Consumer Tips

Cash Back Credit Cards

By: Amy 

Recently, I was asked by WalletHub to comment on cash back credit cards.  The post should be forthcoming on the WalletHub site.  Nonetheless, I am also sharing my insights here:

•    Should everyone have at least one cash back credit card?

Not necessarily.  For starters, consumers should always “shop around” and compare credit cards, and be sure to understand what they are getting themselves into before signing up.  One resource consumers my find helpful is on the CFPB credit card agreement webpage. Furthermore, cash back may not be the most important feature for all consumers.  Consumers need to consider their own situations and interests.  Once again, the CFPB provides excellent resources on credit card features. Consumers also may not all qualify for the same types of credit cards, and should be sure that they are in a position to pay off credit card debt in a timely and prudent manner.  Anyone interested in finding out more about credit scores should check out CFPB’s “How do I get and keep a good credit score?”

•    What are the biggest mistakes that people make when shopping for a cash back credit card?

First, some consumers may take on another credit card without truly considering whether they should open themselves up to greater spending power, and falling behind on bills.  Second, credit card offers may be confusing with respect to annual fees.  For example, some credit card offers include a waiver of the annual fee for the first year, thus lulling consumers into ignoring that fee in their decision-making.  However, consumers are usually dismayed when the fee kicks in and dissipates any benefit of “cash back.”  At the same time, consumers may not be able to cancel the card at that time due to the debt they have incurred or the “hit” they would take on their credit scores for canceling a card so quickly.  Third, consumers often fail to read the rules and restrictions on earning cash back.  For example, some cards offer elevated cash back for certain categories of purchases, but then restrict what qualifies for that category. Take the example of “3% cash back on fuel purchases” – with the caveat that fuel purchases from stations that are linked to grocery stores do not qualify (a very common restriction).  Similarly, “big box” and “warehouse” stores may not qualify for elevated cash back on “grocery” purchases.  Again, it is important to read the fine print of any credit card agreement.  Fourth, credit card offers may restrict consumers’ redemptions.  Does the offer allow consumers to redeem cash back at any time and in any amount, or does the offer require that consumers wait until they have accumulated a certain cash back sum?  Does the offer allow consumers to get a check in the mail, or only a statement credit?  These are just some of the questions to ask and consider.

•    Why don’t all rewards credit cards offer cash back?

“Rewards” mean different things to different consumers.  Some consumers prefer to get travel points or other perks.  Some consumers do not qualify for cash back cards, or may focus on low interest rates over any rewards.  Again, consumers must always consider their own situations and interests.  Cash back cards are not right for everyone, and the credit card market has responded.

Center for Dispute Resolution at University of Missouri

Campus Free Speech Issues and Dispute Resolution 

Although the free exchange of ideas is fundamental to every university’s mission, events on many of our nation’s campuses in recent years vividly demonstrate that preserving and promoting this principle in a university community presents enormous challenges. Members of the CSDR at the University of Missouri have had to deal with this type of conflict at a different level. In 2015, we were touched closely by events such as the shooting of Michael Brown by a police officer in Ferguson, Mo., a number of racially motivated incidents on our own campus, and the protests by students following those incidents, which, in turn, resulted in the resignations of high-profile campus leaders.

While perhaps Missouri played the role of the proverbial “canary in the coal mine,” confrontations like the one we experienced in 2015 soon emerged in other campuses across the U.S. Opposing narratives developed describing these events. One narrative portrays today’s students as hypersensitive and intolerant as they seek protections against offensive words and ideas, which results in the sacrifice of both intellectual rigor and First Amendment values. A counter-narrative posits that the rise in verbal abuse and violence against historically persecuted groups requires the prohibition or limitation of hateful, intolerant, or threatening speech on our campuses, as learning becomes impossible in an environment where members of the community feel unsafe.

Motivated by those experiences, Prof. Robert Jerry, who served as the dean of the law schools at the University of Florida and the University of Kansas for a combined total of 16 years, and who teaches and writes in dispute resolution among other subjects, and Prof. Chris Wells, who is one of the leading First Amendment scholars in the country and teaches in the dispute resolution area, have organized the 2017 CSDR/Journal of Dispute Resolution Symposium along this topic. The symposium, which is titled “The First Amendment on Campus: Identifying Principles for Best Practices for Managing and Resolving Disputes,” will explore the complex intersection between free expression and conflict at universities.

In what is likely a first-of-its-kind-effort, the program will bring together free speech scholars, dispute resolution experts, and university leaders with experience with free expression conflict, with the goal of advancing our understanding of how university leaders can remain true to both the mission of the university and the values of the First Amendment.

The timing of the symposium is particularly propitious for us, as it coincides with the arrival of our new Dean Lyrissa Lidsky, who is also an expert in First Amendment Law and has written on the topic of campus speech issues.

 
Expanding Access to Justice through ODR 

At one time, transactions between merchants and consumers were often sealed with a handshake. This handshake was more than a kind gesture—it helped reassure both parties that the other was committed to the deal and would correct any problems. As more transactions occur online, finding fair and efficient resolution of problems that arise can be challenging. In her new book with Colin Rule of Tyler Technologies, Prof. Amy J. Schmitz argues that using technology to enhance access to remedies is in the best interest of both retailers and consumers. In their book, The New Handshake: Online Dispute Resolution and the Future of Consumer Protection, Schmitz and Rule propose a design for this using Online Dispute Resolution (ODR) to establish a new virtual handshake for the online world. Their proposed process uses a single platform that merchants and consumers would access to resolve disputes. The platform would have a single set of guidelines, would abide by agreed due process standards, and would include means for alerting regulators regarding suspected fraud or unsafe products. It would utilize forward thinking encryption and coding to ensure privacy and coordinate with other consumer remedy processes throughout the world. Indeed, the EU has established its own ODR platform, UNCITRAL has pursued global ODR, and new ODR programs continually emerge in the wake access to justice movements.

The proposal is a collaboration between Schmitz, a consumer advocate and founder of MyConsumertips.info; and Rule, a high-tech entrepreneur who had directed ODR for eBay. In this way, the project aims to create a win-win for consumers and businesses. “Our goal is to rebuild trust in the business-to-consumer marketplace and provide a blueprint for the future of online consumer protection.” More information can be found at Newhandshake.org and Prof. Schmitz’s interview on the book can be heard here. A few comments on the book include: Corporate Counsel; ODR.INFO; Oxford Business Law Blog; Business Conflict Management LLC.

 
Making Stone Soup 

The Stone Soup Dispute Resolution Knowledge Project is designed to promote collaboration by faculty, students, scholars, practitioners, educational institutions, and professional associations to produce, disseminate, and use valuable qualitative data about actual dispute resolution practice.

Professors John Lande and Rafael Gely are the co-directors of the project, which grew out of the Center’s 2016 symposium, Moving Negotiation Theory from the Tower of Babel Toward a World of Mutual Understanding. Several symposium speakers criticized the current state of negotiation theory and argued that more empirical research about actual negotiations is needed to advance negotiation theory.

Faculty have multiple ways to participate in the project. For example, they may use their courses to generate knowledge about dispute resolution. As part of their course requirements, students may interview professionals and/or laypeople about actual cases. Some faculty may conduct “focus group classes” in which they systematically ask selected guest speakers about actual cases. Faculty may use these assignments and activities in a wide variety of courses including those that do not specifically or exclusively focus on dispute resolution.

The project encourages schools to take advantage of practitioners’ perspectives by conducting general debriefing of student competitions. Faculty may also take advantage of talks at continuing education programs to obtain data from practitioners. For more information, see law.missouri.edu/drle/stone-soup.

In this inaugural year of the project, it should engage at least 800 students in 48 classes covering 17 subjects, taught by 29 faculty from 24 schools in three countries.

 
Dispute Resolution Empirical Research 

Empirical research has long been a mainstay of dispute resolution scholarship, and the members of the CSDR continue to generate ground-breaking and influential work. Some recent work in this field was conducted by Prof. S.I. Strong in her article “Realizing Rationality: An Empirical Assessment of International Commercial Mediation,” 73 Washington and Lee Law Review 1973 (2016), which included the first-ever large-scale international study of international commercial mediation. Preliminary findings from that project were provided to the United Nations Commission on International Trade Law (UNCITRAL) to support efforts to adopt a new international instrument relating to the enforcement of settlement agreements arising out of commercial mediation.

Prof. Strong, with Prof. Rafael Gely, CSDR director, is currently working on a new project funded by a $25,000 grant from the American Arbitration Association-International Center for Dispute Resolution (AAA-ICDR) Foundation. The project seeks to expand the understanding of arbitrator reasoning in international commercial disputes by conducting a multi-phased empirical study. The first prong of the research involves a series of semi-structured interviews with leading arbitrators working in the area of national and international commercial arbitration so as to identify the goals arbitrators that are seeking to achieve when writing reasoned awards and how arbitrators believe they are fulfilling those aims. The second prong of the study involves an international survey of commercial arbitrators and judges. This material will seek to confirm information gleaned during the interviews and to identify additional supplemental material. The third prong is doctrinal in nature and involves an empirical analysis of publicly available arbitral awards gleaned from enforcement proceedings in court or published in arbitral reports and judicial decisions gleaned from case reports in the United States and elsewhere. After identifying the relevant awards and decisions, the materials will be coded for various attributes and analyze the data to determine whether there are any differences between national and international commercial awards on the one hand fully reasoned arbitral awards and judicial decisions on the other.

Prof. Gely is also undertaking a separate strand of empirical research looking at how is the arbitration process portrayed in the mainstream media. Motivated through a partnership with the National Academy of Arbitrators, Prof. Gely and his collaborators, and drawing from the work of scholars in communications and journalism, the research project is seeking to collect and analyze data taken from news reports about arbitration. The goal of the project is to better understand how the media is reporting about arbitration. A preliminary article discussing the research project (“What and How Journalists are Reporting About Arbitration”) was published in Proceedings of the Sixty-Ninth Annual Meeting of the National Academy of Arbitrators, Arbitration 2016: Arbitration in Practice.

 
More News 

Mizzou Law – CSDR • 206 Hulston Hall, Columbia, MO 65211

CFPB is Fighting the Good Fight

/ September 12, 2017

The Consumer Financial Protection Bureau (CFPB) today announced that its recent work resulted in $14 million in relief to more than 104,000 harmed consumers from January through June 2017. The Press release read in part:

“Today’s report, the 16th edition of Supervisory Highlights, covers CFPB supervision activities from January through June 2017, and shares observations in the areas of auto loan servicing, credit card account management, debt collection, deposits, mortgage origination, mortgage servicing, remittances, service providers, short-term small-dollar lending, and fair lending. Among the findings:

  • Banks deceived consumers about checking account fees and overdraft coverage: One or more institutions deceived consumers by inaccurately describing when checking account service fees would be waived. One institution told consumers it would waive the fee if the customer met certain qualifications, including making 10 or more payments from the checking account during a statement cycle. In fact, only debit card purchases and debit card payments qualified toward the fee waiver. One or more institutions also misrepresented opt-in deposit overdraft services as extending to consumer payments by check, electronic funds transfers through the Automated Clearing House payment network, or recurring payments, when those transactions were not actually covered.
  • Credit card companies deceived consumers about the cost and availability of pay-by-phone options: The Bureau’s examiners found that customer service representatives of at least one credit card company disclosed only costly pay-by-phone fees while omitting mention of much cheaper payment options. Failing to disclose less costly options can result in consumers being charged for services they don’t need.
  • Auto lenders wrongly repossessed borrowers’ vehicles: Many auto loan servicers give borrowers options to avoid repossession of their vehicle if a loan is delinquent or in default. But the CFPB’s examiners found that one or more companies were repossessing vehicles after the repossession was supposed to be cancelled. Some lenders wrongfully listed the account as delinquent. In other instances, customer service representatives did not cancel the repossession order when feasible after borrowers made sufficient payments. Also, some repossession agents did not check the documentation beforehand to see if the repossession had been cancelled.
  • Debt collectors improperly communicated about debt: Generally, debt collectors must get consent of the person owing the debt before discussing it with other parties. The Bureau’s examiners found that one or more third-party collectors did not confirm they had contacted the right person before starting collections, or wrongly attempted to collect from consumers who were not responsible for the debt. Also, one or more payday lenders, in collecting a debt, repeatedly called third parties, including personal and work references listed on the borrowers’ loan application. In some instances, even after being told to stop, these collectors called borrowers at work or asked third parties to relay messages to them. Such calls can lead to negative job consequences for the borrower, and risk improperly disclosing the default or delinquency to third parties.
  • Mortgage companies failed to follow Know Before You Owe mortgage disclosure rules: CFPB examiners found that one or more companies overcharged closing fees to consumers and one or more companies wrongly charged application fees before consumers had agreed to the mortgage transaction. Examiners did find that in general, both banks and nonbanks were able to effectively implement and comply with the Know Before You Owe mortgage disclosure rule changes.
  • Mortgage servicers failed to follow the Bureau’s servicing rules: Servicers are responsible for reviewing borrowers’ initial loss mitigation applications to determine what documents are missing. They must then tell borrowers what documents are missing, so that consumers can get a full evaluation of options they have available. One or more mortgage servicers offered a forbearance option to consumers to help them prevent foreclosure, but did not let the borrower know of their right to complete an application to be considered for other options. In addition, they did not exercise reasonable diligence in collecting information needed to complete the borrower’s application. Additionally, one or more servicers, through a vendor, also provided borrowers mortgage statements that failed to specifically list fees charged.

Today’s report shares information that companies can use to comply with federal consumer financial law. When CFPB examiners find problems, they alert the company and outline necessary remedies. These steps may include paying refunds or restitution, or taking actions to stop illegal practices and assure future compliance such as implementing new policies, or improving training or monitoring. When appropriate, the CFPB opens investigations for potential enforcement actions.”

For more information, see: today’s edition of Supervisory Highlights is available at: http://files.consumerfinance.gov/f/documents/201709_cfpb_Supervisory-Highlights_Issue-16.pdf

College Textbooks – Worth Their Weight in Gold?

By: Bob Bennett

Anyone who has either been in college recently or has had a child in college knows that textbooks are expensive. Some textbooks cost well over $200. Many students continue to purchase textbooks from their campus bookstore and then resell those books back to the university. The main reason is simply the convenience of purchasing the books near where you have the courses and not having to order them in advance. Unfortunately, campus bookstores often charge far more for books regardless of condition (New, Used, or Rental) than online retailers. Moreover, the campus bookstores also will pay far less for them at the end of the semester than other sources will.

What is the most cost effective way to purchase textbooks?

For any student looking to save money on their books, there are three simple steps. First, the student must determine the textbooks’ ISBN numbers, which can be used to find that textbook elsewhere. Many campus bookstores offer online book lists with ISBN numbers based on a student’s schedule. Second, the student needs to compare prices on a website, such as CheapTextBooks.org, or just search online retailers, such as Barnes & Noble or Amazon. Third, the student needs to order the books at least 2 weeks before classes begin.

Students always have the option of renting a textbook, rather than purchase the textbook. Websites, such as Amazon or CheapTextBooks.org, may have an option to rent the textbook for less than purchasing the book. This choice comes down to the preference of the student. If the student plans on making many notes and highlights in the book while studying, renters may charge the student. However, the student would not be responsible for reselling the book at the end of the year.

I, personally, recommend purchasing the textbook used around 3 weeks before courses start to get a lower price than right before classes start. Also, I recommend purchasing over renting textbooks, because a student may recover more money by reselling the books than students can initially save by renting.

What is the most cost effective way to resell textbooks?

Finals are over and students have 100lbs of textbooks that they never want to open again. Students have several options for reselling textbooks. Students may sell to the campus bookstore, a textbook company, or to another student. First, as mentioned above, reselling a book to the campus bookstore is not going to pay the most. Fortunately, some bookstores offer a minimum buyback price for those books which can only be purchased from the bookstore or are no longer used. For example, your marketing class requires you to pick up a book unique to your university. So you have to purchase the book from the campus bookstore. When classes are over, the marketing class decides to use a different book in the future. The student can go to the campus bookstore during their buyback and still sell the book back for $5.00 or some other minimum. Second, many textbook companies will set up on campuses at the end of the semester offering to buy textbooks for students. Most of their offers will be higher the campus bookstore’s offer. However, these tend to be picky about what books they purchase, and will not buy above a certain number of books. Third, the best way to recover your price of a textbook is to resell the book yourself to another student. Selling through an online retailer, such as Amazon, will cost a fee, but you will make far more money than reselling a book to a bookstore to act as a middleman.  However, this method requires much more effort than the first two. The student will have to ship the textbook to the other student and there is a chance the textbook will not sell.

This past semester I resold my books through Amazon and recovered most of my money. So, since I chose Amazon, I created a sellers account and then priced my books at the lowest price (or lowest price+shipping). The closer the school year comes, the more expensive books tend to get. Therefore, unlike when purchasing books, you should sell your books closer to classes beginning.

Filing Bankruptcy? Make Sure You Double-Check Debt Collectors’ Submitted Claims

By: Pamela Foohey 

Debt collection is a multi-billion dollar industry, and it is only growing. One of debt collectors’ tactics is to get people who owe long past due debts to pay those debts despite the fact that the debts cannot be collected as a matter of states’ statutes of limitations. Debt collectors do so in a variety of ways, including filing collection actions in state courts and hoping that debtors will not assert the statute of limitations as a defense. Fortunately, the Fair Debt Collection Practices Act (FDCPA) deems this tactic a misleading and unfair practice. Courts hold that debt collectors violate the FDCPA when they file debt collection actions in state courts on debts that they are barred from collecting under statutes of limitation. Based on the FDCPA, debt collectors have entered into consent decrees with the federal government and paid millions of dollars in restitution to debtors for trying to collect time-barred debts through state court debt collection proceedings.

The FDCPA also has pushed debt collectors to look to another venue to collect on time-barred debts: bankruptcy proceedings. When a person files bankruptcy, particularly chapter 13 bankruptcy, debt collectors file proofs of claim asserting a right to collect these debts. It seemingly is up to the debtor, or the trustee, to object to the claim on the basis that collection of the debt is barred by the applicable statute of limitations. In recent years, debt collectors have added to their business model specifically buying debts that will be collected through bankruptcy proceedings and then filing claims in hopes that the debtor, trustee, or another party will not object. The practice has the potential to be quite lucrative. About a million people file for bankruptcy every year. One-third of those cases are filed under chapter 13. And given that Americans owe trillions of dollars in consumer debt, many of those cases likely include time-barred debts. The questions thus becomes, is filing a proof of claim for a time-barred debt a violation of the FDCPA?

The answer to this question split courts. Some courts said no, the FDCPA does not apply, reasoning that bankruptcy affords debtors its own set of protections. Other courts said yes, the FDCPA applies, and a private party or the government can sue a debt collector for filing time-barred claims in bankruptcy, potentially winning sanctions. This split among courts was brought to the Supreme Court, which yesterday held (in a 5-3 opinion, Midland Funding LLC v. Johnson) that the FDCPA does not apply to proofs of claim filed by debt collectors for time-barred debts. The majority, in short, reasoned that the Bankruptcy Code and other rules provide a way for debtors and trustees to identify and respond to these claims, as well as the ability for bankruptcy judges to levy sanctions against debt collectors for filing time-barred claims. The dissent, in contrast, noted that the realities of bankruptcy practice make it so that trustees and other parties are short on both time and money, such that the protections built into the Code are not protections in reality. Instead, the bankruptcy claims process now sets a “trap for the unwary.”

If you want to read more about the decision itself, see my co-blogger Adam Levitin’s post on Credit Slips. The on-the-ground question for consumers now is, what can people do to protect themselves? There are a couple actions that debtors can take to make sure that they do not fall into that trap and that time-barred claims are not paid out through their chapter 13 bankruptcy cases. If they are represented, they can ask their counsel to examine claims submitted by debt collectors. Indeed, all debtors’ counsel now should be on notice that they must examine claims submitted by debt collectors. Regardless of whether they are represented, debtors should specifically inquire about claims submitted by debt collectors, either through their counsel or by themselves.

That debtors make sure to double-check debt collectors’ submitted claims is very important. As noted in the dissent, and as my co-authors and I have shown in our recent work, less than half of chapter 13 cases end with a discharge of debts. If a time-barred debt is included in a chapter 13 case, and the case is dismissed, that debt is reactivated, and the statute of limitations on collection begins anew. As Justice Sotomayor wrote in the dissent, debtors will “walk out of bankruptcy court owing more to their creditors than they did when they entered it.”

The Newhandshake: Online Dispute Resolution and the Future of Consumer Protection

By: Amy 

We used to buy goods and services in person.  We’d introduce ourselves, look each other in the eye, and negotiate the terms of the transaction.  If we thought it was a good deal, we’d seal it with a handshake.  That handshake was more than a kind gesture – it signaled that if any problem arose, both sides were committed to getting it resolved quickly and fairly.  That handshake was our personal trustmark.

Nowadays, it’s harder to close deals with a handshake.  We can buy items from all over the world with just a few swipes on our iPhones, but when problems arise (as they inevitably do) the next step is often unclear.  On the internet it is difficult, if not impossible, to tell the good merchants from the bad merchants, and the processes for resolving disputes are often confusing or hard to find.  Customer service can feel like a runaround (e.g. long hold times, unfair refund policies) and formal redress mechanisms that work in the face-to-face world, like the courts, are generally impractical for online purchases — especially when purchases are low value and cross several legal jurisdictions.

The New Handshake: Online Dispute Resolution and the Future of Consumer Protection focuses on this lack of trust and access to remedies for online transactions.  This groundbreaking book proposes a design for a “New Handshake” for the online world.  This New Handshake uses Online Dispute Resolution (ODR) to provide fast and fair resolutions for low-dollar claims, such as those in most B2C (Business-to-Consumer) contexts.  This revolutionary system is designed to operate independently of the courts, thereby eliminating procedural complexities and choice of law concerns.  Furthermore, it can be integrated directly into the websites where transactions take place. It would provide consumers with free access to remedies, while saving businesses from costs and complexities of court.  The New Handshake aims to rebuild trust in the B2C marketplace, and provide a blueprint for the future of online consumer protection.

This is not your typical “law” or “business” book.  Instead, is a collaborative effort of a business leader and a law professor.   The result is essential reading for:
Online merchants
Payment providers
Customer services
Lawyers
Judges
Law and business students
Consumer advocates
Policy makers
ODR systems designers
The New Handshake can be purchased on the ABA website here:
https://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=267464824&term=5100032

Can You Believe That Free Credit Score?

By: Pamela Foohey
I have a couple credit cards, and for more than a year, both have provided me with a free credit score (FICO score), updated about once a month. From what I know about the computation of credit scores,they seemed more or less accurate. Nonetheless, they are hard to compare because each credit card company’s FICO score is on a different scale. One is out of a maximum of 900, and the other tops out at 850. Which made me wonder if one was more accurate than the other, or if either reflected the score that lenders would use to evaluate my credit worthiness. The answer to the latter question, according to a recent legal settlement from the Consumer Financial Protection Bureau, is (most likely) no.

As reported by the Washington Post, the only credit score that matters is the one that lenders use to evaluate customers. And, importantly, that score might not match the “random” scores customers received from their credit card companies or free websites, such as Experian, Equifax, and TranUnion. Although those scores may be interesting, they ultimately have little bearing on the interest rate a customer is quoted, or when a customer’s application will be approved. This is because lenders use different models to calculate a customer’s credit score than Experian or credit card companies. And, perhaps not surprisingly, lenders’ models tend to calculate lower credit scores for customers than customers found online.

In short, don’t rely on the free credit scores you receive, or even those you pay for, to assess your ability to pay for the mortgage or car loan you are considering. Instead, build in a cushion. What lenders use may vary markedly from the credit score you used to benchmark loan payments, resulting in monthly payments $100 or more higher than anticipated. But, importantly, if the credit score your lender uses seems unduly low as compared to the score given to you by your credit card company, inquiry with your lender about it by asking what model is being used to generate your score.

CFPB ORDERS TRANSUNION AND EQUIFAX TO PAY $23.1 MILLION FOR DECEIVING CONSUMERS

On Jan. 3, the the Consumer Financial Protection Bureau (CFPB) took action against Equifax, Inc., TransUnion, and their subsidiaries for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The companies also lured consumers into costly recurring payments for credit-related products with false promises. The CFPB ordered TransUnion and Equifax to truthfully represent the value of the credit scores they provide and the cost of obtaining those credit scores and other services. Additionally, TransUnion and Equifax must pay a total of more than $17.6 million in restitution to consumers, and fines totaling $5.5 million to the CFPB.

“TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises,” said CFPB Director Richard Cordray. “Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”

Consumers are again advised to be aware of the terms when they sign up to receive a credit score or other credit-related products.  All credit reports are not free, and credit scores are generally not provided free of charge directly from these companies.  However, some credit card companies to provide scores to their customers without charge, and thus consumers would be wise to ask their credit card companies if they provide such information for free.

CFPB warnings regarding college-sponsored accounts

By: Amy
Today, the Consumer Financial Protection Bureau (CFPB) released a report raising new concerns about costly fees and risky features often related to certain college-sponsored accounts. The Bureau’s analysis of roughly 500 marketing deals between these schools and large banks found that many deals allow for risky features that can lead students to rack up hundreds of dollars in fees per year. The report also examines trends in the school-sponsored credit card market.  The campus banking report is available at: http://files.consumerfinance.gov/f/documents/201612_cfpb_StudentBankingReport2016.pdf

Notably, some of the nation’s largest colleges and universities continue to maintain deals with large banks that allow for the marketing of products that may not be in the best financial interests of their students and that contain costly features.  Key findings from the Bureau’s report and analysis of college marketing deals for prepaid and debit accounts include:

  • Dozens of bank deals with colleges fail to limit costly fees:  The Bureau found that dozens of deals with banks for school-sponsored accounts, including deals at some of the nation’s largest colleges and universities, do not place limits on account fees, such as overdraft fees, out-of-network ATM fees, or other common charges. These costly fees remain a concern at dozens of campuses, even as safer and more affordable alternatives are widely available at many other schools across the county.
  • Some students may pay hundreds of dollars per year in overdraft fees: College students may pay hundreds per year in overdraft fees when using student banking products. This is particularly concerning given that a growing body of evidence suggests that small financial shocks—such as a few hundred dollars— can cause significant financial hardship for students and even deter college completion. Further, the Bureau’s analysis found that fees associated with school-sponsored accounts can collectively cost a college student body hundreds of thousands of dollars per year.
  • Deals provide financial benefits for banks and schools but offer few, if any, financial benefits for students: The Bureau found marketing agreements between colleges and banks often contain extensive details about how the school and the bank can profit. Contracts frequently include details on revenue sharing and other payments made in exchange for exclusive marketing access to colleges’ student population. At the same time, many of these agreements do not require banks to offer safe and affordable accounts—and may drive students to high-cost products.
  • Some schools fail to disclose key details of marketing deals with banks: Most colleges were required by the Department of Education to publicly disclose marketing contracts by Sept. 1, 2016. However, the CFPB found that some agreements publicly announced by banks or colleges were not included in the Department of Education’s public database of agreements, suggesting that some schools did not submit their agreements to the Department before the agency’s disclosure website launched.

This is a good time to remind readers that the CFPB published a Safe Student Account Toolkit to help colleges evaluate whether to co-sponsor a prepaid or checking account with a financial institution. The Safe Student Account Toolkit is available at: http://files.consumerfinance.gov/f/201512_cfpb_safe-student-account-toolkit.pdf 

New Used Car Disclosure Rules

/ November 15, 2016

On November 10, the FTC issued new rules regarding used car sales.  See 16 CFR 455.

The new rule improves disclosures for service contracts and unexpired manufacturer warranties, increases Spanish language disclosure information, and adds air bags and catalytic converters to the sticker’s list of major defects that can occur.  The rule also changes the language on the sticker describing an “as is” sale. The old language merely stated that “[t]he dealer assumes no responsibility for any repairs regardless of any oral statements about the vehicle.” The language the FTC initially proposed in its new rule as a replacement would have been even more unclear: “The dealer is not responsible for any repairs, regardless of what anybody tells you.” After opposition from consumer groups, the language is now changed to “The dealer does not provide a warranty for any repairs after sale.” Since the Rule prohibits the dealer from making an “as is” disclosure when there is a warranty under state law, this is an accurate statement.

Nonetheless, there are various ways to challenge an “as is” disclaimer.  For example:

  • 1. A car sold “as is” still has a warranty of good title–that the transfer is rightful, and that the car is delivered free from liens–unless excluded by specific language or by circumstances that give the buyer reason to know that the seller may not have clear title.
  • 2. Express warranties generally cannot be disclaimed.
  • 3. Federal law provides that a dealer that “makes any written warranty” or “enters into a service contract” cannot sell a car “as is.”
  • 4. Many states have used car lemon laws that may limit “as is” sales and provide strong consumer remedies. States also may have minimum standards for used cars.
  • 5. State vehicle inspection laws also may provide a remedy even in an “as is” sale where the vehicle does not pass inspection.
  • 6. State deceptive trade practices statutes apply to oral or written misrepresentations or the failure to disclose defects or a wreck, flood, or other salvage history, even where a vehicle is sold “as is.”
  • 7. The federal odometer statute, including $10,000 minimum damages and attorney fees applies, despite the “as is” sale, to odometer misrepresentations, mis-disclosures or tampering.
  • 8.  There are also common law fraud and other claims that may assist a consumer stuck with a faulty vehicle.