Here's why consumer regulations are useless...

Consumer Affairs has a report on a debt collector hit with fines for, of course, abusing consumers and lying. The amount of the fine? 1.3 million.

Maybe I'm just a pessimist, but I don't see how this solves anything.

By abusing consumers, making illegal threats, etc, this company likely raked in millions in extra profits. They collect 1.25 million accounts per year. A 1.3 million fine from the FTC is probably listed on their financial report as overhead, along with electricity. Is the FTC making any difference? Of course not...we know this because they allowed this fraudulent company to stay in business.

Under the proposed settlement, LTD will pay a $1.375 million civil penalty. In addition, LTD and its owners, Timothy Feldman and Leonard Pruzansky, and its top managers, John Brewster and Derrek Davis, are permanently prohibited from misrepresenting to consumers that nonpayment of a debt will result in garnishment of wages, seizure or attachment of property, or lawsuits.

They also are permanently barred from using false, deceptive, or misleading representations in connection with the collection of any debt, communicating with a consumer at any unusual time or place, including their place of employment, or harassing, oppressing, or abusing any person.

Is anyone else laughing at this "punishment"? Aren't all of these things already illegal?

Imagine...you rob a bank for 5 million dollars, so the state sues you for 2 million and permanently prohibits you from robbing any more banks.

This is why our regulations are useless...because companies are free to abuse consumers with impunity.

Why doesn't this company want my business?

I was reading a post on Consumerist and came across a comment from one of their registered members about an unfair cellphone policy that resulted in a loss of business for the company. The short of the story was that he had 2 lines, moved one line, and could not retain his other line with them. He was being cut off and charged an early termination fee. This was their "policy", though it was not even in his contract. He will never do business with them again. They didn't care.

Am I surprised? No...there is a good reason why I believe companies, utility companies in particular, are too large and cannot be trusted.

• 1) When I call SBC, I am not talking to SBC. I am not talking to anyone who gives a rats behind about the company, whether I am retained as a customer, or their ultimate health as an organization. I am speaking with some guy getting paid low wages who only cares about his own job.
  
  "Retention" is only important to him if he has a quota or gets some kind of immediate reward or bonus. If he gets neither, or he has already maxed out his rewards for the pay period, he does not care if you cancel or not. The company could be losing a good customer for life - it doesn't matter, because you really never talk to anyone in the company that cares.
  
  
• 2) Their contracts are a joke. Do you think it matters what is in your contract when you sign up for a cellphone? The only reason the contract exists is to empower the provider. Further, they can break, add, or change the contract at any time with no penalty. They can charge you whatever they want, for whatever reason, or cancel you...or provide lousy service. Even if something is not stated in your contract, they can do it.
  
  Why? Because your only recourse is a lengthy legal process that they know 99% of their customers are not going to deal with. Thanks to new popular arbitration clauses, even the 1% of them that do will only win 5% of the time. If your cell provider charged you an extra $50 for some reason and refused to refund it, what would you do?
  
  Take them to court? The filing fees alone would exceed the balance. Would you not pay it? Then it will go on your credit report - and a collector isn't going to care what your contract says, they will just go back to the company for verbal verification.
  
  
• 3) There is no liability. What can you do if some CSR doesn't hit the right button? Will the next CSR listen to you? Will they believe you, or will they think you are yet another customer calling in trying to pull a fast one? If it isn't on their little computer screens, it doesn't exist. You are at the whim of the CSR and their supervisors. See #1.
  

Companies have too much power over consumers, and we have too little resources to fight them. Indeed, for just about any dispute it comes down to whether you want to fight it on principle - because it will probably cost you more in the battle than to just relent and pay them.

Food Stamps to buy junk?

I was in the store behind a woman in line with 2 kids. What I saw made me search out more information about food stamps, food stamp fraud, and shopping behavior. This family bought a couple gallons of milk with food stamps. It took quite a while, because not only did they have to fill out their little ticket and run it like a check through the machine, they had to run it as a separate transaction. You see, I don't think the government would be happy knowing they gave food stamps to this family if they knew what else they were buying.

When I sought out program requirements, I had to ask myself whether or not this particular family looked like someone who would qualify. Assuming she was married, she must have a household income of less than $1,613. The woman in front of me wearing nice clothes, sipping a Starbucks-whatever, and talking on a brand new Treo/Blackberry-type cellphone certainly didn't look like she was insolvent.

I suspect I had witnessed Food Stamp fraud.

Here's a little excerpt from a food stamp program:

Food stamp benefits...can be used in supermarket checkout lines only for the purchase of food.

What I witnessed instead was the food stamps, instead of buying food for hungry people, simply subsidized their other frivolous purchases. This family's cart (run up separately) also contained: a DVD player, several new DVDs, a case of Cola Cola, a case of beer, a few kid's toys, a cordless home telephone, and a bunch of other miscellaneous items that I didn't see.

Food stamps make it possible for such working poor families to stretch their income.

Yes it does. It is giving them free milk so they can buy $200 worth of frivolous junk. Our tax dollars hard at work.

I think my bank stole 54 cents from me

There has finally been a resolution to my auto financing problem. To sum up, the bank decided I didn't have insurance charged me for some of their own, a total of $83.87 that they helped themselves to out of my last payment without telling me (thankfully I always check my payments online).

After faxing over the appropriate paperwork showing no lapse in insurance coverage, it took 33 days to get it corrected - oddly, a day before my next payment was due. $83.87 has been credited to my account and correctly applied to the balance of the loan (the interest was unaffected).

But here's the thing. The insurance payment they took left me with an inflated principle from 8/3 to 9/5. An inflated principle $84 more than it should have. Thus this next payment in which they are going to charge me interest, based on the 33 day billing cycle, is going to be more than I should owe. By my calculation that is a full gain to the bank of 54 cents.

I wonder why it took a whole month to get the problem corrected? I guess they had 54 little incentives to drag their feet.

Mismanaged Auto Loan

As if I needed another reason not to want to do business with loan companies, my wife's auto loan has been misapplied this month. I have vowed never to take another loan or finance a car again. When you pay in cash, you aren't dependent on some guy in an office somewhere entering your information into their computer. The more businesses you work with, the more problems you will inevitably have. You will always have human error.

Since I hate my debt and I distrust companies, I always double check my payments and make sure the companies are doing their jobs. Since I started to handle my wife's auto loan, I began checking the deposits made each month. The payment I just made has a problem, a big problem. Out of a $300 payment, only $175 was applied to principle with a $30 interest payment. $95 vanished.

So I went back and looked at all the payments all the way back to the origination of the loan. No other problems. However, I noticed another huge issue.

2 months after she signed her loan, the finance company increased her balance by over $2,200, then credited the $2,200 back 2 months later. For 2 solid months (59 calendar days to be precise) she was being charged interest for an artificially inflated balance. I ran the numbers and determined that during that time, they overcharged her around $25 in interest!

We are calling them this afternoon to try to get this straightened out. Certainly people make mistakes, but knowingly collecting interest that isn't owed without informing the customer of the mistake? That sounds negligent to me. And disappearing money? The numbers don't look like they could be a simple typo, and its quite possible an employee somewhere pocketed it.

Always scrutinize your payments to be sure they've been properly applied. You can't trust other people with your money.

Derogatory credit report UPDATE

A couple of weeks ago I checked my credit score, which I get for free with my Providian card that...well, I don't actually use and only keep because of the free score (sorry Providian). Anyway, this score fluctuates several points between months but has remained stable over the last year, which is as far back as they display the records. The score for July however dipped 30 points. I had opened up a credit card with Citibank, so I at first assumed it was because of that - though that seems like quite a drop just for opening a line of credit. However on the "reasons" it said, and still says, "You have multiple accounts showing late payments or derogatory remarks."

That's not good! I feared that either someone I do business with reported me late, which I have not been, or maybe an account had been opened I wasn't aware of and wasn't being paid. After mulling it over I was torn between waiting a few months to see what happened and just biting the bullet, checking the report, and seeing what was up. In the end, I guess because as a personal finance blogger I'm always reading articles on identity theft and credit reporting errors, I plunked down $10 to check it.

Turns out there is nothing derogatory on the report at all. No late payments, no strange accounts. Nothing. I feel better, but I could have bought a really nice cheeseburger with that $10.

Qwest CEO goes to jail, does not pass go

Here's a bit of news that made me smile, Qwest's CEO Joe Nacchio gets 6 years in prison for stealing 52 million dollars. And he has to pay it back. But why stop there?

Qwest's CEO was just following company policy. Stealing is incorporated into their business model. Shareholders or customers, it doesn't matter, these are pockets full of green that must be added to the Qwest bottom line.

When I was in college I had to deal with Qwest for landline phone service. They come out, to hook up my service, and charge me $80 worth of services that I specifically asked them not to do. After months of trying to get the charges removed, they "reorganized" my bill and suddenly no one could even verify what the charges were. It was all just one lump "past due" balance with no history attached whatsoever. I did not have my original bill, Qwest CSRs could care less and supervisors never called back. What's a poor college student to do?

All this time I've been paying my regular bill, minus the $80 bad charge, and they decide to cut our phone. So my roommate gets the phone in his name, and all is well. Being a college student, I wasn't about to pay $80 to these ripoff artists. Of course, a year later I start getting collection calls. I explain everything, even write a formal letter of dispute. Well, the agency tells me to pound sand. They contact Qwest, who reads off their computer and sees "owes $80 past due" and, well, I'm a consumer, to heck with my rights. So the agency won't back off, and I have no recourse. What can I do, sue them? How is a poor college student supposed to do that?

So I pay them $80 just to get them off my back. But Qwest is, by far, the most crooked company I'd ever done business with. Can you guess what happened? A year later I get another collections call for the same amount. Qwest has no record of payment. All I have is a copy of a statement, which just shows my payment as some code surely only the bank understands. So again, I am told to pound sand. And again, another $80 is stolen from a poor college student. I had the foresight to tell them to send me a letter verifying that I paid, and they did, so all was well.

Anyway, don't stop with Nacchio. Send them all to jail.

I'm not bitter at all.

Ford is a little behind

Ford envisions its company could utilize technological breakthroughs in battery technology not yet invented in order to bring a plug-in hybrid Ford to the market within 5-10 years.

Mulally said the rollout of Ford plug-in hybrids is dependent on advancements to lithium ion batteries that will be charged by the car's owners using regular household electrical outlets.

Consumers have been waiting a long time for an automaker to offer the next generation of ultra-fuel-efficient, gasoline-optional cars

Which is why another company already did it.

Online safety: test your passwords

After reading about an ebay hacking on Consumerism Commentary, I was reminded of the importance of having a secure password. Having your ebay account broken into may not be the end of the world, but your online banking? Your vanguard account? Worse, many people use the same password for all of these services. If one site password is stolen, the thieves have access to them all!

I use a password tester online from Microsoft, and I'd like to share that with you if you don't know about it already.

Password checker

Some basic tips for choosing a password: make it lengthy (14+ characters), combine letters, numbers, and symbols, use the entire keyboard, avoid repeated characters, avoid dictionary words, use a different password for each site, write the passwords down and keep them in your desk at home - not online.

Assume collectors are scams

A friend of mine recently received a collection call. It sounded legit, they had a balance owed, a name, to what company the debt was owed, etc. But during their entire conversation, the collector refused to answer where she was calling from, what their phone number was, or who they were.

Is this common? They wanted her to make a payment over the phone, but refused to tell her who they were or how to contact them. The first thing I thought was: scam. But in reality, she did owe this debt and needed to pay it. Obviously these collection agencies are just running loose without any regulation (at least, enforced regulation) and doing anything they please. What right minded individual would just give bank account information to a random caller?

"Yes, unidentified telephone voice, here's my bank account number, I trust you not to empty my accounts or steal my identity."

Yeah, right. If you ever get a collection call, immediately ask their phone number and name of their company, and a case reference number. Try to get their address if you can, but by then they will probably be calling you names and threatening to take your dog. Then immediately hang up and MAIL by certified letter a demand not to communicate by phone and only by mail, with a demand to see all of the documentation related to the debt. The same day, pull your credit report and check to see if it is there. It may not be on there yet.

If you can't get any information out of the collector, and its not on your credit report, it could possibly be a scam. If it is legit, the collection agency contact information will be listed on your report. You should always get a number and a case reference, verify the validity of the agency, and call them back. Better yet, you should always do all correspondence by certified mail, otherwise you will not have a paper trail to verify any "negotiations" that you made with the agency. You can safely assume any collector is lying, and you need to protect yourself. The only time you should give financial or personal information out is when you initiate the communication.