Archive for the ‘Bureau of Consumer Credit Protection’ Category

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.

2015 Debt Collection Booklet.pub

Click image to read online.

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.

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.

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