Commonwealth Conversations: Consumer Connections

National Consumer Protection Week Conference: Robocalling Update

This month’s National Consumer Protection Week conference enlightened us about several new initiatives by two of the nation’s federal consumer protection agencies.

Deborah Marrone, Regional Director for the Federal Trade Commission’s Northeast Regional Office, spoke about current and future protections against robocalling – an illegal telemarketing practice where robots auto-dial consumers without their express consent.  These calls have been been prohibited by federal law since 2009 and the federal government is examining the exposure of consumer privacy when they are made.

Not every type of automated phone call is prohibited by this regulation.  Emergency phone calls – like severe weather alerts or states of emergency – are still allowed and very much needed for municipalities and relevant government agencies to contact their citizens in times of concern.  Political phone calls, like reminders about elections, are still allowed, as they’re considered an important public service announcement.

Though the FTC’s prohibitions have been fairly successful in eliminating robocalls, regulators still face challenges.  Scammers somehow find a way to utilize the newest technology to their advantage, and the need for new ways to block these illegal calls is evident.  Recently the FTC put out a challenge to innovators to create solutions that will block illegal robocalls.

After receiving nearly 800 eligible submissions, the agency announced its two individual winners, Serdar Danis and Aaron Foss, who tied for the $50,000 prize for Best Overall Solution.  Both winning ideas focus involve technology to “blacklist” robocaller phone numbers and “whitelist” numbers that you want to accept, filtering out robocallers using a CAPTCHA-style test to prevent these illegal calls from being transmitted to a consumer’s telephone.

The FTC also accepted a winner for the Robocall Challenge Technology Achievement Award, with applicants from an organization with ten or more employees. Daniel Klein and Dean Jackson from Google won for their idea that involves using automated algorithms to identify “spam” callers.

For more information on robocalls, the robocall challenge and its winners, visit www.ftc.gov/robocalls.  Click here for information and to sign up for the National Do Not Call Registry; click here for the Massachusetts Do Not Call Registry.

National Consumer Protection Week Conference: Prepaid Cards

This week the Office of Consumer Affairs hosted the 23^rd Annual National Consumer Protection Week Conference with our co-sponsors the Division of Banks, Suffolk University Law School and ConsumerWorld.org.  The main topic of the conference was prepaid cards, and each of our speakers gave some insight into this popular financial product.

A prepaid card is a card – like a debit or credit card – offered by a financial intuition or retailer that has a specific amount of money pre-loaded onto it. They offer consumers many benefits such as paying bills online and depositing their paychecks onto them. Over the past decade the prepaid card industry has exploded, with more and more people turning to them for everyday use.  An article in USA Today by Sheila Bair noted that the use of these cards has grown over 600% since 2010 and that Americans will likely load over $200 billion on them this year.

Prepaid cards are attractive to consumers because, unlike cash, many can be replaced if lost or stolen (though this process can be fairly complex).  Consumers don’t need a bank account to use a prepaid card, and these cards are a good way for the unbanked population to avoid check cashing fees.  A person’s credit history has no impact on his or her ability to get a prepaid card.  There is the option to have multiple cards associated with one prepaid account, and on most cards there is no risk of overdrawing on the account.  These are especially good for parents or caregivers who wish to monitor the expenses of a dependent.

Though there are many benefits to prepaid cards, they pose many problems as well. There are limited federal regulations that apply to these cards.  There is no federally mandated fraud protection and no requirement for FDIC insurance if the card is issued by a non-bank entity.  The cards do not help build credit, so proper management of them will not positively impact credit history.  There is also no requirement for periodic statements, making it difficult for the consumer to keep track of the amount of pre-loaded money left on the card.

The biggest item of concern for the Office of Consumer Affairs is that prepaid cards are associated with high use-related fees and extra charges.  Associate Dean Kathleen Engel of Suffolk University Law School outlined many of these fees at Tuesday’s conference.  Here are just some of the fees a consumer can be charged for using a prepaid card:

• Card purchasing fee
• Transaction fee
  
• Monthly fee
• ATM withdrawal fee
• Bank teller withdrawal fee
• Customer service call fee
• Paper statement fee
• Balance inquiry fee
• Cash back at retailers fee
• Card replacement fee
• Declined transaction fee
• Declined ATM withdrawal fee
• PIN use fee
• Monthly inactivity fee
• Fund deposit fee
  
  

There’s no limit on the size or number of fees companies are allowed to charge.  Most of the fees are not fully disclosed, as there is no uniform disclosure required.  This makes it hard for consumers to shop and compare fees from one prepaid card to the next. 

It is also nearly impossible to redeem the full value of these cards.  When a consumer has just a few dollars or cents left on the card, if she doesn’t know the exact amount on the card, the transaction may not be completed.  Merchants generally will not be able to determine the available balance.

Nowadays, these cards are being used for everything from insurance and entitlement benefits to rebates for cell phones, appliances and other items.  If possible, ask for refunds or rebates to be delivered by direct deposit or in the form of a check so that you’re not being charged these fees.

Top 5 Consumer Issues of 2012

Posted by: Barbara Anthony, Undersecretary of the Office of Consumer Affairs and Business Regulation

A key mission of the Office of Consumer Affairs and Business Regulation is to provide consumers the information they need to fully exercise their rights and also to understand their responsibilities in the marketplace. Our partners – the Attorney General’s Office, Better Business Bureau, and U.S. Postal Inspection Service – also strive toward that same goal of consumer education and empowerment.

At the Office of Consumer Affairs, we hear from thousands of consumers through our hotline and our email database. We’ve compiled all of those complaints and inquiries to calculate our Top 5 Consumer Issues for 2012:

1. Auto Insurance
2. Health Insurance
3. Home Insurance
4. Home Improvement Contracting
5. Lemon Law

One eye-catching component of our Top 5 is that the top three are insurance-related issues. This is not surprising. Many Massachusetts residents have cars, and everyone who has a car must have auto insurance. All of us must have health insurance, and indeed 98% of Massachusetts residents are covered. The numerous weather events that occurred in 2012, most recently Superstorm Sandy and several blizzard-like storms, caused havoc around the Commonwealth that prompted questions and claims on home insurance.

The two issues that round out our Top 5 have consistently made this list. My office runs the Home Improvement Contracting complaint, registration, and arbitration programs as well as the Guaranty Fund.  We also house the Lemon Law arbitration program, and our consumer hotline staff take questions and give advice about the law’s qualifications.

Navigating the networks of insurance plans, dealing with insurance claims, resolving issues with home improvement contractors, and dealing with lemons are all trying situations for consumers. My Office and affiliated agencies seek to provide assistance through education and outreach so that consumers can know and use their rights.

 

If you have a question or complaint, contact the Office of Consumer Affairs Consumer Hotline, Monday through Friday, 9 a.m. - 4:30 p.m. at 617-973-8787 or toll-free in MA at 888-283-3757.

Division of Insurance Awareness Event

Our Division of Insurance is hosting an outreach event today at South Station talking about insurance
awareness, changing weather patterns and the potential for property damage.

Today’s event is part of our ongoing effort to educate consumers to “Know What You Have, Learn What
You Need.”  Division staff is distributing brochures and are available to explain to consumers why it is important to check insurance policies regularly. Consumers are encouraged to ask questions they may have about storm damage, their insurance coverage, or any other insurance-related questions.

In the last two years we have seen tornadoes, tropical storms, hurricanes and snowstorms deliver considerable damage to different regions of the Commonwealth.   These unexpected weather events resulted in millions of dollars in damage to homes, businesses, and vehicles.  By taking proactive steps to adequately insure property, consumers can save themselves time, money, and significant headaches. 

Consumers with insurance questions can reach the Division of Insurance’s toll-free line at (877) 563-4467 or visit their website at www.mass.gov/doi.  You can also find the Division of Insurance on Twitter @MassDOI.

The event is going on right now – DOI staff will be on hand to answer your questions until 6pm.

National Consumer Protection Week 2013

This week is National Consumer Protection Week (NCPW). More than 60 nonprofit organizations and federal, state, and local agencies are participating this year all with the intention of bringing a larger awareness to consumer rights. For the past 15 years, the week has brought together a broad coalition to share tips and information about privacy protection, money and debt management, and recognizing identity theft, frauds and scams.

Whether we know it or not, we make consumer decisions every day. We are consumers when we make big decisions like buying a car or choosing a home contractor. But we are also consumers when we make day-to-day decisions like which gas station to fill up at or where to eat for lunch.

Underneath all these decisions, we process information on the reliability, prices, safety, and many other factors of the goods and services we consume. No matter how large or small the decision, our office aims to provide consumers with the knowledge to make informed choices 365 days a year. We truly believe in our motto “Better Business, Smarter Consumers.”

The Office of Consumer Affairs and Business Regulation and its five agencies work with two goals in mind: to protect and empower consumers through advocacy and education, and to ensure a fair playing field for all Massachusetts businesses. Our office works to make sure that the consumers of Massachusetts are protected from unfair business practices and empowered when making decisions. During this year’s National Consumer Protection Week, we’ll be highlighting our own consumer resources, and holding our annual Top 5 press conference where we’ll highlight our and other consumer agencies’ top 5 most asked about consumer issues of the past year.

The spotlight that we put on consumer protection doesn’t fade when National Consumer Protection Week ends. We hope that Massachusetts consumers are always aware of their rights no matter what week it is. Visit our website regularly, and make sure to follow our blog, Facebook, and Twitter @Mass_Consumer for consumer tips and advisories throughout the year.

Justin Bensan is a student at Northeastern University and is the communications co-op at the Office of Consumer Affairs.

Don’t Get Hijacked by a Tax Scam

“Brand new tax relief program!  If you owe more than $10,000, call us!  We know industry secrets and have a 97% success rate—you’ll only have to pay the IRS 8-10% of what you owe.”

This time of year, we are flooded with ads assuring us that no matter how much we might owe in back
taxes,  some advertiser – usually sporting gray hair or glasses, for that distinguished look – promises he will make it all go away for cents on the dollar. While most of us are skeptical about such claims when we hear them on the TV or radio, they may seem more legitimate if we get a letter from an official-looking company, or an e-mail from someone who copies a government logo. 

We called one such company, which advertises on television.  In addition to hearing the above claims, we were told that “this is a tax law firm,” and “this program has been around for years, but the President expanded it to help more people.” 

While some of this is partly true, we believe it is misleading.  A lawyer probably is not going to be handling your offer, more likely a CPA.  Two of the names on a “Power of Attorney and Declaration of Representative” form we were sent to fill out are not lawyers in the state in which the company says it is located.  Although Congress, not “the President,” expanded the program in 2006, it was to help unemployed taxpayers, not to generally allow people to pay less in taxes.  Those changes required most filers to include a partial payment with their offer. 

More troubling to us was the inconsistency surrounding the company.  While one company name was provided in the advertisement, another company name was used in the paperwork we received in response to our call.

The thing that concerned us most was the requirement to pay $1,000 up front to review the services, if any, this program could offer us.  It was through persistence that we were able to avoid this fee.

There are legitimate ways to settle a tax debt.  The Internal Revenue Service’s “Offer in Compromise” program is the only way for you to settle your tax debt for less than what you owe.  The program has been in place, with some variations, since 1954.  The IRS defines an Offer in Compromise as an agreement between a taxpayer and the Federal government that settles a tax liability for less than the full amount owed. 

According to the IRS Form 656 Booklet, “the offer program provides eligible taxpayers with a path toward paying off their debt and getting a ‘fresh start’.” The ultimate goal is a compromise that suits the best interests of both the taxpayer and the IRS.

To be considered, generally you must make an appropriate offer based on what the IRS considers your true ability to pay. Submitting an offer application does not ensure that the IRS will accept your offer.  It begins a process of evaluation and verification by the IRS, taking into consideration any special circumstances that might affect your ability to pay.

Generally, the IRS will not accept an offer if you can pay your tax debt in full through an installment agreement or a lump sum.  While the IRS does not limit the number of offers it reviews, only about 25% of the offers made each year qualify for the program.

Here are some tips to help you avoid a tax relief scam:

• Before you call anyone to help if you owe back taxes, call the IRS at 1-800-829-3676 for a copy of IRS Form 656 Booklet, or get it online here. You may be able to fill out the forms yourself – the IRS has made the instructions clear and useful.

• File all tax returns you are legally required to file, make all required estimated tax payments for the current year, and make all required federal tax deposits for the current quarter if you are a business owner with employees. You cannot file an offer if you are in bankruptcy.

• Penalties and interest will continue to accrue during the offer evaluation process. Unless you qualify as a low-income taxpayer, you will need to pay the $150 application fee to file your offer.  If the Offer in Compromise is not appropriate for you, you may still be able arrange for an installment agreement to pay what you owe, but you will probably need to consult with a tax professional to help you take such a step.

Common Disqualifying Criteria for the Guaranty Fund: Part II

In Part I of this series, I gave homeowners three tips for avoiding circumstances that will disqualify them from the Guaranty Fund.  In today’s post, I give three more tips.

To be eligible for the Guaranty Fund, you must submit your written Guaranty Fund Application within six months of receiving your court judgment or arbitration award.  The Home Improvement Contractor Law sets this six-month deadline and, accordingly, the Office of Consumer Affairs enforces it strictly.  Without exception, homeowners who apply late are automatically disqualified from the Guaranty Fund.  Often homeowners who apply late explain that they did not exhaust their collection efforts within the six-month time period, but homeowners do not need to exhaust their collection efforts before applying to the Guaranty Fund.  Exhaustion of collection efforts is only a prerequisite to receiving a payment from the Guaranty Fund.

To be eligible for the Guaranty Fund, your contractor must issue you a written contract and that contract must list a total price for the job.  Homeowners who do not have a written contract with their contractors will be summarily disqualified from accessing the Guaranty Fund.  Home improvement contractors are required by law to draft a written contract for any home improvement project exceeding $1,000.  The contractor is also obligated under the law to give the homeowner a copy of the contract after it is signed.  The contract is required to contain, among other terms, a total price.  Contractors sometimes insist on working on a “time-and-materials basis,” which is their hourly rate plus the cost of materials, without giving the homeowner a total price for the project.  Not only will this billing practice disqualify homeowners from the Guaranty Fund, but it can sometimes leave homeowners with unexpectedly large bills if the project runs longer than originally anticipated.

To be eligible for the Guaranty Fund, you must not pull your own building permit.  Contractors, especially those who do not have their Construction Supervisor Licenses, will sometimes invite homeowners to apply for their own building permits.  By obtaining your own building permit, you declare that you are responsible for the project – not your contractor.  Every town’s building permit application notifies homeowners that applying for their own permits will disqualify them from accessing the Guaranty Fund.  For example, look at the permit applications for Boston, Cambridge, or the Standard Massachusetts Permit Application.

 

Steven J. Zuilkowski is a hearing officer for the Office of Consumer Affairs and Business Regulation.  Steve conducts hearings to determine whether contractors have violated the Massachusetts Home Improvement Contractor Law.  To have your questions relating to home improvement contracting answered by Steve in a blog post, write to him at steven.zuilkowski@state.ma.us.

Common Disqualifying Criteria for the Guaranty Fund: Part I

One of the most important programs administered by the Office of Consumer Affairs and Business Regulation is the Home Improvement Contractor Guaranty Fund.  If a homeowner incurs actual losses during a transaction with a registered home improvement contractor and successfully sues their contractor, but the contractor fails to pay the judgment, the Guaranty Fund can reimburse those homeowners up to $10,000.  Most homeowners do not hire their contractors imagining they will need such a program, but in 2012, for example, the Guaranty Fund reimbursed 44 homeowners a total of $375,347.87.  For those 44 homeowners, the Guaranty Fund was an important safety net to help them recover financially after their home improvement projects went wrong and their collection efforts failed.

There are several eligibility criteria that homeowners must meet before accessing the Guaranty Fund.  In this series of blog posts, I will discuss some things you, as a homeowner, can do to prevent yourself from being disqualified from the Guaranty Fund.

To be eligible for the Guaranty Fund, your contractor must have a Home Improvement Contractor (HIC) Registration.  If a homeowner hires a contractor who does not have his HIC Registration at the time of the contract signing, the homeowner will be disqualified from the Guaranty Fund.  A contractor pays a registration fee to obtain his HIC Registration and part of every registration fee goes into the Guaranty Fund.  Homeowners who hire contractors that do not pay the registration fee, therefore, are not covered under the program.  In my hearings, homeowners sometimes tell me that their contractors offered to obtain their HIC registrations after they hired the contractors and paid them deposits.  The contractors tell these homeowners that they plan to use the deposit money to pay the registration fee.  These homeowners, however, are routinely disqualified from the Guaranty Fund because their contractors were not registered before the homeowners hired them.  To protect themselves, homeowners should look up the HIC registration status of any contractor they are considering to hire.

To be eligible for the Guaranty Fund, your contractor’s registered trade name must match the actual business name they have used on their contract.  As contractors’ businesses grow, their needs change as well.  Some contractors start their businesses as a smaller, simpler operation, but as they experience success and growth, some of them incorporate.  Many contractors forget that their corporation needs its own registration.  As a result, when they start issuing contracts under their corporate names, but fail to obtain new registrations for their corporations, they have conducted business as an unregistered home improvement business.  This has the effect of disqualifying homeowners from the Guaranty Fund, as I mentioned in the paragraph above.  A homeowner must be certain that the business name on their contracts with home improvement businesses matches the name the contractor registered.

To be eligible for the Guaranty Fund, you must have a court judgment or a confirmed arbitration award against your contractor.  Sometimes homeowners incorrectly believe the Guaranty Fund is a form of insurance, automatically compensating homeowners whenever a registered contractor causes them financial harm.  Though there are a few narrow exceptions, generally there are two paths to the Guaranty Fund: a homeowner must obtain either (1) a court judgment or (2) a confirmed arbitration award against the contractor.  Once a homeowner has either of those and has made a reasonable, though unsuccessful, effort to collect from the contractor, then the homeowner will be considered eligible for reimbursement from the Guaranty Fund.  While payment from the Guaranty Fund is not automatic when there is a financial loss, the Office of Consumer Affairs and Business Regulation offers an arbitration program that homeowners may use to initiate and simplify their pursuit of the Guaranty Fund.

Part II of this series will be posted next week.  Check back for additional information on Guaranty Fund disqualifications.

 

Steven J. Zuilkowski is a hearing officer for the Office of Consumer Affairs and Business Regulation.  Steve conducts hearings to determine whether contractors have violated the Massachusetts Home Improvement Contractor Law.  To have your questions relating to home improvement contracting answered by Steve in a blog post, write to him at steven.zuilkowski@state.ma.us.

Don’t Get Scammed Out of Love

As more and more of our daily social interactions move to the Internet, it’s not surprising to see dating follow this trend. Online dating services offer the chance of meeting somebody through the convenience of the Internet under the veil of privacy, but it also brings an element of uncertainty.

While finding love may not be guaranteed, some consumers have complained of unsatisfactory service that online dating services promised them.

We received a serious complaint last year from a woman regarding her experience with an online dating service. The consumer reported to have paid $6,000 for a three year contract with the expectation of meeting up to two “matches” per month. The consumer signed up for the service in December of 2011, but she met only four people who met her stated criteria from January to November. This isn’t the only example of a consumer being misled into false expectations.

This week, CBS Boston’s I-Team conducted an investigation of Date-and-Dash, an online dating service that allows users to sign up for dating events at local cafes and restaurants. They found that restaurants and shops reported not receiving any notice for their use as dating venues, and users reported being set up with other users who did not match their criteria and complained that events were canceled completely without notice.

As with any contract, it’s important to know what you’ll be getting for your money. Always shop around to compare fees and services. More importantly, look for user reviews online from third-party sites, like the Better Business Bureau, that would provide insight into the efficacy of these services.

While consumers may lose money or be inconvenienced by taking a chance on an online dating service, there are more serious risks with using these services. Scammers may set up fake user profiles to coax would-be romance prospects into wiring them money with the pretense of being in some sort of emergency situation.  Even more dangerous situations could arise if your match is looking to meet in person. Be extremely cautious with anybody you meet online. With concerning issues like these, both the FBI and State Department have released tips on how to protect yourself from these dangers.

We hope that no matter how you date, you stay vigilant, safe, & as always a conscious consumer. Have a Happy Valentine’s Day.

 

Justin Bensan is a student at Northeastern University and is the communications co-op at the Office of Consumer Affairs.

Better Budgeting in 2013

Learning how to properly manage your personal finances is an essential skill that will reduce your stress and improve your quality of life. Good budgeting doesn’t have to be painful if you follow these tips and suggestions.  

1. Identify spending habits.  Look at past months and flag any problem areas like frequent unnecessary spending. How often do you eat out? How much money do you spend a week on meals or snacks you would have at home or pack up for work or school? How much do you spend on clothes, 
   accessories, electronic equipment, or entertainment? Ask yourself the following two questions about purchases: is it something I actually need or want? Does a particular purchase mean that I have to
   forgo something I really need.
2. Create a budget.  Though it may seem obvious, it is an essential step many consumers skip.  Now that you know how much you spend on different items, set limits for each category.  Make sure to budget for fun things too, not just rent and bills.
3. Stick to the budget.  Remember your goals the next time you are out spending money, and try to think long term. An easy way to do this may be to automatically put away a little bit of money each paycheck or month into a savings account or 401K. Not only will you be able save up for big-ticket items, but you’re investing in your own financial security.

Make sure you’re tracking your spending regularly, especially small day-to-day expenses, which can really add up. In the end, budgeting is really about being thoughtful with your money—make sure you’re using it efficiently. There are a number of tools that can help with this. Microsoft has a free personal budgeting spreadsheet available here, while personal finance apps such as Mint make keeping track of your purchases very easy and allow you to manage your money from your computer, smartphone or tablet.

We encourage consumers to keep these tips in mind when managing their money this year. Make sure to check back regularly for more personal finance tips.

 

Justin Bensan is a student at Northeastern University and is the communications co-op at the Office of Consumer Affairs.