Children’s Leukemia Foundation folds amid fraud claims

CONSUMER FORUM

Posted Aug. 02, 2015, at 2:24 p.m.

In August 2009, Neal Rubin wrote a scathing piece for The Detroit News about the National Children’s Leukemia Foundation, or NCLF.

It wasn’t the first time the writer took on the organization based in Brooklyn, New York. It raised money for years nationwide as a “charity,” though Rubin’s research turned up little in the way of charitable activity.

It did turn up complaints by the president of the Children’s Leukemia Foundation of Michigan, William Seklar. His group has been spending at least 80 percent of the money it raises on getting information, financial aid and emotional support to families facing life-threatening blood disorders.

NCLF consistently has done much less, according to Rubin and more recently to investigators with the attorney general for New York state. Last month, New York’s attorney general filed a petition in State Supreme Court in Brooklyn to shut down the group and recover money the AG’s office said had been raised through fraud.

The petition cited what it called exorbitant fees for telemarketing and direct mail campaigns, more than 80 percent of the $9.7 million NCLF raked in from mid-2009 to mid-2013. Those court documents found a total of $57,451 in “direct cash assistance to leukemia patients” over the four-year period.

The petition said the foundation really was a one-man operation run by Zvi Shor, who started NCLF in 1991 after he lost a child to leukemia. Court papers showed Shor paid himself $595,000 in salary and $600,000 in deferred compensation from 2009 to 2013, plus a promised lifetime pension of more than $100,000 per year.

The foundation’s phone number is disconnected and its website has disappeared. Shor’s attorney, Douglas Gross, told the New York Times he thinks the AG’s claims are baseless.

“Mr. Shor began this charity and ran it with the best of intentions,” Gross said.

While the New York attorney general’s office includes a charities bureau, the state does not have a law that makes charities fraud a crime. Criminal prosecutions there usually involve tax fraud, embezzlement or larceny.

Records on file with Maine’s Department of Professional and Financial Responsibility show NCLF was registered as a charity and thereby able to solicit funds in Maine in 2004. The records indicate the organization did not renew its license after that.

It’s important to remember that charitable giving works best when your donations do the good work you intended to have done. Giving to “sound-alike” charities may benefit the organizers and professional fundraisers most.

Keep in mind that very few legitimate charities “cold call” people. The good ones are happy to mail you information about their services and to explain what percentage of money raised goes to programs. The good ones won’t pressure you for a credit card number now; they’ll gladly take your check when you are ready.

Guidestar, Charity Navigator and the Better Business Bureau’s Wise Giving Alliance, are probably the most often used resources to check out charities. The Tampa Bay Times published results of a lengthy investigation of bad charities, which can be found at http://tampabay.com/americas-worst-charities/.

The Center for Investigative Reporting published similar findings at http://cironline.org/americasworstcharities.

Check charities licensed to solicit funds in Maine at maine.gov/pfr and see “licensee search and status” under Consumer Tools. Consider supporting charities that operate close to your home. There’s nothing like a personal visit to see how things run and to have your questions answered.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Feds say LifeLock broke online data security promises

CONSUMER FORUM

Posted July 26, 2015, at 2:39 p.m.
The commercials seemed reassuring.

They led viewers to believe LifeLock could keep consumers’ sensitive data as safe as some financial institutions. Last week, the Federal Trade Commission called such claims deceptive and told LifeLock executives to stop making such claims.

In fact, the FTC told LifeLock the same thing back in 2010. That’s when the company, FTC and 35 state attorneys general — including Maine’s — reached a settlement requiring LifeLock to stop making deceptive claims, to tighten up the way it safeguards the information it collects from consumers and to pay $12 million in refunds to consumers.

Last week, the FTC filed documents with the U.S. District Court for the District of Arizona. The agency claims the documents prove LifeLock violated the 2010 order by falling short in three areas:

— Failing to protect customers’ sensitive data.

— Falsely advertising that it used the same high-level safeguards as financial institutions to safeguard those data.

— Failing to meet recordkeeping requirements set forth in the 2010 order.

Jessica Rich, director of the FTC’s Bureau of Consumer Protection, doesn’t have much of a sense of humor when she thinks agreements aren’t being followed.

“It is essential that companies live up to their obligations under orders obtained by the FTC,” she said. “If a company continues with practices that violate orders and harm consumers, we will act.”

The Associated Press quoted a LifeLock spokesman as saying the FTC actions relate to past practices and that the company is prepared to defend itself in court. LifeLock says it has been talking and cooperating with the FTC for the past year and a half.

The documents filed with the court are sealed, so we don’t know what information the FTC has to back up its claims. The court will decide which documents would be unsealed.

Consumers still need to decide how best to protect their sensitive data. Some may feel paying LifeLock or a similar company amounts to money well spent. Others may feel they can do the best job of keeping an eye on their own credit card statements, getting their free annual credit reports and doing everything else necessary to keep their personal and financial data secure.

Consumer Reports advises that, whatever consumers do, they should act fast if they discover their Social Security numbers have been accessed. Consumer Reports advises putting a security freeze on credit reports with the three major reporting agencies: Equifax, Experian and Trans Union. That would keep creditors from accessing your file if a crook tries to open a new account in your name — without that access, creditors are likely to deny the application.

If you’re not a victim of identity theft, the freeze should cost no more than $6, according to a change in the law approved during the last session of the Maine Legislature. If your identity has been stolen, there is usually no charge to freeze your account.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

State Consumer Protection Officials Announce New Publication:

Downeaster Common Sense Guide: Automobile Buying and Financing

Auto Guide 1st Ed Web

Click image to access booklet

GARDINER – Governor Paul R. LePage joined staff at Maine’s Bureau of Consumer Credit Protection, an agency within the Department of Professional and Financial Regulation, in announcing the release of a new auto buying publication.  The Downeaster Common Sense Guide: Automobile Buying and Financing is a 32-page booklet available online or in paper copy free to Maine residents.

“Purchasing a car or truck can be an enjoyable experience, but it can also be complicated,” Governor LePage said.  “This new guide—the latest in a Downeaster series of consumer protection publications—provides important information and guidance to help individuals and families make sound financial decisions when considering a new vehicle.”

Bureau of Consumer Credit Protection Principal Examiner David Leach, who coauthored the new guide, emphasized that an automobile purchase is a significant financial commitment that often involves a large number of issues and considerations.  He outlined the topics covered in the guide:

  • Determining how much vehicle you can afford;
  • Understanding how to conduct auto buying research;
  • Learning how to check your credit reports before applying for an auto loan;
  • Determining the lowest Annual Percentage Rate or APR for your vehicle loan;
  • Understanding why “No money down” financing can be an expensive mistake;
  • Learning how to negotiate the best price for your new vehicle and trade in;
  • Preparing yourself for the “closing room” at the auto dealership; and
  • Evaluating the pros and cons of add-ons like extended warranty programs and credit insurance.

“This publication will help consumers become more comfortable with auto buying and financing by clearly explaining the process in an easy to understand, step-by-step format,” David Leach said.  “The thought of buying a car or truck makes many people uneasy.  This booklet provides Mainers with the tools and tips to understand and succeed in the process.”

An online copy of the auto buying guide, and several other Downeaster Common Sense financial publications, can be found at www.Credit.Maine.gov by clicking “Publications.”  Copies can also be ordered by calling the Bureau of Consumer Credit Protection at 1-800-332-8529 (toll-free in Maine) or 624-8527. 

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Report: Student loan firms still mistreating military members

CONSUMER FORUM 

Posted July 19, 2015, at 10:09 p.m.
In May of last year, the U.S. Department of Justice and Federal Deposit Insurance Corporation entered an order that provided $60 million to compensate more than 77,000 military service members.

The action was against Sallie Mae and Navient — which formerly were one company — and followed numerous complaints about the educational loan benefits the service people should have received.

Now, 14 months later, the Consumer Financial Protection Bureau, or CFPB, published a report saying problems with educational loans persist.

The report, titled “Overseas & Underserved: Student Loan Servicing and the Cost to Our Men and Women in Uniform,” cites ongoing mistakes in the ways loan payments by service members are handled and the denial of legal benefits, negative credit reporting and sloppy legal remedies that often follow.

Congress passed the Servicemembers Civil Relief Act, or SCRA, to help ease financial burdens on men and women in the military.

The law includes a ceiling on interest rates for military people who assumed student loan debts before going on active duty. Federal student loans include deferment and forgiveness provisions for military service. Some private student lenders say they offer loan discharge, military deferment and other ways to ease the burden on families in the military.

The CFPB wrote a report in October 2012 citing many of the same problems. Since that report was issued, the bureau said it received another 1,300 complaints.

The report cites four major problem areas:

— Military deferments are denied with inadequate explanation, applied haphazardly and sometimes approved verbally but never applied, resulting in late fees, defaults and debt collection.

— Service members still struggle unnecessarily for SCRA protections, and loan servicers still appear not to understand the law.

— Military families continue to have problems with the disability discharge, and negative credit reporting can follow. Families also are unsure whether that benefit applies to private student loans as well as to federal loans. The uncertainty extends to co-signers looking for the same protections following the disability or death of a primary borrower.

— On top of loss of protections specific to military borrowers, complaints also show that servicing breakdowns can affect their financial and military readiness.

Language in the CFPB report makes it clear lenders need to understand and apply military deferment, discharge because of disability and SCRA interest rate reductions.

“Servicers must make the requirements, application process and communications regarding these programs clear, concise and free of unnecessary roadblocks,” the report states. In its conclusion, it recognizes that “no comprehensive statutory or regulatory framework exists” to ensure uniform servicing of all student loans.

At the Finance Authority of Maine, or FAME, Governmental Affairs and Communications Manager William Norbert said Maine service members have not reported any problems. He advises ongoing communication with lenders, especially when service people leave for or return from active duty.

If problems do arise, FAME has an ombudsman, or problem-solver, who can help, online at famemaine.com or by calling the agency at 207-623-3263 or 1-800-228-3734.

The U.S. Department of Education also has an ombudsman who can help military and non-military borrowers with student loan issues. For information, visit the DOE site at https://studentaid.ed.gov/sa/ or call toll free at 1-877-557-2575.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Payday loan firm’s departure won’t end predatory lending

CONSUMER FORUM

Posted July 12, 2015, at 1:15 p.m.

Click image to file a complaint

When Ace Cash Express announced it would stop doing business in Maine on July 11, reactions were mixed.

Consumers who depended on payday loans from the firm wondered where else they might get needed cash. The Maine People’s Alliance cheered, charging Ace was just like all other payday lenders, keeping needy people in a circle of debt. Regulators were unsure whether the unknown that lies ahead might be more troubling than the present we know.

Ace, which had stores in Portland and Brunswick, is shrinking its presence nationwide. This follows a $10 million settlement last July with the federal Consumer Financial Protection Bureau, or CFPB. The bureau had found evidence the company used harassment and false threats of prosecution or imprisonment, among other illegal tactics, to pressure overdue borrowers to take out more loans.

When they’re approved for the loan, borrowers usually hand over a check for the loan plus interest; the lender holds it until the borrower’s next payday. If the borrower can’t repay, the loan can be rolled over with another interest charge tacked on.

In Maine, Ace was charging $15 to borrow $150 and $25 to borrow $250 for up to one month. The average annual interest rate of payday lending in Maine is 217 percent, according to a study by the Pew Charitable Trust. Rates in other states can go much higher, so Maine is not a prime target for payday lenders.

William Lund, superintendent of Maine’s Bureau of Consumer Credit Protection or BCCP, said Ace operated within the law. He said the company is allowing consumers with outstanding loans to set up installment payments to settle their debts. Lund says, when the state had questions, Ace was reachable and responsive.

In 2014, the CFPB did a study of the payday loan industry. Among its findings: the majority of borrowers renew their loans so many times that they end up paying more in interest than the amount of the original loan.

CFPB plans to release new rules this fall affecting payday lenders, regulation that has until now been left largely to the states. The Maine People’s Alliance, which organized a small rally last Thursday in Portland, wants CFPB to pass strong rules covering car title loans, installment payday loans and online loans as well as traditional payday loans.

Jamie Fulmer is a spokesman for Advance America, the largest U.S. payday lender. He wrote in a recent op-ed that federal officials “do little to understand why millions of Americans choose these loans over other similar products, or what would happen if that choice was taken away.” Fulmer argued that if the new rule affects only payday lenders and ignores other sources of short-term credit, “people will be forced into higher-priced and lower-quality services.”

Lund says his staff would much sooner deal with the storefront lenders who have a brick-and-mortar presence; the online lenders who offer contact only by email are much tougher to regulate.

“Every single day we hear from Maine consumers who are being threatened with illegal collection tactics,” Lund told me.

Since neither consumers nor regulators can readily locate the tough talkers, many of them keep gouging the people they had promised to help.

The CFPB says its rules will require lenders to take steps to make sure consumers can pay back their loans. CFPB Director Richard Cordray said, “These common-sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.”

After a review panel looks over the rules, they could take effect sometime this fall. In Maine the maximum fee for a payday loan of $500 or more is $25. Unlicensed, unscrupulous lenders may charge much more. Find a list of licensed lenders at the BCCP website at Credit.Maine.gov, click “list of license types” and select the payday lender list, or call 1-800-332-DEBT-LAW (1-800-332-8529).

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Deposit checks electronically? Here are some mobile banking cautions

CONSUMER FORUM

By Russ Van Arsdale, executive director Northeast CONTACT
Posted July 05, 2015, at 12:08 p.m.

Today we’ll learn about the term “remote deposit capture.”

You might hear it also called mobile remote deposit capture. In a nutshell, it’s the ability to deposit a check electronically.

Convenient, right? Yes, until something goes wrong. When it does, you have the major role in spotting the problem and getting it corrected.

What could go wrong is that a check can be deposited more than once, either by error or with the intent to defraud. Credit Union Times wrote in June 2013 that a man from Louisville, Kentucky, managed to deposit 32 Western Union money orders, which he also cashed out at a Kroger. Police reports say the man doubled his money in the process, getting away with more than $12,000.

In traditional deposits, the financial institution retains the “deposit instrument.” In remote deposit capture transactions, it stays with the depositor, making a second deposit possible. Crooks may feel safer in trying this kind of fraud; instead of walking into a bank or credit union with evidence in hand, they’re pulling their scam remotely.

It’s estimated that two-thirds of all financial institutions in Maine offer customers the option of remote deposit capture; snap a picture of the check with your cellphone and deposit it.

People at Maine’s Bureau of Financial Institutions say they have not received complaints or questions about remote deposit capture via its consumer complaint line (800-965-5235). Consumers also may write to the Bureau’s Consumer Outreach Program, 36 State House Station, Augusta ME 04333-0036.

An interagency body called the Federal Financial Institutions Examination Council has written what it calls a guidance document for financial institutions. It says duplicate presentment at a bank or credit union is a double-edged sword: a business process and a fraud risk. The Federal Financial Institutions Examination Council says insider fraud is a greater risk “because the financial institution typically does not perform background checks on its customers’ employees who may have access to physical deposit items or electronic files.” It also says customer and staff access to nonpublic personal information embedded in deposit items could also increase the risk of identity theft.

The Federal Financial Institutions Examination Council says management of financial institutions and customers need to be diligent to prevent abuse of remote deposit capture. Managers and customers should be on the same page as their computer technologies evolve. To reduce the risk of double deposits, deposit items should be “endorsed, franked or otherwise noted as already processed.” It says institutions also might want to buy insurance against such happenings, if coverage is available and affordable.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

A few tips for safe, fun fireworks use

CONSUMER FORUM
Posted June 28, 2015, at 3:15 p.m.
Each Independence Day safety officials renew their advice regarding consumers who buy and use fireworks: Make sure everyone involved knows the items are not toys and are not to be used by children.

“I want to make sure people are aware that fireworks are for people 21 years of age and older,” Joseph Thomas, the state fire marshal, told me last week. Thomas noted young people suffer far too many hand and eye injuries because they are victims of fireworks-related accidents or because they have inappropriate access to fireworks.

Don’ let fun with fireworks turn tragic

 

The attraction is clear: They’re bright, colorful and noisy. Adults use them to celebrate, and children want to be part of the fun. The sad fact is that, in the month surrounding each Fourth of July, people make more trips to hospital emergency rooms because of fireworks mishaps. The Consumer Product Safety Commission estimated the total in 2013 at 11,400 injuries; the safety commission said one in four children hurt in fireworks-related incidents were bystanders at backyard fireworks displays.

The commission further states 240 people on average suffer fireworks-related injuries each day in the month surrounding July Fourth. Even sparklers — legal in most states where other fireworks can’t be sold — burn at 2,000 degrees and can cause serious burns.

Here is the Consumer Product Safety Commission’s top 10 list of what not to do when it comes to fireworks:

— Never allow young children to play with or light fireworks.

— Don’t buy fireworks wrapped in brown paper, which may be a sign of fireworks made for professional displays that could pose a danger to consumers.

— Always have an adult supervise fireworks in use.

— Don’t stand directly over a device when lighting the fuse; back up to a safe distance after igniting.

— Light fireworks one at a time, then move back quickly.

— Never re-light or pick up fireworks that haven’t gone off.

— Never point or throw fireworks at anyone.

— Keep a bucket of water handy in case of fire.

— Never carry fireworks in a pocket or shoot them off in glass or metal containers.

— Soak spent devices with plenty of water before discarding to prevent trash fires.

If your neighbor’s fireworks malfunction and burn down your house, your homeowner’s insurance likely will cover your loss — your insurer probably would try to recover the payout from your neighbor. If your fireworks burn down your neighbor’s house, you may be responsible for the property damage and suppression costs; however, your policy might only defend but not cover the loss. The Maine Bureau of Insurance can answer detailed questions at 207-624-8475. Types of coverage in typical homeowner’s policies are found on the Bureau’s website .

Check first to make sure fireworks are legal in your community. The state fire marshal’s office website has a map showing 39 Maine communities where fireworks are banned. If in doubt, call the fire marshal at 207-626-3870 or check with your local fire department.

In most Maine communities, fireworks use by consumers is a given. As Fire Marshal Joseph Thomas put it, “if it’s going to happen, let’s make it happen as safely as possible.”

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

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