DirectTV Charges Customers for Unwanted Movie
December 8, 2009
Consumer Warning Network received two inquires concerning “pay for view” fees showing up on DirectTV statements for movies that were not ordered. We looked into it and learned what the problem was.
Warning, apparently there is a glitch in DirectTV’s system that downloaded the movie “Angel and Demons” to receivers automatically whether you ordered the movie or not. Here is the catch; if you watch the movie you will be charged for it. Delete it and you will be o.k. There is no warning that you are about to be charged. You look at your play list and, lo and behold, there is the movie “Angels and Demons”. Hey, it’s on my play list so it must be ok to watch. NO! You will be charged.
DirectTV is working on this problem, but until it is fixed - Beware. Thanks to Consumerist for first reporting this.
Getting Tough on Mortgage Lenders Who Won’t Help Homeowners
November 30, 2009
Homeowners facing foreclosure may have a little help on the horizon. Of course, we’ve all heard that before. The Department of Treasury just announced a new ‘get tough’ policy that will punish mortgage lenders with fines, unless they speed up efforts to help homeowners.
With foreclosures still on the rise, the administration says this is an effort to make sure banks come through on offers to lower payments through mortgage modifications. Click here to read an article by Reuters on the new effort.
For many homeowners who have been unable to get their mortgage company to work with them, there may still be hope with the “Produce the Note” strategy. Click here to learn more.
The Best & Worst Deals at Warehouse Club Stores
October 23, 2009
By Nicole Andriso:
Shopping at one of the big warehouse clubs is a little like going to Disney World – it’s a sensory overload of things that are bigger and better than they are anywhere else. As Americans, we are conditioned to believe that bigger is better, and in a warehouse club store, buying bigger products or products in bulk is also typically cheaper. Right?
Well, right and wrong. Some items purchased at the big warehouse stores (including Sam’s Club, BJ’s, Costco) are worth buying in bulk, but other products aren’t a deal at all. In fact, the same products could be purchased at a regular grocery store or merchandiser for a much cheaper price. This quandary got the Consumer Warning Network thinking about what constitutes the best and worst deals at warehouse stores. They might surprise you.
To Buy
According to an article in Smart Money magazine, the best items to buy at the warehouse stores include: alcohol, electronics, dairy products, meat and prescription medications.
Wine, liquor and beer prices can be 35% lower than supermarket prices, while high-quality, top-notch butcher cuts of meat are sold at supermarket prices. This means the consumer is getting a higher quality cut for the same price. Dairy products such as milk, butter and eggs are good deals, especially since those prices never fluctuate in the regular grocery stores. At the warehouse stores, these items are up to 20% cheaper all the time.
Prescription medications can cost more than 50% less than the regular pharmacy chains, and according to Smart Money, the prices sometimes even beat the $4 generics sold at Walmart. A perk of going to a warehouse store – often times non-members can get their prescriptions filled at the pharmacy or online.
Not to Buy
While some items are worth the savings for a $30-$40 per year membership fee, others clearly are not. These items include: designer clothing, frozen foods, paper goods and those random items you just don’t use in their entirety.
Many designers create clothing lines specific to warehouse stores. If a true fashionista wants to buy a discounted item, a better bet would be TJ Maxx or Marshalls. And unless you have multiple freezers, the warehouse store deals on frozen food aren’t so cool, either. Since the food is in bulk, the issue of storage comes into play for the consumer – does the average consumer have enough room in their freezer for a 5-count box of frozen pizzas? Most don’t.
Which leads us to the next worst buy at the warehouse store: those items that you just don’t ever fully use, or can’t use before it goes bad. Items like large bottles of sunscreen, large cans of tuna or 5 pounds of fruits or vegetables. Unless you have a large family or are purchasing these items for a party, the average consumer probably won’t eat or finish everything, nor will they get their money’s worth.
The Question
For consumers who still believe that bigger is always better and that warehouse club stores have the best deals, might want to reconsider. Ask yourself a few easy questions before putting anything in your oversized cart: Will you finish the item? How many people will use it? Can you get it cheaper elsewhere? Asking these simple questions will not only save you money, but will also prevent you from purchasing another gallon of mayonnaise that will just sit in your pantry.
Have They No Shame?
October 15, 2009
By Angie Moreschi:
Here we are, one year after our entire financial system teetered on the brink of collapse. The good news is most banks, with a strong assist from taxpayers, are now back on steady ground. The bad news, they’re right back to the same slippery slope of executive compensation.
JP Morgan Chase had the good fortune of announcing a second consecutive quarter of surprisingly strong earnings. Chase’s hefty $3.6 billion in profit for the 3rd quarter helped send a wave of euphoria onto Wall Street, sending the Dow Jones industrial average back up over 10,000, for the first time in a year.
It all sounded so positive and reassuring, that maybe the economy really is beginning to rebound. Then came word that Wall Street would also pay out a record $140 billion in executive bonuses, this year. That news landed with a thud and left consumers wondering, “Have they no shame?”
When all of their 2009 profits have a lot to do with being propped up by taxpayer dollars and the drastically cut prime rate, which makes it very cheap for banks to borrow money, it just doesn’t feel right for executives to excessively pad their pockets. It’s down right sleazy when you consider just how much consumers are still hurting, with unemployment approaching 10%. Here we go again. Wall Street celebrates, while Main Street suffers.
Instead of raking in big bonuses for profits made on the backs of citizens, how about sharing some of the wealth? Loosen up credit for small businesses, so they can get a fair shot at staying afloat and keeping people employed. Give that homeowner struggling to pay his mortgage, a real offer on a loan modification.
But no, on Wall Street, we see that greed does not release its grip quite so easily. Mine. Mine. Mine. Maybe if angry consumers continue to protest, we can shame these CEO’s into taking fair compensation, based on the circumstances.
Then again, maybe they’ll just take their millions and get away for a nice vacation in the south of France.
Don’t Get Mad, Get Even: How To Complain Effectively
October 2, 2009
By: John Newcomer
Most people would rather have a root canal than complain about a defective product, an overcharge, or unsatisfactory service. Their reluctance is easily understood. Companies have made it extremely difficult to complain. How many of us dread the thought of the ever present “phone tree.” To successfully maneuver through the tedious steps of the phone tree options requires the patience of Job and the cunning strategy of an Army general.
First you must wait the obligatory 10 minutes, because every company seems to be experiencing extremely high call volume. Then it is “phone tree” time. All the time you are going through punching numbers, listening to the next instruction, punching in the next number, you know deep down inside that you will either get disconnected or there will be no option for complaining.
Mortgage Lenders Deny 1 in 3 Applications
October 1, 2009
By Angie Moreschi:
It wasn’t just your imagination. It’s been tough going to get a new mortgage or refinance, according to a new Federal Reserve report. Lenders made it harder for borrowers by tightening up qualifications, despite billions in taxpayer bail-out dollars that were supposed to loosen up lending.
The Federal Reserve report shows nearly one in three borrowers who applied for a mortgage last year was denied. In the annual report on mortgage practices among the nation’s lending institutions, the Fed says the denial rate for all home loans was about 32 percent last year — about the same as in 2007, but up from 29 percent in 2006.
The denial rates for Blacks and Hispanics were more than twice as high as the rate for white borrowers.
The report highlights massive changes in the lending industry after the housing market bust. Overall loan applications were down by a third from a year earlier, and were half the level in 2006.
The data, collected from nearly 8,400 lenders, is required under the Home Mortgage Disclosure Act of 1975.
5 Ways Drug Companies Put Profits Before Patients
September 10, 2009
By Terry Smiljanich:
When it comes right down to it, drug companies don’t look at us as patients, they look at us as consumers. Their primary goal is not to discover new drugs to make us healthier, but rather to make their shareholders happy by keeping short term profits up.
Unfair, you say? But unfortunately, quite true. Let’s look at some big ways the major drug companies put profits ahead of patients. Here are five drug industry tactics that serve to put their bottom lines above the country’s welfare:
Student Loans - The Next Mortgage Meltdown
September 4, 2009
An entire generation of our country’s young people face a financial Armageddon of sorts. The promise of a better future through education has turned into a means by which student lenders trap kids in oppressive debt, often with outrageous interest rates. These young people, just beginning life on their own, are unable to get out of the debt cycle, often for the rest of their lives. It sounds ominous, but it’s happening.
Students are beginning to fight back against lenders like Sallie Mae. Consumer Warning Contributor Attorney Nicole Mayer is helping them. She was interviewed for the article below by The American Association for Justice’s Trial Magazine.
Student Loan Lenders Face Scrutiny–and Lawsuits
September 2009 Issue
By Carmel Sileo -Trial Magazine , Associate Editor
Take easy credit terms, anxious and unsophisticated borrowers, and a commodity pitched as the ticket to wealth and security. Result: financial meltdown.
If that sounds like the housing market, it’s because the student loan industry has similar characteristics. Like mortgages during the housing boom, student loans are easily available and eagerly embraced by borrowers, lenders, and society. Like homeownership, a college education is promoted as the key to middle-class prosperity, a solid investment worth borrowing to the hilt for. Like mortgages, some private education loans were securitized and sold in bundled packages that mixed high-risk and low-risk borrowers.
And like homeowners facing foreclosure, students face loan burdens so onerous that default seems inevitable.
“As a nation, we have $700 billion in student loan debt,” said Alan Collinge, author of the new book The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back and founder of the Seattle-based group Student Loan Justice. “Student loans have a higher default rate than any other loan, including credit cards, car loans, home loans, and almost anything else.”
Many borrowers allege that the lenders they trusted used predatory lending and collection practices. Because student loans are exempt from many rules governing consumer loans, the potential for abuse is high, critics say. The growing number of complaints has led to scrutiny by government investigators and private lawsuits against the lenders.
In 2007, a nationwide investigation headed by New York Attorney General Andrew Cuomo found that three major student lenders-SLM Corp., better known as Sallie Mae; Citibank; and Education Finance Partners-had given universities kickbacks in exchange for being designated their “preferred lenders.” The investigation led to a settlement of $6.5 million.
In June, Deanne Loonin, director of the Student Loan Assistance Program of the National Consumer Law Center, testified before the Department of Education about lending and collection practices in the student loan industry, especially at for-profit schools.
“The current messy patchwork of federal law is inadequate to protect students and taxpayers,” Loonin testified, and “using private collection agencies not only to collect but also to resolve disputes with borrowers has been a disaster for borrowers.”
“With the government guaranteeing many loans and without consumer protections, you get predatory lending on the front end and abusive collection tactics on the back end,” said Nicole Mayer, a lawyer with the Tampa-based James Hoyer law firm. “It’s a double whammy of the worst kind.”
There are three types of student loans: federally guaranteed loans backed by the Federal Family Education Loan Program (FFELP), including Stafford and PLUS loans, administered by private lenders like Sallie Mae; federally guaranteed loans by the Department of Education issued directly to students; and private education loans (PELs) that are not federally guaranteed, often those issued by for-profit schools, such as trade and technical schools.
Most students use a mix of loan types. The average student’s debt is nearly $20,000 by graduation-double the amount owed a decade ago. Recent media reports have highlighted the problem of borrowers defaulting on these loans: In July, for example, the newsmagazine program Now on PBS profiled a social worker in Baltimore who was evicted when, after losing her job, she was unable to afford both her rent and her student loan payments despite repeated attempts to renegotiate her terms.
“The Department of Education will tell you that it’s not a big problem, that the system works well and defaults are low,” said Collinge. “It’s a lie.” Collinge pointed to a 2003 audit by the department’s Office of the Inspector General, which found that the lifetime default rate for students at four-year colleges was between 19 percent and 31 percent, depending on the type of loan. For students at two-year colleges, the rate was as high as 42 percent, and students at for-profit schools had a high-end default rate of 51 percent.
Unique legal status
Student loans enjoy a unique legal status unlike most other consumer loans. “You can’t discharge them in bankruptcy. They don’t have to comply with federal truth-in-lending laws, state usury laws, statutes of limitations on debt collection, or much of anything else,” said Collinge. “If it’s a federally guaranteed loan, the lenders can garnish your paychecks, your Social Security and disability checks, and your tax refunds.”
Michael Zahara, a former default prevention specialist at the Las Vegas office of the Student Assistance Corp. (SAC), a debt collection agency owned by Sallie Mae, said, “What we want is to get back what was lost: The protection of the district courts. Let a judge rewrite the terms of a loan, or even discharge it. Give people back the access to the courts.”
Students can only discharge their loans, including PELs, in bankruptcy by proving that paying them poses an “undue hardship.” As a result, hard-pressed graduates have little recourse but to ask for a forbearance.
Granted by the lender when a borrower finds it impossible to meet monthly payments, forbearance halts the collection process. But during forbearance, interest and penalties continue to accumulate, resulting in loan amounts that can double or triple once the borrower begins paying again.
Robert Applebaum, a lawyer in New York who founded the Facebook group Cancel Student Loan Debt to Stimulate the Economy, which claims almost 200,000 members, wrote on the New York Times “Room for Debate” blog in June that he used a forbearance after law school to work in public service law. Then he “watched as the amount I owed ballooned by nearly $20,000 during the time I served the community.”
On his Facebook site, Applebaum writes that the student loan industry has created a generation of “educated poor, with student loan debt making ever more college graduates and young professionals unable to buy a house or start a family or a small business.”
Mayer of the James Hoyer law firm filed suit last year against Sallie Mae, the country’s largest distributor of student loans. The suit alleges violation of the federal Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA). In March, a district court in Connecticut granted Sallie Mae’s motion to dismiss the TILA charge but did not dismiss the ECOA charge. (Rodriguez v. SLM Corp., 2009 WL 598252 (D. Conn. Mar. 6, 2009).)
Suing Sallie
Many critics of the student loan industry say lenders like Sallie Mae are pressing borrowers to go into forbearance, sometimes even against the students’ will.
Zahara said SAC loan administrators routinely pushed borrowers into forbearance to hide the number of bad loans on their books. “I would estimate that in my facility alone we had about $350 million in bad loans,” he said.
In 2005, Zahara filed a qui tam lawsuit against his former employer, alleging violations of the federal False Claims Act and charging that Sallie Mae and SAC “allowed their employees and agents to falsify loan records pertaining to delinquent FFELP loans held by Sallie Mae.” His suit claims that “fabricating forbearances benefited defendants and defrauded the federal treasury.” In March, the lawsuit was dismissed without prejudice so that Zahara could find a new lawyer. (Zahara v. SLM Corp., No. 1:06-cv-088-SEB-JMS (S.D. Ind. Mar. 12, 2009).)
Last year, Sallie Mae shareholders also sued the company, saying it engaged in risky behaviors by granting loans to high-risk borrowers (primarily students attending for-profit schools). The plaintiffs claim that Sallie Mae “used forbearance as a means to reduce delinquencies and avoid charge-offs on the increasing number of loans that were past due with no documented basis for future repayment and to avoid charging off those loans.” (In re SLM Corp. Secs. Litig., No. 08-CV-1029 (WHP) (D.N.Y. filed Dec. 8, 2008).)
According to the complaint, “If these were private credit loans where the lender bears the risk of loss, Sallie Mae would have forced the loan into default long ago and cut its losses; but because FFELP loans are essentially risk-free to Sallie Mae, it keeps extending the loans knowing that the government is ultimately responsible for paying the loan balance when the borrower defaults.”
The lawsuit also claims that “based on information provided by former employees of SLM that worked in collection centers . . . [the] policy was consistent in encouraging PEL collection employees to move past-due loans into forbearance whenever it appeared that payment was not forthcoming. SLM did anything it could to avoid charging-off a loan.”
Signs of relief
There are signs that the government is trying to head off the problem before the numbers get too dire. Student advocates praised the Obama administration’s decision to remove “middleman” lenders like Sallie Mae and make all student loans direct government loans.
In July, the Department of Education instituted the Income-Based Repayment (IBR) plan, which caps student loan repayments to levels based on income, state of residence, and family size. Also, any debt and interest remaining after 25 years will be forgiven. Students who opt to work in specific nonprofit or public-service jobs could be forgiven after 10 years of IBR payments.
Mayer said she was taking a “wait and see” approach to the IBR, pointing out that it did not affect PELs, which cause most of the hardship. Collinge said the government was taking some good first steps but that these tended to sweep aside the real issue, which is to return bankruptcy and other consumer protections to people who have student loans.
“We’re not fighting to let people skate on their debts,” he said. “We just want people to have the same protection that applies to every other kind of debt.”
Carmel Sileo, Associate Editor
Back to School Shopping Falls Short
August 25, 2009
By Nicole Andriso:
The beginning of a new school year is just getting underway, and retailers are hoping back-to-school shoppers will overlook the down economy and higher gas prices and still go shopping for new school supplies. But according to a recent Gallup Poll, while consumer confidence is relatively high, consumers aren’t expected to respond favorably to back-to-school shopping.
The National Retail Federation’s (NRF) 2009 Back to School Consumer Intentions and Actions Survey states the average family with students in grades kindergarten through 12 is expected to spend 7.7 % less than they did in 2008. According to the survey, the economy is having a major impact on back-to-school spending, as four out of five Americans (85 percent) have made some changes to their back-to-school plans this year as a result. According to the survey, shoppers are spending less, hunting for sales more often, purchasing generic products and using more coupons.
Credit Card Companies Cut Unfair Fee
August 12, 2009
By Angie Moreschi:
One small step for consumers. Two credit card companies announced they are going to drop penalty fees for charging over your credit limit. American Express and Discover have decided to be pro-active in throwing this bone to its customers.
A new law set to take effect next year would force them to do this anyway, but you’ve got to give them credit for moving forward early, especially since it was such a money maker. USA Today reports credit card companies are expected to make $3.7 billion from over credit limit fees this year. That’s up 16 percent from last year.
The whole concept of charging customers for going over their credit limit, instead of just denying the charge is pretty unseamly to begin with, but at least we’re now beginning to see a reversal in some of the most unfair consumer practices of recent years. Let’s hope the trend continues.
Both Discover Card and American Express say they plan to stop charging fees when consumers accidently spend go over their credit limit. The new law only allows fees to be imposed if a consumer says they want the ability to charge more than their credit limit - which would happen rarely at best.
If you go over your credit card limit, American Express and Discover say they use computer programs to decide if they will allow you to splurge, or will cut you off immediately.
Of course, don’t celebrate too soon. Analysts say credit companies may replace the credit limit fees with other charges.
Banding Together and Fighting Back!
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