NC ATTORNEY GENERAL ROY COOPER SHARES TOP TEN CONSUMER COMPLAINTS FOR 2012 Do Not Call, lending, and telemarketing fraud top the list of complaints: A total of 23,205 consumers filed complaints with the Consumer Protection Division of North Carolina Attorney General Roy Cooper's Office in 2012. Cooper encouraged consumers to learn about the top sources of complaints as a way to avoid costly problems. If you think you've been ripped off or just didn't get what you paid for, let my office know about it. Even better, we'd like to help you avoid trouble in the first place by helping you learn to avoid common problems, Cooper said. Complaints were up 25 percent from 2011, when 18,483 written consumer complaints were filed with Cooper's office. Complaints about Do Not Call violations topped the list for 2012, with 6,126 complaints total. Many consumers complained about continuing to get unwanted telemarketing calls after they'd placed their number on the Do Not Call Registry, while others complained about illegal prerecorded robocalls pitching things like lower interest rate credit cards and home alarm systems. Cooper would like to see stronger penalties for telemarketers who violate Do Not Call and related laws. Cooper's office has been fighting a case in federal court for three years that is expected to have a major impact on Do Not Call enforcement. The case, against satellite television provider DISH, involves several million calls to consumers made by DISH, its dealers and representatives. North Carolina law makes it illegal for a business to call you using a recorded message, and the Consumer Protection Division has been able to use consumers' complaints to identify the culprits behind some illegal robocalls and take action to shut them down. Cooper has also warned consumers to simply hang up on robocalls, since pressing a number to get more information or try to stop the calls is actually likely to result in more calls. The Federal Trade Commission is currently offering a $50,000 prize to encourage people to develop new technology to block robocalls. Also included in complaints about unwanted telemarketing calls are complaints about political robocalls, which Cooper has long pushed to ban to numbers listed on the Do Not Call Registry. He would also like political robocallers to be required to provide a contact name and number to stop the calls at the beginning of each recorded message instead of at the end of the call. Complaints about lending were number two on the list for 2012, with 4,314 complaints filed about issues such as interest rate hikes, charges for late payments, foreclosure relief scams and other lending related matters. Last year, Cooper won a landmark national settlement to reform mortgages and prevent foreclosure abuses, winning more than $338 million in help for North Carolina homeowners. The Attorney General is fighting a proposal to bring payday lending back to North Carolina, which would likely lead to more complaints about lending. Cooper fought in court for years to chase payday lenders out of North Carolina, and the last storefront payday lenders operating in the state closed their doors in 2006. Senate Bill 89 would allow payday lenders to open up shop again, charging interest rates of more than 300 percent on loans that must be paid back in two weeks. Complaints about telemarketing fraud came in at number three on the list, with 3,418 filed in 2012. Popular telemarketing fraud schemes include phony sweepstakes and lotteries, sweetheart scams, fake government grants, and counterfeit check scams. Fraud artists usually operate from outside the country and try to trick victims into sending them money overseas, through wire transfers, reloadable debit cards, or even by bringing or sending them large amounts of cash. Victims reported $8.5 million in losses to telemarketing fraud to us last year, with victims losing on average $10,000 each. Cooper's telemarketing fraud experts work with federal and international law enforcement to try to unravel the schemes, and they've also negotiated agreements with Western Union and Moneygram to make it harder for telemarketing fraud rings to use their services. They also help families deal with the often difficult process of convincing senior loved ones that they're being scammed, and work to keep victims from being ripped off repeatedly. Complaints about health care, home repair, motor vehicles, credit and collections, television services, Internet and computers, and telecommunications rounded out the top ten. See the complete list of top ten consumer complaints of 2012 at www.ncdoj.gov. The top ten list is based on written complaints filed with the Attorney General's Consumer Protection Division. Tens of thousands of North Carolina consumers also get help from consumer protection experts from the office over the phone and by email as well as at scam jams and other educational events across the state. Scammers are never shy about making money at your expense, and they can be very convincing, Cooper warned. Learn to recognize scams so you can avoid them, and report them to help us enforce the law. Cooper shared information about top complaint sources and top tips as part of National Consumer Protection Week, March 3-9, 2013. Cooper also issued a list of top ten tips to help North Carolinians avoid scams and unfair business practices. Visit www.ncdoj.gov for more consumer tips and tools. North Carolina consumers who want to check up on a business, get tips or file a complaint can contact the Attorney General's Consumer Protection Division. Call 1-877-5-NO-SCAM toll-free within North Carolina or submit a complaint online. Once a consumer files a written complaint, the NC Attorney General's office can try to help resolve the situation. In cases where there is a pattern of illegal business practices, the Attorney General may also take action to enforce the law on behalf of all North Carolina consumers. Media Contact: Noelle Talley (919) 716-6413

North Carolina Attorney General Roy Cooper makes his position quite clear: “This is the same old rip-off we ran out of our state years ago. These overpriced loans trap borrowers in a cycle of debt many cannot escape. Payday lending was a bad idea then, and it’s a bad idea now.” Background: Cooper fought in court for years to chase payday lenders out of North Carolina. A bill filed recently in the NC Senate would allow payday lenders to open up shop yet again in the state, charging excessive interest rates on loans that must be paid back quickly. Senate Bill 89 would amend the Check Cashing Licensing Act to allow a check casher/lender to pay out cash loans of up to $500 for a fee of 15 percent of the cash advance. On a typical loan repayable in two weeks, the annual percentage rate would be more than 300 percent. Current state law allows a maximum rate of 16 percent on consumer loans under $25,000 except that licensed consumer finance lenders can charge up to 36 percent on loans under $600. The bill would not allow payday loans to be made to military personnel or their spouses. Congress already banned payday lending to military personnel in 2007 to protect service members from these predatory loans. In the late 1990’s, payday lenders expanded rapidly across the state. Many North Carolina consumers who took out payday loans saw their debts mount quickly when they were unable to find the money to repay their original loan in such a short period of time. After legislators outlawed payday lending in 2001, some payday lenders closed their doors while others used a variety of ruses to keep operating. Cooper and the Commissioner of Banks’ office fought a long legal battle to shut down illegal payday lenders in North Carolina, winning agreements to close the last storefront payday lenders operating in the state in 2006. Last year, Cooper became concerned about payday-type loans being offered by Regions Bank, which tried to claim protection under federal law because it is chartered in another state. Thanks to pressure from Cooper’s office and other consumer advocates in the state, the bank stopped making those loans in North Carolina last month. Media contact: Noelle Talley (919) 716-6413

Student Loans: Debt for Life

This much we know: College pays. You can lose your house to foreclosure, but never your education. Four-year college graduates’ pay advantage over high school grads has doubled over the past 30 years. If money for tuition is tight, the advice goes, borrow what you need. Students have been listening. In 2010 student debt exceeded credit-card debt for the first time. In 2011 it surpassed loans for vehicles. In March, the Consumer Financial Protection Bureau announced that student debt had passed $1 trillion. It grew by $300 billion from the third quarter of 2008 even as other forms of debt shrank by $1.6 trillion, according to a separate tabulation by the Federal Reserve Bank of New York. In a press briefing at the White House in April, Education Secretary Arne Duncan said, “Obviously if you have no debt that’s maybe the best situation, but this is not bad debt to have. In fact, it’s very good debt to have.”

If student loans are good debt, how do you account for the reaction of Christina Mills, 30, of Minneapolis, when she found out her payment on college and loans from law school would be $1,400 a month? “I just went into the car and started sobbing,” says Mills, who works for a nonprofit. “It was more than my paycheck at the time.” Medical student Thomas Smith, 25, of Hamilton, N.J., is $310,000 in debt and is struggling to make ends meet even before beginning to repay his loans. “I don’t even know what I eat,” he says. “I just go to the supermarket and buy the cheapest thing I can and buy as much of it as I can.” Then there’s Michael DiPietro, 25, of Brooklyn, who accumulated about $100,000 in debt while getting a bachelor’s degree in fashion, sculpture, and performance, and spent the next two years waiting tables. He has since landed a fundraising job in the arts but still has no idea how he will pay back all that money. “I’ve come to the conclusion that it’s an obsolete idea that a college education is like your golden ticket,” DiPietro says. “It’s an idea that an older generation holds on to.”

Even if you buy into the notion that education debt is good debt, at what point does it become too much of a good thing? Mark Kantrowitz, publisher of FinAid.org, which researches aid to financially assist students, estimates that student debt, compounded by rising enrollments, is growing by nearly $3,000 a second.

“The question isn’t the debt per se. It’s what the students are getting in return,” says Richard Arum, a New York University sociologist who specializes in education. Many students are incurring heavy debts for an education (ethnomusicology, theater arts) that just isn’t worth it from a strictly financial viewpoint. (Money isn’t everything, but try telling that to the collection agency.) Education is a benefit to society by creating a workforce that creates wealth, pays taxes, and stays off welfare. But state governments—whose schools educate 7 in 10 students—have raised tuition abruptly because of their own financial problems. So far the federal government has offset the state cutbacks by boosting financial aid, but Education Under Secretary Martha Kanter testified to Congress earlier this year that “this path is not fiscally sustainable.”

There’s a lot of speculation that college debt is the next bubble after housing, the latest sector in which prices leap above real value. American colleges may not be turning out the kind of graduates that employers want. In Academically Adrift: Limited Learning on College Campuses, NYU’s Arum and sociologist Josipa Roksa of the University of Virginia write that employers are being forced to turn to foreigners or graduate and professional schools to fill jobs that they once filled with homegrown college graduates.

That’s the value side. The cost side is ugly, too. The economic slump that began in 2007 has forced people to pay more for college even as it has driven more of them into it as a refuge from an unfriendly job market. The National Center for Education Statistics projects that college attendance this fall will be up 19 percent from the fall of 2007. Meanwhile, state and local support for higher education last year was the lowest in 25 years of measurement, in inflation-adjusted dollars per student, according to the State Higher Education Executive Officers Association. Two-thirds of college seniors graduated with loans in 2010, and those who did had an average of about $25,000, according to the Institute for College Access & Success.

zachmanifold@gmail.com posted on September 06, 2012 14:08

What a Half Million Unwary Consumers Don’t Know: Schemes Only Work for 1 in 10 Who Pay for Them; Consumer Alert: Programs That Promise to Settle Debt are Seen as “#1 Threat to America’s Most Indebted Consumers.”

WASHINGTON, D.C. – As few as one in 10 unwary consumers who are lured into so-called “debt settlement” schemes actually end up debt free in the promised period of time, making the risky schemes the No. 1 threat facing America’s most deeply indebted Americans, according to a major new consumer alert issued today by the nonprofit National Association of Consumer Bankruptcy Attorneys (NACBA).

Available online at http://www.nacba.org, the NACBA consumer alert notes: “Already struggling with home foreclosures, harsh bank and credit card fees, and other major financial challenges, America’s most deeply indebted consumers are now falling victim to a major new threat: so-called ‘debt settlement’ schemes that promise to make clients ’debt free’ in a relatively short period of time. Unfortunately, most consumers who pursue debt services offering to settle debt find themselves facing not relief but even steeper financial losses. Even the industry acknowledges – though not in its ever-present radio and online advertising – that debt settlement schemes fail to work for about two thirds of clients. Federal and state officials put the debt-settlement success rate even lower – at about one in 10 cases – meaning that the vast majority of unwary and uninformed consumers end up with more red ink, not the promised debt-free outcome.”

The private debt-settlement industry remains robust. More than 500,000 Americans with approximately $15 billion of debt are currently enrolled in programs that promise to settle debt, according to industry estimates. And there is room for further growth: One in 8 U.S. households has more than $10,000 in credit card debt.

Durham, NC bankruptcy attorney Ed Boltz, NACBA Board member and incoming NACBA president, said: “Based on what bankruptcy attorneys are seeing across the nation, we believe that debt settlement schemes are the number one problem facing America’s most deeply indebted consumers today. Bombarded with slick radio and Web advertising falsely promising a smooth road to being debt free in a short period of time, these companies prey on the most desperate victims of the economic downturn. These particularly vulnerable consumers usually end up getting sued, stuck with outrageous fees, more deeply in debt, and far worse off in terms of their credit score.”

Earlier this year, NACBA focused national attention on the “student debt bomb,” which then was identified as the fastest growing consumer debt problem being handled by consumer bankruptcy attorneys.

Richard Thompson, a Rialto, California, retiree and victim of a debt settlement scheme, said: “I was told they could settle my $89,000 in debts for a total of $39,000 if I made payments of $1,800 for 22 months. I was contacted about a chance to settle $15,000 debt for $6,000 but my debt-settlement company ignored the offer. In fact, I paid them a total of $25,200 as they kept on ignoring settlement offers from creditors. I thought they were taking care of me by bringing my debt down, but all they were doing was taking my money. I ended up with $25,000 more in debt than I started out with. Before I retired I worked 25 years as a manager, now I have had to go back to work as a part-time security guard to help make ends meet.”

Bankruptcy attorney Trisha Connors, a NACBA member from Glen Rock, New Jersey who has testified before the New Jersey Law Revision Commission on debt settlement abuses, said: “Over the last three years, I have worked with 12 different for-profit debt settlement companies and over 25 clients who came to me after their debt settlement program failed to serve them. The results with each client were the same: exorbitant fees being paid, settlement (at best) of one small credit card debt, and mounting late fees and penalty interest charges on the unsettled debts. When clients informed the companies that promised to settle their debts of their desire to exit the program, the firms kept all or most of the accumulated savings for debt reduction as ‘fees.’ Every person I dealt with who had been current on their debts prior to contacting a debt settlement program told me that the sales representative told him the only way to be successful in the program is to stop paying credit card bills.”

Ellen Harnick, senior policy counsel, Center for Responsible Lending, said: “Debt settlement companies require clients to default on their debts before they will negotiate. This adds late fees and penalty interest to their debt and frequently results in the client being sued by creditors. Since only a tiny proportion of debts are actually settled by these companies, clients are typically left worse off than they were when they started.”

In addition to highlighting the stories of three victims of debt settlement schemes, the NACBA consumer alert notes the following:

• There is now across-the-board agreement on the danger that debt settlement schemes pose to consumers. The Better Business Bureau has designated debt settlement as an “inherently problematic business.” Similarly, the New York City Department of Consumer Affairs called debt settlement “the single greatest consumer fraud of the year.” Across the country, the U.S. Government Accountability Office (GAO), the Federal Trade Commission, 41 state attorneys general, consumer and legal services entities, and consumer bankruptcy attorneys have all uncovered substantial evidence of abuses by a wide range of debt settlement companies.

• Debt settlement schemes encourage consumers to default on their debts. Because creditors frequently will not negotiate reduced balances with consumers who are still current on their bills, debt settlement companies often instruct their clients to stop making monthly payments, explaining that they will negotiate a settlement with funds the client has paid in lieu of their monthly debt repayments. Once the client defaults, he or she faces fines, penalties, higher interest rates, and are subjected to increasingly aggressive debt-collection efforts including litigation and wage garnishment. Consequently, consumers often find themselves worse off than when the process of debt settlement began: They are deeper in debt, with their credit scores severely harmed.

• “Self help” may be the best answer for smaller debt burdens. If you have just a single debt that you are having trouble paying (such as a single credit card debt) and you have cash on hand that can be used to settle the debt, you may be able to negotiate favorable settlement terms with the creditor yourself. Creditors typically require anywhere from 25 to 70 percent on the dollar to settle a debt so you will need that much cash for a successful offer. Be sure to get an explicit written document from the creditor spelling out the terms of the debt settlement and relieving you of any future liability. Also be prepared to pay income taxes on any of the forgiven debt.

• Nonprofit credit counseling agencies can help, but must be vetted carefully. If, like most people, you owe multiple creditors and do not have the cash on hand to settle those debts, you may want to consult a non-profit credit counseling agency to see if there is a way for you to get out of debt. But make sure to check it out first: Just because an organization says it’s a “nonprofit” there is no guarantee that its services are free, affordable or even legitimate. Some credit counseling organizations charge high fees (which may not be obvious initially) or urge consumers to make “voluntary” contributions that may lead to more debt. The federal government maintains a list of government-approved credit counseling organizations, by state, at www.usdoj.gov/ust. If a credit counseling organization says it is “government approved,” check them out first.

• Bankruptcy will be an option for some consumers. Bankruptcy is a legal proceeding that offers a fresh start for people who face financial difficulty and can’t repay their debts. If you are facing foreclosure, repossession of your car, wage garnishment, utility shut-off or other debt collection activity, bankruptcy may be the only option available for stopping those actions. There are two primary types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 13 allows people with a stable income to keep property, such as a house or car, which they may otherwise lose through foreclosure or repossession. In a Chapter 13 proceeding, the bankruptcy court approves a repayment plan that allows you to pay your debts during a three to five year period. After you have made all the payments under the plan, you receive a discharge of all or most remaining debts. For tax purposes, a person filing for bankruptcy is considered insolvent and the forgiven debt is not considered income. Chapter 7 also eliminates most debts without tax consequences, and without any loss of property in over 90 percent of cases. To learn more about bankruptcy and whether it makes sense for you, go to www.vujoviclaw.com for more information.

NACBA urges consumers to steer clear of any companies that:

• Make promises that unsecured debts can be paid off for pennies on the dollar. There is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet is to contact the creditor directly as soon as you have problems making payments.

• Require substantial monthly service fees and demand payment of a percentage of what they’ve supposedly saved you. Most debt settlement companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee– a percentage of the money you’ve allegedly saved.

• Tell you to stop making payments or to stop communicating with your creditors. If you stop making payments on a credit card or other debts, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score will also suffer as a result of not making payments.

• Suggest that there is only a small likelihood that you will be sued by creditors. In fact, this is a likely outcome. Signing up with a debt settlement company makes it more likely that creditors will accelerate collection efforts against you. Creditors have the right to sue you to recover the money you owe. And sometimes when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.

• State that they can remove accurate negative information from your credit report. No company or person can remove negative information from your credit report that is accurate and timely.

Boltz emphasized: “Many different kinds of services claim to help people with debt problems. The truth is that no single solution works in all cases. Bankruptcy is an option that makes sense for some consumers, but it’s not for everyone. For example, the National Association of Consumer Bankruptcy Attorneys and its individual consumer bankruptcy attorney members do not encourage every person who looks at bankruptcy to enter into it. What makes sense for each consumer will depend on their individual circumstances. We encourage everyone to get the facts and do what makes the most sense in their situation.”

ABOUT NACBA

The National Association of Consumer Bankruptcy Attorneys (http://www.nacba.org) is the only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors in bankruptcy. Formed in 1992, NACBA now has more than 4,000 members located in all 50 states and Puerto Rico.

MEDIA CONTACT: Patrick Mitchell, for NACBA, (703) 276-3266, or pmitchell@hastingsgroup.com.

Though complaints about debt collectors are pouring into a federal database that tracks allegations of illegal late-night phone calls, arrest threats and other abuse, few of the complaints are likely to result in enforcement actions, the Wall Street Journal reported recently.

The debt-collection industry, booming as many Americans struggle to catch up on their payments or walk away from what they owe, was the subject of a record 164,361 complaints through Dec. 8 of 2011, according to the Federal Trade Commission.

The total is 17 percent higher than the 140,036 debt-collection complaints the FTC got for 2010.

Since the start of 2011, though, the FTC has launched just four enforcement actions against debt-collection firms under the primary federal law used to oversee the industry.

From 2005-10, the average was two cases a year. FTC officials said that the small number of enforcement actions against debt collectors is a misleading barometer of its determination to punish violators.

J. Reilly Dolan, acting director of the agency’s financial-practices division, said that the FTC "is cracking down on abusive collection practices and directs its resources to go after some of the largest debt collectors."

The United States Senate has blocked a vote on the nomination of Richard Cordray as Director of the new Consumer Financial Protection Bureau (CFPB). Without a Director, the CFPB cannot exercise its full authority to protect students and their families from deceptive and predatory private student loan practices.

Consumers across the country are counting on the CFPB to oversee and supervise the consumer financial products that affect their lives, including private student loans. Private student loans are one of the riskiest, most expensive ways to pay for college.

Like credit cards, private student loans can have uncapped variable interest rates that are highest for those who can least afford them. They also lack the consumer protections and flexible repayment options that are provided by federal student loans, and they are usually not dischargable in bankruptcy.

That is why a broad coalition of student, consumer, civil rights and higher education organizations strongly supported the creation of the CFPB with authority over all private student loans.

As Senate Banking Committee Chairman Tim Johnson, Senator Jack Reed, and others noted in their floor statements, the CFPB plays a crucial role for private student loans. Students and their families need the CFPB now more than ever to fulfill its critical mission with full authority. Richard Cordray is highly qualified to serve as its director, and blocking his nomination has done a great disservice to all consumers.

# ## #
An independent, nonprofit organization, the Institute for College Access & Success works to make higher education more available and affordable for people of all backgrounds. The Institute’s Project on Student Debt works to increase public understanding of rising student debt and the implications for our families, economy, and society. For more information see
www.projectonstudentdebt.org
and  www.ticas.org.