Consumer Tips

Privacy in the Digital Age: Data Tracking and Data Brokers

By: Dylan Sheji

It’s a bit of an understatement to say that the Internet changed everything, because it most certainly did. Almost all of humanity’s combined knowledge can be found on the Internet. Friends and family members that live thousands of miles away from each other can be brought together with a single click. There are billions of websites are out there that Internet users browse daily that have a wide range of utility. But as you browse the Internet, have you noticed that the ads you see on websites are starting to follow you? And that they relate to previous Internet searches or websites you’ve visited? These targeted ads are consequences of data tracking, the analysis of Internet user behavior on websites in order to identify buying intentions or interests. The blog posts I write will discuss data tracking, the companies tracking data, how Internet data is tracked, and methods we consumers can use to push back against the collection of our data. This blog post will discuss the concept of data tracking, the companies that track consumer data, and methods of data tracking.

As I said above, data tracking is the analysis of our Internet behavior in order to target consistently annoying personalized ads at us. Data tracking monitors your Internet activity similar to how your credit report tracks you with regards to your financial history. The companies that collect this information are called data brokers. Data brokers take the information they gather and sell it to other companies, namely advertising and marketing companies, in order to directly appeal and advertise to specific groups of Internet users. This is the reason why ads seem to follow us; companies are getting your Internet data in real time and directly advertising to you.

Who are these companies that are tracking our data? Some are foreign to a majority of consumers while others are names we see every day. For example, Facebook and Twitter, repositories of much of our personal data, are some of the top data brokers. And for good reason: we willingly publish so much information about ourselves on these public platforms, and as their privacy statements make clear, what we share is readily available to the rest of the world, including other data brokers and advertising companies. Facebook further developed it’s utility to advertisers in 2014, when it bought Atlas, an ad server, from Microsoft. Atlas allows marketers to measure consumer data and target consumers across all digital sites, not just limited Facebook, and even across every type of device. Other data broker companies are relatively unknown to the average consumer, for example the largest data broker, Axciom, which collects on average 1,500 pieces of information on more than 200 million Americans. Another such company is eBureau, a company that sells Internet profiles to online marketers complete with a real-time scoring system for about 220 million Americans, so that marketers can sell you exactly what you need when you need it.

Now that you know who is tracking our data and why, how do these sites collect information from their users in the first place? The main method of tracking is through “cookies,” small bits of text that are downloaded to one’s browser as one uses the web. These text files contain small strings of numbers that can be used to identify individual computers. Cookies can come the website the user is visiting, called first-party cookies, or from some other website, called third party cookies. First party cookies used by websites are typically not used for advertising, but to analyze website traffic and figure out who is visiting the site and why in order to increase traffic. Third party cookies are more insidious, and can come from any of the companies I listed above without consumer approval or awareness. Most websites have a variety of third party cookies hidden within them. Facebook and Twitter widgets that one sees on many websites also contain these third party cookies. Cookies lack any personal identifiers and aggregate a user’s tracking data from multiple sites to infer interests. This “aggregated not personal” concept is the reason why these tactics are legal; they are anonymous data bits used for marketing purposes and not to track your credit or finances, which is heavily regulated by the government.

At this point all of this data tracking sounds a little too Big Brother, and though there can be positive benefits to receiving personalized ads for items you may actually really need, the easy dissemination of our data is nonetheless frightening. Fear not consumers, in my next blog post I will go over various methods to prevent data brokers from analyzing your Internet data.

Privacy in the Digital Age: Data Tracking and Data Brokers

By: Dylan Sheji

It’s a bit of an understatement to say that the Internet changed everything, because it most certainly did. Almost all of humanity’s combined knowledge can be found on the Internet. Friends and family members that live thousands of miles away from each other can be brought together with a single click. There are billions of websites are out there that Internet users browse daily that have a wide range of utility. But as you browse the Internet, have you noticed that the ads you see on websites are starting to follow you? And that they relate to previous Internet searches or websites you’ve visited? These targeted ads are consequences of data tracking, the analysis of Internet user behavior on websites in order to identify buying intentions or interests. The blog posts I write will discuss data tracking, the companies tracking data, how Internet data is tracked, and methods we consumers can use to push back against the collection of our data. This blog post will discuss the concept of data tracking, the companies that track consumer data, and methods of data tracking.

As I said above, data tracking is the analysis of our Internet behavior in order to target consistently annoying personalized ads at us. Data tracking monitors your Internet activity similar to how your credit report tracks you with regards to your financial history. The companies that collect this information are called data brokers. Data brokers take the information they gather and sell it to other companies, namely advertising and marketing companies, in order to directly appeal and advertise to specific groups of Internet users. This is the reason why ads seem to follow us; companies are getting your Internet data in real time and directly advertising to you.

Who are these companies that are tracking our data? Some are foreign to a majority of consumers while others are names we see every day. For example, Facebook and Twitter, repositories of much of our personal data, are some of the top data brokers. And for good reason: we willingly publish so much information about ourselves on these public platforms, and as their privacy statements make clear, what we share is readily available to the rest of the world, including other data brokers and advertising companies. Facebook further developed it’s utility to advertisers in 2014, when it bought Atlas, an ad server, from Microsoft. Atlas allows marketers to measure consumer data and target consumers across all digital sites, not just limited Facebook, and even across every type of device. Other data broker companies are relatively unknown to the average consumer, for example the largest data broker, Axciom, which collects on average 1,500 pieces of information on more than 200 million Americans. Another such company is eBureau, a company that sells Internet profiles to online marketers complete with a real-time scoring system for about 220 million Americans, so that marketers can sell you exactly what you need when you need it.

Now that you know who is tracking our data and why, how do these sites collect information from their users in the first place? The main method of tracking is through “cookies,” small bits of text that are downloaded to one’s browser as one uses the web. These text files contain small strings of numbers that can be used to identify individual computers. Cookies can come the website the user is visiting, called first-party cookies, or from some other website, called third party cookies. First party cookies used by websites are typically not used for advertising, but to analyze website traffic and figure out who is visiting the site and why in order to increase traffic. Third party cookies are more insidious, and can come from any of the companies I listed above without consumer approval or awareness. Most websites have a variety of third party cookies hidden within them. Facebook and Twitter widgets that one sees on many websites also contain these third party cookies. Cookies lack any personal identifiers and aggregate a user’s tracking data from multiple sites to infer interests. This “aggregated not personal” concept is the reason why these tactics are legal; they are anonymous data bits used for marketing purposes and not to track your credit or finances, which is heavily regulated by the government.

At this point all of this data tracking sounds a little too Big Brother, and though there can be positive benefits to receiving personalized ads for items you may actually really need, the easy dissemination of our data is nonetheless frightening. Fear not consumers, in my next blog post I will go over various methods to prevent data brokers from analyzing your Internet data.

Exploring Student Loan Repayment Options

By: Mercedes Pineda

The Consumer Financial Protection Bureau (CFPB) reports that more than 40 million borrowers owe on federal and private student loans, with the average student debt around $23,000. I, like many of you, am one of those 40 million borrowers. Student loan debt can be a stressful financial burden for most people. However, armed with some knowledge and a helpful toolkit, we can make these loans more manageable.

Why is paying back student loans so difficult? The CFPB’s recent report highlights many of the problems student borrowers experience when trying to repay their student loans. These problems include (but are not limited to): a lack of flexible repayment offerings for distressed borrowers, lack of information regarding repayment options, paperwork processing delays, and inconsistent instructions from servicers. Below I outline the best way to approach repayment and the various options available to borrowers. 

How Do I Find Information About My Loans?

The best place to start is the National Student Loan Data System (https://www.nslds.ed.gov/nslds/nslds_SA/). This is a government database that keeps track of all your federal loans. Speak to your school’s financial aid administrator about any information they may be able to provide you about your loans. Additionally, check your credit report. Student loans are often listed on your credit report. You are entitled to a free copy of your credit report from each of the three major credit-reporting agencies. (www.annualcreditreport.com). However, please be aware that student loans may look confusing on your credit report. Loan servicers often sell loans, and it may be difficult to determine which servicer owns your loan now and how much you owe. I highly recommend going over your credit report with a trained financial counselor. Take advantage of your local or county community services that provide this resource!

What Are My Repayment Options?

  • Standard Repayment Plans
    • Payments are generally a fixed amount over the course of a certain amount of years
  • Income Based Repayment Plans
    • If you have federal loans, flexible repayment options may work best for you. These plans take into account your yearly income and the payments are a certain percentage of your discretionary funds (that is the money you have available after paying rent and bills). Payments are recalculated every year. Generally, outstanding balances are forgiven after a minimum of 20 years.
    • Learn more about these plans here: www.studentaid.ed.gov/sa/repay-loans/understand/plans
  • Consolidation
    • Allows you to simplify repayment by combining loans into one payment. Not all federal loans are eligible for this option, and it may not be the best option for your situation. You cannot consolidate federal and private loans into one payment. You cannot “undo” consolidation.
    • Beware of “Debt Relief” scams! Many scammers try to charge you fees to help consolidate your loans. They can often leave you with a loan that was worse than your original loan! Federal debt consolidation is an option you can apply to for free via studentloans.gov
    • Get more information about consolidation here: http://www.bouldercounty.org/doc/hhs/student-loan-consolidation.pdf and here : studentaid.ed.gov/sa/repay-loans/consolidation
  • Refinancing
    • To refinance you take out a new loan, and you use that loan to pay off the existing loans. With this option you can change the terms of your loan. By doing this you can lock in a different interest rate and save money over the life of your loan.
    • The government does not offer refinancing. You can refinance your federal loans into private student loans. BUT, you may give up benefits such as income based repayment options or eligibility for student loan forgiveness programs by converting your loan.
    • However, like consolidation, there are some scams out there for loan refinancing. The following to sites are reliable and have resources such as a refinancing calculator to help you explore this option:
  • Student Loan Forgiveness
    • The most common of these is the Public Service Student Loan Forgiveness Program. This program allows federal student loan borrowers a chance to qualify for loan forgiveness after committing 10 years to public service work. To find out if you may be eligible for this option use the chart at the following site: bouldercounty.org/doc/hhs/public-service-loan-forgiveness.pdf
    • There are VERY limited other situations in which your loan may be forgiven. To learn more about them visit this site: studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation
    • Please be aware that this is another option that sees many scams. Your federal loans can only be forgiven by the federal government. Please visit the government site listed above or reach out to your servicer directly to figure out if you qualify for a forgiveness program.

Summary:

I hope the above information will help borrowers explore and consider the right repayment options. I highly recommend seeking out local resources, such as a financial counselor at your community services center, who can help you understand the repayment process and help pick the best option for your situation.

Understanding Student Loans

By: Mercedes Pineda

According to recent reports by the Consumer Financial Protection Bureau, student loan debt is currently around $1.2 trillion. For many people, the decision to take on student loans is often the first major financial decision of their adult life. However, it is also a decision that can haunt us later in life. Students often struggle to understand the confusing financial documents given to them and have a difficult time finding helpful resources us navigate the student loan process. I know that my 18-year-old self definitely didn’t understand every aspect of the student loans I agreed to. So let’s start with the basics.

The Basics:

What’s the difference between federal loans and private loans?

Federal government loans almost always cost less and tend to have more flexible repayment options. Many federal student loans are subsidized and have fixed interest rates (more on interests later). Most students are eligible for these loans. The amount of money students can borrow is limited.

Private loans are usually done through private banks or lenders. Some schools and state agencies may offer these types of loans as well. You can borrow larger amounts than federal loans. Private student loans usually have higher costs and often require a co-signer. You are charged interest while attending school. Additionally, interest rates on private loans are often variable (more on this later) and repayment options are usually not flexible.

            Interest Rates

An interest rate is the cost of borrowing money. Interest rates are calculated as a percentage of the unpaid principal (the amount you borrowed). The total cost of your loan varies depending on the interest rate charged and the type of loan. The following are different types of interest characteristics that will effect how much your loan ultimately ends up costing:

  • Fixed interest rate: this is a set rate that will not change over the life of the loan. Generally, a fixed rate will be higher than a variable rate.
  • Variable interest rate: this is a rate that can change as interest rates in the market change. This means you may have a different interest rate on a monthly, quarterly, or annual basis.
  • Subsidized: The Government will pay the interest on your loans while you attend school. These loans are awarded based on financial need. You do not pay interest during the 6 months after graduation (the grace period) or during periods of deferment.
  • Unsubsidized: Interest starts to grow and is added to your principal (“accrue”) as soon as you receive the loan. You do not need to demonstrate financial need. You are responsible for all the interest on these loans during all time periods.

What is the best student loan for you?

There are many factors you should consider before deciding on what type of student loan to get. For example: Can you work during the school to cover some costs? Can you live at home? Do you think you may be able to pay the loan off quickly? Is one school offering me a better financial aid package? Below is a list of tips to help you make the best financial decisions regarding your student loans.

Strategies for building a strong financial future as a student:

  • Fill out a Free Application for Federal Student Aid (FAFSA). You must fill out this form to be eligible for any federal student loans. Since federal student loans are usually the best option for most students, you should explore your federal loan options first. Also, schools often use the FAFSA to award scholarships and grants, so fill it out even if you don’t think you’re eligible! Access the application here: https://fafsa.ed.gov/
  • Research free funds. Scholarships and grants are free money! These applications don’t usually take up much of your time and can really help you save money on education costs.
  • Negotiate for more aid.
    • Do not be afraid to talk about your accomplishments. I did this myself! It can be difficult to put yourself out there, but you should always be your own advocate! Even just a little extra financial aid can be the difference in being able to attend the program you want. You can email your financial aid office and ask to meet with a staff member to explain your position. You can also send a letter with the same information if a face-to-face meeting is uncomfortable.
    • Here is a helpful tool from the Consumer Financial Protection Bureau to compare your financial aid offers. You can use this information to help negotiate a better offer. http://www.consumerfinance.gov/paying-for-college/compare-financial-aid-and-college-cost/
  • Know what your financial situation will be.
    • Learn how to budget and be practical about what your costs will be. Getting informed now can save you from many headaches down the road.
  • Get good advice. Your community likely has free or low-cost financial counselors that can help you with the student loan process and other important financial decisions. Make use of these resources. Reach out to your school’s financial aid office if you have any questions. Talk to friends or family about their student loan experiences. The Consumer Financial Protection Bureau also has some great resources. http://www.consumerfinance.gov/paying-for-college/

Summary:

This information will hopefully help you understand and manage the student loan process. Student loans are not easy to understand, so take the time to learn as much about them as you can before making this important financial decision.

How to Dispute an Online Order That Was Never Delivered

By: Aaron Fransua

According to the latest reports from the U.S. Dept. of Commerce, roughly $3.4 Billion of retail sales occurred online just last year alone. Consumers are becoming increasingly more comfortable with making their purchases online. Fortunately, the vast majority of these sales occur without any problems, but what happens when those shoes you purchased online do not show up? What are your rights when the seller delays delivery? Even worse, what happens when you get the credit card bill in the mail a few weeks later with the charge for the shoes still on it?

Two federal laws- the Mail, Internet or Telephone Order Merchandise Rule and the Fair Credit Billing Act offer protections and procedures, so you don’t have to pay for merchandise that you ordered, but never received.

Your Rights When Shopping Online, Phone, or by Mail

The Mail, Internet, or Telephone Order Merchandise Rule is a federal regulation that is administered by the Federal Trade Commission and applies to most goods you order by mail, phone, fax, or online. Essentially, this rule requires sellers to have a reasonable basis for claiming they can ship an order within a certain time. The rule also tells sellers what to do whenever there is a delay in an expected shipment.

By law, a seller should ship your order within the timeframe stated in its ads or over the phone. In cases where a delivery date is not promised, then the default rule is that you can expect the seller to ship the goods within 30 days of your order. The timer begins as soon as the seller receives a completed order with your Name, Address, and Payment.

If the seller is unable to ship your product within the promised time, the rule requires that they must notify you, provide you with a revised shipping date, and give you an option for either a full refund or to accept the new delivery date. If you do not respond, and the delay is 30 days or less, then it is assumed that you accept the delay and are willing to wait for the merchandise, If, however, you do not respond, and the delay is more than 30 days, the seller must cancel the order by the 30th day and issue you a full refund promptly.

Hopefully, the seller has delivered your order within the revised delivery schedule. But, if there is yet another delay, then the Rule requires the seller to contact you again and give you a revised delivery date, or the option cancel the order for a full refund. If you do not respond to the second notice, the seller should assume that you are not willing to wait, cancel your order, and issue a full refund.

How to Dispute Your Charges for Non-Delivery:

Below is a quick summary of steps to take to get either your money back or the charge removed from your credit card bill:

Step One: Contact the seller

Reach out to the seller and try to resolve the problem with them directly first. Larger websites such as Amazon have great consumer dispute resolution processes to either get a new product reshipped quickly, or a refund issued. In general, most businesses want to keep the consumer happy so you’ll keep coming back with them. Hopefully, this should be the only step you need to take, but if you get pushback from the business, you still have options!

Step Two: File a Dispute with your Credit Card Company (Unless you paid via Paypal, then jump down to the PayPal Dispute section below)

The Fair Credit Billing Act allows you to file a dispute with your credit card company for undelivered merchandise, so long as you inform the credit card company within 60 days of the first bill that has the disputed charge on it. To take advantage of this right:

  • Write to the credit card issuer at the address given for “billing inquiries,” not the address where you send your payments. Make sure to include your name, address, account number, and a description of the billing error- in this case nondelivery of your goods.
  • Include copies of sales slips or any other documents that support your position.
  • It’s recommended to send this letter via certified mail, so you have proof of what the credit card issuer received.

After you have filed your complaint, the credit card company must acknowledge your complaint, in writing, within 30 days after receiving it. The credit card company then must resolve the dispute within two billing cycles after getting your letter. During this time that the company investigates your dispute, you may withhold your payment on the disputed amount. Keep in mind this is only for the disputed amount, so make sure you continue to pay for all other charges on that card. Also, during this time, the credit card company may not take any legal or other action to collect on the disputed amount and related charges (including finance charges).

Paypal Dispute:

If you paid for your online order with your credit card and used Paypal as the payment processor, it’s recommended that you file your complaint with Paypal due to their expanded line of protection. The Paypal Purchase Protection policy gives you 180 days to file a complaint, and will provide you with a full refund of your purchase price and shipping costs if:

1) You were charged for something you didn’t purchase, or

2) Your order never arrived, or

3) Your order arrives, but it is significantly different than how it was described. 

There are a variety of scenarios that meet this condition, for instance:

  • You received a completely different item.
    Example: You purchased a book, but received a DVD.
  • The item is missing parts or features, and this was not disclosed.
    Example: The listing said batteries included, but they weren’t.
  • You purchased a specific quantity of an item but received the wrong amount.
    Example: You purchased five pairs of fuzzy dice and only received four.
  • The item was damaged en route to its destination.
    Example: You bought a beautiful antique lamp, and it arrived in pieces.
  • You received a counterfeit version of the item.
    Example: You purchased a Rolex, but received a Faux-Lex.

Summary:

Hopefully utilizing the above steps should quickly put the law on your side and help get you a refund for your order, or the charge removed from your credit card statement! When shopping online, always try to stick with using larger retail stores since many of them have policies in place to quickly resolve these sorts of issues. It also helps to use a payment processor such as Paypal whenever you get the chance so that you can take advantage of the Purchase Protection policy.

 

Your Facebook Account Doesn’t Have to Die with You

By: Michael Havlik

In a 2014 estimate, there were almost 1.4 billion Facebook users in the world, with 890 million of these users spending an average of 21 minutes per day on Facebook. Even senior citizens, traditionally a demographic slow to adopting online technology, are seeing the value of creating a virtual life on social media. In fact, a recent reportfound that the fastest growing social media demographic is persons 50 years and older. Among all of these users, an estimated 4.75 billion pieces of content are shared daily.

Have you ever wondered what happens to your Facebook account–and all that uploaded content–after you die? Fortunately, recent changes to Facebook’s policy has made death a little less scary.

It has been said that “old age isn’t so bad when you consider the alternative.” Similarly, to fully appreciate Facebook’s new policy, it is worth discussing the alternatives. Consider the widely publicized saga of the Ellsworths family following the death of their son, Lance Corporal Justin Ellsworth. Justin, a Marine, died in combat in 2004 while serving in Iraq. After his death, the Ellsworth family wanted to make a memorial of his life by using the e-mails Justin had sent and received while deployed overseas. Yahoo!, the e-mail service provider, denied all requests by the Ellsworth family, citing that it was against their terms-of-service. It was only after a lengthy and costly court battle that Yahoo! gave the family access to Justin’s emails.

Even Facebook’s policy used to be onerous for heirs. In 2012, a family sued Facebook to compel Facebook to give them access to their son’s account. Their son had unexpectedly committed suicide, leaving no note or rationale for the coping family, and the family sought access to help solve the mystery. Even though the family won the lawsuit, Facebook refused to provide the access for some time afterwards.

All of that changed in February of this year (at least for Facebook users). Facebook’s new “Legacy Feature” allows account holders to designate a friend to have certain access after the user passes away. For instance, the legacy contact will be able to pin a post on the decedent’s timeline after death (such as a funeral announcement), respond to new friend requests, or update cover and profile photos. Additionally, users can elect whether they want their legacy contact to be able to download pictures, posts, and videos from their account. And lest you worry about those embarrassing messages with your ex—the legacy contact won’t be able to log in as you or read any private messages.

Alternatively, through this feature, you can tell Facebook to permanently delete your account after death.

Here’s how to designate your legacy contact:

  • From your Facebook profile, click on “Security”
  • Choose “Legacy Contact” at the bottom
  • Enter the name of a Facebook friend as your legacy contact. (Note: an email will be sent to the friend alerting them of their new status)

Differences Between Chapter 7 and Chapter 13 Bankruptcy

By: Michael Richardson

The bankruptcy laws offer two primary options for consumer bankruptcies: Chapter 7 or Chapter 13. This blog post describes the basics of each of these chapters. In addition, the costs, benefits, and eligibility requirements of each chapter are described.

A Chapter 7 consumer bankruptcy is commonly referred to as a “liquidation” bankruptcy. Basically, consumers who file for Chapter 7 must give up all of their non-exempt property[1] in exchange for a discharge of a portion of their debt. The ability to discharge (which means to completely get rid of) outstanding debt is a very attractive feature of Chapter 7. However, lawmakers thought that consumers were abusing the system. So, in the last 10 years, the laws were changed to make it more difficult for consumers to be eligible for Chapter 7 “relief.” If the court determines that a consumer has the means and financial ability to make consistent payments to the consumer’s creditors over time, then the court can either convert the case into a Chapter 13 consumer bankruptcy (discussed below) or the court can dismiss the case entirely.

A Chapter 13 consumer bankruptcy is “repayment” bankruptcy. Consumers who file for Chapter 13 are allowed to keep all of their property. In exchange, consumers must promise to pay a portion of their future income over to the court for a period 3 to 5 years. This is called a repayment plan. The consumer submits her own repayment plan, and both the court and the consumer’s creditors are required to approve the plan. In deciding whether to approve the repayment plan, the court will look at whether the consumer’s income is stable and consistent, among other factors. If the court approves the plan, the consumer must not miss payments or default in any way, because the court can convert the case to a Chapter 7 or dismiss the case entirely.

As discussed above, Chapter 7 and Chapter 13 consumer bankruptcies contain different legal consequences and eligibility requirements. Each chapter is suited for different consumer financial profiles, and there are important advantages and disadvantages of each chapter. Here are some important requirements and features of Chapter 7 and Chapter 13 bankruptcies:

  • Chapter 7 “Liquidation”
    • Main Benefit:
      • Ability to make a fresh start by discharging a large portion of outstanding debt
    • Downside:
      • Must give up all non-exempt property
    • Eligibility
      • Not all consumers are eligible
        • **But, those with “below-median” incomes are usually eligible
      • The court will compare the amount of debt with the amount of the consumer’s disposable income
      • A consumer may only receive a Chapter 7 discharge once very 8 years
      • A consumer may convert a Chapter 13 to a Chapter 7 case at any time
  • Chapter 13 “Repayment”
    • Benefits:
      • The consumer is able to keep all of her property
      • Discharge of some debt is potentially available at the end of the repayment plan
    • Downside:
      • Often, a consumer cannot discharge any debt
      • The consumer must endure a fixed budget and pay portion of her income to the court for 3 to 5 years
      • If consumer misses payments or otherwise defaults, the case is converted to a Chapter 7
    • Eligibility
      • Only available to individuals (not corporations or other organizations)
        • **But, individuals with business debts are eligible
      • The consumer must have stable and consistent income
      • The consumer may only have up to a limited amount of outstanding debt
      • The court must approve conversion from a Chapter 7 to a Chapter 13

The bankruptcy laws can be complicated, and Chapter 7 and Chapter 13 are different in many ways. For this reason, it is always recommended to consult with an experienced consumer bankruptcy attorney to discuss your options before filing for bankruptcy.

[1] For a discussion of exempt property in bankruptcy, please visit the blog post titled “Bankruptcy Basics – Exempt Property.”

Guarantees and Warranties—Is There a Difference and Does it Matter?

By: Andre Kaiser 

100% Satisfaction Guarantee. You’ve read the phrase before, probably on a food product or maybe the packaging of a consumer electronics item. How does this “satisfaction guarantee” relate to the term “limited warranty” that consumers find familiar? While the terms “guarantee” and “warranty” may have become synonymous in the minds of some consumers, the two are actually quite different. Understanding the difference helps consumers know their rights and what remedies they are entitled to.

Much of the confusion starts with the fact that, at a fundamental level, both guarantees and warranties provide remedies to consumers who have an issue with a good they have purchased. Another similarity is that the offering party in both a guarantee and a warranty is legally bound to the terms of the agreement.

A basic distinction between guarantees and warranties is satisfaction as opposed to malfunction. Dissatisfaction with a product is not generally a circumstance that a warranty will cover. A guarantee on the other hand would generally provide a remedy for dissatisfaction. A manufacturer’s warranty is an assurance or stipulation given by a manufacturer against defects in the components and workmanship with a promise to cure any defects. In contrast, a guarantee is a promise that something is of specified quality, content, benefit, etc., or that it will perform satisfactorily for a given length of time. A warranty can be thought of as an insurance policy the purchaser has against the manufacturer for product defects for a certain period of time, while a guarantee is a promise of satisfaction offered to the purchaser. Warranties are more like a contract in which the manufacturer is promising quality and consistency in the product while guarantees can be more subjective to what an individual consumer hopes to get out of a product.

Perhaps an example can further clarify the difference. Consider Connie Consumer who buys a printer, which is manufactured by Perfunctory Printers. Perfunctory provides Connie with a warranty that the printer will print 100 pages per minute and guarantees that Connie will be happy with the printer’s ease of set-up and use. If Connie notices that her new printer only prints 99 pagers per minute, she could request that Perfunctory fix the printer so that it meets the warranted standard under the warranty. Instead, if the printer has an interface that Connie finds confusing and frustrating to use, under the guarantee she can return the printer for a full refund. Note that the warranty does not require Perfunctory to take the printer back, just to fix it. The guarantee, however, allows Connie to return the printer for a full refund on essentially a “no questions asked” basis.

Another distinction between guarantees and warranties is who provides each of them. As the name implies, a manufacturer’s warranty is always going to be provided by the manufacturer of the good. As discussed earlier an extended warranty could be provided by the manufacturer but more likely will take the form of a service contract provided by a third party seller. A guarantee could be offered by the manufacturer, the seller, or both. For a guarantee that is printed on the packaging of the product, the consumer should generally reach out to the manufacturer if they are dissatisfied with the product or good. However, some third-party sellers provide their own satisfaction guarantee in the form of allowing returns on products for a certain period of time.

The remedies that a warranty and a guarantee each provide can also be used to distinguish the two. In general, a warranty offers to repair malfunctioning or broken parts. However, not all warranties are created equal and in some cases a warranty may not provide for the repair of a defective part. Computers are a prime example of this where “Orange Computers” (Orange) might be the “manufacturer” of the computer and assemble everything, but the processor is actually made by another company, and the hard drive by a third company. In such a situation the warranty Orange provides may only cover the parts Orange itself manufactures and not the processor or hard drive. A warranty usually will not provide for full replacement unless multiple attempts have been made to fix the product to no avail. Thus it is always important to check the terms of the warranty to determine what actually is covered. A guarantee usually only offers the consumer replacement or refund on a product that the consumer is dissatisfied with or for a product that isn’t working properly. Thus, a warranty can be thought of as covering the individual parts or components of the product while the guarantee covers the product as a whole.  However, this will depend on the terms of the warranty or guarantee.

Warranties and guarantees are not necessarily free. The “costs” may be rolled into the price of the product, and warranties can often be extended by paying extra. Sometimes an “extended warranty” is offered by the manufacturer, but more often it is offered by the third-party seller of the good (retailer). Nonetheless, a guarantee may be essentially free when it is part of a free promotion for customer satisfaction. Thus, when a good comes with a guarantee the consumer can generally return the product and get a full refund on their purchase within the guarantee period. But once that guarantee period expires, if the consumer becomes dissatisfied they are likely out of luck. However, this is not always a hard and fast rule. Manufacturers and sellers both want to keep consumers happy and thus might refund a product outside of the stated guarantee period.

Understanding these differences can help consumers know where to look for a remedy if they are unsatisfied with a good they have purchased, or if the good malfunctions.

Payday Lenders in Disguise

By: Charles Clark 

This blog has periodically covered the dangers of payday loans. Payday loans charge extremely high interest rates and often leave borrowers deep in debt. Sources show that the average consumer who takes on a payday loan is in debt for over 6 months, is charged an annual interest rate of over 400%, and has to extend the original payday loan 9 times. There is almost never a situation in which a consumer in need should turn to a payday lender for fast cash.

There are a number of alternative options when consumers need cash or need to pay down existing debt. Those alternatives include setting up a payment plan with creditors, salary advances, credit counseling, credit union loans, emergency assistance programs, and — as a last resort — credit card cash advances. As this blog has shown, taking out a payday loan will almost always leave consumers in deeper debt than before taking out the loan.

There are many individuals and organizations trying to educate consumers on the danger of payday loans, and deter consumers from taking on payday loan debt. Many state governments, including Colorado, have passed laws that limit the interest rate payday lenders can charge. These laws are an attempt to protect consumers from predatory financial products. While the Colorado law has helped consumers to some extent, the industry continues to grow and 77% of Coloradans still live within 5 miles of a payday lender.

Many states have recognized the problem with payday loans and are addressing the issue through laws and regulations. However, some of these payday lenders have adapted their business model in an attempt to make sure they don’t have to comply with the law. The new business models create a type of payday lender in disguise – they essentially function like a payday lender and offer extremely high interest rates without having to comply with payday loan laws. The following are a few examples of loans to be careful of:

  • Auto title loans: Also known as a car title loan, this is a loan where the borrowers car is used as collateral. This means that if the borrower does not make loan payments on time then the lender can repossess the borrowers car and sell it in order to repay the borrowers debt. Similar to payday lenders, auto title lenders often charge extremely high rates of interest to borrowers.
  • Tribal affiliated loans: Due to the increase in regulation many payday lenders have started partnering with Indian tribes in order to offer payday loans over the Internet. By partnering with Indian tribes many of these lenders do not have to comply with US law. Partnering with Indian tribes is a way for these payday lenders to keep taking advantage of consumers by charging excessive interest rates.
  • Mobile Home Loans: Recently, reports have uncovered unfair lending practices by mobile home manufacturers. Such reports have found that loan terms have included high interest rates, undisclosed fees, and terms that would make selling or refinancing the home impossible. As always, before financing the purchase of a mobile home consumers should talk to financial professionals they trust and not just the sellers of the mobile home.

Your Foreclosure Rights

By: James Wilson

Foreclosure is a scary process. Navigating the waters and understanding the process is daunting. There are significant benefits to individuals and the community in the preservation and growth of home ownership. Included in the laws designed to protect consumers, Colorado has adopted the Foreclosure Protection Act (the “Act”) to help ease the burden on consumers faced with foreclosure.

If you are facing the possibility of being displaced from your home, your first step should be to contact the Colorado Foreclosure Hotline at 1-877-601-HOPE (4673). Making this call will connect you to a housing counselor who can help offer free assistance. On their website (www.coloradoforeclosurehotline.org), the Hotline points out that, “There were 19,622 foreclosures in Colorado in 2011…but four out of five that met with a Colorado Foreclosure Hotline housing counselor successfully avoided foreclosure.” Many factors go into whether or not you can avoid foreclosure, but knowing the right questions to ask could be the difference between staying in your home or rushing to find alternative housing opportunities. Things you should discuss with a housing counselor include setting up alternative payment arrangements, and the timelines that lenders must follow before initiating, and during, the foreclosure process.

Often times the most appropriate action will be to engage an attorney familiar with foreclosure and consumer protection laws. An attorney will be able to help you consider warnings that the Act and the Colorado Attorney General have identified with regard to consumer foreclosures.

 

Foreclosure Process

In order to initiate the foreclosure process, your lender is required to send you a thirty (30) day notice to allow you the opportunity to speak with a housing counselor and your lender’s loss mitigation department. Only after the expiration of this notice period can your lender proceed with the formal foreclosure process. If you do receive one of these notices, do not ignore it. As indicated, four out of five people who call the Hotline have the opportunity to stay in their home.

If the foreclosure process proceeds past the notice stage, you will receive a series of additional notices setting forth, among other things, information related to the date of sale. Initially, the sale is set to take place in 3-4 months, but delays and postponements could push the actual sale date farther down the road. Depending on where you live—and even if you have vacated the property—you may have continuing obligations with regard to the property, such as HOA assessments, until the property is actually sold. This is one of the most critical reasons to consult a knowledgeable attorney in order to understand what responsibilities you may carry until the property transfers.

Do not forget that you have the right to cure the default on your loan up to fifteen (15) days before the date of foreclosure sale. In order to cure the default you are required to file certain notices with your lender and public officials. An attorney can help you make sure your notices are properly drafted and sent to all the necessary parties.

 

Foreclosure Consulting Contracts

The Act specifically addresses the engagement of a foreclosure consultant. Generally speaking, a foreclosure consultant is an individual you hire in a non-attorney relationship to assist you through the foreclosure process, and who is not affiliated with your lender. The Colorado Attorney General warns that various individuals may contact you to help you avoid foreclosure after you are in default on your mortgage. By law, these individuals are required to follow certain rules in the Act, which you should ensure are followed before agreeing to pay a foreclosure consultant a fee. A consultant is not allowed to charge or collect any fee from you until the consultant has fully performed his or her services.

A consultant is also required to provide you with a written contract for you to keep at least twenty-four hours before you sign it. The contract must contain the following notices:

  • The consultant cannot ask you to sign any document that transfer your ownership to the consultant or his or her associates.
  • The consultant cannot guarantee that they will be able to refinance or arrange for you to keep your home.
  • You have the right to cancel the contract at any time by written notice. The consultant is required to provide you with a “Notice of Cancellation” form. If you are unsure about how to properly complete this form, call the Hotline!
  • If you cancel, you must repay certain expenses plus interest spent by the consultant on your behalf.

The Attorney General also warns against individuals and scams that offer short-term loans that allow you to cure the current default, but leave you unable to pay off the short-term loan. You should also be extremely cautious of any individual who wants you to transfer title to your property with an option to repurchase at a later date. Before you make any decision related to a current or foreseeable foreclosure, call the Hotline and speak to an attorney.