I’m going into semi-hibernation for the next two months.

For those who regularly visit this blogsite, I want to say thank you both (har, har).

The Consumer Gal and I are about to have our book, Enough of Us – which deals with another realm – published in a few weeks. In preparation for the big event we need to concentrate on that project. So for the next eight weeks or so, I will be suspending my semi-monthly Consumer Guy full-length blog posts and, instead, providing  a short consumer tip each week (I hope).

If you would like to learn more about our book that deals with issues of ethics and procreation, please visit our other website, www.enoughof.us. Many thanks for your interest.

When Firefighter (or Police) Charities Call, Hose Them Down

Have you ever received a call from someone that sounds roughly like this: “Hello, is this Mr. Farfegnoogle? Hi, my name is Nigel and I’m calling on behalf of the Firefighters Benevolent Association of Aardvark County. Each year we donate to (Toys for Tots, the Widows and Orphans Fund, a local hospital burn unit, you name it), and we are hoping we can count on your support for this very worthwhile cause.”

You may wonder, “How much should I donate?” Well, here is a handy donation calculator: Figure out how much money you have in your bank account and multiply it by 0. In other words, donate nothing, zip, nada, naught, bubkes. The odds are overwhelming that the “charitable” campaign is a scam; that the organization that endorses it—while likely a legitimate association—is in cahoots with the fundraising outfit that just called you; and that most of the money goes to the fundraiser.

“What,” you say, “Are you telling me that the Firefighters Association isn’t on the up and up?” To which I say, no, it’s the fundraising company that isn’t on the up and up, and the legit organization is willing to go along for the ride in order to get a small cut of the take.

In my days as a TV consumer reporter, I conducted several investigations into these operations, and here’s what I found. There are two basic types of schemes. In each case there is a legitimate organization—I’ll refer to it as the Association—and a fund-raising company, which I will call the Fund-raiser. In the first type of scheme, the Fund-raiser offers the Association a fixed fee, say $5,000. The Fund-raiser then uses the Association’s name to raise all the money it can in the Association’s name, but the Fund-raiser keeps all the proceeds.

With the second type of scheme, the Fund-raiser offers the Association a cut of the gross take, say 15 or 20 percent. In either case, a very small percentage of the proceeds goes to a good cause. Why do the Associations do it? They get a chunk of cash to donate to a worthy cause without having to do any work. Is it ethical? Not in my book.

The Better Business Bureau has developed a set of standards for charities. Included in these standards are three benchmarks that relate to the issues I am discussing. The charities must:

 

  • Have a board of directors that provides adequate oversight of the charity’s operations and its staff.
  • Spend no more than 35% of related contributions on fund raising. Related contributions include donations, legacies, and other gifts received as a result of fund-raising efforts.
  • Spend at least 65% of its total expenses on program activities.

 

These are minimum standards. Most legit charities should, and do, spend a much higher proportion of their expenses on legitimate program activities. No responsible organization should allow big-profit fund-raising companies to represent it.

If you are determined to donate to the nonprofit organization, try this: Ask the Fund-raiser how much of the proceeds go to the nonprofit. Let’s say the amount is 25 percent. Instead of giving the Fund-raiser a $20 payment, send the nonprofit five bucks directly. Your total contribution will equal the amount it would have collected from the Fund-raiser and you will save yourself three-fourths of what you would have “donated.”

But never contribute to an organization that gets a flat fee up front. In that situation the nonprofit has already received its payoff from the Fund-raiser. So whatever you contribute goes into the fund-raiser’s pocket.

Here’s one more twist on the Fund-raiser appeal. Sometimes the caller will tell you about a special event the Association is putting on for disadvantaged kids. It might be a circus or a rodeo (there’s nothing quite as entertaining as animal abuse to amuse children) or a holiday party. Don’t be fooled. The Fund-raiser still gets most of the money and the one such rodeo I witnessed was pitiful.

Look out for Sneaky Contract Terms

I recently came across a magazine article that goosed me into writing about something that has rankled me for a long time. I guess I had to come across this issue elsewhere before I heard my internal wake-up call to write about this issue.

I’m talking about the one-sided contracts with unconscionable clause that most of us sign because we are – or perceive ourselves to be – powerless. The worst of the worst are arbitration clauses. If you want to open a bank account, use an Internet service, or sign onto Netflix, you’ll probably have to agree to a clause that says if you have a dispute with the company, you agree to take it to arbitration, often an arbitration company selected by the vendor. The problem is that arbitrators are notorious for siding with the parties that give them the most business. And that ain’t likely to be you. Adding insult to injury, you may have to share in paying the arbitrators’ fees.

A typical contract arbitration clause

Arbitration clause. photo- CreditInfocenter.com

Recently, each time I logged onto Netflix I saw a banner at the top of the page telling me to read and agree to a change in the Netflix contract. I read the change. It was a requirement that all disputes be settled by arbitration. So I ignored it. The notice was there each time I logged on. After a while I was warned that time is running out. So I let time run out. I never agreed and the banners went away. I guess Netflix would rather have the business of those who wouldn’t agree than lose them as customers. After all, they know we can visit our local Redbox.Here are some tricks you can try to avoid arbitration requirements. If you must agree to an online contract, go ahead. Then email the company’s customer service department and tell them you rescind your agreement to subject disputes to arbitration and that you reserve your right to take disputes to court. Send the email from your own email account; not the company’s “Contact Us” link, and keep a copy of your message. If you don’t hear back, you may be in good shape. If they send you an “either, or” response, you’ll have to make a choice.If you are signing a paper contract, cross out and initial the arbitration clause. If they don’t notice the change, you may be in like Flynn.If you receive a contract by email that you are to print, sign and mail back, yahoo! (Not the Internet service provider – just old fashioned “yahoo.”) Delete the arbitration clause, print the contract, and sign it, and mail it in, keeping a copy for yourself. If the company doesn’t notice the change, too bad for them.  It should have read it before it signed. Just make sure you get a returned copy signed by the appropriate company official. If they can try to slip one by you … turnabout is fair play.

Has your bank, brokerage, credit card company, cable TV provider or any other business ever slipped a little sheet into your statement or bill that notifies you of changes in the terms of your agreement? Read it! If you don’t like what you read, call the company and tell it how you feel. If necessary, take your business elsewhere. If the change of terms is significant, it could give you a way out of your contract with your cellular service company, Internet provider, or the like.

I’ll finish with this. When you get a bill for any utility service that is not a government sanctioned monopoly, like for instance, your electricity provider, check the fees on the statement. There may be a lot of small dings on the bill for just pennies or dimes. Call the utility and ask them to explain each fee and whether it is required by the government as a tax or fee. Many may not be. If so, it’s time to negotiate including the polite threat to take our business elsewhere. Think about it this way: If they say your service (exclusive of taxes and government fees) costs 50 bucks, but they are charging you $54, that’s a four-dollar, or 8 percent – rip-off. While the service provider may not reduce those fees, you threat to leave may prompt them to offer you an extra goodie at no charge. Recently, when I threatened to leave my cable company, the phone rep called me back and offered a “tier” upgrade and a 10 dollar monthly price reduction for six months.

Remember my motto: “Whoever holds the money, has the power.”

 

 

Student Loans are Just That . . . Loans. Defaulting is a Risky Proposition – Part II

In part one of this column I described how borrowers of student loans get into trouble and how collection agencies, on behalf of the federal government often make their lives miserable. But just how do the debt collectors go about it?

According to an excellent article by Andrew Martin (“Debt Collectors Cashing in on Student Loan Roundup”) in the September 9, 2012 New York Times, they often start with trolling the Internet for databases that contain information on respective debtors. When they find a suspect, they contact their prey. If a debtor refuses to cooperate, is employed, the agency will try to garnishee their wages. And the government is tenacious. It usually gives a collection agency just six months before transferring the case to another agency.

The article tells the story of Arthur Chaskin of Michigan, who borrowed $3,500 in the 1970s. By last January the debt, along with interest and penalties, had grown to 19 grand. When a government-contracted lawyer tracked him down, he garnisheed Chaskin’s brokerage account. A judge reduced the debt to $8,200, 25 percent of which went to the lawyer. The object lesson here is that student loan defaulters never know who is looking for them, when the hunters will strike, and how deep in doo-doo the debtors may find themselves. And, as a reminder, repayment may even come in the form of deductions from Social Security payments – not a pleasant prospect for those on fixed incomes.

Martin reports, “Government officials estimate that they still collect 76-82 cents on every dollar of loans made in fiscal 2013 that end up in default. That does not include collection costs that are billed to the borrowers and paid to the collection agencies.” A 2007 MIT study, however, estimates that Uncle Sam collects something closer to 50 percent of debt. The bad news for student debtors – but good news for taxpayers – is that the government, year to year, is growing ever more efficient at getting its money back – an 18 percent one-year improvement last fiscal year, totaling $12 billion.

Student debt demonstration, Washington, DC, April 4, 2012 – Photo – campusprogress.org

Many defaulters are in dire straits. They received schooling and then got caught in the quagmire known as the Great Recession, unable to find work. Some are ill. Some are in over their heads with all types of accumulated debt. But with little chance of shedding their government debt through bankruptcy, they find themselves between a rock and hard place.

And even in cases where a person is broke and either ill, disabled, or unemployed, it’s not easy to incentivize collection agencies to help those debtors get into a program that either allows gradual payment – say through gradual income-based repayment – or to forebear on collecting until the debtors are back on their feet. That’s because the collectors make more money by collecting than by merely preventing default.

The creditors and debt collectors frequently don’t tell the borrowers about programs to ease the repayment burden, or the requirements for qualifying are so daunting that they give up in frustration.

Even President Obama acknowledged, “Too few borrowers are aware of the options available to them to help manage their student loan debt,” in a June memo.

Good news for borrowers may be on the horizon. Congress and the Department of Education are considering regulations that would require debt collectors to offer student loan delinquents an affordable income repayment plan. And the department has promised to do a better job of publicizing such plans, starting with those who are still in school. As part of the proposals, monthly payments would be limited to 10 percent of discretionary income.

But, according to Andrew Martin, “Efforts to change the incentive [reimbursement] structure for guarantee agencies have stalled. And the Obama administration’s efforts to impose new regulations on profit-making colleges were initially watered down and then significantly weakened by a federal judge.”

So while some folks are so deeply in debt that foreclosure and/or bankruptcy are the only ways out from under crushing debt, it will be almost impossible for them to shake off their student loan obligations.

Unless Congress (you know, the government branch with a 9 percent voter approval rating), gets head out of it’s a_ _ _ _ _ e, many of those students who made some big mistakes a long time ago will suffer for a long time to come. Congratulations to those collection agencies that care more about money than humaneness.

 

Student Loans are Just that . . . Loans. Defaulting is a Risky Proposition – Part I

Millions of Americans are up to their wallets in debt for money they borrowed way back when and thought they’d get around to paying off . . . well . . . eventually. Good luck with that.

Almost 6 million people are at least a year behind in paying off their student loans for post-secondary education. And with new-graduate unemployment as high as it is, the prospects are getting worse. A September 9, 2012 article in the New York Times paints a pretty bleak picture. Sixteen percent of all those with outstanding balances—representing a whopping $76 billion—are in default. So what’s the upshot?

Many of the defaulters are being hunted down, not by the FBI or the local sheriff, but by collection agencies. This is ironic because in my last blog post I discussed the need to regulate collection agencies. Who should regulate them? The federal government (as well as the states). Who is hiring them? The federal government. So while the Consumer Financial Protection Bureau (CFPB) is taking steps to protect debtors from unsavory collection practices, the U.S. Department of Education (DOE) is hiring some of those same agencies the CFPB is trying to get in line. In the last fiscal year, the DOE paid $1.4 billion to collection agencies and other “bounty hunters” in order to recoup its losses.

Many years ago, there was a TV commercial for Chiffon margarine that ended with the catch phrase, “It’s not nice to fool Mother Nature.” Learning she had been fooled into thinking Chiffon was butter, Mom would summon up a thunderbolt. Substitute the U.S. government for Mother Nature and collection agencies for the thunderbolt, and you get a picture of what defaulters are up against. Unlike pitiful little banks and lame mortgage lenders, the fed can muster up some pretty loud thunderbolts of its own. The Times article tells the story of 29-year-old single mother Amanda Cordeiro of Florida, who is in the red on a student loan to the tune of 55 grand. She has had two tax refunds seized (private companies can’t do that) and has changed her phone number several times in the last year to avoid the harassing phone calls the CFPB is trying to put a stop to.

Other defaulters have had Social Security payments garnisheed. This makes life miserable for a lot of former students, especially those who have taken pricey courses at private for-profit schools, like University of Phoenix, ITT Technical Institute, Kaplan University and DeVry University. Many of these schools specialize in Internet coursework with disappointing completion rates for students and less-than-stellar job placement records. The educational institutes frequently coach students into taking out the loans, which are paid directly to the schools. Often, those who fail to find well-paying employment take it on the lam because they have no way to pay back the loans. Students who attended profit-making schools –about 11 percent of all students – account for nearly half of all defaults. Dropouts were nearly four times as likely to default as those who graduate.

While there are programs available to help desperate students pay off their loans over an extended period, with outstanding balance forgiveness at the end of that term, the companies that administer the loans for the government frequently fail to inform the borrowers of those programs. Mounting penalties and accumulating interest rates can lead to huge debt and ruined credit ratings, making life even more difficult when defaulters tries to take out a loan on a car or home, or when they apply for credit cards.

It is very difficult to wipe out government loans through bankruptcy, and they have no statute of limitations. The government has been able to recoup a whopping 80 percent of defaulted debt, about four times the rate of nongovernment lenders.

You may know the acronym ARM as standing for “adjustable rate mortgage.” ARM can also mean “accounts receivable management,” as debt collectors call themselves. The ARM industry is booming thanks to defaulted student loans. ARM companies seek government contracts because of their high rate of return.

When borrowers are delinquent paying for a year, the lender (Uncle Sam) declares them in default. If it cannot find the debtors, the government sics collection agencies on them.

 I leave you and those you care about with a checklist:

  •   Be very, very careful about taking courses from Internet post-secondary schools (see my column of July 17, 2012);
  •  Don’t take out a student loan unless you are damned sure you are going to finish your course of study;
  •  If you do apply for a student loan, get all the information up front about programs to help students who are having trouble paying off their loans;
  •  If you are already delinquent, go to the agency through whom you acquired the loan and ask for the information on extended payback programs;
  • And finally, if you are in debt up to your neck, don’t go making babies, or you’ll be asking for a heap of grief.

To be continued. “See” you in part 2.

While Debt Collection Companies and Credit Reporting Agencies are Watching You, Who’s Watching Them?

On May 5, 2011 and June 20 of this year, I wrote about the new Consumer Financial Protection Bureau (CFPB). The anti-big-government contingent in Congress hated the idea of a big bully regulatory agency picking on poor, put-upon, and pitiable financial institutions. Never mind that the new bureau was designed to protect consumers from the types of abuses that contributed to the Great Recession.

Congressional Republicans let it be known that the driving force behind the formation of the CFPB, Elizabeth Warren, would never be approved as bureau director. So Warren decided to turn the tables. While President Obama nominated Richard Cordray to be the CFPB’s director, Warren threw in her hat to run against Republican Senator Scott Brown in Massachusetts.

CFPB Director Richard Cordray

Cordray has been showing that he’s no softy either. The former Ohio attorney general announced on Wednesday that debt collection agencies will come under the scrutiny of the bureau in cases that involve the collection of overdue student loan payments.

According to Edward Wyatt in The New York Times, the U.S. Department of Education holds more than $850 billion in outstanding student loan debt. “Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,” said Cordray. “We want all companies to realize that the better business choice is to follow the law — not break it.”

You may be familiar with the Dodd-Frank Act (actually, very few folks are all that familiar with it) that attempts to restrain the excesses of the finance industry. Under that legislation, the federal government has the authority to oversee nonbank financial companies.

The CFPB will scrutinize the debt collectors to ensure that they properly identify themselves and accurately disclose the amount of debt owed. The companies must provide a process to resolve any disputes—as well as communicate with consumers–“civilly   and honestly.”

The Federal Trade Commission (FTC) received more than 180,000 complaints against debt collection companies in 2011. The CFPB’s new rules cover approximately 175 companies that each have annual receipts of at least $10 million.  These companies account for almost two-thirds of the $12-billion-plus in annual debt collections of all types.

According to the Times story, a spokesperson for Consumers Union said, “There has been an explosion of shady debt collection tactics in recent years.” She went on to say “Businesses have a right to collect what they are owed but not to harass consumers for debt that has been already paid off or doesn’t belong to them.”

For years, state and local government consumer protection agencies have targeted debt collection agencies. They have accused collectors of abusive practices like harassing them with repeated telephone calls or misleading them by threatening to have them imprisoned for failure to pay debts, which is a nonexistent penalty.

What troubles me is that the while the big boys will come under scrutiny and face penalties, what about those companies that fall under the purview of the law but are too small to rattle the CFPB’s cage? I fear this policy will unintentionally give small offenders the impression that they are getting a free pass.

In any case, if you are in debt and feel you are being harassed or threatened by a collection agency, contact your state attorney general’s office. If the debt is about a student loan, contact the FTC or CFPB (Web site is your best bet). But don’t assume that lets you off the hook if you are in arrears. If you fail to deal with your predicament, you could end up in civil court as the defendant in a lawsuit.

In addition, the CFPB is now accepting complaints about credit reporting agencies, including :

  • Incorrect information on a credit report
  • A consumer reporting agency’s investigation techniques
  • Improper use of a credit report
  • Being unable to get a copy of a credit score or file,      and
  • Problems with credit monitoring or identify      protection services.

 ——————-

Here is a roster of categories that the Consumer Financial Protection Bureau is now covering. If you have a complaint concerning any of these financial areas, go to the CFPB Web site and click the appropriate icon:

  • Mortgages
  • Credit Cards
  • Banking
  • Consumer loans (including vehicles)
  • Student loans
  • Credit reporting

 

Something Different from The Consumer Guy – A Commentary on Journalism and Phyllis Diller

I’m going to step out of my The Consumer Guy persona to discuss a few topics that are near and dear to me. For almost 20 years in a previous life, I was a standup comic and actor. That career actually led me to one in television consumer reporting.

During my comedy career, I twice crossed paths with Phyllis Diller. Once, I appeared in disguise on the iconic “game” show, The Gong Show, as the Bandit Impressionist. Ms. Diller was one of the three judges. She, along with the other judges, gave me the maximum score of 10 points each and I was that show’s winner, walking away with $516.32 and a trophy (which sits on my bookcase even today).

Some years later I ran into her at LAX. I introduced myself. We spoke for a brief moment. She was affable and very real, as opposed to her wacky comedy persona.

I tell you this because I want it understood that I have no axe to grind with Diller. I really liked her.

But . . .

When I hear in TV reports that she was a “pioneer” in women’s standup comedy, or as Joan Rivers said, Diller “broke the way for every woman comedian,” I feel that I must correct the record.

Have you ever heard of Minnie Pearl? Or Judy Canova? Moms Mabley? Betty Walker? Or Jean Carroll? They are among the handful who really were the “standup” trailblazers for women, including Phyllis Diller. And they started in the 1940s.

Minnie Pearl – photo – wikipedia

Canova was a major radio star and film actress in the 40s. You can still  listen to episodes of her show.

Minnie Pearl, a character portrayed by Sarah Colley, with her trademark straw hat sporting a price tag hanging on a string, was a Grand Ole Opry fixture for decades starting in 1940. She became a regular on TV’s Hee Haw in 1969. There are more Minnie Pearl videos on YouTube than fleas on a stray hound dog.

Moms Mabley

Moms Mabley became a star with general audiences not too long before her death in 1975. She had spent most of her career in vaudeville and the so-called chitlin’ circuit, a loose collection of venues for black audiences that sprang up as a result of racial discrimination in the first half of the 20th century. Moms’ bawdy humor found a wider audience as television shows became less restrictive.

One of my favorite female comedy “pioneers” was Jean Carroll. She was a regular on the Ed Sullivan Show. Carroll was one of the few women on the “borscht belt” circuit – the Jewish hotels in the Catskill and Pocono Mountains near New York City. She had a fast-paced delivery with impeccable timing. I think of her as a precursor to the Joan Rivers style of standup. She even had her own TV show in 1953-54.

Jean Carroll. photo – whosdatedwho.com

Jean died last year at the age of 98.

I mention all of these women not to degrade Phyllis Diller, who stands tall in her own right, but to pay deserved homage to the ladies mentioned above and their many lesser-known contemporaries and those who preceded them.

Check out these women, and while you’re at it, take a peek at Fanny Bryce, Gracie Allen, Totie Fields, and any other old-timers you can find.

It couldn’t hurt!

Professional sports pitching intoxicants to kids? You bet.

In 1991 the late journalist Jeff Zaslow interviewed me for his column in the Chicago Sun-Times about how advertisers sometimes use poor taste – or even hypocritical pitches – in order to hawk their wares.

Allow me to quote from Zaslow’s column: “Consumer advocate Ellis Levinson . . . finds all liquor ads objectionable and says our society is hypocritical. ‘During the World Series, you see baseball players [in public service ads] telling kids to say no to drugs. Then in the next commercial, ballplayers pitch beer. Beer gets you stoned. It’s a drug commercial.’”

Have things changed? You bet. Have you ever heard of Avion Tequila? I never had, until tonight. I was watching the Yankees-Rangers game when a commercial came on for the Mexican elixir (replete with a subtle reference to S & M pain).

What, exactly, are they selling?

I have also seen ads for Captain Morgan Rum and Skyy (please, spare me the clever spelling; Toys R Us is bad enough with its backward R) Vodka on professional sports broadcasts. Coors Beer promises you not only a silver bullet high-speed train electrifying your life, but lots of sexy women wearing not much in the way of sartorial splendor (i.e., they’re scantily clad).

I don’t know how else to say this, but I am pissed off. There was a day when beer and wine were the only alcohol products that advertised on TV. No more. I truly believe that if our graft-ridden Congress were not beholden to the booze industry, alcohol advertising on television would go the way of the dodo and cigarette ads. It’s already  bad enough that kids can’t wait to get to college so they can board the Coors Silver Bullet.

Let’s just hope that Phillip Morris doesn’t gain enough traction among members of the House of Reprehensibles to entice its members to allow smokes back onto our home screens. In the meantime, if you have kids, lock your liquor cabinet.

3 Quick Tips for Savvy Consumers

In this post I’m kicking back (what the hell, it’s August and the livin’ is easy). Here are a few tips to make life a little simpler for you.

Cramming

No, this isn’t about what you do the night before an exam. It occurs when your phone bill, either home or mobile, lists charges for features you never requested; for instance call waiting or ringtones, respectively. On a landline bill the extra charges might even be itemized as “miscellaneous” or “enhanced” services.

If you don’t examine your bill you might end up paying for charges that an outside provider added to your bill.

Check your bill each month and challenge charges itemized as “service charge,” “other fees,” “membership,” or the like.

According to the National Consumer League you should also avoid all 900 numbers they typically hit your bill by way of anonymous collect calls or signing up for online contests via your cell phone.

 

 

Free phone calls without a phone

I must confess I have not used this service myself because I hate electronics in general (look up the word “Luddite”). But here’s the lowdown. www.bobsled.com offers free calls from most web browsers, the iPad, iTouch, iPhone (ay, ay, ay!) and Android phones. Bobsled lets you call any landline or mobile phone in the United States (including Puerto Rico) and Canada. The receiving device does not need to have the Bobsled program.

 

Changing doctors and health insurance

According to Money magazine, you need to be extra cautious when changing physicians in order to be sure that your health insurance coverage stays in effect. It seems that insurers’ directories are often out of date. So if you switch from an in-network doc to one who is no longer part of the network, it could make you sick in the head.

This is especially true when it comes to emergency physicians and anesthesiologists, who rarely accept insurance.

If possible, find out in advance what your insurer will pay. Some insurers will only pay the current Medicare rates for out-of-network care. Some have reduced their coverage from 80 percent to 70 percent.

If you are checking into a hospital and you still have your wits about you, request in writing to be seen only by in-network providers. If you go out of network, call the hospital’s billing office and request a lower fee (unless taking the time means you will die or lose a leg, for example). Money advises that you try to negotiate a one-third deduction.

 

 

TV appearance tonight

I’ll be appearing tonight on NBC Bay Area news at 11:00 p.m. It’s a story on hidden fees used by merchants in various transactions.
You can find it tomorrow at www.nbcbayarea.com/news and search for “Stephanie Chuang” (reporter).