FOR IMMEDIATE RELEASE: FEBRUARY 26, 2018 || Contacts: Mary Spector (mspector@smu.edu); NCLC: April Kuhenhoff (akuehnhoff@nclc.org) or Jan Kruse (jkruse@nclc.org)

Dallas – Nearly 80 attorneys and law professors from every corner of Texas sent a letter on Monday to U.S. Representative Vicente Gonzalez (D-TX15th) urging him to drop sponsorship of a bill that would severely weaken the federal Fair Debt Collection Practices Act, and instead work with them to defeat the bill. H.R. 4550 would carve out an exception, just for attorneys, and immunize them from liability when they abuse the debt collection process in court. This protection would come at the expense of law-abiding collectors and attorneys and hurt Texas consumers and their Texas families. “We hope that Representative Gonzalez will rethink his sponsorship of this bill, which could have devastating, long-term consequences for Texas families,” said Mary Spector, law professor at the SMU Dedman School of Law in Dallas. “If passed, it will likely lead to even more lawsuits by unscrupulous lawyers.”

In their letter, the Texas attorneys and law professors noted that about “44 percent of adult Texans have a debt in collections, and that three counties in Texas 15th district have rates nearly 20 percentage points higher than other Texas counties and rank among the top 20 nationwide (among those for which they have data) for rates of adults with debt in collection.”

Additionally, if HR 4550 were to become law, the legal experts expect that it would likely lead to more lawsuits as attorneys rush to litigation to immunize their conduct in an already over-burdened court system. In 2017 alone, attorneys filed more than 166,000 debt collection cases in the Texas Justice Courts, continuing a trend of yearly increases. The majority of cases were filed on behalf of debt buyers — businesses that buy delinquent debts for pennies on the dollar. Many of the debts cannot be verified, yet consumers rarely have resources to contest them, and even fewer resources are available to consumers once a collection case is filed. Approximately 30 percent of the cases closed last year resulted in a default judgment for the collector.

The harm resulting from judgments obtained through abusive litigation practices can have long-lasting effects, making it more difficult for consumers to obtain housing, a loan, find a job, or secure insurance. Also, it could lead to greater use of unfair methods to collect judgments, such as pressuring consumers to sign over their Social Security or other protected government benefits.

FOR IMMEDIATE RELEASE: FEBRUARY 26, 2018 || Contacts: Persis Yu (pyu@nclc.org) or Jan Kruse (jkruse@nclc.org); (617) 542-8010

The following statement is by Persis Yu, National Consumer Law Center attorney and director of NCLC’s Student Loan Borrower Assistance Project.

“The Education Department’s reported plan to immunize student loan servicers and collection agencies from state law demonstrates a true indifference to the plight of millions of student loan borrowers struggling to repay their student loans and getting little to no help from their servicers. Servicers and collectors who mistreat student loan borrowers and steer them into inappropriate payment plans should not be above the law.

“For years, National Consumer Law Center attorneys have sent examples of poor service and legal violations to the Education Department and more recently to the Consumer Financial Protection Bureau (CFPB). Well documented systemic errors from servicers can cost borrowers thousands of dollars and add years to the repayment of their loans.

“Abusive debt collection practices threaten to deprive borrowers of their rights under the Higher Education Act and make them vulnerable to the seizure of vital benefits, such as Social Security retirement and disability payments, and even the Earned Income Tax Credit. Inexplicably, last December, the Education Department assigned hundreds of thousands of borrowers to collection agencies it had previously fired for violations of federal consumer protections laws. NCLC has called for an end to the use of private collection agencies.

“Given the Education Department’s utterly lackluster record of oversight, it should be doing more to work with states to protect the interests of student loan borrowers. Student loan borrowers deserve relief.

“The idea that providing student loan borrowers with robust consumer protections – such as prohibiting misleading and deceptive statements – would be too costly to taxpayers should be taken as a slap in the face to the nearly 43 million taxpayers who also owe federal student loan debt.

“It is well established that the Higher Education Act does not “preempt the field”—in other words, it does not override state laws that provide additional protection to student loan borrowers, as long as those laws do not actually conflict with federal law. Thus, Congress envisioned a role for states to play in protecting student loan borrowers. And given the Education Department’s record of siding with servicers over borrowers, the state role is more critical now than ever.”

Related Links:

NCLC letter in support of an Act Establishing a Student Loan Bill of Rights (Massachusetts S129), July 18, 2017

NCLC comments to the CFPB on Proposal to Collect Student Loan Servicing Data (Federal and Private), April 24, 2017

FOR IMMEDIATE RELEASE: FEBRUARY 23, 2018 || NCLC Contacts : Margot Saunders (msaunders@nclc.org or (202) 595-7844); Jan Kruse (jkruse@nclc.org or (617) 542-8010); Consumers Union: Kara Kelber (kkelber@consumer.org or (202) 462-6262); Consumer Federation of America: Susan Grant (sgrant@consumerfed.org)

Washington – The Federal Communications Commission (FCC) has proposed new rules to clarify that voice service providers may block some spoofed robocalls. But much more must be done, according to comments filed with the FCC by advocates from the National Consumer Law Center, Consumers Union, the Consumer Federation of America, Consumer Action, National Association of Consumer Advocates, and Public Citizen.

“The FCC rules do something: they allow telephone companies to block spoofed calls from numbers that do not actually exist. But spoofers have simply moved to make fraudulent calls from real numbers—meaning that the rules do not cut down on the spoofed calls at all,” said National Consumer Law Center Senior Counsel Margot Saunders. “It’s like closing one door of a double door to keep the mice out—all the vermin will simply rush through the other door. Moreover, the rules are not even mandatory so telephone companies are free to ignore them.”

The national consumer organizations point out that meaningful authentication for all calls along with robocall-blocking tools will eliminate many, if not most, of the unwanted calls currently plaguing American phone subscribers. In their comments, the national consumer organizations urge the FCC to:

1. Require voice service providers to provide free, effective caller ID authentication for every call (subject only to public safety exceptions).
2. Require that all telephone companies provide free call-blocking services.
3. Establish an unblocking system that ensures that consumers can control calls they receive, and is maintained on a centralized basis paid for by the callers, rather than by the telephone providers.
4. Require providers to submit comprehensive information regularly to the FCC about the implementation and efficacy of their current call-blocking services, and release a yearly report in consultation with the Federal Trade Commission (FTC) based on that information.

“Bad actors are continuing to find ways around the rules to prevent fraudulent robocalls and take advantage of consumers but there is more that can be done to protect consumers,” said Maureen Mahoney, Policy Analyst at Consumers Union. “The FCC should ensure that consumers can control the calls they receive by requiring that phone companies provide blocking technology free of charge to consumers.”

Unwanted robocalls are a worsening problem: in January 2018, 2.9 billion robocalls were placed in the United States; in June 2015, the number was 1.3 billion, according to YouMail.com. Four of the five top callers were debt collectors acting on behalf of credit card, bank, and cable companies.

The FCC is considering these rules under a section of the Telephone Consumer Protection Act (TCPA) that prohibits call spoofing. The TCPA is the federal law that protects consumers from unwanted robocalls.

“Blocking illegal and unwanted calls isn’t a just a nice option to offer, it’s an essential protection from fraud and abuse,” said Susan Grant, Director of Consumer Protection and Privacy at Consumer Federation of America. “Government and industry must take effective steps to ensure that Americans’ no-call rights really work.”

FOR IMMEDIATE RELEASE: FEBRUARY 21, 2018
National Consumer Law Center contacts: Olivia Wein (owein@nclc.org) or Jan Kruse (jkruse@nclc.org); (617) 542-8010

Washington – Today the National Consumer Law Center along with 20 other civil rights and consumer advocacy organizations filed comments with the Federal Communications Commission (FCC) urging the Commission to preserve the role of the federal Lifeline program to help low-income households afford modern voice and internet service. “The intent of the Lifeline program is to help low-income households afford essential voice and data service. This package of proposals runs the risk of harming over eight million Lifeline households and millions more eligible veterans, older Americans, and households with school-aged children,” said Olivia Wein, staff attorney with the National Consumer Law Center.

The FCC is seeking to eliminate the most popular providers of Lifeline service, the wireless resellers who serve around 70 percent of the Lifeline households, simply because these carriers do not own or operate their own infrastructure. “Millions of poor families would lose their Lifeline service provider, with no assurance that there would be another Lifeline service provider to serve them,” said Cheryl Leanza, policy advisor to the United Church of Christ, OC, Inc., one of the organizations that have joined in the Low-Income Consumer Advocate filing. Since 1997, the United Church of Christ has formally recognized that we need to ensure we do not become a society divided between “information rich” and “information poor,” which leaves struggling people without the tools to succeed in modern society. “The FCC must keep the focus of Lifeline on people,” said Leanza.

Other dangerous elements in the FCC’s proposal include one that would limit Lifeline voice support to rural areas. “Voice service is vital for health and safety, no matter where a consumer lives,” said Wein. Another proposal takes this very simple $9.25 month affordability program and adds a complex funding cap that would mean that the benefit amount would have to be recalculated for millions of recipients, possibly mid-year, making it difficult for Lifeline companies and consumers to budget and increasing the chance of consumer confusion and loss of service.

The FCC’s Lifeline proposal also seeks comment on whether there should be a lifetime cap on Lifeline service, which would hurt low-income elders in particular. Another harmful proposal mandates all Lifeline providers require payment from Lifeline recipients. This would eliminate the no-cost Lifeline products that serve those without bank accounts or good credit scores, consumers fleeing domestic violence, and those who frequently experience homelessness or irregular work.

“We urge the FCC to step back from these harmful proposals that will destabilize the Lifeline program,” said Wein. “Instead the FCC should focus on ensuring that the program integrity measures from the 2016 Lifeline Modernization and Reform order are implemented in a timely fashion and on strengthening the Lifeline program so that it can play a key role in helping to bridge the digital divide.”

Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has used its expertise in consumer law and energy policy to work for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the United States. NCLC’s expertise includes policy analysis and advocacy; consumer law and energy publications; litigation; expert witness services, and training and advice for advocates. NCLC works with nonprofit and legal services organizations, private attorneys, policymakers, and federal and state government and courts across the nation to stop exploitative practices, help financially stressed families build and retain wealth, and advance economic fairness. www.nclc.org

FOR IMMEDIATE RELEASE: FEBRUARY 14, 2018 || Contacts: Lauren Saunders (lsaunders@nclc.org) or (202) 595-7845; Jan Kruse (jkruse@nclc.org) or (617) 542-8010

Bill Would Allow Lenders to Launder Loans through Banks to Evade State Interest Rate Caps

Washington – Today, the U.S. House of Representatives passed a bill, H.R. 3299, that would allow lenders to launder loans through banks to override state limits on high-cost loans, potentially paving the way for loans of up to 300 percent APR or more in states where those rates are prohibited. The U.S. Senate’s companion piece of legislation is S. 1642 and was introduced by Senator Mark Warner of Virginia.

“This legislation could eviscerate limits on high-cost loans,” said National Consumer Law Center Associate Director Lauren Saunders. “Make no mistake: payday lenders will try to exploit this bill to obliterate interest rate caps, which are the simplest and most effective method to protect consumers from unaffordable loans.”

More than 200 local, state, national, faith, and veteran groups oppose the legislation. Twenty attorneys general also oppose the same provisions in another pending bill (the CHOICE Act), noting in a letter to the U.S. House: “It is essential to preserve the ability of individual states to enforce their existing usury caps and [we] oppose any measures to enact a federal law that would preempt state usury caps.”

The pending legislation would override the Second Circuit’s Madden v. Midland decision to state that if a loan’s interest rate is legal when the loan is made, the loan remains valid even if it is assigned to another lender that cannot charge those rates. Marketplace lenders and some high-cost lenders have used banks (which are not subject to state interest rate caps) to originate loans that they cannot make directly, which the bank then instantly assigns to the real lender. However, some courts have questioned if the bank is the true lender. A separate bill, HR 4439, would specify that the true lender is determined by the paperwork, not the company that has the predominant interest in the loan.

FOR IMMEDIATE RELEASE: FEBRUARY 13, 2018 || Contacts: Lauren Saunders (lsaunders@nclc.org) or (202) 595-7845; Jan Kruse (jkruse@nclc.org) or (617) 542-8010

Trump calls for elimination of Legal Services Corp and home energy assistance; supports drastic cuts and changes to weaken the Consumer Financial Protection Bureau

Washington – President Trump’s proposed budget once again seeks to eliminate funding for programs that have bipartisan support that help rural families, elders, struggling families and veterans, according to advocates at the National Consumer Law Center. Additionally, the Consumer Financial Protection Bureau (Consumer Bureau) would be severely weakened due to drastic cuts and changes to weaken its independence.

“Legal services programs serving urban and rural areas in every state around the country are there for veterans, seniors and struggling families when they need legal help to transition from military service, to save their homes from foreclosure, to protect the Social Security funds they need to buy food, or to stop domestic violence.” said Rich DuBois, executive director of the National Consumer Law Center. In the words of the late Justice Antonin Scalia, the Legal Services Program ‘pursues the most fundamental of American ideals, and it pursues equal justice in those areas of life most important to the lives of our citizens,’” he added.

LSC has broad bipartisan support, and the proposed elimination of LSC last year was opposed by the heads of over 150 law firms in all 50 states, 185 leaders of corporate legal departments, the Conference of Chief Justices and the Conference of State Court Administrators.

“The budget proposes drastic cuts to the Consumer Financial Protection Bureau and changes that would weaken its independence from Wall Street lobbyists,” added Lauren Saunders, associate director of the National Consumer Law Center.

The proposed budget would also eliminate the Low Income Home Energy Assistance Program (LIHEAP), the low-income Weatherization Assistance Program (WAP) and the Community Service Block Grant (CSBG) program — three safety net programs that protect the health and safety of low-income families who have trouble paying their energy bills, and provide the core funding for the front-line community groups that deliver these programs in all 50 states.

“President Trump’s proposed budget for FY 2019 leaves poor elders, individuals with disabilities, and families with young children out in the cold by zeroing out funding for three critical health and safety programs,” said Olivia Wein, staff attorney with the National Consumer Law Center. “We urge Congress to have a heart and adequately fund these essential programs.”

LIHEAP and WAP are targeted to help vulnerable populations, including the elderly and families with young children, which are at risk from severe health complications, including death, from frigid winters and sweltering summers. LIHEAP provides bill assistance for families so they can afford essential home heating and cooling to stay safe. WAP provides cost-effective long-term measures to make drafty homes weather-tight and lower energy bills year after year. CSBG funds community action agencies that are the front-line service agencies that deliver LIHEAP and WAP assistance.

“As a candidate, President Trump said he would work for ordinary families but his draconian Valentine’s week cuts will result in heart ache for regular Americans, especially our most vulnerable families,” added Saunders.

FOR IMMEDIATE RELEASE: FEBRUARY 8, 2018 || Contacts: National Consumer Law Center: Stephen Rouzer (srouzer@nclc.org) (202) 595-7847; Legal Aid Foundation of Los Angeles: Robyn Smith (RSmith@lafla.org) (213) 640-3906

Lawsuit Filed Challenging U.S. Department of Education’s Refusal to Discharge Loans of Students Defrauded by Marinello Schools of Beauty

WASHINGTON, D.C.– The Legal Aid Foundation of Los Angeles and National Consumer Law Center filed a lawsuit yesterday in federal court against the U.S. Department of Education and Secretary Betsy DeVos on behalf of three student loan borrowers defrauded by the for-profit Marinello Schools of Beauty (“Marinello”). At the time of its closure, Marinello had 56 campuses throughout California, Connecticut, Kansas, Massachusetts, Nevada, and Utah. The students also challenge the Department’s delay of student loan borrower defense regulations.

The Department has already determined that the school engaged in fraud, but it refused to discharge the Plaintiffs’ federal loans–in direct conflict with a discharge mandate in the Higher Education Act (HEA). In addition, the Plaintiffs are challenging the Department’s recent delays of an updated discharge regulation that would have clarified students’ rights to loan discharges. Originally set to go into effect on July 1, 2017, the updated regulation was improperly shelved by the Department until at least July 1, 2018, and the Department is already seeking further delays.

“The Higher Education Act provides critical protections for students lured to illegitimate institutions by deceptive practices and false promises,” said Joanna Darcus, an attorney at the National Consumer Law Center. “The Department of Education’s ill-conceived denial of the Plaintiffs’ discharge applications is part of an alarming trend of letting institutional bad actors off the hook–while penalizing students with unaffordable loans and the threat of debt collection.”

“It is outrageous that the Education Department, which determined that Marinello used a phony high school diploma scheme to falsely certify student financial aid eligibility, has refused to comply with the law and grant loan discharges to harmed students,” added Robyn Smith, senior attorney at the Legal Aid Foundation of Los Angeles. “These students, pawns in Marinello’s fraudulent scheme to increase its revenues, should not have to repay these loans.”

In 2013, the Plaintiffs, Lizette Menendez, Lydia Luna, and Leonard Valdez, inquired about enrolling in Marinello’s cosmetology program to improve their job and income prospects. Although none of the Plaintiffs were eligible for federal financial aid because they had not completed high school, Marinello promised that they could earn valid high school diplomas from Parkridge Private School. Based on Marinello’s representations, the three Plaintiffs went through the Parkridge program, received diplomas, and obtained federal loans to attend Marinello.

After graduating, the students discovered that their Marinello educations were worthless. Marinello failed to teach them the most basic haircutting skills necessary to maintain employment as cosmetologists. Marinello had taken their money and left them with unaffordable student loan debt.

The students believed that they could at least benefit from the Parkridge high school diplomas they had earned but in February 2016, they were devastated to learn that even their Parkridge diplomas were a scam. At that time, the Department determined that Marinello had partnered with Parkridge in an illegal scheme to heavily advertise high school diplomas that were in fact phony. It further determined that Marinello targeted students who lacked high school diplomas or GEDs, pressured them into enrolling, and then illegally certified their eligibility for federal student loans. The Department barred five Marinello campuses from receiving federal financial aid, triggering the closure of all 56 Marinello campuses.

The Plaintiffs applied for discharges of their federal loans based on a broad provision of the HEA which requires discharge of the loans of students whose schools falsely certify the students’ financial aid eligibility. Despite finding Marinello responsible for this fake diploma scheme, the Department ignored the HEA discharge mandate and unlawfully denied all three Plaintiffs’ applications.

The Plaintiffs are asking the court to reverse the Department’s denial of their discharge applications on the grounds that the denials were arbitrary, capricious, an abuse of discretion, contrary to law, and in excess of statutory authority. They also seek a declaration that the HEA requires the Department to grant discharges to all students whose schools falsely certify financial aid eligibility based on phony high school diplomas, regardless of the narrowness of the false certification discharge regulation.

It is likely that thousands of other Marinello students were similarly scammed and remain trapped in student debt. Marinello students may call Legal Aid Foundation of Los Angeles at 800-399-4528 for assistance.

Legal Aid Foundation of Los Angeles seeks to achieve equal justice for low-income people in Los Angeles County. LAFLA changes lives through direct representation, systems change and community empowerment with five offices in the Greater Los Angeles area.

Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training. www.nclc.org

A Lifeline that Breaks Down Barriers to Affordable Communication

February 7, 2018

Communities of color often face challenges connecting to and maintaining affordable broadband and voice service. The federal Lifeline program has been around since the mid-1980s. While it started as a low-income program to help households afford voice service, it has been expanded to include wireless voice and broadband Internet support. The program is available in every state and territory and has helped over 1.5 million households in 2016 with low-cost, and in some cases free voice (750 minutes a month) or voice and data services (for example, 3G and 1 GB/data in a wireless voice and data bundle). Now some of the most popular Lifeline products are under attack, particularly the universal availability of these low-cost/no-cost products. Hear from our panel of experts about the Lifeline program and how it works and what potential changes could emerge in the near future and what steps you can take to defend affordable access for low-income people.

Presenters:

Kham Moua, Associate Director of Policy and Advocacy (OCA – Asian Pacific American Advocates)

Carmen Scurato, VP, Policy and General Counsel (National Hispanic Media Coalition)

Cheryl Leanza, Policy Advisor (United Church of Christ OC Inc.) and President (A Learned Hand, LLC.)

Moderator: Olivia Wein, Staff Attorney (National Consumer Law Center)

More Lifeline resources (.zip file)