Thursday, March 31, 2011

Debt settlement bill in the General Assembly offers high fees, few protections

Read MCRC's Executive Director's op-ed in the Baltimore Sun about the debt settlement legislation pending in the Maryland General Assembly. Call your delegate and senator and ask them to oppose SB 741/HB 1022. Let us know if you contact them as well as any response you receive.,0,6025960.story


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Wednesday, March 30, 2011

Consumers win victories on home improvement, employment rights, extending consumer protections

With less than two weeks left in the legislative session, consumers are winning important victories on a number of important issues in Annapolis and many of the legislative goals we’ve been working  for look like they’re on track for success.
Both the House and the Senate have now passed legislation that promises to give homeowners better protection and better information when they renovate their homes. The bills to renew the Maryland Home Improvement Commission passed in each chamber (SB 236 and HB 362) would require the MHIC to provide consumers much more information about their rights in home improvement projects and establish a searchable database that will make it much easier for consumers to find the complaints lodged against contractors. The Senate’s bill also promises to study the use of performance bonds to give homeowners much better insurance against the damages they might incur in expensive renovation projects than the state’s Guaranty Fund now provides, a reform we’ve long supported, and we’re hopeful that such a study will be part of the final bill.
We’re also very pleased that both houses have passed bills that would ban the use of credit checks in most employment decisions. This legislation (SB132/HB87) will prevent many Marylanders from being denied a job as a result of credit woes unrelated to their job performance or employment record. That’s a big victory for many jobseekers struggling to find work during tough times that fulfills one of the Consumer Caucus’ most important goals.
The House and the Senate have also now approved bills that would extend the Consumer Protection Act to cover transactions in which merchants buy commodities like gold, cars and homes from consumers   (SB 75/HB128). That legislation would close a loophole in our consumer protection law and give new protection to the cash-strapped Marylanders  who need to sell such goods.
We’re also very glad that a House Bill that threatened to encourage predatory lending by allowing mortgage brokers to take new finder’s fees for originating loans has now been withdrawn. That bill (HB 1323) would have weakened  the Finder’s Fee Act, one of our state’s most important consumer protections, and allowed brokers to take new fees out of the pockets of homebuyers. 


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Friday, March 25, 2011

Bad Debt Settlement Bill Passes Senate Second Reader -Call NOW to Oppose

 The Senate passed SB 741 on second reader. The bill would regulate debt settlement firms in Maryland (SB 741) but as amended, the bill provides virtually no consumer protections. Senate Bill 741 was intended to cap fees for debt settlement companies and regulate the industry in Maryland to provide much stronger protections for financially distressed consumers who turn to debt settlement companies for relief. The original bill called for debt settlement firms to collect no more than 30 percent of what they save consumers in fees. This “savings” model provides incentives for the settlement firms to settle debts quickly and efficiently, because companies are paid only when the debt is settled and on the basis of how much they save consumers.  

The Senate Finance Committee passed out a bill based on industry concerns which instead caps fees at 25% of the total debt a consumer enrolls with a settlement firm. This cap would result in much higher fees for consumers that would likely erase any savings consumers might realize. This fee is higher than any limit proposed by the industry. This model also provides perverse incentives -- it rewards debt settlement firms for talking consumers into enrolling their debts, whether or not they succeed in settling those debts.  

CALL YOUR SENATOR NOW AND ASK HIM OR HER TO OPPOSE SB 741.   To contact or find your Senator go here:


Debt settlement companies have grown in tandem with rising consumer debt as working families have struggled to make ends meet amid stagnant wages and rising costs for health care, education and housing.   Debt settlement firms promise to settle consumers’ debts by having consumers save enough money in a separate account to make a “lump sum” settlement with a creditor. They often encourage consumers to quit paying their debts while they pay into that separate account. Many consumers have then found that the settlement firms have NOT reduced their debts and have had to face collection activity and bankruptcy after paying fees to a debt settlement firm.  New federal regulations mean that a debt settlement firm cannot charge a consumer fees until a debt is settled. Legislation introduced this year in Maryland (HB 1022/SB 741) would cap these fees for consumers but as the Senate bill now stands it would permit fees so high that it would do little to protect consumers.  

To read our debt settlement policy brief:
To watch Marylanders stories about debt settlement:


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Monday, March 21, 2011

Home Improvement Bill Moving Forward-Save Homeowners from Losing Money to faulty contractors

Eileen Ambrose’s fine article in the Sunday Sun told the story of one of the many Maryland families who have been victimized by abusive home contractors and offered some good advice about how homeowners can protect themselves when they remodel their homes.  Here’s the link:,0,3093001.story

Including much stronger consumer protection in the legislation to renew the Maryland Home Improvement Commission will help protect all Marylanders from that kind of abuse.  That’s why MCRC is working to ensure the legislation requires home improvement contractors to disclose the rights of consumers more clearly, creates a reliable database for consumer complaints against contractors and provides better insurance for homeowners.

Today the MHIC’s Guaranty Fund offers some insurance to homeowners whose renovation projects cost less than $20,000 but offers little protection to those doing more costly renovations. We’re calling for the state to require contractors to provide a performance bond that would guarantee the work on projects costing more than $25,000. Such bonds would add just .5% to 2% to the cost of the job and contractors would be free to add that cost to their fees.  That’s a simple an inexpensive way to protect homeowners with expensive projects from the high costs of shoddy or incomplete work.

The law should also require MHIC to establish a searchable database that lists licensed contractors and the complaints lodged against them. The Maryland Board of Physicians has set up  such a database that clearly lists complaints against state physicians and establishing such a system for contractors would make it much easier for homeowners to make well-informed renovation choices.

Please  let your state senators and delegates know that you want these reforms to be part of the MHIC bill (HB 362/SB236). Members of the Senate Education, Health and Environment Committee and the House Business Regulation Subcommittee are particularly important to the process. Delegates on that subcommittee include
Michael L. Vaughn, chair     
Aisha Braveboy,     
Emmett C. Burns, Jr.
Jeannie Haddaway-Riccio   
Benjamin F. Kramer
Joseph J. Minnick   
David D. Rudolph             410.841.3444
Steven Schuh                    410.841.3206
Kelly Schulz               
Contact information for members of the Senate EHE Committee is listed below in the March 15 entry.


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Tuesday, March 15, 2011

Senate Bill on Home Improvement Voted on March 17 or 18

Maryland home-owners have banded together after being defrauded by a licensed home-improvement contractor. Now, they are using their experiences to try to pass legislation to protect other home-owners who embark on home-improvement projects. MCRC has been working with this group since last June. MCRC and the home-owners group are calling for:
  • stronger consumer disclosures in home-improvement contracts
  • listing complaints and actions against home-improvement contractors on the Maryland Home Improvement Commission's website
  • requiring contractors who take on home improvement projects above $25K to purchase a performance bond (currently home-owners are protected by the Maryland Guaranty Fund up to $20K)
The Senate Education, Health, and Environmental Affairs (EHE) Committee is scheduled to vote on the bill this Thursday or Friday. Call or email senators on the committee and ask them to protect home-owners by passing SB 236 with MCRC's amendments.

Senators on EHE include:
  • Joan Carter Conway, Chair 410-841-3145
  • Roy Dyson, Vice Chair 410-841-3673
  • Joanne Benson, 410-841-3148
  • Bill Ferguson 410-841-3600
  • J.B. Jennings 410-841-3706
  • Karen Montgomery
  • Paul Pinsky, 410-841-3155
  • Edward Reilly, 410-841-3568
  • James Rosapepe 410-841-3141
  • Bryan Simonaire 410-841-3658
  • Ronald Young 410-841-3575
The Howard County Office of Consumer Affairs, the Montgomery County Office of Consumer Protection, the Consumer Protection Division of the Attorney General's Office are also supportive of these amendments.

Check out our YouTube channel to hear some of the home-owners stories.


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Monday, March 14, 2011

Senate Debt Settlement Working Group TODAY

Today, MCRC joins a Senate work group meeting on debt settlement-Senate Bill 741. MCRC is advocating for a 15% fee cap on the amount firms can charge cash-strapped consumers. Between April-December 2010, the Attorney General's office received 88 new complaints from Marylanders who had lost $112,000 to unscrupulous debt settlement firms. Of these 88 complaints, 64% of victims were women and many were retired or nearing retirement age.

Currently, the legislation calls for a 30% fee cap. MCRC believes this fee is far to high. Individuals turn to debt settlement companies when they have nowhere else to turn. Recent research from the Center for Responsible Lending shows that fees need to be set below 20% for a consumer to break even IF the majority of their debts are settled. While debt settlement firms need to generate profits, testimony and reports from The Association of Settlement Companies (TASC) and Debt Shield state that many of these costs are in acquiring customers. MCRC believes these costs could be reduced without diminishing their services. TASC is asking that fees are not capped at all and that each debt settlement firm can determine its own fees.

If you think fees should be lower, call or email your Senator today. Ask them to amend the bill to cap fees at 15%. Email for more information.


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Tuesday, March 1, 2011

Debt Settlement -one story-bill hearing today

Listen to this story on debt settlement, which is part of MCRC's upcoming film "Stealing Trust: Marylanders Speak Out on Frauds, Scams, and Financial Abuses."

Debt settlement firms claim they will cut consumers's debt in half. Yet, to date, the majority have collected up-front fees and failed to deliver on their promises-leaving consumers with poorer credit scores, higher debt, and less money in their bank accounts.

Today, the Senate Finance Committee is hearing legislation to regulate debt settlement firms in Maryland. The House Economic Matters Committee will hear the legislation on Thursday.

MCRC supports regulating the industry but feels the 3o% cap on fees is too high! Maryland families struggling to pay their bills need to keep more money in their pockets. We support a 15% cap on fees, strong disclosures, and reporting requirements. For more information check out MCRC's two reports on the issue at

Call your Senators to tell them you support a 15% cap on fees for SB 741.


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