Archive for the ‘Bureau of Consumer Credit Protection’ Category

If you have to borrow, here’s how to do it smartly

CONSUMER FORUM

Posted Aug. 22, 2016, at 6 a.m.

In prior columns, we’ve discussed the need to shop around for low annual percentage rates or APRs when borrowing money. Either a hefty APR or a term that’s too long can add interest dollars that end up making that loan a bad deal.

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That point is among many made in the latest in the series called Downeaster Guides. The newest one deals with high-interest, high-cost loans. Like the others, it is published by Maine’s Bureau of Consumer Credit Protection.

Regular readers of this column know that earlier guides have dealt with a range of issues affecting credit. David Leach, principal examiner with the Bureau of Consumer Credit Protection and co-author of the latest guide, says it explores alternatives to several types of high-cost borrowing, including:

— Buy-here-pay-here auto loans.
— Payday loans.
— Furniture and appliance loans.
— Private student loans.
— Non-bank finance company lending.

As an example, the guide points out that overdraft lines of credit usually carry annual percentage rates or APRs of 9.9 percent to 18 percent or a flat per-item fee. The guide goes on to say, “A line extension of $100 for a couple of days could result in finance charges under $1.00 — a big savings over a payday loan!”

A major component of consumer debt is acquired through credit cards. Many consumers have multiple cards, and many have more debt than they would like on more than one card. The guide advises that consumers might take one of two possible routes to whittle down those debts.

One strategy is called the “avalanche” method. Budget an amount to pay toward lowering your total credit card debt each month. Then, pick the debt with the highest APR and put the bulk of your budgeted amount toward eliminating that debt. Make at least the minimum payments on the other card bills.

When the highest APR bill is zero, use the same strategy on the amount with the next highest rate. Keep the same budgeted amount each month and knock down the balances one by one.

Another approach is termed the “snowball” method. Some financial experts say it focuses on the smallest debts first, while others say consumers focus on paying for the things that matter to them the most.

Leach is in the second school, saying, “Experts agree that the mortgage or rent gets paid first, followed by a vehicle loan payment, because in Maine, we need a car or truck to get to work!”

Some consumers will prefer the avalanche method, while others will find the snowball method more satisfying. The key is to choose a strategy and stick with it.

The Downeaster Common Sense Guide to High Interest/High Cost Loans details strategies to keep debt under control. The guide will be available soon at www.Credit.Maine.gov; click on “consumer guides.” A hard copy is available free to Maine residents by calling the Bureau of Consumer Credit Protection at 800-332-8529 (toll-free in Maine) or 624-8527.

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 weigh changes to make aggressive debt collectors back off

CONSUMER FORUM

Posted Aug. 08, 2016, at 7:08 a.m.
Last modified Aug. 08, 2016, at 9:29 a.m.

As Maine gripes, so gripes the nation.

That twist on an old saying means the top consumer complaint heard by the federal Consumer Financial Protection Bureau, or CFPB, deals with bill collection. Of the roughly 400 complaints filed yearly with Maine’s Bureau of Consumer Credit Protection, or BCCP, about 100 concern debt collectors.

In late July, the CFPB made public a proposal to strengthen the rules governing debt collection.

When the proposals take effect, they would limit the number of times companies can contact debtors to six per week, and they would require debt collectors to have better information about debts before they collect them.

While collecting, companies would have to limit communications, explain details of the debt clearly and make it easy for consumers to dispute the debt. Collectors also would have to explain if debts are too old for the collectors to take them to court.

The CFPB said it has reasons for its proposed changes. When old debts are sold, the information about those debts may not be complete. Anything consumers have submitted might not be passed along, and errors can result.

The new CFPB rules would require collectors to verify information they have before contacting debtors.

William Lund is superintendent of Maine’s BCCP, and he said a lot of work went into the 200 pages of rules and reports the CFPB has made available to his office. Lund said eliminating indiscriminate calling by collectors, including the limit of six calls per week, is a positive step.

He also supports moves to verify debtor information, make disputing debts easier and limit actions by a collector during a dispute.

Lund said another change would affect the sales of debt.

“Sellers would be required to be more careful in what they sell and would have to provide more information as a part of each sale. That’s a positive proposal,” Lund said.

The new rules probably won’t be final for at least a year, and there’s criticism from consumers and the collection industry.

Some consumer groups say while the rules are a good start, portions may confuse consumers. If a collector calls and says, “this debt is too old to take to court, but you still have to pay it,” the debtor might wonder just how much clout the caller has.

Collectors say the rules apply only to third-party collection efforts. Groups including the American Financial Services Association and Consumer Bankers Association are first-party collectors, whom the CFPB may address separately.

Richard Hunt, president and CEO of the bankers group, said in a statement that CFPB recognizes that “consumers have very different experiences when dealing with banks as opposed to debt collectors.”

CFPB said it recognizes that “debt collection serves an important role in the proper functioning of consumer credit markets.” It is also trying to avoid any tightening of credit that over-regulation might trigger.

“If creditors are not able to collect rightfully owed debts, they will be less likely to extend credit to consumers,” Cindy Sebrell, a spokeswoman for the Association of Credit and Collection Professionals, said.

Lund said the CFPB proposals apply only to the “larger participants,” the 175 companies that recover about more than $10 million per year, or about 60 percent of outstanding debt. Lund said depending on the wording of the final rules, Maine might adopt them and “fill in the gap” by having them apply to companies of all sizes.

You can find a list of licensed debt collectors at BCCP’s website at maine.gov/pfr/consumercredit/index.shtml. There’s also a link to the Downeaster Common Sense Guide to Debt Collection under the heading “consumer tools.”

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.

Self-checkouts are prime targets for skimmer scammers

CONSUMER FORUM

Posted July 11, 2016, at 6:04 a.m.

In the previous column on cloning of credit and debit cards at pay-at-the-pump sites, one piece of advice was key. If one card-reading device does not look like the others, it’s probably wise to avoid it.

“An illegal, fraudulent skimmer (the data-stealing device) is big and bulky and should stand out,” David Leach, principal examiner at Maine’s Bureau of Consumer Credit Protection or BCCP, said. Leach advised consumer to be “situationally aware.” If something doesn’t look or feel right, trust your instincts and keep your card in your wallet.

As in the case of gas pump scams, other businesses that use self-checkout machines are susceptible.

Crooks design a skimmer to look almost exactly like the real machine; a thief can slide on the phony device in seconds and return later to collect the information from the cards of anyone who uses it in the meantime. They usually use the data to buy gift cards or transfer the data to blank cards.

“Skimmer scammers,” as one internet security wonk termed the criminals, have targeted automated teller machines or ATMs for years. ATM skimming grew more than 500 percent from 2014 to 2015 by some estimates.

Just last month, police investigated the discovery of skimmers at bank ATMs in Kennebunk and Wells.

Chris Pinkham, executive director of the Maine Bankers Association, was quoted in one news report as saying it’s “a sign of the times.” Just as none of us is immune to fraud attempts by phone or over the internet, we’re all potential targets of skimmer crooks.

The illegal devices have been found at self-checkout stands at Wal-Mart and Safeway, and no retailer is exempt from skimming attempts. Security experts say the roll-out of chip-embedded cards should slow the rate of skimming offenses; however, many consumers don’t have cards with chips, and many terminals are not yet chip compatible.

Even with chip technology in place, consumers should not be complacent. Thieves won’t give up being thieves because chip-and-PIN or chip-and-signature technologies apply another layer of security; they’ll look for ways to get around any protections that card issuers use.

They’ll also be focusing on the magnetic strips that are still a part of the cards. Those strips still contain sensitive material that thieves want. And the thieves will double down on data stolen earlier. With the spread of chip technology, security experts predict more sales among crooks of data obtained through breaches of retailers’ websites.

Consumers can buy radio frequency ID, or RFID wallets which purport to safeguard card carriers from hacking by passers-by. Some security experts claim aluminum foil works as well. Whatever safety measures you adopt, resolve to be less trusting when a credit or debit card leaves your hand.

Instead of giving that card to a restaurant worker you’ve never seen before — and having that person disappear for several minutes — seriously consider paying cash for your meal.

“Most restaurant owners are pleased to see cash, because it means they don’t have to split their profits [with major credit card companies],” BCCP’s David Leach said.

As always, monitor your financial statements closely — not using public Wi-Fi — and check your credit reports regularly. Before using an ATM, look for signs of tampering: things that don’t line up, mismatched colors or materials and graphics that seem “off.”

See if any parts wobble or rattle; those machines are sturdy, so you should not hear sounds indicating that anything is loose.

When entering a PIN, cover the keypad as best you can. Watch for hidden cameras that may be recording your every move. Be aware.

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.

How to protect yourself from credit card skimmers

CONSUMER FORUM

Posted July 04, 2016, at 2:25 p.m.

Three people were arrested recently in southern Maine, facing charges relating to a scheme to “clone” credit cards at gas pumps.

Police say the three had installed a machine called a skimmer, which steals card data that can then be transferred to a blank card and used for illegal purchases.

Those phony charges will show up on the true owner’s monthly statement, so it’s up to all smart consumers to check those statements closely. Disputing them will take time, and so will the process of getting a new card.

A better idea is avoiding any card machine that appears to have been altered.

Look around the card slot. If you see scrapes, scratches or torn labels that raise your suspicions, make your purchase the old-fashioned way: Pay with cash. You might see that one pump seems to stick out farther than the rest. That can be a sign that it’s been tampered with.

Thieves can install a skimmer in a matter of seconds. Even with attendants on duty, they can’t watch every pump every second. The crooks often use double-stick tape to put their skimmers in place. If the card slot looks odd, give it a wiggle. It might just drop right off the pump.

The Minnesota Department of Commerce has classified skimming at gas pumps as an “emerging threat.” In Eagan Minnesota, police and most local gas station operators have teamed up in an effort to defeat the skimmers.

Stations that take part in the SkimStop program place stickers on their pumps, warning potential thieves that the pumps are checked daily. The stickers bear serial numbers, so they can’t be easily duplicated. If the seal on the security label is tampered with, the pump can be checked to make sure a skimmer hasn’t been installed.

Eagan police say thieves in one case captured the data of 157 victims. They used the data they stole to buy gift cards and made some $21,000 in illegal purchases.

“For the cost of some stickers, we can solve a lot of problems,” Officer Aaron Machtemes told me.

The SkimStop program began in March. “We haven’t had a skimming device in our city since,” Machtemes said.

At least one Maine chain of convenience stores tried another version of sticker, but company officials declined a request for an interview. Some stickers do not carry a serial number and are readily available for purchase online. Thieves can buy a roll of 500 stickers for about $70, do their dirty work and slap a new sticker on a pump, leaving consumers — and likely most store employees — none the wiser.

William Lund is superintendent of Maine’s Bureau of Consumer Credit Protection. Lund said the arrest of the three suspects in the Brunswick case shows that some thieves consider Maine as ripe for ripping off as anywhere.

“It all boils down to people in Maine realizing that we don’t get a free pass when this technology becomes common,” Lund said. He urged consumers to be observant and cautious when using credit or debit cards in any public setting. More on this topic next week.

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.

Risk usually outweighs reward with payday loans

CONSUMER FORUM

Posted March 28, 2016, at 9:07 a.m.

Just two weeks ago in this column we wrote about some debt collectors who bend rules or break laws. Last week, the Federal Trade Commission warned that some collectors are trying to capitalize on bogus payday loans.

A payday loan is a cash advance given to a consumer. The consumer hands over a check or agrees to have a deposit account debited. Either transaction takes place at a future date when, the theory goes, the consumer can repay the loan plus interest.

Those short-term loans tend to carry high interest rates. In Maine, a supervised lender license is required, and lenders cannot charge more than $25 on a loan of $250 or more. If a consumer can’t pay back the loan — often due in two weeks — it might be renewed, incurring another $25 fee. If the loan were renewed every two weeks for a year, the consumer would pay $650 in fees on that $250 loan.

Unscrupulous lenders don’t bother with licenses or with obeying the state and federal Fair Debt Collection Practices Acts. The FTC last week alerted state regulators nationwide that several companies either are trying to collect nonexistent loans or that they’re trying to collect on loans that were never turned over to any third-party collector.

The FTC alert stated that some suspicious portfolios of alleged payday loan debts have surfaced in the debt collection marketplace. Third-party collectors buy portfolios and try to collect, often at pennies on the dollar. Buyers of phony debt are violating the Fair Debt Collection Practices Act, Federal Trade Commission Act or both.

The FTC said it has learned third-party collectors are trying to collect loans allegedly made by USFastCash, 500FastCash, OneClickCash, Ameriloan, United Cash Loans, AdvantageCashServices, and StarCashProcessing.

The servicer of debts owed those firms, AMG Services, has told the FTC that none of the above companies’ loans were placed with or sold to any third parties for collection.

Last week’s alert was directed at people in the debt collection industry.But consumers who get threatening calls about money they supposedly owe to one of the above online lenders — or about any debt — should verify what they’re told.

Consumers have the right to dispute a debt and request verification within 30 days of getting written notice of the debt. Until the collection agency sends proof that you owe the debt, it has to stop trying to collect.

People at Maine’s Bureau of Consumer Credit Protection can answer specific questions. Call them at 1-800-DEBT-LAW (1-800-332-8529) or visit online at Credit.Maine.gov. At the website, you can find the Downeaster Common Sense Guide: Debt Collection or request a copy by calling the Bureau.

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.

Naughty debt collectors draw consumers’ ire

CONSUMER FORUM 

Posted March 14, 2016, at 12:17 p.m.

Roll two of America’s top consumer complaints into one, and the result might wear a T-shirt proclaiming, “I am a phony debt collector.”
The Federal Trade Commission just released its annual list of consumer complaints. Debt collection topped the list, and imposter scams came in third. Together, the two categories accounted for roughly 1.2 million complaints, 40 percent of all complaints the FTC received in 2015.

Nationally, the FTC last year increased its effort to protect consumers from illegal debt collection practices. The agency coordinated a federal-state-local effort called Operation Collection Protection; through that program, more than 130 legal actions were brought. The FTC brought 12 actions against 52 defendants, and permanently barred 30 companies and individuals from the debt collection industry. The agency said in a recent statement that it obtained almost $94 million in judgments against debt collectors.

Among the bad practices that have drawn fire from regulators in recent years are these:

— One big bank robo-called a couple 700 times over four years and followed up with letters threatening foreclosure; a judge ordered the bank to pay the couple $1 million.

— A Georgia firm collected $4 million for nonexistent offenses, claiming it had been hired by the federal government; federal officials say these phony collectors have operated in all 50 states.

— A collector threatened a central Maine consumer, who recorded the phone conversation. A transcript of the conversation persuaded the company — which was licensed to do business in Maine — that it should let the employee find work elsewhere.

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David Leach, Principal Examiner at Maine’s Bureau of Consumer Credit Protection, said more than 1,000 debt collection companies are licensed in Maine and that the majority of them abide by the Fair Debt Collection Practices Act. However, Leach said the number of complaints about scammers or unlicensed collectors is “enormous and growing.” Call the bureau at 800-DEBT-LAW with your questions about debt collection or to receive a copy of “Downeaster Common Sense Guide: Debt Collection” or read the guide online .

The Maine Bar Association reminds consumers that Maine’s Fair Debt Collection Practices Act forbids bad language, calling people at work, telling others about someone’s debt and other harassment. It also prohibits using phony letterheads to imitate law enforcement and threats of legal action they can’t take. For general information (not legal advice), visit the Bar Association’s website, mainebar.org/lawyer-referral/legal-information/maine-fair-debt-collection-practices.aspx.

While we’ve written about debt collection before (see Consumer Forum, 12/7/2015 on our blog), some points bear repeating. If a collector calls about an old debt, don’t send money without question. Make sure the debt is really yours by having the collector detail the amount owed and to whom it is owed. Have the collector mail the details to you, and get a physical location of the collector’s place of business. If you do pay, send a check rather than sending funds by wire.

The FTC has published a list of companies that it has banned from further debt collection activities. You can see that list at ftc.gov/enforcement/cases-proceedings/banned-debt-collectors.

Next week, we’ll take a closer look at some imposter scams.

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.

Why it’s a bad idea to hurry to holiday auto deals

CONSUMER FORUM

Posted Feb. 15, 2016, at 6:59 a.m.

Here’s a quick quiz for consumers: What word is most often featured in those Presidents Day car sales ads?

Answer: “Hurry.”

According to David Leach, principal examiner at Maine’s Bureau of Consumer Credit Protection, that is the last thing consumers should do.

“It’s a great time for Maine auto dealers, both new and used, to market and sell a good number of vehicles in what generally would be a pretty slow time of year,” Leach told me.

Otherwise sluggish sales prompt dealers to create promotions designed to spur quick action by buyers.

“Hurry is the antithesis of what a consumer should be in,” Leach added. He said consumers should adopt a deliberative, thoughtful process in which they thoroughly research their needs and assess their budgets.

With that in mind, the Bureau of Consumer Credit Protection has issued a special edition of its Downeaster Guide: Automobile Buying and Financing.

In his letter of greeting, Leach cautions that reforms in the mortgage lending industry have not yet reached the auto loan market. As a result, “it remains quite possible to purchase and finance a vehicle that you, the consumer, cannot afford.”

The guide goes on to list a half-dozen danger signs that a vehicle deal might go bad. One is title washing, in which damaged cars or trucks can be salvaged and resold, especially in other states.

A second tricky practice is called spot delivery, when a dealer allows a customer to drive a vehicle home “on the spot,” even if financing has not been formally approved. If that approval doesn’t happen, the buyer may have to pay the balance in full or return the vehicle.

A third area of concern is contract mistakes. Signing a contract means you agree its contents are correct. Signing could affect your rights in case of a dispute over the vehicle or loan. Certain clauses in a contract might cause problems; failing to maintain insurance on a vehicle might allow the creditor to repossess without sending a Notice of Right to Cure.

The guide also warns against title loans, when the consumer gives the lender a hard copy of the title so the vehicle is used as collateral. Such loans are illegal in Maine.

Watch out also for what are called “loaded” payments, which are monthly payments including add-on items the buyer did not request.

The guide offers a range of information about buying versus leasing, getting the best possible deals on loans and checking your credit reports. There also are tips on research you can and should do, and what to look for in the “closing room” before you sign on the dotted line.

The guide is available online by visiting the Bureau of Consumer Credit Protection website, at credit.maine.gov, and looking under “consumer guides.” Maine residents can receive a hard copy by calling the bureau toll-free at 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.

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