "help" tops list of consumer complaints

New York Times: The fastest-growing consumer complaint in 2009 was about bogus offers to help save homes from foreclosure, according to a new survey of state and local consumer agencies released Tuesday.

The 2009 Consumer Complaint Survey Report was conducted by the Consumer Federation of America, the National Association of Consumer Agency Administrators and the North American Consumer Protection Investigators and is their 15th report on top consumer complaints. The latest results are based on a survey of 33 state, county, and city agencies from 18 states on the most common complaints received from January 2009 through December 2009.

http://bucks.blogs.nytimes.com/2010/07/27/top-consumer-complaints-in-2009/?nl&emc=aua1

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FTC hands a consumers a huge victory

In a big victory for consumers, the Federal Trade Commission on Thursday approved new telemarketing rules that would prohibit debt-relief firms who use telephone sales from charging clients advance fees.

"Banning advance fees is huge because currently many debt settlement firms seem to have a business plan based on the notion of charging incredibly high fees but doing no work. That means vulnerable consumers are subsidizing this lucrative industry," said MCRC Executive Director Marceline White. "With advance fees, they basically take the money and run. By the time the consumers figure out that the so-called debt-relief company isn't actually helping them, those fees have already been paid and are nearly impossible to recoup."

The FTC ruling also requires better disclosure about what consumers can reasonably expect from the debt-relief firms, and it sets guidelines for dealing with the "dedicated accounts" in which consumers save their money in hopes of one day paying off their creditors. To read the FTC's release on the ruling, click here.

MCRC and one dozen other local and national consumer groups had urged FTC officials to tighten the rules that govern debt settlement telemarketing calls. To read their letter, click here.

Debt settlement is a system that promises to reduce and pay off consumers' debts, but instead often leaves them in worse shape than before. Many debt settlement companies collect huge upfront fees, encourage consumers to stop paying their creditors, and typically perform no real service but still walk away with thousands of dollars in profit. The consumer is left with less money, a worse credit score, angrier creditors, and dwindling options. Consumer complaints to the Maryland Attorney General's Office about debt settlement firms have risen 144 percent over the past three years.

MCRC strongly supported legislation in the Maryland General Assembly last session (HB392 and SB701) that would have: limited the advance fees that debt settlement firms could charge; required the firms to actually reduce a consumer's debt before collecting the bulk of their fees; and limited the amount that firms could charge. Lawmakers put aside making a decision on the reforms and instead voted to create a working group to study the issue, to which MCRC was named.

"This ruling by the FTC shows that debt settlement needs to be reformed," White said. "While this development is extremely positive, there is more that can and should be done at the state level to protect Marylanders."

To read MCRC's report, Debt Settlement in Maryland: Compounding Problems, Deepening Debt, or the executive summary, click here.

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MCRC executive director will be on MPT tonight


MCRC Executive Director Marceline White will be on Your Money & Business tonight at 7:30 discussing the Consumer Protection Act. Also appearing will be Kathleen Murphy of the Maryland Bankers Association. Not surprisingly, the two had different takes on the reform measures.

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Wednesday, July 28, 2010

National Food Policy Conference is Sept. 22-23

For 33 years, the National Food Policy Conference has been a Washington institution and a unique collaboration between consumer advocates, the food industry and government. It is a key national gathering for those interested in agriculture, food and nutrition policy. The conference, September 22 and 23 in Washington, D.C., is coordinated by the Consumer Federation of America, in cooperation with the Grocery Manufacturers Association.

This year’s conference will focus on the important issue of child nutrition and health. The conference will explore how to assure sustainability for these programs, examine food labeling issues, and discuss the application of the new Dietary Guidelines. Speakers and panelists will examine changes to the Supplemental Nutrition Assistance Program; discuss how to assure healthy environments for low-income children; explore the challenges of making healthier food products; and look at how best to incorporate evaluation into program development. For more info, click here.

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Tuesday, July 27, 2010

FTC settles with deceptive mortgage modifiers

Eight marketers are banned from selling mortgage modification or foreclosure relief services under settlements with the Federal Trade Commission. The FTC alleged that the marketers charged homeowners up-front fees and falsely claimed they could get their mortgage loans modified or prevent foreclosure on their homes. The settlements in three separate actions are part of the FTC's ongoing efforts against scams that target financially distressed consumers.

http://ftc.gov/opa/2010/07/lmshope.shtm

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Thursday, July 22, 2010

Automakers said to be undermining safety legislation

New York Times: A coalition of consumer groups says automakers are trying to undermine a motor vehicle safety bill needed to give the National Highway Traffic Safety Administration the power and money the agency requires to better protect consumers.
http://wheels.blogs.nytimes.com/2010/07/21/consumer-groups-criticize-automakers-over-safety-legislation/

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Forced arbitration to be addressed in Consumer Protection Act

Public Citizen: The Bureau then has the authority, by rulemaking, to "prohibit or impose conditions or limitations on the use of" mandatory arbitration clauses, consistent with the study. This provision had its origins in the Obama Administration's initial white paper on financial reform and, amazingly, it stayed in the legislation all the way. Read more here.

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Wednesday, July 21, 2010

Eric Friedman Appointed to State Collection Agency Licensing Board

MCRC board member Eric Friedman, who is director of Montgomery County’s Office of Consumer Protection, has been appointed by Governor Martin O’Malley to serve as a consumer representative on Maryland’s Collection Agency Licensing Board within the Department of Labor, Licensing and Regulation, Division of Financial Regulation.

“This appointment provides Montgomery County’s Office of Consumer Protection with a great opportunity to use information from individual complaints to address systemic changes in the collection agency industry,” said Friedman. “This will enable our office to better collaborate with Maryland’s Department of Labor, Licensing, and Regulation in serving as a catalyst for change.”

The board is comprised of two consumer representatives and two industry representatives. The Commissioner of Financial Regulation, Sarah Bloom Raskin, currently serves as chairperson. The board has statutory responsibility for the licensing of collection agencies operating in Maryland and addresses written complaints, conducts hearings on alleged violations, mediates disputes and issues orders requiring licensees to correct violations. The board informs both licensees and the public about abusive debt collection practices.

Friedman will serve a four-year term that began on July 1, 2010.

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Maryland Office of People’s Counsel revamps website

The Maryland Office of People’s Counsel has a new consumer-friendly website. While at the same address (www.opc.state.md.us), it has been totally re-designed. Consumers, community agencies and organizations will be able to find information on utility rates and services, consumer protections for utility customers, assistance for customers struggling to pay utility bills, and OPC’s testimony before the Public Service Commission and Maryland Legislature.

The new website also features in-depth information on current activities and issues before the MD Public Service Commission and federal agencies. New features such as “hot topics” and “public hearings” serve as quick reference to pending activities of the office.

“We have re-designed this website for easy access to useful and timely information on utility issues,” said Maryland People’s Counsel Paula Carmody. “We hope that Maryland consumers, and others interested in issues affecting utility consumers, will visit us and explore the new website.”

OPC recommends that you “register” on the home page if you would like to receive email notice of OPC’s press releases and alerts.

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President Obama signs Consumer Protection Act

New York Times: The law subjects more financial companies to federal oversight, regulates many derivatives contracts and creates a panel to detect risks as well as a consumer protection regulator. A number of the details have been left for regulators to work out, inevitably setting off complicated tangles down the road that could last for years. Read full story here.

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Thursday, July 15, 2010

Financial reforms about to become law

New York Times: A broad overhaul of the nation’s financial regulatory system, intended to address the causes of the 2008 economic crisis and rewrite the rules for a more complex — and mistrustful — era on Wall Street, cleared one last procedural hurdle in the Senate on Thursday as it headed for final Congressional approval later in the day.
http://www.nytimes.com/2010/07/16/business/16regulate.html?hp

Story in Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/15/AR2010071500464.html?hpid%3Dtopnews&sub=AR

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Monday, July 12, 2010

FTC says debt collection system is "broken"

MCRC is very happy to see that the FTC is recommending arbitration reforms. We worked for local mandatory-arbitration reform in the General Assembly this year but the legislation died in the Senate Finance Committee.

"A new Federal Trade Commission report concludes that the system for resolving consumer debt collection disputes is broken, and recommends significant litigation and arbitration reforms to improve efficiency and fairness to consumers.

The report, “Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration,” reflects information gathered at roundtable discussions the FTC held throughout the country in 2009, as well as public comments and the FTC’s experience in debt collection matters. The roundtables followed a February 2009 report that identified some concerns with debt collection litigation and arbitration, but concluded that more information was needed about certain debt collection litigation and arbitration practices before further recommendations could be made.

The FTC’s 2009 report found that debt collection litigation raised concerns about collectors failing to properly notify consumers of suits they have filed, collectors filing suits based on insufficient evidence of indebtedness, courts frequently granting default judgments against consumers who do not appear or defend themselves, collectors seeking to recover on debts beyond the statute of limitations, and banks freezing funds in bank accounts that are exempt from garnishment by law." Read more here.

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Sunday, July 11, 2010

Red, White, and Scammed

Parade magazine: The used BMW was pretty, its silver paint gleaming, and the $17,000 price was reasonable. So, in March 2007, U.S. Army Spc. Diann Traina signed a contract, took out a loan, and traded in her pickup to buy the sedan at a dealership in Fayetteville, N.C., right outside the gates of Fort Bragg.

What she didn’t know was that the dealer had taken out a loan against his inventory and didn’t actually own the vehicle he sold her. Spc. Traina was never able to get the title to the BMW, so when the dealership shut down soon afterward, she was stuck—without a car and with an $11,000 debt. In the meantime, she had been deployed to Iraq, leaving her helpless to do much about it.

http://www.parade.com/news/2010/07/11-red-white-and-scammed.html

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MSNBC shines light on debt settlement industry

Here is a great piece from MSNBC that shows just how deceptive debt settlement firms will be in order to get consumers' money. MCRC is working hard to regulate this industry to protect Marylanders.

Visit msnbc.com for breaking news, world news, and news about the economy

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NCLC's Consumer Rights Litigation Conference in November

This year’s 19th Annual Consumer Rights Litigation Conference will take place in NCLC’s hometown, Boston, November 11-14, 2010.

You don’t want to miss the conference’s cutting edge courses that will strengthen your cases, sharpen your legal strategies, and improve your results for your consumer clients. In addition to a full lineup of breakout sessions, plenaries, and the Consumer Class Action Symposium, the conference will feature a number of Intensive sessions that provide timely, in depth information on mortgage litigation and foreclosure defense, consumer bankruptcy, manufactured homes, consumer issues affecting domestic violence survivors, and debt collection suits. NCLC is also hosting an Open House at our offices on Friday, November 12th. For details, click here.

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Tuesday, July 6, 2010

Fair Housing seminar this Saturday

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Thursday, July 1, 2010

Groups opposed safe harbor for advance fees

The national and local groups submitting this letter are strong supporters of the FTC’s proposed advance fee ban amendment to the Telephone Sales Rule. We submit this additional comment to share with the Commission the reasons for our strong opposition to The Association Settlement Companies’ (TASC) proposal to undermine the advance fee ban with a safe harbor that would allow the use of advance fees as long as another option is also offered to the consumer.

We oppose the addition of any safe harbor that would continue to permit the charging of advance fees for debt relief services, including debt settlement. The reasons for our opposition include:

1. Safe harbors should be used rarely, and only to encourage positive behavior. A safe harbor that immunizes the charging of advance fees cannot meet that standard.

2. The experience of the GAO mystery shoppers and others illustrates the risk that debt settlement employees will steer consumers toward advance fees if they are a permitted “option.”

3. The very different base amounts on which a percentage advance fee and a percentage settlement fee would be calculated (whole debt vs. the smaller savings amount) would make comparison of percentage fees highly misleading.

4. A choice for a harmful fee approach would in no way ameliorate the harms from advance fees.

5. Savings-based-only fees are fair to any segment of the debt relief industry that does in fact reduce consumer debt.

Read more here.

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Mandatory arbitration takes center stage at Kagen hearings

Sen. Al Franken: "I want to discuss something that is denying more and more working Americans that precious day in court, that fair shake, and that's mandatory arbitration. Now, arbitration has its place. I'm talking about mandatory arbitration. Chances are if you have a cell phone or credit card or if you work, you're likely to have signed a contract with a mandatory arbitration clause. These clauses basically say if we violate your rights, you can't take us to court. You have to take it to an arbitrator. But then the fine print essentially says an arbitrator that we pay who depends on us for work and who makes decisions in secret. So a lot of people are denying their opportunity to come before the court." Read more here.

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