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“Hundreds of complaints revealing FinWise Bank’s predatory puppy loans, unaffordable lending and potential violations of the law strongly support downgrading the bank’s Community Reinvestment Act rating” said Lauren Saunders, associate director at the National Consumer Law Center. “FinWise Bank’s predatory credit that borrowers can’t afford to repay and that evades state interest rates does not meet the convenience and needs of communities as required by the CRA.”

Earlier this year, the FDIC downgraded another bank, Transportation Alliance Bank, over unfair or deceptive acts or practices by one of its partners, likely EasyPay Finance. FinWise Bank’s partner American First Finance has a business model similar to that of EasyPay Finance, offering predatory puppy loans and other deceptive, high-cost loans through retail stores for pets, furniture, auto repairs and appliances. The advocates’ comments pointed out that American First Finance has twice as many complaints as EasyPay. One consumer complained, “I purchase a puppy .. and its was super cute but… American first finance if you read this YOU GUYS ARE SCAMMERS AND LIERS dont trust them guys!!!!!!”

“The FDIC’s assessment of FinWise Bank must take into account the full scope of its business practices,” said Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending. “High-cost credit that extracts wealth and crushes borrowers with debt does not meet communities’ credit needs and must be penalized on CRA exams.”

Two of FinWise Bank’s other rent-a-bank lenders, Elevate and OppFi, have rates well over 50% for charge-offs, a measure of debts unlikely to be collected, illustrating high-rates of default and the predatory nature of their loans.

FinWise Bank, chartered in Utah and supervised by the FDIC, is one of only a few rogue banks that front for predatory lenders. Most states have interest rate limits to stop predatory lending, but predatory lenders try to evade state laws by laundering their loans through banks, which are exempt from state rate caps.

“Predatory payday and installment lenders are using harmful ‘rent-a-bark’ partnerships with FDIC banks, like FinWise, to make triple-digit interest rate loans to unsuspecting consumers. FinWise Bank must be stopped from fronting for these loans that are illegal across the country,” said Rachel Gittleman, financial services outreach manager at Consumer Federation of America.

The comments described how FinWise Bank partners American First Finance, Elevate, and OppFi have generated hundreds if not thousands of complaints to the Consumer Financial Protection Bureau (CFPB) about:

• Deception and unaffordable interest rates on loans that borrowers are unable to repay

• Receiving loans that they never applied for and identity theft

• Improper debt collection tactics, including collecting debt not owed, failure to validate debts, harassment and abuse

• Credit reporting problems, including incorrect information and failure to respond to disputes and errors

Under FDIC Guidance, banks are responsible for risks that arise from third-party relationships to the same extent as if the activity were handled by the institution.

“The FDIC can protect consumers, especially low wage earning working families by down-grading FinWise Bank. FinWise Bank’s participation in rent-a-bank schemes erases efforts by states to protect residents from predatory lenders through modest interest rate caps,” said Kimberly Fountain, Consumer Financial Justice Organizer.

“The federal banking system was not developed to enable predatory lenders to evade the clear will of both the people and the legislature in a given state,” said Brent Adams, Senior Vice President of Woodstock Institute, a consumer advocacy group based in Illinois, which has a 36% cap on loans passed by an overwhelming majority of the legislature and supported by 86% of the State. “FinWise’s role in scheming with predatory lenders to skirt consumer protections is anathema to the CRA and should earn FinWise the lowest possible rating under the CRA.”

“The FDIC must hold FinWise Bank accountable for the impact its lending has on consumers,” said Adam Rust, Senior Policy Advisor of the National Community Reinvestment Coalition. “FinWise’s ‘charter-as-a-service’ model doesn’t meet the conveniences and needs of borrowers. It conveniently serves the needs of predatory lenders. That contradiction underscores why it’s incumbent on the FDIC to downgrade FinWise on its CRA exam.”

The letter was signed by Accountable.US, Americans for Financial Reform, Center for Responsible Lending, Consumer Action, Consumer Federation of America, National Community Reinvestment Coalition, NCLC (on behalf of our low-income clients), Public Citizen, U.S. PIRG, and Woodstock Institute.

Additional Resources

• TAB Bank, Facilitator of Predatory Puppy Loans, Gets Rating Downgraded by FDIC, Feb. 6, 2023

• In Evaluating TAB Bank, FDIC Should Consider Consumer Harm, Possible Legal Violations, from Predatory Lending, June 30, 2022

• Press Release, National Auto Repair Chains Must Stop Offering Predatory Loans Through EasyPay Finance and TAB Bank, May 18, 2022

• Report, Predatory Puppy Loans by TAB Bank and EasyPay Finance (Feb 1, 2022)

• NCLC’s High-Cost Rent-a-Bank Loan Watch List

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Consumer advocates had urged the FDIC to downgrade the bank for offering predatory credit that does not meet the convenience and needs of communities, and provided evidence that TAB Bank was facilitating predatory puppy loans, predatory auto repair loans, and predatory loans to servicemembers and veterans. Through a “rent-a-bank” partnership with EasyPay Finance, the bank helped EasyPay make loans up to 189% APR in states where that rate is illegal for non-bank lenders. Hundreds of consumers have lodged complaints about these loans, describing payments that mostly go to interest, deceptive interest-free promotions, debt collector harassment, and credit reporting problems.

The public portion of TAB Bank’s evaluation identifies a violation of the Federal Trade Commission Act’s prohibition of unfair or deceptive acts or practices (UDAP).

TAB Bank is one of six rogue banks that consumer groups have urged the FDIC to stop from laundering triple-digit interest rate loans that are issued by nonbank lenders to evade state interest rate laws.

“TAB Bank has been disserving the community through its predatory rent-a-bank loans and deserves this downgrade,” said Lauren Saunders, associate director of the National Consumer Law Center. “No bank should help predatory lenders evade state interest rate laws and make destructive loans that put people in a debt trap.”

“TAB Bank has a record of enabling harmful rent-a-bank loans for auto repairs, pet purchases, and other retail purchases,” said Rachel Gittleman, financial services outreach manager for Consumer Federation of America. “This downgrade is an important first step, but we encourage the FDIC to stop TAB bank and others from peddling predatory loans into the communities that they are supposed to serve.”

“The CRA calls on banks to meet the convenience and needs of the communities where they do business,” said Adam Rust, senior policy advisor for the National Community Reinvestment Coalition. “That starts with not using a bank charter to facilitate harmful and deceptive lending practices. We commend the FDIC for taking this step to hold TAB accountable.”

“In lowering TAB Bank’s CRA score, the FDIC sent the message that banks engaged in predatory lending practices will face negative consequences,” said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending. “We urge the FDIC to take additional steps to stop all banks it regulates from harming consumers through rent-a-bank schemes.”

The CRA, or Community Reinvestment Act, is a 1977 law intended to encourage insured banks and thrifts to meet local credit needs, including those of low- and moderate-income neighborhoods, consistent with safe and sound operations.

Additional Resources

• Read the CRA Comment: 40 Groups Urge FDIC To Downgrade TAB Bank, June 30, 2022
• Report: Predatory Puppy Loans by TAB Bank and EasyPay Finance; Press release, February 2022
• Letter to FDIC from consumer groups urging crackdown on predatory rent-a-bank lending, Feb. 4, 2022
• Report: Predatory Auto Repair Loans by TAB Bank and EasyPay Finance, May 11, 2022
• Letter to national auto repair chains urging them to stop offering loans through EasyPay and TAB Bank, May 11, 2022
• Report: Predatory Lenders TAB Bank and EasyPay Finance Harm Veterans and Military Servicemembers with Loans up to 189% APR; Press release, May 25, 2022
• Letter to FDIC from consumer groups urging crackdown on predatory rent-a-bank lending, Feb. 4, 2022

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The CFPB previously promulgated a rule limiting the use of forced arbitration and class action waivers. After the Trump administration took office, a 50-50 Senate vote struck down the rule when former Vice-President Mike Pence broke the tie in favor of allowing big banks to use forced arbitration freely.

As the letter explains:

“The Bureau’s eventual rule in 2017, which prohibited regulated entities from using forced arbitration clauses that bar consumers from enforcing their rights by participating in class or collective actions, would have restored rights and leveled the playing field for millions of consumers. We were exceedingly disappointed that Congress voted by the narrowest of margins to disapprove the rule before it could go into effect. However, the Bureau’s statutory authority to address this widespread problem on behalf of consumers and the public interest remains and the abusive use of forced arbitration by the banking industry has only grown worse in the intervening years. The Bureau can and must exercise its authority in any number of ways that would not be substantially the same as the regulation Congress acted to nullify.”

The groups signing this letter urge Director Chopra to engage in a public conversation on how the secret, accountability-killing practice of forced arbitration leads to greater fraud in the financial sector that affects every day Americans’ lives.

“We are proud to join with consumer, worker, and civil rights organizations to ask the CFPB to limit forced arbitration and stop banking fraud and abuse. The time for action is now – the CFPB’s own forced arbitration study found that consumers don’t know they have ‘agreed’ to give up their rights, that they rarely have their case against a bank addressed and that the bank nearly always wins because forced arbitration is a rigged system,” said American Association for Justice CEO Linda Lipsen.

“Consumers need the CFPB’s help combating forced arbitration clauses that take away our day in court,” said Lauren Saunders, associate director at the National Consumer Law Center. “The CFPB does important work enforcing consumer protection laws, but it cannot pursue every injustice alone. Forced arbitration must not strip consumers of access to the courts.”

“Forced arbitration is a rigged game, one that banks and other financial industry players nearly always win,” said Robert Weissman, president of the consumer advocacy organization Public Citizen. “It is far past time for the CFPB to level the playing field and ensure that harmed consumers regain access to the courts when wronged by the financial industry.”

“The CFPB should act now to remove the chokehold of forced arbitration and class action bans which stands in the way of consumers seeking remedies from the well-known traps of junk fees, sky-high interest rates, inaccurate credit reporting, fake accounts, and other predatory practices in financial products and services,” said Christine Hines, legislative director for the National Association of Consumer Advocates.

“It’s time for the CFPB to stop letting big banks and predatory financial services companies hide their bad acts in private, forced arbitrations,” said Rachel Gittleman, Financial Services Outreach Manager with Consumer Federation of America. “We look forward to working with the CFPB to create a new rule that empowers consumers to assert their rights in the forum of their choosing.”

“The CFPB has been a true champion for consumers under Director Chopra. But it only has so many people and so many resources, and many consumers who are cheated by predatory lenders need the ability to protect their own rights in court. The only way that is possible is if the Bureau will take on the blight of forced arbitration,” said Paul Bland, executive director of Public Justice.

“The debate surrounding forced arbitration has moved away from what it was just a few years ago, which suggests further change is as possible as it is desirable. We’ve recently seen Congress’ bipartisan enactment of the Ending Forced Arbitration for Sexual Assault and Harassment Act, which ends forced arbitration in the workplace at one of the most vulnerable times for employees. We are urging the CFPB to extend the same protections to consumers because forced arbitration perpetuates consumer vulnerability and abuse in the financial sector,” said Elyse Hicks, consumer policy counsel for Americans for Financial Reform Education Fund.”

BACKGROUND

Congress recognized forced arbitration as a leading threat to the enforcement of consumer protection laws and explicitly empowered the Consumer Financial Protection Bureau (CFPB) to limit its use in the 2010 Dodd-Frank legislation. Before issuing a rule, the CFPB studied the financial sector’s use of forced arbitration against consumers and the 728-page report released in March 2015 confirmed what consumer advocates have long known – forced arbitration denies justice to customers and allows big banks to escape accountably when they break the law.

The final rule limiting forced arbitration was released in 2017 but was struck down by the Congressional Review Act by a 50-50 Senate vote with then-Vice President Pence making the tie-breaking vote against consumer rights.

Contact: Rachel Gittleman, 609-571-5953

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First, although the majority of consumers maintain a balance in their P2P apps, most of these applications lack FDIC deposit insurance. Secondly, given the instantaneous nature of payments, there is a high and growing prevalence of scams and fraud associated with P2P apps. This problem is compounded by the absence of meaningful oversight, accountability, or consumer protections beyond disclosures and warnings, resulting in little or no recourse for defrauded consumers. Third, these apps collect vast amounts of consumer data, especially financial data which raises significant privacy concerns. Finally, it is questionable how much these apps do to promote financial inclusion, a common industry claim, especially given that consumers who use P2P payment apps likely need a smartphone and wireless data or internet access and a significant amount of low-income consumers lack a smartphone and/or high speed internet access. 

Lack of Federal Deposit Insurance 

Issued by the Federal Deposit Insurance Corporation (FDIC), federal deposit insurance protects consumers’ deposits should a bank institution fail, ensuring public confidence in and stability of our financial system. However, non-banks and P2P apps are not federally-insured or even regularly supervised or examined by federal financial regulators. Even if non-banks partner with FDIC-insured banks, funds sent to or held in the nonbank are not FDIC-insured. Although some cash funds in P2P apps are FDIC insured, insurance only covers limited funds in certain instances. For example, for Venmo users, funds are eligible for pass through insurance when the user has bought cryptocurrency or added money through direct deposit or remote check capture. Therefore, for the most part, consumers maintaining large balances in P2P apps do not have their funds protected. 

Without deposit insurance, P2P apps have the ability to freeze and deactivate consumers’ accounts and funds. Consumers unwittingly agree to these terms buried in the fine print of user agreements during account creation. Further, some P2P products lack fair notice and appeal process should a consumer’s account be closed. P2P providers do not publish reports of account freezes and closures, further obscuring this conduct from consumers. There are no comprehensive federal regulations for non-bank financial institutions, subjecting consumers to the unchecked conduct of sophisticated financial entities, leaving consumers to fend for themselves. As more consumers use P2P systems, they may be at greater risk than they know.   

High Prevalence of Fraud and Scams, Coupled with Lack of Accountability and Oversight 

Nearly 18 million Americans were scammed or defrauded while using P2P apps in 2020. The convenience, speed, and ease of P2P systems create an opportune environment for fraudsters and scammers. These bad actors use a variety of tactics to lure consumers into sending money, because the scammer will immediately receive the funds due to the quick nature of these systems.  In addition, consumers are also victims of phishing or hacking of P2P apps and resultingly, see that their account transferred money without their consent.  

P2P apps have disclosures, warnings, and certain security checks, in part due to the high prevalence of fraud and scams. However, these warnings are insufficient in protecting consumers and place the risk and onus unfairly on the consumer. Although consumer alerts published by federal regulators and advocacy groups help inform consumers, they do little to actually protect consumers when using these products.  

In the absence of safeguards being built into products, consumers should, at the very least, have meaningful recourse when faced with account closures or deactivations. Despite these rising concerns, there is minimal accountability or oversight of P2P providers, and little has been done to make these products safer for consumers. Those consumers who have been defrauded or scammed are rarely made whole after losing funds to scams or fraud.  

Defrauded consumers are often left without any resolution for their stolen money due to ambiguities and gaps in existing consumer protection regulations. Regulation E implements the Electronic Fund Transfer Act (EFTA), but in its current form does not protect consumers when they have been defrauded into making a payment.  

That is why CFA supports Chairwoman Maxine Waters’ Protecting Consumers From Payment Scams Act. This bill would amend EFTA and protect consumers from liability when they are defrauded into initiating a transfer. It would also clarify that responsibility to resolve errors applies. Finally, this bill would clarify that EFTA’s error resolution procedures also apply when the consumer makes a mistake, such as when the consumer sends the incorrect amount of funds or to the wrong recipient.  

Ineffective Consumer Privacy, Especially of Financial Data 

P2P apps collect enormous amounts of consumer data and some even include consumer consent to data aggregation in their initial terms and conditions. P2P companies are not transparent with consumers about the amount of data they collect, what they use the data for, or whether they are selling it to other companies.   

Further, the default privacy settings for P2P apps are not in the consumer’s best interest for their financial privacy. For example, Venmo’s default settings publicly show transactions between users, including the parties’ names and attached message with the payment. One does not need an account to see these transactions, and users must manually change two areas of their settings to hide transactions from public view. These practices clearly lack adequate privacy protections, which, coupled with unclear initial privacy notice, puts both consumers and their financial data at risk of great harm.  

Financial Inclusion 

Finally, despite industry claims, it is unclear whether P2P apps expand financial inclusion for unbanked consumers and other marginalized communities. At first glance, non-banks like P2P apps may seem like an attractive alternative that can aid financial inclusion. However, more than 80% of mobile payment users connect their bank account, credit, or debit card to a smartphone application, requiring at least a smartphone and data, and best used with internet access. Yet, more than 40% of adults in low-income households lack high-speed internet access in their homes and roughly a quarter of low-income consumers lack a smartphone, making P2P applications difficult or impossible to access. This results in a large barrier to entry for many marginalized consumers, and P2P apps are therefore in all likelihood not expanding services to these consumers.  

Conclusion 

As P2P app usage grows, CFA and other consumer advocates grow increasingly concerned about the lack of consumer protections built into the products combined with extremely minimal federal oversight and accountability. Funds left in P2P apps are not covered by FDIC insurance, which means that P2P apps can freeze funds or deactivate accounts, leaving consumers without access to their stored funds. In addition, consumers lack recourse when defrauded, scammed or hacked, which is occurring at increasingly alarming rates. Plus, P2P apps have access to large amounts of consumer financial data and consumer privacy is insufficient. Finally, although these apps can certainly meet some consumer’s needs, it is unlikely that P2P apps are expanding financial inclusion to underserved consumers.  

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The FTC issued its Advanced Notice of Proposed Rulemaking (“ANPRM”) in February, seeking comments about the scope, applicability and impact of a trade regulation rule which would challenge deceptive or unfair marketing using earnings claims. CFA joins the NCL in support of a rule, and the comment letter points to the problematic history of multi-level marketing companies and gig economy platforms. The FTC has a long enforcement history of pursuing these claims as violations of the FTC Act, but after a recent Supreme Court decision, its ability to return money to consumers through the FTC Act is severely impacted. Pursuing violations of a rule would return this critical tool to the FTC, which CFA fully supports.

“99% of multilevel marketing recruits lose money,” the comment letter states, citing a 2011 statistic from the Consumer Awareness Institute. The comment letter also points to unsubstantiated and evidence-free earnings claims by gig-economy companies and explains how these companies target minorities and women. CFA joins NCL in asking the FTC to regulate companies making these claims by requiring substantiated data prior to making such claims, requiring “verifiable, easy-to-understand” income disclosures, and prohibiting deceptive lifestyle claims and imagery.

“Too many consumers have been enticed by unsubstantiated and false claims about income and lifestyle by these companies,” said Erin Witte, CFA’s Director of Consumer Protection. “We are glad to comment in support of the ANPRM and urge the Commission to take the next step in the rulemaking process so that the FTC can continue its work of returning money to defrauded consumers.”

A copy of the comment letter can be found here.

Contact: Erin Witte, 202-569-9807

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When a consumer signs a credit contract disclosing the cost of financing and drives the car off the lot, the deal appears to be complete from the consumer’s perspective. Some dealers, however, employ a deceptive tactic where they know at the time of the sale that the deal may not actually be final. The dealer calls the consumer days, weeks or even months later to tell them that they need to pay additional costs or a higher interest rate to keep the car, or that the deal needs to be completely undone and the consumer must return the car. This process of subjecting a consumer to being “yo-yo’d” back and forth to the dealership pressures consumers to pay more than what they expected and agreed to and adds significant stress and uncertainty to an already complicated and expensive financial transaction.

“Yo-yo sales frequently harm consumers by lowering their credit scores, forcing them to forfeit their hard-earned down payments, and jeopardizing their primary means of transportation,” stated Erin Witte, Director of Consumer Protection for Consumer Federation of America.

In the petition, the consumer advocates asked the FTC to issue a rule that requires dealers to add language to the consumer credit contracts which states that the terms of the deal are final, even if the contract is assigned to a third party. Violations would be enforceable by the FTC. The petition provides real-life examples of consumers’ experiences with spot deliveries, including one instance where a consumer was yo-yo’d to the dealership repeatedly with requests to sign new contracts, provide a co-signer, and provide new financial documents. After 40+ days, the dealer said that the deal fell through and threatened to file a stolen vehicle report unless the consumer returned the car.

“The proposed rule would help to ultimately lower the cost of vehicle purchases and level the playing field between consumers and car dealers,” continued Witte. Consumer advocates also pointed out that this practice undermines federal laws like the Truth in Lending Act which requires the timely disclosure of clear and accurate financial terms.

“Certainty, transparency and clarity of sale terms, particularly the financing details, are crucial to facilitate a smooth, incident- and injury-free process for all parties in this seemingly complex process,” stated the consumer groups in support of the petition.

Contact: Erin Witte, 202-596-9807

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Thirty-four city, county and state consumer agencies from 18 states participated in the survey, which asked about the complaints they received last year, their biggest achievements, and new consumer protection laws enacted in their jurisdictions.

Top Ten Complaints in 2020

1. Auto: Misrepresentations in advertising or sales of new and used cars, deceptive financing practices, defective vehicles, faulty repairs, car leasing and rentals, towing disputes.
2. Home Improvement/Construction: Shoddy work, failure to start or complete the job, failure to have required licensing or registration.
3. Landlord/Tenant: Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics.
4. Credit/Debt: Billing and fee disputes, mortgage problems, credit repair and debt relief services, predatory lending, illegal or abusive debt collection tactics.
5. Services: Misrepresentations, shoddy work, failure to have required licensing or registration, nonperformance.
6. Utilities: Complaints about gas, electric, water and cable billing and service.
7. Retail Sales: False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver.
8. Travel: Misrepresentations about cost, amenities or other aspects of travel packages, failure to provide promised services, disputes about refunds.
9. (Tie) Health Products/Services: Misleading claims, unlicensed practitioners, failure to deliver, billing issues; Internet Sales: Misrepresentations or other deceptive practices, failure to deliver online purchases.
10. (Tie) Pandemic: price gouging, refunds for canceled events and travel, financial issues, problems getting repairs and other services, “self-help” evictions, scams, and other complaints stemming from the pandemic; Fraud: Bogus sweepstakes and lotteries, work-at-home schemes, grant offers, fake check scams, imposter scams and other common frauds; Household Goods: Misrepresentations, failure to deliver, repair issues in connection with furniture and major appliances.

This ranking is based on the categories that appeared most frequently in the consumer agencies’ “top ten” complaint lists. Collectively, the 34 agencies that participated in the survey handled 280,413 complaints and recovered or saved more than $262,973,073 for consumers in 2020 through informal mediation, administrative action, and lawsuits.

COVID-19 also significantly changed the way state and local consumer agencies operated. Most had to switch to working entirely remotely. Some agencies provided staff with cell phones and laptops and set up secure systems to enable them to work entirely from home. Others sent small numbers of personnel into their offices on a rotating basis to handle the phones and mail. Their staffs sometimes fielded calls about problems totally unrelated to consumer protection because people were unable to get through to other state or local agencies. Forced to rely on technology more heavily than ever, agencies encouraged consumers to communicate with them via email and used online platforms for administrative hearings and educational events that would normally be conducted in person. “State and local consumer agencies had to turn on a dime to change how they worked,” observed Grant. “They continued to provide vital information and assistance to the public without missing a beat.” The “Consumer Agencies Biggest Achievements” section of the report describes how agencies resolved consumers’ problems, improved their operations, and reached out to the public even as the pandemic raged.

Examples of Pandemic Complaints

• Wedding Fireworks Fizzled. A young couple had planned a river boat fireworks cruise as part of their wedding. Because public gatherings were restricted to 10 people and they had invited 60, they asked to cancel the cruise. The business refused to cancel without penalty. The couple were given a choice of losing 25 percent of their deposit if they canceled by a certain date or 100 percent if they waited longer to cancel. With the help of the District of Columbia Attorney General’s Office, they were able to obtain a full refund of $1,750.
• The Price Wasn’t Right. A consumer complained to the New York State Division of Consumer Protection that a local restaurant was adding a surcharge when customers paid by credit card. The restaurant insisted it was following the law and said its credit card processor had assured it that the practice was acceptable. However, the agency explained that under New York law, businesses that charge differently for credit cards must publish their prices to reflect the higher credit card amount. A business can offer a discount to cash-payers but cannot add an extra charge for paying with a credit card. The restaurant provided that information to the credit card processing company, which quickly adjusted its software to eliminate the surcharge and notified all of its clients of the change.
• Pasty COVID Cure. Investigative work by the Los Angeles County Department of Consumer and Business Affairs in California helped the Los Angeles City Attorney resolve a case against a local company, Insan Healing, and its CEO, Angela Oh, for allegedly advertising and selling radish paste as “a must-have product for the protection and prevention of the COVID-19.” The settlement provided for full restitution to consumers, a broad injunction, and a $20,000 civil penalty.
• Landlord Goes Too Far. After a landlord allegedly used physical violence against one tenant and attempted to have another tenant deported by ICE to remove them from their apartments, the Massachusetts Attorney General’s Office went to court to seek emergency injunctive relief to protect the tenants and witnesses in the case from any further harassment.
• Gym Member Gets Exercised. When a gym closed in March 2020 due to the pandemic, a customer was told he could freeze his membership so he wouldn’t be charged. However, he was charged $43.14 for the month of June. When he took it up with the gym, he was offered a 50 percent credit instead of a full refund. In disgust, he canceled his membership and was charged a fee for doing so. The New Mexico Attorney General’s Office got his money back.
• Ticket in Paradise. It was a lovely evening in Florida, and a woman parked her car in a lot at a beach to go for a stroll. When she attempted to put money in the meter, the screen was frozen. A resident who lived nearby informed her that people were not being charged for parking due to the pandemic. When she returned to her car, however, there was a $75 ticket from the private company that operates the lot. She filed an appeal, which was denied without explanation. The woman called and emailed the company multiple times, with no response. She filed a complaint with the Broward County Environmental and Consumer Protection Division, which got the ticket withdrawn.
• Masked Robbery. More than 2,300 price gouging complaints were filed with the North Carolina Attorney General’s Office last year. The agency sued Stephen Gould Corporation, a New Jersey-based business that allegedly offered millions of N95 masks to the North Carolina Emergency Management Unit of the North Carolina Department of Public Safety, UNC Health, Duke Health, and the Charlotte Chapter of the American Red Cross at a markup of more than 100 percent. If the sales had been successful, the company would have profited more than $30 million per transaction. In addition to winning a $150,000 judgment, the agency obtained an order permanently barring the company from engaging in unfair and deceptive practices or selling personal protective equipment at unreasonably excessive prices.
• Deep Freeze. Last winter an elderly couple who suffered from numerous disabilities and had another older woman living with them in their home asked the Arkansas Attorney General’s Office for assistance. Their HVAC unit, which was under warranty, had stopped functioning in August 2020. The business that sold it to them sent several subcontractors to try to repair it, but they were unsuccessful. The consumers had been using space heaters for months to keep warm. It soon became clear that the necessary parts were not available due to the pandemic. The business agreed to resolve the problem by replacing the HVAC unit.
• Smelly Situation. Fairfax County Department of Cable and Consumer Services in Virginia received 41 complaints involving trash companies in 2020. Due to workers’ exposure to COVID-19, trash companies struggled to maintain service. Consumers complained that their trash or recycling were not picked up as scheduled, nor were alternate arrangements made. They also complained that while their service had been reduced, their rates had increased. With the help of the agency consumers received credits for missed service, got reduced rates in some cases, and were provided with more timely service.
• No Home Away From Home. A woman asked the Consumer Assistance Council in Massachusetts for help when her request for a refund for a home she rented in Oak Bluffs for a week in August last year was denied. She explained that she could not travel to Massachusetts because of the requirement to self-quarantine for two weeks and the limited heath care facilities on the Cape. She was especially concerned about the potential for contracting the COVID-19 virus and bringing it home to her elderly mother, for whom she was the sole caregiver. The real estate broker agreed to rebook the house and refund the woman’s deposit, minus a small fee.

One thing that became clear in reviewing the complaint stories is that the usual terms of service and cancellation policies don’t take into account the unusual circumstances consumers experienced last year. For example, in one complaint, a mother put a prom dress on layaway for her daughter and when the prom was canceled, the retailer refused to return her money. “Since it wasn’t the consumer’s fault that the prom was canceled due to COVID, she understandably felt she shouldn’t have to pay for a fancy dress that her daughter, stuck at home, had no place to wear,” explained Grant. Often consumer agencies were able to persuade businesses to make exceptions to their regular cancellation and refund policies, but not always. They generally had a stronger basis to argue that consumers should be able to cancel with no penalty and get their money back when the pandemic prevented businesses such as party venues and sports promoters from being able to provide the promised services. Even then, however, consumer agencies sometimes found it difficult to resolve the problems. For instance, some childcare providers that were forced to temporarily close insisted that parents continue to pay their fees in order to “save” their children’s slots when the facilities reopened.

The “Pandemic Complaints” section of CFA’s survey report provides other examples of COVID-related complaints. There are Ten Tips for Navigating the COVID-19 Pandemic (and Other Disasters) in the report and separately at here.

State and local consumer agencies also continued to receive complaints last year about issues unrelated to the pandemic. Examples of these are provided in the “Real-Life Complaints” section of the report. There are tips for consumers throughout that section and collected in Appendix B.

The full 2020 Consumer Complaint Survey Report is available here.

Contact: Susan Grant, 202-939-1003

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Auto

If you’re considering buying a car, shop around and don’t commit to anything until you have read the contract and the finance agreement carefully to make sure you know the terms and cost of the deal. Don’t be rushed or pressured, ask questions, and if there is anything you still don’t understand, show the paperwork to someone you trust before you sign. When you buy a new car, state law protects you if there are problems that substantially affect your ability to use it, but not all problems make a new car a “lemon.” Ask your state or local consumer agency about your lemon law rights.

At http://www.ialla.net/law_contacts.htm the International Association of Lemon Law Administrators provides information about how to reach the government agency that oversees the new car lemon law in your state. It also offers tips for consumers on issues such as how to prepare for lemon law arbitration hearings.   

Thinking about trading in a car that you still owe money on? Since it’s frequently cheaper to repair a car than to replace it, you might be better off financially if you wait until you can pay off your existing car loan before you buy another vehicle. But if you can’t delay, get the dealer’s promise to pay off the loan on your trade-in in writing and follow up with your lien holder within 30 days of signing the contract to confirm that the promise has been kept. If you’re buying a used car, don’t take it from the dealer’s lot until you have all of the paperwork you need to register it in hand.

Only do business with auto repair shops that you know and trust or that have good reputations based on other people’s experiences. Be sure to get an itemized receipt for the work. If you have any doubts about the diagnosis of your car’s problem, bring it to another shop for a second opinion.

If you’re considering buying an RV or any other type of vehicle, get any promises the dealer makes in writing in case there are questions later about the terms of the deal, such as whether your deposit will be refunded if the financing falls through.

Don’t do business with car dealers or auto mechanics who are operating in parking lots or other locations that are not their regular places of business. They may not be licensed or in compliance with other legal requirements that apply to them, and they could be hard to find if you have problems later.   

Have a problem with an auto repair shop? Give the owner or manager a chance to resolve it, but if that fails, contact your state or local consumer agency for advice and assistance.

Purchasing a car “as is” doesn’t always mean that you’re out of luck if something goes wrong. You may be able to hold the dealer responsible. But the best way to protect yourself is to have the car checked out by a mechanic you trust before buying it to look for problems that might not be obvious to you. Buying a used car long-distance is especially risky since you may not be able to test drive it or have a mechanic examine it before you pay, and shipping it back if it’s not satisfactory could be expensive. 

Auto repairs may take longer than expected because the shop has trouble getting the right parts or the mechanic discovers that additional work is needed. Keep in touch with the shop and make notes about the dates of each conversation, who you talked to, and what was said. Don’t pay before the work is done. If you think that you’re being strung along, ask your state or local consumer agency for help.

New car defects can be more than inconvenient –they can be dangerous. Contact the National Highway Traffic Safety Administration at www.nhtsa.gov or by calling 800-424-9153 to get information about auto recalls, check for complaints from other individuals about the same problem, and report safety defects.  If there are problems with your new car that substantially affect your ability to use it, ask your state or local consumer agency about your lemon law rights.

Review the auto sales contract carefully before signing. If there is something in it that doesn’t match what is on the vehicle or what the salesperson told you, beware! You may want to steer clear of the deal.

Just as with buying a car, it’s a good idea to research the make and model of the boat you’re considering as well as the reputation of the dealer. Check online boat reviews and sources of complaint information such as the Better Business Bureau, https://www.bbb.org/. If there are any problems after the sale, keep records of what they are, when you contacted the dealer, how long the boat was in the repair shop, and what repairs were made. Contact the manufacturer if the problems persist.   

Business Services

Buying equipment for your business? Ask potential suppliers if they have experience with providing machinery for the specific work you’ll be doing. Be sure that the bill of sale includes a description of what the equipment is intended to be used for in case there are any issues later about its suitability for the job.

When you agree to provide services for a company, there should be a written contract that clearly spells out the terms, including how you will be paid and the grounds for termination. Not all state or local consumer agencies handle business-to-business disputes, but they may at least be able to provide advice.

You have a great idea for a new product or service, but how do you get started? There are many companies that promise to evaluate, develop and market people’s inventions, but they may be more interested in getting your money than in promoting your idea. A legitimate invention promoter will tell you how many inventions it has evaluated, how many of those inventions got positive or negative evaluations, its total number of customers, how many of those customers received a net profit from the promoter’s services, and how many of those customers have licensed their inventions due to the promoter’s service. And it will get paid through royalties if your invention is a success, not by charging you a large fee in advance. For more information about how to protect yourself go to https://www.consumer.ftc.gov/articles/0184-invention-promotion-firms.

Communications

Problems with the quality of your internet service? Speak up! Keep notes of when outages or other service problems occurred, who you spoke to at the company and on what dates, and what they said. If you don’t get satisfaction, contact your state or local consumer agency for advice. In addition to getting the problem fixed, you may be entitled to a bill adjustment.

If you’re going away for an extended period of time, you may want to make special payment arrangements with your telephone and utility suppliers. Keep a record of when you contacted them, the names of the people you dealt with, and the specific terms of the agreement. Ask them to send confirmation of the arrangement in case there are any questions or problems when you return. 

Check your phone bill carefully before paying it in case there are any mistakes or unauthorized charges. If you have a billing problem and can’t resolve it, ask your state or local consumer protection for help.   

The Federal Communications Commission is working to rein in excessive rates and egregious fees on phone calls from jails and prisons. For information about caps on allowable calling rates and fees go to https://www.fcc.gov/consumers/guides/telephone-service-incarcerated-individuals.

Credit/Debt

When you’re financing a purchase through a retail store for furniture, appliances, or other expensive items, take the time to carefully read the agreement before signing, no matter whether it’s a document on paper or on a computer. Don’t be pressured, and ask questions if anything is not clear. Some financing arrangements can add significantly to the cost of the merchandise. You might want to consider other options, such as lay-away. For more information go to https://www.consumer.ftc.gov/articles/rent-own-lease-own-layaway-and-buying-over-time.

The Consumer Financial Protection Bureau offers information about how to calculate the amount you can afford to borrow to buy a car, the different ways that you can finance the loan, and what your lending rights are. See https://www.consumerfinance.gov/consumer-tools/auto-loans/.

Debt mix-ups can happen when people have the same names, account numbers are entered incorrectly, or other mistakes occur. If you’re contacted about a debt you don’t believe you owe, don’t ignore it! Your credit could be damaged and you may be sued. Contact your state or local consumer agency for advice. For more information about debt collection go to https://www.consumerfinance.gov/consumer-tools/debt-collection/.

Reverse mortgages typically require homeowners to keep their payments for property taxes and insurance current. Failure to do so can lead to foreclosure. As part of the loan agreement, the mortgage servicer may automatically withdraw money from your bank account to make those payments for you. If you have such an arrangement, check with the tax collector and your insurance company to confirm that the payments were made when they were due. For information about reverse mortgages go to https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/.

Many states limit fees for debt settlement services. While there is no federal fee cap, federal rules prohibit debt settlement and other for-profit debt relief services from charging fees until they’ve actually obtained a satisfactory solution for consumers. There are some exceptions; see information at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre02.pdf.

There are many ways to finance higher education. Unfortunately, some for-profit schools exploit students by pushing them into high-cost loans they may not be able to afford. Learn about student loans and how to avoid the pitfalls at https://www.consumerfinance.gov/consumer-tools/student-loans/.

Payday loans are very expensive and can trap you in a never ending cycle of debt. Even worse is being dunned for a payday loan that you never took out. You have the right to dispute a debt you do not owe. See https://www.consumerfinance.gov/consumer-tools/debt-collection/. New rules from the Consumer Financial Protection Bureau about the frequency of debt collection calls may be coming soon.

Employment

Workers are legally entitled to get the wages they are owed. If you believe that you are being shortchanged by your employer, don’t be afraid to stand up for your rights.

Whether you are an employee or a contractor, you are entitled to be paid for the work you do. Ask your state or local consumer agency where to go for help.

Fraud

Common danger signs of fraud include: promises of sudden riches with no work or risk; unexpected demands for money to avoid something bad happening; popular items offered online at incredibly low prices; and requests to send payment for something using a money transfer service or gift cards. Protect yourself by checking with your state or local consumer agency before you take the bait.

 Online dating sites, social media sites and other forums on the internet make it possible to meet people from all over the world. But they’re also places where scammers lurk, waiting for someone to come along who wants to be friends – or maybe something more – and building a fake relationship with the person until the time is ripe to ask for money. Once you’ve sent the cash, you can kiss your “sweetie” goodbye.

Dishonest immigration consultants can do more than just rob people of their money; if they fill out your application incorrectly they can damage your chance of success. Only licensed attorneys or nonprofit organizations that are authorized by the U.S. Citizenship and Immigration Services (USCIS) office can give you legal advice or represent you to obtain legal status. For more information go to www.uscis.gov/avoidscams or call 800-375-5283, TDD 800-767-1833.

No one from Medicare will ever call asking for your Medicare number or other personal information unless you’ve given them permission in advance, call to try to sell you something, enroll you in anything over the phone unless you called first, or visit your home. Learn more and report Medicare fraud at https://www.medicare.gov/forms-help-resources/help-fight-medicare-fraud.

You’ve heard the saying, “On the internet, no one knows you’re a dog.” It’s also hard to know if the person who is offering a dog for sale actually has it or if it’s a scam. One “tell-tail” sign is if you’re asked to send your payment via a money transfer service. Legitimate businesses don’t ask for payment that way, but fraudsters do because they can get the cash fast and it’s hard to trace them. Pet scams are so common even the International Pet and Animal Transportation Association warns consumers about them. See https://www.ipata.org/pet-scams.

Swindlers sometimes impersonate celebrities or even create totally fictitious ones to lure people into sending them money, and social media platforms enable them to reach millions of potential victims all over the world. Search online for the name the person is using plus “scam” to see if anything pops up. 

Tech support scammers use pop-ups and other forms of online ads, and also solicit victims by phone and email. Often pretending to be from well-known companies, they ask for money but don’t do any work. They may claim that there is a problem with your computer when there isn’t, and even worse, they may cause a problem with your computer and then demand money to fix it. If you need computer help, find a local vendor. Never let anyone who contacts you out of the blue have access to your computer. If while browsing on the internet, you receive a pop-up window warning you that your computer is infected or there is an “error” and you must call a number or click a link for tech support help, press Control+Alt+Delete, and use the Task Manager to close out the pop-up window. Do not click a link, call the number listed or attempt to use the “X” in the corner to close the pop-up. Learn about the “tech support scam” at https://www.consumer.ftc.gov/articles/0346-tech-support-scams.

Telephone companies are working on ways to block unwanted robocalls and stop fraudulent Caller ID spoofing. Ask your landline and/or wireless phone service provider what tools are available to you. For more information go to https://www.fcc.gov/consumers/guides/stop-unwanted-robocalls-and-texts.

Online shopping sites such as Amazon don’t contact people to tell them a big order has just been placed using their credit cards and ask them to call if they didn’t make the purchase. This is just another type of “phishing scam” designed to scare people into providing their passwords, credit card numbers and other sensitive information. See https://www.consumer.ftc.gov/blog/2020/07/hang-business-imposter-scams.

If you get a robocall from someone to whom you did not give permission to make those kinds of calls to you, don’t press certain digits on the keypad or call a number that’s provided. You’d just be confirming your number to a scammer. 

Does the price seem too good to be true? That’s because it’s a scam. Never send money to individuals through websites that don’t provide buyer protection. 

Health Products/Services

Use gift cards and gift certificates as quickly as possible, as businesses can close without warning and there is no guarantee that you’ll be able to get the unused value.

If you suspect there is a problem with a medical product, ask your state or local consumer agency where to report it.

Should you pay to subscribe to a service for help obtaining low-cost or free drugs from pharmaceutical companies’ patient assistance programs? Compare the monthly fee to the actual savings you might get. You can find the drug makers’ patient assistance programs yourself using Medicare’s directory at https://www.medicare.gov/plan-compare/#/pharmaceutical-assistance-program; some states also have directories, see https://www.medicare.gov/plan-compare/#/pharmaceutical-assistance-program/states. If the application forms are complicated, perhaps a trusted friend or someone from a social service agency can assist you. Another way to try to lower your drug costs is to consult with your doctor about generic drugs, which are less expensive than brand-name ones and may be as effective. 

Home Improvement/Construction

Get estimates from a few contactors and ask for referrals to previous customers so you can check on their reliability and the quality of their work. You may also find useful information about contractors from the Better Business Bureau and other sources by searching online.

Many states have enacted laws concerning solar sales and leases. Before you sign a contract, ask your state or local consumer agency about your rights and the company’s responsibilities. Be sure you understand the terms and what will happen if you decide to sell your home or no longer want solar power. Get a written contract that spells out everything you’ve been told. The Solar Energy Industries Association offers free guides at https://www.seia.org/initiatives/solar-customer-resource-portal.

If you’ve paid for home improvement work that was never even started, you may be the victim of a crime. Contact your state or local consumer agency.    

Pay only a small deposit when you contract for home improvement work; some state laws limit the percentage of the total price that can be requested upfront. Get a written contract that sets out the work and payment schedule. Payments should be proportionate to the work done and the supplies that have been ordered.

Some problems with home improvement work only become evident after the warranty has expired Contact the contractor as soon as you discover the problems. Take pictures and keep notes as documentation. If the issue is faulty materials or installation, it’s likely that other homeowners are having the same problem. Ask your state or local consumer agency for advice about next steps.

Be sure the home improvement contract specifies the date that the work will begin. While there may be legitimate reasons for delays, such as problems obtaining materials or other jobs taking longer than expected, the contractor should let you know and provide you with a new starting date. Contact your state or local consumer agency if the contractor is unresponsive.

If a contractor has left you without a roof over your head or the shell of a house, you may need to fire the company and hire a new one. In some states consumers can apply for reimbursement from a home improvement guaranty fund if they can’t resolve problems with their contractors, but to be eligible there may be a requirement that the contractor was duly registered or licensed – a good reason to ask your state or local consumer protection agency what you need to know before you sign on the dotted line for the work.

Before having a home constructed, consult with an attorney about whether a performance bond or other protections can be built into the agreement.

Never pay the full amount for home improvement work until the job is done. You have no leverage if the work is incomplete or unsatisfactory.

Home improvement can be one of the most costly investments consumers make in their lifetimes. It’s essential to get estimates and have a written contract that lays out the payments and total cost.

If contractors are regulated in your area, check with the government agency that oversees that program on whether there have been disciplinary actions against the contractor you’re considering. Be aware that subcontractors may be able to put liens on your property if the contractor hasn’t paid them. Don’t make the final payment until the contractor can confirm that the subcontractors have been paid for their work.

Even legitimate home improvement contractors can run into financial or supply problems that prevent them from completing the job. Protect yourself by insisting on a contract that sets a payment schedule that is proportionate to the work that is done and the materials that are delivered. If the contractor has gone out of business, contact your state or local consumer agency for advice and assistance.    

If the contractor is arranging for financing for the job, carefully read the loan agreement to make sure you understand the cost and terms.

Take pictures to document shoddy workmanship and any damage it has caused, and ask your local or state consumer agency for assistance if you can’t resolve the problem with the contractor.

Home Solicitations

If your phone number is on the federal or a state “Do Not Call” registry and you’re getting sales calls from companies that you don’t do business with, or you’re getting pre-recorded sales calls from a company that you never gave written permission to make those kinds of calls to you, it’s a violation of your telemarketing rights. Learn more about your calling rights and where to report violations at http://consumerfed.org/consumer_info/understanding-your-telemarketing-rights/.

Household Goods

Resist pressure to buy extended warranties. They usually have all sorts of exclusions and limitations and don’t provide much more protection than the manufacturer’s warranty that comes with the appliance.  Even if you buy an extended warranty, you may have to be persistent to get repairs or a replacement. Keep notes of your communications with the warranty company, including the dates, who you dealt with, and what you were told in case you need that information to make a complaint or take other action.

It’s aggravating when appliances break down and even more aggravating if you are being bounced between the manufacturer, the retailer, and the company that handles the warranty claims. Keep track of your communications as you try to resolve the problem and contact your state or local consumer agency if you need help.

If new furniture is defective, don’t take it lying down – insist that it be repaired or replaced. Take pictures of visible defects, and if necessary pay an independent repair shop to assess the problem and give you a written statement.

ID Theft

Most states require residents to be notified about data breaches, and in some cases, to be provided with certain types of assistance. Federal law now allows consumers to ask the credit reporting agencies to “freeze” their credit records, at no charge, whether they are ID theft victims or not, to make it harder for their personal information to be misused if it does fall into the wrong hands. For more information go to https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs.

Internet Sales

When you order something by phone, by mail, or online, federal regulations require the merchandise to be shipped by the time promised, or if no delivery date was specified, within 30 days. If the delivery is delayed, you must be notified and given the choice to wait longer or cancel for a refund. The retailer can cancel the transaction, however, if it had a reasonable basis to believe that it could make timely delivery when it accepted your order but later learns that it cannot.

A free trial offer doesn’t mean that you get something for free, no strings attached. Typically you’ll be charged unless you cancel before the trial period ends, and depending on the terms of the deal, the charges may go on and on every month indefinitely. Be sure you know exactly what you’re getting into if you agree to a free trial offer and report any problems to your state or local consumer agency.    

If you are thinking about buying expensive equipment online, check the seller’s reputation with the Better Business Bureau and on complaint websites. Make sure you know the terms of the deal and print the details of the transaction to keep in case any questions or problems arise later. If you can’t get clear answers for why there is a delay, or the seller doesn’t fulfill the contract in a timely manner but tries to intimidate you or charge you for canceling, contact your state or local consumer agency.

Buying perishable goods online can be risky if the seller doesn’t package it properly and deliver it promptly.

Using a credit card is the safest way to pay for online purchases because federal law gives you the right to dispute the charge within 60 days of receiving the first bill on which it appears if it’s for the wrong amount, you never got the merchandise, or what you got is different than what you were promised. If you don’t discover a problem with an order until after that 60-day window, you may have a legitimate beef with the seller, but your ability to get a chargeback (refund) from your credit card issuer will depend on its internal policies. For the strongest protection, look for online retailers that promise delivery sooner than 60 days. Contact your credit card issuer right away if there is a delay in shipping or other problems.

Landlord/Tenant

You may be entitled to a certain amount of notice before your landlord can unilaterally end your tenancy. If you’re unsure whether your landlord is treating you fairly, don’t suffer in silence. Ask your state or local consumer agency for information about your rights and how to enforce them.

Tenants are generally only responsible for damage or other problems they and their guests cause. If your security deposit has been wrongly withheld or isn’t returned to you in a timely manner, contact your state or local consumer agency.

Many states require landlords to ensure that their rental property meets certain safety and health standards. But tenants are generally responsible to treat the property respectfully and avoid causing damage. Your state or local consumer agency can give you information about your rights and responsibilities as a tenant and help to mediate disputes with the landlord. 

If you contact your landlord about health or safety problems with the property, you may want to follow up with a letter and keep a copy so you’ll have a record. The time limits for landlords to make repairs may depend on the seriousness of the problems. Your state or local consumer agency can give you information about the landlord’s obligations. If timely action isn’t taken to remedy the problems, contact the local inspector. Some state laws specifically protect tenants from retaliation for reporting health code violations. You may be able to break the lease if the house or apartment becomes uninhabitable because of the issues.

Moving

Always get a written estimate for moving services and be sure you know what is included in the price, including how compensation will be calculated if anything is damaged. You may want to purchase additional insurance if you have valuable furniture or other belongings. If your property is going to be in storage for a while, inspect the storage area first to look for signs of water and other potential problems.

Before you buy a pet from a store or a breeder, ask your state or local consumer agency about your rights if the animal turns out to be unhealthy. You can find information about dog breeders and buying dogs through the American Kennel Club, www.akc.org. For information about cats and cat breeders, visit the American Cat Fanciers Association at www.acfacat.com/. 

Real Estate/Timeshares

Tempted to buy a timeshare? Ask yourself: Can you afford it? How does the cost compare to what you normally spend on accommodations when you go on vacation? What happens if you can no longer use it? Resist pressure to purchase a timeshare, and don’t rely on the salesperson’s assurances. Get the total cost, including fees and finance charges, and all promises in writing, and read the documents carefully. Check the company’s reputation with the Better Business Bureau nearest to its headquarters (find it at https://www.bbb.org/bbb-locator/). Remember, once you sign, you may not be able to cancel.       

Selling real estate can be complicated. Have a lawyer review the paperwork and advise you on any requests for listing fees or other payments you’re asked to make.

It’s worthwhile to have a lawyer represent you when you buy or sell a home to make sure that the property is free of liens and there are no other problems that could come back to haunt you later.

Own a timeshare you don’t want or can no longer use? Avoid companies that ask for fees upfront to sell your timeshare, regardless of whether they succeed, and don’t believe them if they claim they have eager buyers waiting. Consult with a licensed real estate broker or agent who can tell you if there is a market for your timeshare and will only take a fee if it’s actually sold. For more information about buying and reselling timeshares go to https://www.consumer.ftc.gov/articles/timeshares-vacation-clubs-and-related-scams#avoid. 

Some timeshare companies are unscrupulous, using high-pressure sales tactics and lies to wear people down and get them to agree to make a purchase – or even to buy multiple timeshares. If you or someone you know was abused by a timeshare company, ask your state or local consumer agency for advice about what to do.

The board of directors of a homeowner’s association sets the rules owners must abide by and is responsible for collecting fees and enforcing the rules. The board is also responsible for ensuring that the common areas are well-maintained. In addition to the association’s rules, there may be state or local laws that apply. If you have a problem or question about your rights, your state or local consumer agency may be able to provide advice and assistance.

Retail

The products you buy should perform as you would expect them to for a reasonable period of time, whether they are covered by written warranties or not. If a product stops working repeatedly, you may have the right to insist on a replacement or a refund.      

A mobile home is a big investment. Before you buy one, make sure you have a place to put it, since there is no automatic right to cancel the purchase if your circumstances change.

Handling funeral arrangements can be stressful, but as with any major purchase, it’s important to get a contract that specifies what will be done and when, and to follow up with the seller if the products or services are not provided. Don’t pay the full amount before everything you were promised has been done. At https://funerals.org/ the nonprofit Funeral Consumers Alliance provides information about planning funerals and your legal rights.

Services

If you have reason to believe that a plumber, electrician or heating and air conditioning contractor is not competent to do the work properly, ask your state or local consumer agency where you should report the problem.    

Be cautious before entrusting valuable items for repairs or consigning them for sale. Get a written receipt that describes what will be done. Don’t make any payments until the repairs have actually been made. Commissions for sales are normally deducted from the proceeds. Be sure you know what will happen with your items if they do not sell.   

Paying for services with a credit card rather than a check gives you added protection because you can dispute the charges if they aren’t performed or are not done correctly.

Towing

If you believe that your vehicle was towed from private property unfairly, ask you state or local consumer agency for information about the laws that apply and what your rights are.    

Failure to obey the parking rules set by apartment complexes, condominium, and homeowners associations can result in a costly tow. If you believe a tow was improper or you were overcharged, pay the fee to avoid storage charges and contact your state or local consumer agency for advice.  

If you are parking a vehicle that you don’t own in your designated parking space at your apartment complex, you might want to let the management know to avoid confusion and an unnecessary tow. 

Travel

Many travel agencies and tour companies belong to the American Society of Travel Advisors (ASTA), whose code of ethics requires members to deliver the services they promised and make prompt refunds when they are due. See Traveler Support under Find a Travel Advisor on the website, https://www.asta.org/. The safest way to pay for travel is by credit card because you can dispute the charges if the services were never provided or the refund to which you are entitled wasn’t made.

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For example, there’s the story in the survey report about a disabled man in Massachusetts who wanted to buy a scooter for $1,999 to help him get around. The salesperson told him financing was available and arranged to have someone from the finance company call him. The woman who called said she was emailing the finance paperwork and told him to remain on the phone while it worked its way to his inbox. She then instructed him to skip to the last page and initial some boxes, which he did, and promised to email the completed contract to him. When he received it, he saw that there would be 57 monthly payments of $92 plus a $262 buyout at the end, making the total cost nearly $6,000. Alarmed, he called the finance company to ask what the interest rate was on the loan and learned, to his surprise, that that there was no interest because it was a lease, not a loan. He also noticed that his signature appeared on the contract, though he never signed it.

There’s also the story from San Francisco about people receiving pre-recorded calls in Mandarin that claimed to be “official communications” from the Chinese embassy and directed them to press a number to connect with an embassy employee. The person at that extension (an imposter, not a real embassy employee) said there was a message waiting for them and offered to open it while they stayed on the line. Of course they agreed. The message was that they were wanted for questioning about a major fraud investigation involving their families back in China. While still on the line, they were then connected to the “detective in charge of the investigation” (another imposter), who explained that they could get out if the situation by paying for “bail.” Sadly, people emptied their savings accounts, mortgaged their homes, or borrowed heavily to wire thousands of dollars overseas to the scammers.

Keeping consumers on the phone in this manner is a form of control. It prevents them from having time to think about what they’re doing, read what they’re agreeing to, or check with anyone else. Furthermore, giving consumers a series of instructions to follow is a way of “grooming” them to do what the caller ultimately wants them to do – agree to the deal, provide their personal information, or send money.

When the Massachusetts man jumped to the end of the document to initial the boxes while the woman from the finance company waited on the phone, he didn’t have a chance to look at the terms of the agreement. And the victims of the Chinese embassy scam were so intimidated by the end of the call that they didn’t question whether they should wire the money – something they probably wouldn’t have done if they had checked the credentials of the people who spoke to them.

In its survey response, the consumer agency in Cuyahoga County, Ohio reported an even more disturbing trend: some scammers are instructing consumers to stay on the phone while they go to the bank to withdraw the money or to stores to buy gift cards in order to make the payments. This essentially enables the crooks to hold their victims captive and tell them how to respond if a teller or cashier becomes suspicious and starts asking questions. It also prevents the consumers from checking the validity of the claims or demands the callers are making.

Here’s advice from CFA about how to protect yourself from these abusive control tactics:

• Take charge of the conversation. It’s up to you to decide whether to speak with someone who calls you, especially if the call is unexpected. If you don’t want to talk to someone, say so and hang up!
• Take a time out. If the call is about something you’re interested in or you think might be valid, ask the person to give you the information and tell them you’ll call back. If the caller won’t give you the time to look at something or verify what you’re being told, hang up!
• Read the contract before you commit. If someone sends you a contract by email or text, don’t initial anything or click on “I agree” until you’ve read the whole thing carefully. If you’re not sure what something means or the agreement doesn’t match what you were told, ask questions and don’t seal the deal unless you’re satisfied with the answers.
• Resist scare tactics. Many phone scams involve callers falsely claiming to be from law enforcement agencies. This is deliberately intended to strike terror in your heart and make you easier to control. Tell the caller you’ll get back to them and hang up! Then find the number of the agency the person claims to be from by looking online or through directory assistance, and call directly to ask if what you’ve been told is true. Don’t use the number the caller gives you or that shows on Caller ID, since it may just lead right back to a scammer.
• Get advice. When something seems like it might not be quite right, ask for advice from your state or local consumer agency, your lawyer, your accountant, or someone else you trust.
• Take care how you pay. Government agencies don’t tell people to pay money they owe by wiring it or buying gift cards. Neither do debt collectors, utilities, and other legitimate businesses. If you’re asked for payment by one of these methods, hang up! And if you realize you’ve been tricked into doing it, contact the money wiring service or the gift card issuer immediately to ask if anything can be done to stop the payment.

For more tips from our consumer complaint survey report about how to avoid fraud and other problems, click here.

The post Take Control of the Call to Avoid Scams and Abuse appeared first on Consumer Federation of America.

We’ve also seen emails that look like they’re from the World Health Organization or other trusted sources with information about how to protect yourself, but when you click on the link or attachment it infects your computer with malware that steals your personal information or holds your computer for ransom. In another email scam, the message appears to be from the government offering money and asking for your banking and other personal details.

My electric company just issued a warning about imposters who are calling pretending to be from the utility and demanding payment. These scams aren’t new, but people who are struggling to pay their bills because they’ve lost their jobs due to the pandemic are especially vulnerable and may be unaware that many utilities are suspending collections during this emergency period. Investment scams are also common during times of financial stress. There is no such thing as a 100% safe investment.

While many scams rely on scare tactics, others are designed to appeal to your desire to help other people in need. The US Attorney for the Eastern District of Virginia recently warned that scammers are soliciting donations for individuals, groups, and areas affected by the virus.

Since scammers are endlessly creative, we’re sure to see more frauds related to COVID-19. Here are things you can do to protect yourself:

• Don’t respond to unexpected emails, texts, or calls from anyone you don’t know.
• Reject promises of miracle cures for the coronavirus – there aren’t any.
• Be aware that the government is not calling or emailing to offer you free money.
• Guard your personal information as you would your wallet.
• Only make purchases online from companies you know or have checked out with the Better Business Bureau.
• Avoid charity scams by following basic tips about how to donate wisely.
• If you are having trouble paying your utility bills, ask your state utility regulator if there is a program in place to prevent shut-offs and suspend collections.
• Get information about how to spot investment scams from your state securities regulator.
• If you have any doubts about an offer or request you receive, or suspect that something is a scam, contact your state or local consumer protection agency BEFORE you respond.
• Get your information about the virus from reliable sources, not posts on social media or sketchy news outlets. At https://USA.gov/coronavirus you’ll find information about what the federal government is doing in response to the virus and links to federal agencies and state health departments.

The post Protect Your Wallet and Your Personal Information from Coronavirus Scams appeared first on Consumer Federation of America.

We’ve also seen emails that look like they’re from the World Health Organization or other trusted sources with information about how to protect yourself, but when you click on the link or attachment it infects your computer with malware that steals your personal information or holds your computer for ransom. In another email scam, the message appears to be from the government offering money and asking for your banking and other personal details.

My electric company just issued a warning about imposters who are calling pretending to be from the utility and demanding payment. These scams aren’t new, but people who are struggling to pay their bills because they’ve lost their jobs due to the pandemic are especially vulnerable and may be unaware that many utilities are suspending collections during this emergency period. Investment scams are also common during times of financial stress. There is no such thing as a 100% safe investment.

While many scams rely on scare tactics, others are designed to appeal to your desire to help other people in need. The US Attorney for the Eastern District of Virginia recently warned that scammers are soliciting donations for individuals, groups, and areas affected by the virus.

Since scammers are endlessly creative, we’re sure to see more frauds related to COVID-19. Here are things you can do to protect yourself:

• Don’t respond to unexpected emails, texts, or calls from anyone you don’t know.
• Reject promises of miracle cures for the coronavirus – there aren’t any.
• Be aware that the government is not calling or emailing to offer you free money.
• Guard your personal information as you would your wallet.
• Only make purchases online from companies you know or have checked out with the Better Business Bureau.
• Avoid charity scams by following basic tips about how to donate wisely.
• If you are having trouble paying your utility bills, ask your state utility regulator if there is a program in place to prevent shut-offs and suspend collections.
• Get information about how to spot investment scams from your state securities regulator.
• If you have any doubts about an offer or request you receive, or suspect that something is a scam, contact your state or local consumer protection agency BEFORE you respond.
• Get your information about the virus from reliable sources, not posts on social media or sketchy news outlets. At https://USA.gov/coronavirus you’ll find information about what the federal government is doing in response to the virus and links to federal agencies and state health departments.

The post Protect Your Wallet and Your Personal Information from Coronavirus Scams appeared first on Consumer Federation of America.

Our nation’s comprehensive COVID-19 response must include a strong paid sick leave policy and protecting consumers by ensuring affordable access to communications services, preventing utility shutoffs, mortgage foreclosures, student loan defaults, negative credit reporting effects, overpriced insurance, and making sure that airline and hotel customers’ rights are protected in any financial bailout of these industries.

The Consumer Federation of America has identified critical consumer protection issues that must be addressed as part of a comprehensive response to this crisis. Many of these items are focused on protecting those hardest hit by the economic fallout. Doing so is not just a matter of economic justice; it is the best way to stabilize the economy.

CFA and it’s over 250 national, state and local organizations are committed to working with policymakers at all levels to implement a “Comprehensive Consumer Agenda to Address the COVID-19 Crisis”.  For the details behind the following agenda, please see our LINK March 20, 2020 letter to the President and Congress.

A Comprehensive Consumer Agenda to Address COVID-19

1. Create a comprehensive national paid sick leave policy to reduce the spread of the disease. Lack of paid sick leave encourages tens of millions of workers to continue working when they are sick, which can nullify the critically important benefits of social distancing.

2. Protect those hardest hit from economic hardship by:

• Providing forbearance to economically distressed mortgage borrowers. Any homeowner experiencing economic hardship because of the virus must have access to 180 days of forbearance on mortgage payments.
• Halting evictions and foreclosures. There must be a 180 day moratorium on evictions of tenants experiencing economic hardship because of the virus, with support provided to property owners who suffer rental income losses.
• Canceling student loan payments for the duration of the crisis. It is not enough to pause monthly payments, the government must make tax free payments on holder’s behalf so millions of Americans can continue to make progress reducing their student debt as the economy struggles.
• Suspending debt collection. Debt collection activities, including legal proceedings, garnishments, repossessions, and debt selling, must be prohibited during the state of emergency.
• Curtailing high-cost lending schemes: A rate cap of 36% must apply to high-cost credit, such as payday loans, refund anticipation loans, and car title pawns to ensure that vulnerable consumers aren’t trapped by overpriced debt.
• Placing a moratorium on negative credit reporting. To protect consumers’ credit records during the pandemic, there must be, at least, a four month moratorium on negative credit reporting.
• Maintaining consumers’ access to affordable communications services. As remote communications become critically important, service providers must abandon pricing practices that maximize revenues, suspend overcharges for “excess” data usage, terminate service cut-offs, and increase network availability to the public.
• Requiring big data platforms to promote the public interest. Big data platforms must remove misleading information. Their big microphones must promote the public interest, not the corporate bottom lines. Non-commercial pandemic information from public health, safety and governmental entities must be given a prime location on all screens.
• Preventing misleading advertising and price-gouging. Advertisers, and the media carrying ads, must ensure that claims related to the coronavirus are completely accurate. Online marketplaces must reject products and services making misleading claims or that offer basic necessities at unfairly inflated prices.

3. Ensure that consumers’ interests are protected as industries seek federal financial support by:

• Mandating fairness in the skies. Airlines must waive cancelation and change fees for all consumers during the federal state of emergency. As a condition of an airline bailout, Congress must require price transparency, make future fees for cancelations, changing flights, and checking bags proportionate to actual costs, lift state preemption, and provide consumers with private rights of action.
• Accommodate hotel customers. As organizations and individuals heed requests to limit non-essential travel and cancel events, some hotels have continued to charge consumers and organizations. As a condition of a hotel bailout, Congress must require hotels to honor requests for room and event cancelations without penalty and to refund deposits until the federal state of emergency is suspended or travel limit recommendations are lifted. Going forward they must provide full price transparency on charges and extra fees.
• Reduce auto insurance premiums to reflect reduced driving. Insurers should be required to offer discounts to people driving less due to COVID-19.  Miles driven, a key factor in claims costs, will drop dramatically as workers are laid off, switch to telework, or self-isolate. This should be a consumer benefit, not an insurer windfall. See CFA’s letter to Insurance Commissioners.

The post Government Must Protect Consumers’ Health And Pocketbooks During COVID-19 Crisis appeared first on Consumer Federation of America.

1. Check travel cancelation and refund policies. If you have booked a flight, cruise, train trip, tour, hotel or other travel arrangements and no longer wish to go because of concerns about the virus or because the event you were attending has been cancelled, you are not automatically entitled to refunds or credits. Companies set their own cancelation and refund policies, but many are now making exceptions in light of the situation. Contact the businesses to ask about your options. You may also have protections as a benefit from your credit card issuer. If you haven’t made travel plans yet, ask companies how they will handle cancelation requests before you book. Travel insurance is often offered through airlines and other travel sellers and is also available to purchase independently, but the situations these policies cover vary, so read the fine print and contact the insurer directly to make sure you understand the coverage.
2. Report price-gouging. In some states, price hikes for certain necessities are illegal if the governor has declared an “emergency.” Even in the absence of an official emergency, your state or local consumer protection agency may want to hear about sudden increases in prices for items such as face masks, sanitizing products, and essential household goods. You should also notify companies such as eBay and Amazon if you notice that sellers using their platforms are offering such products at exorbitant prices.
3. Investors beware. In times of wild market swings, consumers may be vulnerable to scare tactics designed for lure them into “safer” investments that in reality have hidden risks and costs. For example, salespeople might prey on people’s fears to sell them annuities by claiming that these products “do not lose value like stocks” or are “no cost” investments, neither of which is true. Contact your state securities regulator if you have questions about investment offers.
4. Watch for other scams. Crooks take advantage of hot topics in the news, and the coronavirus is no exception. There are already reports about scammers sending emails pretending to be from well-known health organizations and including attachments or links which, if you click on them, can infect your computer and steal the personal information it contains. It would not be surprising to see other scams emerge, such as bogus claims for products to prevent or cure coronavirus. Be on guard for unexpected messages or offers that are suspicious and contact your state or local consumer agency for advice before you respond. You can also report scams to those agencies and to the Federal Trade Commission.

The post Consumer Federation of America Offers Coronavirus Tips appeared first on Consumer Federation of America.

• Know who you’re dealing with. Confirm the online seller’s physical address and phone number before you buy.
• Know what you’re buying and what it will cost. Read the seller’s description of the product, including the fine print! Factor in shipping and handling into the total cost of your purchase.
• Check out the terms and conditions. Can you return the item for a refund if you’re not satisfied? Who pays the shipping costs? Is there a restocking fee? Print and save records of your online transactions, including all emails to and from the seller.
• Pay with a credit card or gift card, NOT debit. Credit cards offer the best consumer protections. When your debit card number is stolen, you must report unauthorized charges to the card issuer within sixty days after your account statement showing the errors is sent to you. Otherwise, you may have to pay. For stolen credit card numbers, you are not responsible for any unauthorized charges.
• Shop on a secure server. Never shop on a public Wi-Fi network or unsecured server. Look for the lock and/or “https” at the beginning of a URL to ensure your visiting a secure site. It doesn’t mean your information cannot be compromised, but it’s less likely on these types of servers.
• Use antivirus or antispyware software and a firewall. Make sure to update them regularly.

If you decide to use your credit card, make sure to pay off your purchases before any interest accrues. No matter how you pay for online, monitor banking statements closely. See charges you didn’t make? Contact your financial institution immediately and follow-up in writing.

This blog is one of a series of articles contributed by state and local consumer agencies in connection with the annual survey about consumer complaints conducted by Consumer Federation of America. The survey report provides “real life” examples of complaints and tips for consumers. Have a consumer problem or question? Find your state or local consumer agency at https://www.usa.gov/state-consumer.

The post How to Stay Safe when Shopping Online appeared first on Consumer Federation of America.

According to recent studies, we should be less trusting of online reviews. In fact, one firm predicts that by 2020 a “digital distrust” will set in as people will consume more false information than true information. Evidence of this has become increasingly more apparent; Yelp labels approximately 25% of its reviews as “suspicious” and Airbnb has been accused of blocking negative reviews. Although it is illegal to ban honest reviews, businesses have tried to sue customers that left negative reviews on the grounds of defamation. Moreover, according to a recent consumer survey, 79% of people claim they’ve seen a fake review in the past year.

Fortunately, some action is being taken to help curtail the spread of misinformation. For example, Amazon banned reviews by people who get free or discounted products in exchange for making them and sued over 1,100 sellers of fake reviews. Law enforcement agencies also prosecute cases to halt companies from supplying fake reviews.

Still, with 84% of the people surveyed admitting they can’t always identify fake reviews, how can consumers rely on the information they read? Here are some clues to spot false or bot-generated reviews:

• High volume of reviews in a short time span
• Reviews with similar language
• The company or seller being reviewed has no website
• High percentage of five-star reviews
• Reviews are very vague or short
• Odd language and phrasing in reviews

Before making a purchasing decision, check reviews from multiple sources, use reputable review outlets like Consumers’ Checkbook or Consumer Reports, and even speak to sales staff trained on the products or services offered. As technology evolves, building trust in online information matters more than ever.

This blog is one of a series of articles contributed by state and local consumer agencies in connection with the annual survey about consumer complaints conducted by Consumer Federation of America. The survey report provides “real life” examples of complaints and tips for consumers. Have a consumer problem or question? Find your state or local consumer agency at https://www.usa.gov/state-consumer.

The post Review Bots: False Advertising or Opinion Spam? appeared first on Consumer Federation of America.