Archive for the ‘Bureau of Consumer Credit Protection’ Category

Second-chance resolutions for smart consumers

CONSUMER FORUM

Posted Jan. 11, 2016, at 7:27 a.m.
Have you abandoned all your New Year’s resolutions? Here’s a chance to start over (good consumers deserve second chances).

Take the pledge to be more aware of your spending, saving and other monetary decisions. We’re well aware of the ads, store displays and peer pressure during the recent holidays. Let’s agree to be attentive to our finances year-round.

A great goal for the end of 2016 is a “rainy day fund,” savings equal to one month’s wages. Setting a few dollars aside each week can get you started, and the extra money could be critical in an emergency. Financial advisers say we should all eventually set aside two to four months pay for unforeseen events.

Setting up such a fund is one recommendation of David Leach, principal examiner at Maine’s Bureau of Consumer Credit Protection. Leach says consumers can save themselves a lot of grief by following the most basic of advice: Always spend less than you earn. Follow that rule, and you can have part of your paycheck withheld and put automatically into a retirement account.

Leach and others at the Bureau of Consumer Credit Protection have been watching interest rates with, well, interest. While it’s too soon to get any clear indication how consumers will react to the Fed’s raising of the prime rate by 0.25 percent, Leach cautions consumers not to rush into a major spending spree in anticipation of more rate hikes.

Economists seem to be leaning toward predictions of a few quarter-point increases in coming months. Over time, those increases in the prime lending rate will make their way into the rates consumers pay for loans.

In the near term, Leach predicts those consumer rates won’t change much. That could prompt people to buy durable goods — cars, appliances, other big items — while rates are low. It might trigger other consumer action as well.

“My advice to consumers is to always shop around for the lowest annual percentage rate, or APR, when looking to finance their next home, automobile, snowmobile, or when selecting a new credit card,” Leach told me.

He said big-ticket purchases should come only after thorough investigation of both the items and consumers’ ability to repay any loans needed to buy them.

Leach offers several other money-saving resolutions for Mainers for 2016:

— Pay cash or use a personal check or debit card whenever possible; reduce or eliminate interest paid on credit cards.

— If you’re buying a vehicle, try to make at least a 20 percent down payment in cash or through a trade-in.

— On outstanding auto or home mortgage loans, pay a little extra each month, to shorten the term of the loan and thus save on interest payments.

— Avoid impulse buying at grocery and department stores. When you shop, make a list and stick to it.

Leach’s colleagues at the Bureau of Consumer Credit Protection can help with a variety of consumer credit issues. Reach them by phone at 800-DEBT-LAW (800-332-8529) toll-free in Maine, or find the bureau online at Credit.Maine.gov.

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.

Ignoring debt collectors often leaves consumers defenseless

CONSUMER FORUM

Posted Dec. 07, 2015, at 8:27 a.m.
Last modified Dec. 07, 2015, at 9:17 a.m.

A consumer from southern Maine was summonsed to court by a creditor seeking to collect a debt. The consumer failed to show up; he lost the case in what was termed an uncontested, default judgment.

By not going to court, the consumer lost his chance to present evidence that might have swayed the judge. The consumer could have demonstrated his precarious financial position and possibly been able to pay off his debt on more favorable terms.

People who deal with consumers in debt say that such stories are not uncommon. Because they’re afraid or don’t know the law, people can make debt repayment more difficult than it needs to be.

Help is available in the latest in a series of booklets from Maine’s Bureau of Consumer Credit Protection. It’s titled “Downeaster Common Sense Guide: Debt Collection.”

If you are in debt, you owe it to yourself (pun intended) to read the guide.

A cardinal rule if you are in debt is to keep lines of communication open. That advice comes from the guide and from one of its authors, David Leach. Leach also is principal examiner at the Bureau of Consumer Credit Protection.

“Legitimate, licensed debt collectors have a job to do,” Leach said. “Our experience is the majority of times the collector will work constructively with their debtor client if that consumer will work with them in good faith, offering a plausible repayment plan.”

It’s when debtors fail to return phone calls, answer letters or otherwise become unresponsive that things can get nasty. Collectors tend to dig in when that happens, turning up heat on the debtors and using legal remedies at their disposal.

Ignoring a court date could result in a judge’s order that a debtor’s wages be garnished, granting the creditor a chunk of the debtor’s pay until the debt is settled. The guide advises always filing a written answer to a complaint with the court.

The guide covers legal protections that debtors have under Maine law, including a statute of limitations. It says the statute of limitations is usually six years from the time a debtor last made regular payments.

Debts older than the statute-limit age are often called time-barred debts. The debtor is not off the hook for the amount of the debt; collectors can still try to get a debtor to pay at least a portion of the amount due, but they may not have all the legal tools allowed in cases of more current debt.

Then there’s something called the “re-aging” of old debts. In the case of a really old debt, the statute of limitations clock can reset if you make even a single, small payment.

The guide suggests either ignoring demands to settle ancient debts or fighting such claims with the aid of an attorney; the attorney can help with language for a letter saying you don’t recognize the debt and asking for verification including the last date a payment was made.

There’s a lot more advice in the guide, available at maine.gov/pfr/consumercredit/publications.htm.

Consumers in Maine can request a printed copy by calling Bureau of Consumer Credit Protection at 800-332-8529 or writing to Bureau of Consumer Credit Protection, 35 State House Station, Augusta, ME 04333. The bureau also maintains a list of debt collectors who are licensed to do business in Maine.

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.

Even Maine’s attorney general can’t avoid online thieves

CONSUMER FORUM

Posted Nov. 30, 2015, at 9:47 a.m.

Maine’s attorney general knows firsthand what debit card fraud means.

Last month, a debit card belonging to Attorney General Janet Mills was breached. A spokesman for Mills said her credit union luckily spotted unusual activity and alerted Mills before the thief racked up too many charges.

CardHub says unauthorized use of debit and credit cards totaled $11.27 billion in 2012.

Card issuers and merchants absorb virtually all losses involving credit cards. Prompt reporting is critical to minimize a consumer’s liability in case of debit card breach or loss.

On Oct. 1, new rules made merchants liable for losses if they had not installed new card processing equipment. The aim was to make chip-embedded cards universally acceptable and to get outdated, magnetic stripe cards out of circulation. Card issuers embraced the chip, but many continue to require a signature as supposed authentication.

Technology known as chip-and-PIN, or personal identification number, boosts security sharply. A consumer can’t vary his or her signature; the consumer can change a PIN at will, and that’s an ability that consumers in about 80 other countries already have.

Mallory Duncan, senior vice president and general counsel of the National Retailers Federation, said recently that “continued reliance on an illegible scrawl isn’t good enough to protect American consumers when the technology of a secret, secure PIN is readily available.” Duncan’s remarks supported efforts by Mills and eight other attorneys general to get card issuers to embrace chip-and-PIN.

On Nov. 16, the eight attorneys general wrote to top officials of American Express, Bank of America, Capital One, Citigroup, Discover, JP Morgan Chase, Mastercard and Visa. Their letter calls for swift adoption of chip-and-PIN.

“Absent this additional protection, your customers and our citizens will be more vulnerable to damaging data breaches,” they wrote. “This is something we cannot accept, and nor should you.”

Debra Berlyn is president of the Consumer Privacy Awareness Project, an effort to educate consumers about online privacy issues. In an OpEd in this newspaper on Nov. 23, Berlyn echoed the attorneys general’s call, charging that “the big banks and credit card companies are cutting corners to cut costs, forgoing the added PIN feature to reduce the amount they would have to invest in new cards.”

Critics contend that requiring PINs could cause confusion among some consumers. Given the need for a PIN in many modern transactions, we doubt serious problems would arise.

An official of the Federal Reserve Bank wrote in 2013 that signature verification in the U.S. was likely to continue for some time. Fraud on lost or stolen cards would likely not drop as a result.

“Fraud may even rise,” Richard J. Sullivan wrote, “as fraudsters, unable to commit fraud on counterfeit cards, begin to target payments with relatively weak security, such as transactions that allow signature authorization.”

The attorneys general say they’re not interested in mandating any particular technology in law. Instead, they call on the executives “as good corporate citizens” to use and continue using available technologies that offer the best protection to consumers.

A spokesman said Mills will be receiving a new debit card, one that includes chip-and-PIN technology. She’s hoping more institutions will make similar shipments in the near future.

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.

New federal budget bill unleashes torrent of collection robocalls

CONSUMER FORUM

Posted Nov. 09, 2015, at 8:54 a.m.

There’s probably nothing more annoying than a pre-recorded call (robocall) asking you to buy something.

Unless it’s a robocall demanding you pay off a debt you might owe. Congress has just made it possible for some debt collectors to add robocalls to mobile phones to their toolkits. And a number of people and groups are unhappy.

Until passage of the latest federal budget, collectors placing robocalls or sending texts needed advance consent of those receiving such calls. That provision was part of the Telephone Consumer Protection Act of 1991.

Section 301 of the new budget bill repealed the advanced consent requirement for collectors of debt that’s owed to or guaranteed by the federal government. The change allows robocalls not only to student loan and mortgage borrowers, farmers, veterans and others with federally backed loans but also to their relatives, references and even unrelated people who get a reassigned cell phone number from such borrowers.

“They sneaked Section 301 in there. Nobody even knows how it got in [the budget bill],” said Tim Marvin of Consumers Union, the policy and action arm of the organization that publishes Consumer Reports.

Click image to access petition

Consumers Union had launched a campaign in February to pressure phone companies to help curb robocall excesses. When we checked its website, endrobocalls.org, more than 568,000 people had signed an online petition of support.

The outrage of consumers was matched by that of 10 U.S. senators who are co-sponsoring a bill to overturn Section 301. The bill is called the HANGUP (Help Americans Never Get Unwanted Phone calls) Act. Seventeen groups supporting the bill drafted a sample letter consumers can mail to their senators, in an effort to give the bill traction.

Critics say allowing robocalls to mobile phones will flood consumers with nuisance calls, and they contend the calls will generate relatively little in repaid debt. Such calls also offer consumers little recourse if they’re targeted unfairly.

Banks often sell bad loans to collection companies for pennies on the dollar — hard-to-collect loans might be sold several times.

The proper paperwork is supposed to accompany such sales, but that doesn’t always happen. As a result, people with similar names or Social Security numbers may receive dunning robocalls over debts they don’t owe, and it may not be easy to find a live person to straighten things out.

Consumers Union’s Tim Marvin says the Senate bill gives supporters of robocall reform “a great opportunity to mobilize all that support we’ve been building.” Despite what seems like popular backing, supporters of the bill aren’t predicting quick passage.

For help with particular debt collection issues, call Maine’s Bureau of Consumer Credit Protection 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.

Hidden costs lurk in delayed interest payment offers

CONSUMER FORUM

Posted Oct. 26, 2015, at 6:52 a.m.

The phrase “no interest until…” may not be what some consumers think.

Offers to pay no interest until the payment period ends are enticing. But you must pay off your balance in full when the time’s up, and you must not be even a day late on a single payment.

The federal Consumer Financial Protection Bureau puts the warning bluntly on its website: “If one of your payments is late, or if you don’t pay off the full balance by the end of the deferred interest period, you could have to pay all of the interest that you expected to be deferred.”

William Lund, superintendent of Maine’s Bureau of Consumer Credit Protection, says consumers sometimes assume deferred interest means they won’t be charged interest on their credit card purchase until the deferral period ends. Lund says they might also expect a notice during month 11 in a 12-month deal, reminding them that full payment is due to avoid retroactive interest charges.

He says both assumptions are wrong.

“Interest and late fees are how banks make money, and they would not offer these plans if consumers all paid the purchase price fully within the promotional period and did not owe fees and interest,” Lund said.

The price of deferred interest, then, is ongoing borrower diligence.

In the case of major purchases — appliances, furniture, medical devices — a lump-sum interest payment could be several hundred dollars. Consumers can avoid such shocks by making sure of the terms of any deal before signing up, giving themselves plenty of time to meet the payment deadline, and not using that credit card for other purchases — making it easier to track a deferred interest balance.

Visit Consumer Financial Protection Bureau’s website consumerfinance.gov, then search “deferred interest,” for several helpful tips:

— Pay off deferred interest balance before the deferred interest period ends. Some offers may be in weeks instead of months, so the end date may differ from your regular payment date.

— Try to pay more than the minimum payment every month. Paying the minimum likely won’t pay off your deferred balance in time; keep close track of your deferred interest balance.

— Ask your credit card company to apply whatever you pay above the minimum monthly payment to your deferred interest balance. The company doesn’t have to agree; if it does, the move might help you pay your balance before the deferred interest period ends.

Lund reminds consumers that interest rates are high, often nearly 30 percent per year.

Some consumers think federal or state laws cap those rates, but neither does. No state or federal law limits interest rates on credit cards issued by national banks, another reason to know terms of any deal before signing up.

Lund also notes that, although credit cards are offered through retailers, they are underwritten by nationally chartered, out-of-state banks. Laws of the banks’ “home states” apply, and Maine regulations don’t apply.

In case of problems, consumers may complain to federal regulators — Consumer Financial Protection Bureau. Staff of Maine’s Bureau of Consumer Credit Protection can answer questions about protecting one’s credit. Call toll-free in Maine at 1-800-332-8529.

CardHub, which compares credit card offerings online, predicts credit card debt will rise a net $60 billion by the end of the coming holiday season. See the company’s study of deferred interest at its website cardhub.com.

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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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.

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