Other Consumer Issues

If you believe your rights have been violated in any of the below situations, you may want to contact an attorney who handles those cases.  A good starting place for locating an attorney is the National Association of Consumer Advocates, 1730 Rhode Island N.W. Suite 805, Washington, D.C., 20036, (202) 542-1989,
http://www.naca.net


Deceptive Pricing     


When a seller makes a price comparison with other items, the items must be similar in quality, model, brand, or other similar characteristics, or the seller must clearly disclose the difference.  For example, if a seller says the lawn mower they are selling is $100 cheaper than another one, and it turns out the cheaper mower doesn’t have an engine, they should have disclosed that in their advertising.

 

It is deceptive for a seller to encourage you to buy ‘because the price is going up’ unless they really do raise the price and keep it there for a while or if the advertising tells you it will be more than 3 months before the price will increase.

 

Sellers also have to be very clear when they advertise "2 for 1" or similar "buy something, get something free" promotions.  If there are special conditions, such as you must pay for the highest price item to get the other(s) free, the advertisement must say so very clearly.


Collecting for Charity     


Sometimes people claim to be collecting for charity, such as for police widows and orphans, when they are not.  Be sure and get details from the caller or solicitor, and consider asking the charity to send printed information identifying themselves and their purposes to you before you donate.


E‑Mail     


It is unlawful to send e-mail advertising without a toll-free number or a valid return e-mail address.  If the toll free number or return email address is provided, you can stop further solicitations, but the difficulty is that responding to the email confirms to the ‘spammer’ that your email address is correct.


Debt Couseling     


Not all debt counseling agencies are honest, caring agencies.  Some will give bad advice and leave you owing more money than when you began the “counseling”.  It can be difficult to tell the difference between the two.  Red flags, or reasons to reject an agency and look elsewhere for assistance, include:

  1. High Fees. In general, if the set-up fee for a debt management plan (also known as debt consolidation) is more than $50 and monthly fees are more than $25, look for a better deal. Similarly, if the agency is vague or reluctant to talk about specific fees, go elsewhere.
  2. "Voluntary" Fees that Aren't So Voluntary. Some agencies publicly claim that their fees are voluntary, but don't pass this information on to consumers.  Others will tell you that their fees are voluntary, but will put a lot of pressure on you to pay the full fee, even if you can't afford it.  Ask all agencies you contact if their fees are voluntary.  If the full fee is too much, do not pay the agency more than you can afford.
  3. The Hard Sell. If the person at the other end of the line is reading from a script and aggressively pushing debt "savings" or the possibility of a future "consolidation" loan, hang up.
  4. Employees Paid by Commission. Most credit counseling agencies are non-profit organizations that are supposed to consider your best interests when offering you counseling options. Employees that receive commissions for placing consumers in debt management plans are more likely to be focusing on their own wallets than yours.
  5. They Flunk the "Twenty Minute" Test. Any agency that offers you a debt management plan in less than twenty minutes hasn't spent enough time looking at your finances.  An effective counseling session, whether on the phone or in-person, takes a significant amount of time, generally thirty to ninety minutes.
  6. One Size Fits All. Some agencies are like a shoe store that sells just one type of shoe.  The only choice they will offer you is a debt management plan.  The agency should talk to you about whether a debt management plan is appropriate for you rather than assume that it is.  If the agency doesn't offer any educational options, such as classes or budget counseling, consider one that does.
  7. Aggressive Ads. Many agencies that advertise treat consumers fairly.  However, some are being investigated or sued for deceptive practices.  Many others charge unreasonable fees or offer no real counseling.  Don't just respond to television and Internet advertising, or telemarketing calls.  Get referrals from friends or family, find out which agencies have been subject to complaints and talk to a number of agencies before making a decision.

Pay Day Lending     


Payday loans are short-term cash loans.  The borrower writes a personal check for the amount borrowed plus the finance charge and receives cash.  The lender holds the check until the next payday when the payment is due.  Borrowers can allow the check to be cashed, or pay the finance charge to roll over the loan for another pay period.

 

Finance charges for these loans vary, perhaps $15 to $30 to borrow $100 for two weeks. At first glance, those fees do not sound very high, but because you have borrowed the money for such a short period of time, that represents an annual percentage rate of interest of 390% to 780%.  Repeated borrowing is encouraged by the lenders.  Many consumers get trapped into a cycle of borrowing, leaving the consumer in perpetual debt, which leads to coercive collection tactics.  Collection tactics include the threat of criminal penalties for failing to make good on checks given as security for a loan.

 

Every unpaid loan involves a check that won’t clear the bank.  Failure to repay leads to bounced check fees from both the lender and the consumer’s bank, and the possible loss of a bank account due to the bounced checks.  If your account is closed due to bounced checks, it is extremely difficult to obtain another.


Rent To Own     


This is referred to in Missouri as the “Rental-Purchase Agreement Law.”  When you enter into a rent to own contract, you will not own the merchandise until every payment, and any fees assessed, such as late charges, are made.  If you only want to use the merchandise for a short period of time, a rent to own contract may be just right for you.  But most consumers enter into these agreements with the goal of owning the merchandise at the end.  If that is your situation, you need to do some price shopping.

 

If the merchandise you want to buy through the rent to own store is new, go to some stores that sell that same merchandise.  Find out what you would pay if you had cash.  Ideally also find out what you would pay if you could finance the sale at the purchase location.  Do not use the rent to own store’s cash price for comparison.  Then you can compare the true cash price of the merchandise to the amount being asked at the rent to own store.

 

If you are considering the rent to own purchase of used merchandise, do some price comparisons with similar products.  Check out garage sales or classified ads in the newspaper.  Then you are armed with the true value of what you wish to buy from the rent to own store.

 

Make sure the rent to own store gives you written details, especially what the penalties are for late payments, or early termination of the contract.  Look at what the merchandise will cost you if you make every payment on time.


Bounced Check Protection     


Overdraft protection is essentially a prearranged line of credit.  If you write a check on an account with insufficient funds to pay the check, the check is paid by the bank instead of ‘bouncing’ it. There is a fee per item, usually the bank’s standard Insufficient Funds fee, which is usually a flat $20 to $35.  Some banks also charge a per day fee, such as $2 or $5 until the consumer has a positive balance in the account.  Those fees are equivalent to an interest rate of many thousands of percent.

 

While the overdraft plans vary by bank, some common features include:

  • Customers automatically have the coverage.  If you do not want it, you must explicitly opt out by contacting the bank.
  • Banks deduct the amount covered by the plan plus the fee by setting off your next deposit, even when the deposit is protected income, such as a welfare or social security check.
  • You do not receive Truth in Lending disclosures (most banks claim this is a courtesy with fees, not a loan), so you do not know the true cost of the ‘protection,’ which is truly astronomical.
  • The bounce protection is triggered by things other than checks, such as ATMs, debit cards, and on-line banking.  In some cases, there are no warnings that you are triggering the fees.
  • A direct deposit to your account, such as your paycheck or social security check, can be made to your account the same day as a withdrawal, such as an ATM transaction, but the fee is triggered because you have no way of knowing when the deposit is actually credited.

Refund Anticipation Loans     


You may be tempted by tax-time advertisements for “Fast Cash Refunds” or “Instant Refunds”.  These ads will offer to get you your refund in just a day or two, or even on the spot.  These ‘fast refunds’ are really loans made against your anticipated tax refund.

 

In a Refund Anticipation Loan (‘RAL’) you pay interest to borrow against your own tax refund.  Loan fees typically range from $30 to $90, which translates into Annual Pecentage Rates (APRs) of about 60% to over 700%.  You sign over your right to get your entire tax refund later for cash now.  If for some reason the IRS denies or delays your refund, or your refund is smaller than expected, the loan still must be repaid.  If you don’t pay back the RAL, the lender will take actions to obtain the money back from you.

 

RALs may speed up your refund by as little as a few days, depending upon how your tax return is filed.  If you file your tax return electronically, and arrange for the IRS to deposit the refund directly into your bank account, your refund will take only about 10 days.  All tax preparers, even those offering refund anticipation loans can file returns electronically.  If you are of low to moderate income, you can save even more money at tax time by using the free tax preparation services of the Volunteer Income Tax Assistance (VITA).  Contact the IRS general help line (1-800-TAX-1040) to find the nearest VITA site.

 

To save money at tax time, open up a bank account if you don’t have one to take advantage of direct deposit, whether or not you file electronically. You can use a savings account to receive your tax refund, and maybe save some of it for a down payment on a house or a car. That will save you the money it often costs to get the check cashed by a check casher.


Force‑Placed Insurance     


When you buy something on credit, such as a car or a house, your installment contract will often require you to have a specific type and amount of insurance covering the property.  For example, if you have a loan on your car, the creditor will require you to have insurance to cover the car if it is damaged.  This insurance is in addition to the insurance required by the state which covers the other car involved in an accident with you.

 

If you do not obtain the proper insurance, or if the creditor thinks you have not, they will obtain insurance on your behalf and bill you for the cost.  There are three very important considerations. First, the insurance only covers the creditor’s risk of loss.  If the property is a car, that insurance does not cover the other car and so does not meet the state requirement for insurance.  If the property is a house, the insurance covers only the amount of the loan and does not include your equity.  So if your house is a total loss due to a fire, and it was worth twice what you owed on it, the insurance will pay the creditor for the loan, but you will get nothing for your equity.  The creditor only bought insurance to cover itself.

 

Second, the insurance will be significantly more expensive than insurance you obtain yourself, even though the coverage you get is likely better.

 

Third, not obtaining the insurance required by your installment contract is a default, meaning you have not met the terms of the contract.  The creditor can repossess the car or foreclose on your home if you do not obtain the required insurance.

 

On occasion, the creditor only thinks you have not obtained the insurance, when you have.  This is usually because you have not arranged that the insurance company send the proof of insurance to the proper address.  Sometimes it is because you did not get sufficient coverage to meet the requirements of the contract.  Address those problems with the creditor BEFORE you are assessed a fee for additional insurance.


Telephone Service     


  • Rates
    Regular land line local service rates are regulated by the Federal Communications Commission (FCC).  Those rates have been approved by the federal and state licensing authorities.  The FCC has determined that long distance service, phone equipment, and cellular service do not have to get their rates approved by them.  As a consequence, there is enormous marketing activity for the products that are not regulated.  The advertising must include truthful details of all costs and limitations, such as per-call charges, montly fees, time limits for advertised rates, etc.  When you shop for those products, be sure and consider all the factors.
  • Slamming
    Slamming is the term used for the practice of changing a customer’s long distance carrier without the customer’s consent.  It is of course, illegal.  Companies are required to have procedures in place to confirm that the changes have been requested by the customer.  You are not required to pay the charges you receive during the first thirty days after a change without your consent.  If you notice changes to your bills that you did not authorize, contact your carrier immediately.
  • Prepaid Phone Cards
    Not all prepaid phone cards are created alike.  Read the fine print.  Some cards charge even if you do not make actual contact, such as busy signals or no answers when you call.  Some charge more if you call from a pay phone.  Some cards, particularly ‘off-brands’ may not work at all, or the calling rate is much higher than promised.
  • Solicitation and No-Call Lists
    When people or companies call you on the telephone to sell you a service or product, there are certain guidelines they must follow.  Those guidelines are similar to those that apply to debt collectors.  They can only call between 8 a.m. and 9 p.m., they cannot use obscene or offensive language, and cannot call you repeatedly to harass or annoy you.  If the telephone call is a tape recording, computer generated or other electronically created voice rather than a real person, the message must begin with that information.  Telephone solicitors must identify themselves by name and the name of the company.  They cannot call you if you have previously made it known to them that you do not wish to receive their calls.  They cannot take funds from your banking account without your express oral or written approval.  Oral approvals should be tape recorded by the solicitor or confirmed in writing prior to the funds transfer.  The federal law also requires that solicitors transmit caller identification information when they do call.  Violations of the Missouri Telephone Solicitation laws permits you to either complain to the Missouri Attorney General’s Office or you may bring your own private lawsuit to recover your money damages, plus punitive damages and attorney fees.  Violations of the federal law are enforced by the Federal Communications Commission.  Only the FTC can file a lawsuit for violations, you cannot file your own.

Both Missouri and the federal government now permit you to record your telephone numbers on a ‘no-call’ list.  The Missouri list is maintained by the Missouri Attorney General.  The federal list is maintained by the Federal Trade Commission.  Telephone solicitors are required to update their lists on a regular basis.  Calls to numbers on that lists are in violation of the law.  In Missouri, you can either complain to the Attorney General or if you received more than one such call from the same entity, you can file a private lawsuit and receive your actual or statutory damages up to $5000, plus your attorney fees and costs of the suit.  The federal list is enforced only by the FCC, there is no right to bring your private lawsuit.

 

In both laws, there are some exceptions to the no-call list.  Even if you are on the no-call list, you can be called by:

  • companies/persons that you give actual permission
  • companies/persons with whom you have done business during the past six months
  • charitable organizations
  • certain tradesmen or professionals who are either referred by someone else or who are working out of their home

Gift Cards     


The gift cards you buy to give people gifts always have conditions such as how much they can spend and where.  Occasionally they have other conditions related to how long the card can be used and additional costs.  Before you buy a gift card, determine whether the card has a fee for non-use.  Some cards have a provision that deducts a monthly fee from the balance of the card, usually if they are not used.  You could give someone a gift certificate for $20 and if they wait to use it for several months, it may have lost a good portion of its value.  Some cards expire completely if not used within a certain period of time.  Before you buy a gift card, read the fine print to determine the actual fees.