This week the Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled, "Consumer Credit and Debt: The Role of the Federal Trade Commission in Protecting the Public"
Various advocates offered their informed expert opinions and recommendations on how best to strengthen the FTC, reinforce consumer protection laws and toughen FTC enforcement actions in a number of areas.
My friend and consumer advocate Ira Rheingold, Executive Director and General Counsel for the National Association for Consumer Advocates offered his views, professional opinion and expert recommendations on how best our consumer protection agency can protect American consumers.
Here is a small portion of Ira's full testimony & recommendations for the FTC;
(Additional testimony, video and information can be found here.)
"In examining what the FTC can and should do to ensure a fair and just consumer credit marketplace, I will first address the specific areas they need to focus on right now and then look at the structural changes needed to embolden the FTC to act as a real consumer protection agency..."
Enforcement Actions
If the FTC was engaged with the rest of the public and private consumer advocacy community, it would have no shortage of public enforcement actions to bring against bad actors and their "unfair" practices in the consumer credit marketplace. Possible enforcement actions would include the following areas:
Fair Credit Reporting Act
For the past eight years there has been little regulatory action in regards to the "Big Three" consumer reporting agencies (CRAs). Unfortunately, this inaction (and the last administration's failed philosophy that industry can police itself) has led to a completely broken system for investigating consumer credit report disputes and is rife with inaccurate information from furnishers, mismatched information in files, and abusive reporting by debt collectors and debt buyers.
Payday Lending
The FTC should prohibit payday lenders from holding a check or any electronic equivalent as security, and from taking any direct access to consumer's checking account. The practice by payday lenders of holding a post-dated check or an electronic debit authorization are coercive, injure consumers, and give creditors the unwarranted ability to exercise self-help remedies. Asking for a post-dated check against an account that does not have the funds to cover it is meant merely as a form of terror against the consumer. It exposes the consumer to bounced check fees, extortion that leads consumers to rollover their loans or take out multiple payday loans to cover the first, and the threat of criminal prosecution for a bad check. It gives the creditor a self-help remedy that prevents the consumer from asserting the claims and defenses, including wage exemptions, generally available against debt collection or predatory loans.
Debt Collection
The FTC should undertake an aggressive enforcement program against debt collection abuses. These days, typically debt collection agencies seldom have proof of the underlying account and rely on small claims courts and private arbitration forums to rubber stamp claims they cannot really prove through evidence. Furthermore, the FTC should declare unfair the debt collectors attempts to collect on time-barred debts, deceptive settlement agreements, putting old debt on new credit cards, and cross collection by refund anticipation lenders.
Debt Settlement Companies
The FTC's own workshop showed that these services benefit no more than 3% of the consumers who pay for them. The FTC should ban the charging of any fees to consumers until and unless their debts are actually reduced. Furthermore, fees charged by these companies need to be capped at a reasonably low percentage of the amount by which the debt is actually permanently reduced.
Auto Fraud
One of the single biggest complaints I hear from consumers and consumer advocates (particularly military legal service attorneys) is the incredibly abusive practices of car dealers and non-bank subprime lenders in the sale and financing of automobiles. The FTC can and must step up enforcement of the Used Car Rule, especially regarding rebuilt wrecks, laundered lemons, and "certified" vehicles where the warranties are represented as being in effect, but in fact are partially or entirely void. Furthermore, the FTC needs to examine and stop the standard bait and switch car financing practices that have left hundreds of thousands of Americans with unaffordable car loans.
Mortgage Servicing
It is clear to anyone reading the newspaper that the mortgage servicing industry is completely incapable of doing the loan modifications necessary to keep millions of Americans in their home. Equally clear, although not quite as publicly discussed is the mortgage servicing industry's fundamental structural problems which promotes the charging of unwarranted fees and limits the ability of a servicer to properly account for the payments made by distressed homeowners. Furthermore, it's an absolute scandal that mortgage servicer's across the country continue to bring foreclosure actions against homeowners without the basic proof necessary to establish that they have the right to take away a person's home.
In another hearing;
US Senators Hear About Alleged Credit Card Abuses
A Rhode Island salesman, Douglas J. Corey, was the star witness at Tuesday's hearing before a subcommittee of the Senate Judiciary Committee.
Many will agree with this statement;
"Bank of America has come before you asking for help, understanding, and, with both hands open, for financial support," Corey said. "Yet when we the consumers go to these institutions looking for the same help, understanding and financial support, we get roughed up and receive no compassion." See more on this here.
Various advocates offered their informed expert opinions and recommendations on how best to strengthen the FTC, reinforce consumer protection laws and toughen FTC enforcement actions in a number of areas.
My friend and consumer advocate Ira Rheingold, Executive Director and General Counsel for the National Association for Consumer Advocates offered his views, professional opinion and expert recommendations on how best our consumer protection agency can protect American consumers.
Here is a small portion of Ira's full testimony & recommendations for the FTC;
(Additional testimony, video and information can be found here.)
"In examining what the FTC can and should do to ensure a fair and just consumer credit marketplace, I will first address the specific areas they need to focus on right now and then look at the structural changes needed to embolden the FTC to act as a real consumer protection agency..."
Enforcement Actions
If the FTC was engaged with the rest of the public and private consumer advocacy community, it would have no shortage of public enforcement actions to bring against bad actors and their "unfair" practices in the consumer credit marketplace. Possible enforcement actions would include the following areas:
Fair Credit Reporting Act
For the past eight years there has been little regulatory action in regards to the "Big Three" consumer reporting agencies (CRAs). Unfortunately, this inaction (and the last administration's failed philosophy that industry can police itself) has led to a completely broken system for investigating consumer credit report disputes and is rife with inaccurate information from furnishers, mismatched information in files, and abusive reporting by debt collectors and debt buyers.
Payday Lending
The FTC should prohibit payday lenders from holding a check or any electronic equivalent as security, and from taking any direct access to consumer's checking account. The practice by payday lenders of holding a post-dated check or an electronic debit authorization are coercive, injure consumers, and give creditors the unwarranted ability to exercise self-help remedies. Asking for a post-dated check against an account that does not have the funds to cover it is meant merely as a form of terror against the consumer. It exposes the consumer to bounced check fees, extortion that leads consumers to rollover their loans or take out multiple payday loans to cover the first, and the threat of criminal prosecution for a bad check. It gives the creditor a self-help remedy that prevents the consumer from asserting the claims and defenses, including wage exemptions, generally available against debt collection or predatory loans.
Debt Collection
The FTC should undertake an aggressive enforcement program against debt collection abuses. These days, typically debt collection agencies seldom have proof of the underlying account and rely on small claims courts and private arbitration forums to rubber stamp claims they cannot really prove through evidence. Furthermore, the FTC should declare unfair the debt collectors attempts to collect on time-barred debts, deceptive settlement agreements, putting old debt on new credit cards, and cross collection by refund anticipation lenders.
Debt Settlement Companies
The FTC's own workshop showed that these services benefit no more than 3% of the consumers who pay for them. The FTC should ban the charging of any fees to consumers until and unless their debts are actually reduced. Furthermore, fees charged by these companies need to be capped at a reasonably low percentage of the amount by which the debt is actually permanently reduced.
Auto Fraud
One of the single biggest complaints I hear from consumers and consumer advocates (particularly military legal service attorneys) is the incredibly abusive practices of car dealers and non-bank subprime lenders in the sale and financing of automobiles. The FTC can and must step up enforcement of the Used Car Rule, especially regarding rebuilt wrecks, laundered lemons, and "certified" vehicles where the warranties are represented as being in effect, but in fact are partially or entirely void. Furthermore, the FTC needs to examine and stop the standard bait and switch car financing practices that have left hundreds of thousands of Americans with unaffordable car loans.
Mortgage Servicing
It is clear to anyone reading the newspaper that the mortgage servicing industry is completely incapable of doing the loan modifications necessary to keep millions of Americans in their home. Equally clear, although not quite as publicly discussed is the mortgage servicing industry's fundamental structural problems which promotes the charging of unwarranted fees and limits the ability of a servicer to properly account for the payments made by distressed homeowners. Furthermore, it's an absolute scandal that mortgage servicer's across the country continue to bring foreclosure actions against homeowners without the basic proof necessary to establish that they have the right to take away a person's home.
In another hearing;
US Senators Hear About Alleged Credit Card Abuses
A Rhode Island salesman, Douglas J. Corey, was the star witness at Tuesday's hearing before a subcommittee of the Senate Judiciary Committee.
Many will agree with this statement;
"Bank of America has come before you asking for help, understanding, and, with both hands open, for financial support," Corey said. "Yet when we the consumers go to these institutions looking for the same help, understanding and financial support, we get roughed up and receive no compassion." See more on this here.
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