Articles Posted in Consumer Protection

In the wake of the economic crisis largely fueled by weak financial regulations and poor consumer protections, the federal government enacted the Consumer Financial Protection Bureau. It was part of the Dodd-Frank Consumer Protection Act, which included a number of elements that shielded consumers from abusive and predatory practices and extended power to hold violators to account. consumer protection

Now, the Trump administration and Republican Congress have made it clear they intend to weaken the CFPB, and slash other consumer protection too.

Just recently, the Treasury Department issued a report that proposes a major weakening of the act, dramatically reducing the role of the federal government in overseeing the consumer financial services market. In particular, the CFPB would be constrained to a major degree. Republicans have been after the CFPB since it was created and began providing regulatory oversight for seven different federal agencies. While even lenders have seen the value in consolidation of regulatory compliance, conservative lawmakers continue to try to undercut the act and the consumer protection it provides.  Continue reading

Since 2010, there has been a rapid growth in the U.S. car loan industry. A new report from Bloomberg indicates borrower fraud is soaring, and we may soon near a bursting bubble, similar to what we saw with the housing crisis. car accident

It’s estimated as many as 1 percent of car loan applications in the U.S. contain some type of material misrepresentation, according to Point Predictive, a data analytics company cited by Bloomberg. That’s close to the just-over-1-percent of fraud we saw in U.S. mortgages back in 2009, when the housing market financial crisis was in full swing.

The good news is the economic fallout is likely to be much less earth-shattering (for most of us) because there is simply less outstanding debt on automobiles as there are on houses. Still, there are some uncanny parallels between the mortgage and auto industries in terms of the growth of this type of fraud. While we don’t know just how widespread the problem was prior to 2009 (lenders weren’t reporting information to each other and often weren’t investigating such incidents on their own), it does seem as if we may be on a similar track.

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We are now slightly more than a month in to the Trump presidency, and Democrats are already gearing up for the next election, setting their sights on the next mid-term. However, if they want to prevail, they are first going to have to acknowledge and accept that the Obama administration did not oversee a golden era of financial and economic policies – no matter what kind of challenges he inherited.miami

The reality is Obama had many opportunities to help those in the working class, and he repeatedly declined to seize them.

The two main areas to which we refer:

  • Obama’s handling of the foreclosure crisis/ subsequent bank bailouts. The end result of the policies adhered to on these fronts resulted in concentrated financial power, rather than support of the American middle class.
  • Enactment of pro-monopoly policies. This approach crushed rural area economies, so it was unsurprising many of those voters – even those who had previously voted for Obama – swung to the side of Donald Trump.

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In the wake of Wells Fargo’s most recent scandal, in which the financial firm was caught red-handed creating two million fraudulent accounts by customers, the bank promised it would clean up its act. It promised to change its practices and do its best to protect its customers. But as a New York Times‘ investigation shows, the bank has been – and still is – actively trying to kill off lawsuits stemming from its fraud by forcing customers affected to settle their claims via arbitration, rather than be allowed to have their day in court. So much for accountability. credit cards

Highlighting these actions are critical now that we have leaders intent on gutting the Consumer Financial Protection Bureau and its regulations – proposed and existing.

We should start by explaining first what forced arbitration is. It is part of a binding contract that bank consumers “agree” to by virtue of having an account, and it requires that all disputes arising with the firm must be handled with a private arbitrator, rather than in a court of law with a judge or jury. There is very good reason banks (and many other businesses) push so hard for these provisions, and its that the outcomes are most often favorable to defendants. Even where decisions are made in favor of consumers, they tend to be for far less than what they might have received in litigation. What’s more, the process is not transparent. It’s all confidential, so it does nothing to help others similarly situated. It effectively quashes the ability of wronged consumers to engage in a class action, which is sometimes the only way to truly hold these large firms accountable.  Continue reading

Massachusetts Senator Elizabeth Warren, in an open letter to U.S. president-elect Donald J. Trump, takes aim at the new administration’s transition team, packed with corporate insiders and lobbyists. pen

In her letter, Warren said if Trump intends to keep his promise to voters to “drain the swamp” and rid it of “powerful special interests” that “rigged” the political and economic systems against the average American, he needs to start by reevaluating his own transition team. Although Trump promised he would not be a puppet to lobbyists or special interests or donors – something that struck a cord with many voters – he has since elevated to his team a number of industry insiders, special interest lobbyists, wealthy investors and Wall Street bankers. Several more are reported to be on the short list of possible cabinet members.

For example, the reported top recommendation for treasury secretary is a hedge fund manager and partner at Goldman Sachs, who once worked for George Soros. The proposed commerce secretary is a billionaire private equity executive who owned a coal mine with hundreds of safety violations before an explosion killed a dozen miners. He’s also a top member of a Wall Street fraternity that, according to New York Magazine, finds entertainment in singing drunken show tunes that mock poor people. These are exactly the kind of people Trump vowed he was running against. Continue reading

Many were shocked by Donald Trump’s win on election day. However, it appears there may have been some foreshadowing that was largely ignored by mainstream media outlets. As we take a step back to analyze the anti-establishment, populist movement that fueled this fire, there is one element that shouldn’t be overlooked: The failure of the Obama administration to hold accountable a single, high-ranking executive at any large financial firm for the 2008 economic crisis.american flag

Millions of people lost their jobs. Millions of people lost their homes. And after the smoke had cleared, there was a failure to pursue those who knowingly engaged in fraud. It confirmed for many the suspicion that powerful players on Wall Street receive special attention. Those on Main Street? We get the short end of the stick. Trump’s repeated assertions of a “rigged” system rang true for a huge swath of the electorate.

Although there were a few media outlets that doggedly pursued this lack of accountability (Rolling Stone was one), many were content to simply report it and move one. Those in affluent areas likely overlooked the fact that this failure resonated with people long after the civil settlements had been inked. These high-profile bankers paid some fines, and sometimes shelled out money for penalties from their own pockets. In exchange, they were able to avoid any jail time. Understandably, that left millions of Americans feeling cheated, and as if the justice system was broken. Continue reading

A company that promises to protect consumers from identity theft has been accused of violating a federal court order that requires it to keep those promises and refrain from deceptive advertising. lock

The case against LifeLock dates back several years, but now,  the Federal Trade Commission (FTC) announces LifeLock has agreed to a $113 million settlement in the matter – the largest monetary award ever wrangled by the commission in an enforcement action.

The FTC first took action against the firm five years ago, when it alleged in the U.S. District Court for the District of Arizona that the company didn’t deliver on advertising claims promoting its identity theft services. The firm vows to keep consumers’ sensitive personal information shielded from thieves. But the FTC alleges the company failed to provide the kind of protection it promised, meaning it misled consumers with advertising that was deceptive. Continue reading

The U.S. Senate recently took one major step toward protecting the rights of consumers and the integrity of capitalism in the 21st Century with its passage of the Consumer Review Freedom Act (S. 2044, H.R. 2110). The bill targets so-called “gag clauses” or “non-disparagement agreements,” which some companies use to curb criticism online.enterkey

Although many companies have argued that competitors or others are unfairly using online tools to spread falsehoods or maliciously damaging their reputation without cause, the flip side is that consumers have been penalized thousands of dollars for posting negative – but honest – online reviews. These reviews are widely used by prospective customers to determine whether to buy a service or patronize a location, so there is a lot at stake on both sides.

These dubious non-disparagement clauses are often tucked into the fine print of the purchase agreement, and have been found on even the most seemingly inane purchases, such as cellphone accessories. Others have been found in rental agreements with landlords, wedding contractors or sellers of weight loss products. Continue reading

Renters in Miami are being bled dry by a combination of sharply rising housing costs, stagnant wages and lower-than-average incomes. miami1

A report from the website apartmentlist.com, based on figures from the most recent 2014 U.S. Census, reveals that no other city in the county had as many renters as cost-burdened as those in Miami. Two out of every three renters in Miami are paying a third or more of their salaries to their landlord. Renters who pay more than 30 percent of their income for housing are considered “cost-burdened.”

Of course, rents aren’t necessarily as high as what you might see in Boston or New York or San Francisco. But people here in South Florida are earning much less in terms of salary. Further, home ownership is not an option that is available to many people who live here because home prices have skyrocketed as the housing market stabilizes from the housing crisis. South Florida had been hit particularly hard by the economic downturn, and while the uptick in housing prices has been good for some folks, it has meant others have lost their homes and/or are stuck in high-price rentals. Continue reading

Florida residents are protected from dubious debt collection practices by two laws: The federal Fair Debt Collection Practices Act and F.S. 559.72. cash

The laws prohibit things like:

  • Using or threatening to use violence;
  • Communicating or threatening to communicate with a debtor’s employer before obtaining a final judgment against debtor;
  • Disclosing information to anyone other than debtor or family information that may affect debtor’s reputation;
  • Using abuse, vulgar or obscene language;
  • Claiming or enforcing a debt when it is known the debt isn’t legitimate.

The problem, as highlighted recently by The New York Times, is that most state laws were written many years ago, long before the digital age. At the core, these statutes were written to protect people from becoming completely destitute. But debt collectors are now finding new ways to secure court judgments that allow them to garnish paychecks or seize bank accounts belonging to debtors. Continue reading