Will Payday Loan Fraud Payback Time Ever Come?

The Federal Trade Commission (FTC) is holding three payday loan services accountable for not disclosing annual percentage rate information on its internet ads. American Cash Market, Inc. Anderson Payday Loans, and CashPro dba MakePaydayToday.com boasted low loan fees in online advertisements without mentioning that their APRs range from 460-782 percent. Talk about some costly cash!

By federal law, lenders (payday loan shark or not) must disclose their annual percentage rate information. While the FTC urges consumers seeking fast cash to always read the fine print, folks can’t read what isn’t there. The FTC’s proposed consent orders would prohibit these three payday lenders from advertising certain credit offers without providing consumers with key disclosures, such as the APR, as required by the Truth in Lending Act and Regulation Z.

A press release by the FTC states that the agreement will be subject to public comment for 30 days, until March 31, 2008, after which the Commission will decide whether to make it final. There is no mention in release of the companies being fined or forced to pay retribution to those already taken by the scam.

FTC Chair to Leave

The chairwoman of the Federal Trade Commission is expected to resign and take a top-level position with Procter & Gamble, according to The New York Times, which cites The Wall Street Journal for breaking the story.

The paper reports Deborah Majoras will step down from her position and that William Kovacic will take her place. Majoras is the latest Bush Administration official to step down during the last year of the President’s second term.

Majoras previously worked at the Justice Department, where she played a major role in the anti-trust case against Microsoft. During her tenure as chair at FTC, Majoras spent a great deal of time dealing with privacy and data security, but pursued far too few anti-trust cases.

Beware Fake Check Scams

The U.S. Postal Service has adopted a theme of “Don’t Fall for a Fake Check Scheme” during the annual National Consumer Protection Week, March 2-8.

Scams often include a check in the mail that will be accepted at many banks. People receiving the check are then asked to wire that cash overseas, but when it comes to the bank that the check was counterfeit, the person who cashed it is on the hook for coming up with that money.

Schemes to be on the lookout for this year include foreign business offers, sudden riches, work-at-home schemes, love losses, overpayments and rental schemes. A spokesperson for the Massachusetts Postal District told WickedLocal.com these scams include counterfeit checks, gift checks, traveler’s checks or money orders.

Scammers will attempt to hook consumers through emails, but also through the mail or by phone

Comcast Goes Totalitarian?

Comcast is already in hot water with the Federal Communications Commission (FCC) for blocking subscribers’ internet access. Now, according to ConsumerAffairs.com and SaveTheInternet.com, the corporate giant cable company has admitted to paying employees and others to fill seats at an FCC hearing Monday in Cambridge. The totalitarian tactic reportedly blocked more than 100 people from getting inside, and many were there to testify.

“Clearly, Comcast will resort to just about any underhanded tactic to stack the decks in its favor,” Tim Karr, campaign director of net neutrality advocacy group SaveTheInternet.com told Consumer Affairs.
“First, Comcast was caught blocking the Internet. Now it has been caught blocking the public from the debate. The only people cheering Comcast are those paid to do so.” On its blog, SaveTheInternet.com published an audio interview of one man who admitted to being paid by Comcast to fill a seat at the hearing. Apparently many of those paid to take up room didn’t even know why they were there.

Earlier this month, Massachusetts Democratic Congressman Ed Markey introduced a new piece of legislation to ask the FCC to investigate Internet service providers in order to ensure they were not blocking or discriminating against certain types of content.

Meanwhile, California resident Jon Hart is suing Comcast over blocking and limiting access to peer-to-peer (P2P) file-sharing services. The suit alleges Comcast misled customers by promising “unfettered access to all the Internet has to offer,” then secretly preventing customers from using file-sharing services to upload video and audio content. The lawsuit came after the Associated Press conducted tests and reported that large file transfers would trigger messages blocking large uploads that appeared to be from one of the users involved in the file transfer, but were actually from Comcast itself.

BlueHippo Settles with FTC

BlueHippo Funding and BlueHippo Capital have agreed to refund consumers about $5 million in a settlement reached with the Federal Trade Commission.

BlueHippo is known for offering new computers to consumers with bad credit. However, the FTC charges the company failed to inform clients that they cannot get a refund for their computers, even if they cancel the order before a computer is delivered. Further, BlueHippo failed to deliver computers to customers entirely, in some instances. The settlement and refunds are available to customers who tried to purchase a computer through BlueHippo before March 2006.

Customers faced about a $100 down payment and then weekly or bi-weekly payments which were taken directly from a bank account. BlueHippo was taking money from bank accounts even if a consumer hadn’t received a computer, or tried to cancel an order. BlueHippo did not disclose any of these policies when it signed up new customers.

Under a settlement proposed by the FTC, the companies are barred from misrepresentations in the marketing of consumer electronics or any product requiring four or more periodic payments before shipment. They also are barred from misrepresenting refunds, cancellations, exchanges or repurchases of products without disclosing the terms and conditions before receiving payment, the FTC said.

Mortgage Crisis Prompts Calls for Home Loan Document Changes

Several home loan experts say if home owners had been able to read and understand all their documents when they signed them, they may not have be in such dire straits now, according to Reuters.

Critics say an easy-to-read and understand breakdown of every loan should be prepared so borrowers know what terms they are signing to. The blame for the mountains of paperwork comes from a lender’s drive to provide full disclosure and more information.

All this information is just confusing borrowers. Would-be homeowners are simply opting not to read any of the documentation, and just signing.

The Federal Trade Commission conducted research on the topic and found that half of the borrowers it surveyed could not identify their loan amount in mortgage papers. A third of those surveyed could not identify their interest rate. And two-thirds did not know if their loans had prepayment penalties.

The FTC compiled simplified documents and showed them to homeowners and found that nearly 80 percent of the questions they asked borrowers about their loan terms were answered correctly.

Experian Sues LifeLock for Fraud

The credit reporting firm Experian is suing the identity theft protection firm LifeLock for allegedly placing false fraud alerts on consumer credit history files, according to ComputerWorld magazine.

Experian says LifeLock is engaging in deceptive and fraudulent behavior. It says the business model for the relatively new firm is built around false and misleading advertising and fraudulent practices causing millions of dollars in damage to Experian. This behavior could lead to the diminished effectiveness of fraud alerts, Experian’s suit claims.

Experian wants LifeLock to pay full restitution for the alleged misconduct, as well a “disgorgement” of any profits LifeLock earned as a result. Experian also wants LifeLock to discontinue its deceptive advertising.

LifeLock’s CEO is using this lawsuit as a chance to increase his business, according to his comments to ComputerWorld. He says his company makes it more difficult for Experian to make money off holding consumer credit files, and hopes he can draw the other two major credit reporting firms into the legal proceedings, Equifax and TransUnion.

LifeLock maintains fraud alerts on its customer’s credit histories and over a lifetime, offers to pay for $1 million in fraud-related costs.

Consumers Win with Supreme Court 401(k) Ruling

While the Supreme Court was ruling against victims of defective medical devices Wednesday, it did rule that workers can sue employers for mismanagement of 401(k) plans.

This decision could impact more than 50 million workers and includes more than $3 trillion invested, according to a report from The Tampa Tribune. The high court ruled unanimously against a lower court decision that prevented employees from suing over losses related to mistake and misconduct.

The Supreme Court has not ruled on retirement benefits in more than two decades, and in that time, the popularity of 401(k) retirement investing has more than blossomed. It’s a nest egg derived of money earned and then re-invested.

The decision allows employees to sue for account mismanagement by administration, rather than just allowing employees to sue when all benefits have been lost. The case was brought on by a man who claimed to lose more than $150,000 when he suggested a shift in his fund when the stock market had tumbled. The lack of action caused that catastrophic loss to his retirement investment.

New York AG Investigates Health Insurance Cos.

New York’s Attorney General Andrew Cuomo is investigating the health insurance industry to figure out why policy holders are paying more out-of-pocket.

In a New York Times article, Cuomo wants to know why when a patient seeks help outside of the insurer’s network, they pay substantially more than they would otherwise. Last week we reported on this blog of Cuomo’s intent to sue UnitedHealth Group as part of this investigation.

“We believe there was an industrywide scheme perpetuated by some of the nation’s largest health insurers to deceive and defraud consumers,” Mr. Cuomo said at a news conference last Wednesday.

Cuomo believes this scheme has lasted at least a decade and has cost consumers nationwide hundreds of millions of dollars more than they expected.

Currently, amid recession concerns, the health insurance industry is booming even though nearly 50 million Americans are uninsured and many more believed to be under-insured.

Post Office Sends Out ID Theft Warning

Just two percent of identity theft starts with the mail, but the Postmaster General wants to reduce it to zero.

In the coming weeks, expect a letter in the mail from Postmaster General John Potter telling you that the Postal Service will continue to work hard to be the most trusted federal agency and protect your identity.

In a recent study by the Ponemon Institute, the U.S. Postal Service has held that distinction for the past three years, but quite frankly that seems like a relatively easy competition to win.

Still, Potter will offer tips to protect identity and include a pamphlet from the Federal Trade Commission that outlines several other precautions a consumer can take.

Notably, Potter recommends checking credit card statements, bank documents and financial reports every month for unauthorized activity. Never carry your Social Security card on your person or write it down on a check.

Personal information should not be relayed over the Internet or telephone. Links from unsolicited emails should never be clicked and all personal information at home should be kept in a secure place.

Identity theft was the most reported fraudulent crime in 2007, far surpassing any other complaint in volume, according to FTC statistics.