FOR IMMEDIATE RELEASE: August 27, 2018 ||  Contact: Persis Yu (pyu@nclc.org); Stephen Rouzer (srouzer@nclc.org) or (202) 320-8394

WASHINGTON – Today, Seth Frotman announced that he is resigning as the Student Loan Ombudsman of the Consumer Financial Protection Bureau. According to his letter of resignation, the current administration “has turned its back on young people and their financial futures,” and “abandoned the very consumers it is tasked by Congress with protecting.”

Persis Yu, staff attorney at the National Consumer Law Center and director of NCLC’s Student Loan Borrower Assistance Project issued the following statement:

“Frotman’s charge that the current administration is betraying the trust of 44 million student loan borrowers is deeply troubling for those who rely on the Bureau to ensure that they are not being ripped off and abused by their lender, servicer, or debt collector. Student loan borrowers need a watchdog that will listen to the evidence and put borrowers’ interests above big business.

“Under Frotman’s leadership, the Office of Students and Young Consumers has uncovered systemic abuses in student loan servicing, prompting important reforms to the industry. Critically, the Office uncovered problems with the U.S. Department of Education’s implementation of income-driven repayment plans, eventually leading to a lawsuit against student loan servicer Navient for practices that caused borrowers to pay thousands of additional dollars on their federal student loans and added years to their repayment.

“Unfortunately, Frotman’s allegations that the current administration is undercutting enforcement of the law raise concerns about the future of the Navient lawsuit as well as future enforcement of known abusive practices.

“For years, the National Consumer Law Center has documented servicer and debt collector abuses that can cost borrowers thousands of dollars and years of repayment. At their worst, student loan servicing and debt collection abuses result in the seizure of Earned Income Tax Credits and Social Security benefits that threaten low-income borrowers’ ability to keep a roof over their heads, food on the table, and pay for critical prescription medication. The student loan industry needs accountability and oversight by a strong Consumer Bureau focused on protecting students and other consumers.”

Model Utility Consumer Protections When Natural Disasters Strike

August 2018
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Severe hurricanes, floods, mudslides and wildfires can threaten life and property, displace families and devastate communities. Residents in areas experiencing natural disasters may find their homes are not be habitable for long periods of time resulting in temporary to permanent displacement of the families. Community recovery efforts could take time, leading to potential loss of income for some residents. One important area of consumer protections during times of disaster and recovery concerns the preservation of essential utility service to the home and minimization of financial harm. This issue brief draws from the work of consumer advocates in California and Texas¹ to secure utility consumer protections in the wake of devastating and natural disasters. The utility consumer protections discussed include:

• revised billing procedures,
• more flexible rules regarding initiation of utility service,
• more flexible payment plans,
• strong disconnection protections, and
• special help for low-income utility consumers.

Given the severity of hurricanes and wildfires in the recent past and the likelihood of similar disasters in the future, this issue brief can help consumer advocates on the frontlines respond in a timely fashion to secure utility consumer protections that preserve access to affordable utility service during the time takes for families and communities recover.

In addition to discussion of a body of emergency consumer protections that should go into effect after a disaster, cross-cutting issues that will also need to be decided in the development of disaster relief consumer protections is also discussed. Finally, it is important to keep in mind that not all utilities are regulated in the same manner. These distinctions, in the choice of a forum, are discussed at the end.

NATURAL DISASTER EMERGENCY UTILITY CONSUMER PROTECTIONS

In natural disaster situations, homeowners may be displaced temporarily or permanently because the home is not habitable or the area is not safe. In response to the wildfires in California, the California Public Utilities Commission passed emergency resolutions that protect access to essential utility service and reduce the risk of financial harm for consumers living in disaster areas.

Emergency Rules to Help Consumers Reconnect Essential Utility Services

1. Waive Deposits: Utilities should be required to waive deposit requirements for residents in affected areas. This protection removes a major barrier to service for displaced residents who have been forced to seek temporary housing and/or relocate as they seek to reestablish essential utility service.²
2. Provide Expedited Move-In and Move-Out Service Requests. Given the potential for households to be transitioning from temporary to more permanent housing situations as they recover from a natural disaster, the utilities should be required to expedite the move-in and move-out (sometimes referred to as “turn-on/turn-off”) processing time.³
3. Offer More Lenient Payment Plans: Households facing the challenge of recovering from a natural disaster will likely be facing numerous financial obligations (e.g., repairing a home, replacing a car and household goods). Some of these households may have already been struggling to pay their utility bills and owe the utility company for unpaid bills. Yet access to utility service is essential for habitable housing, so utilities should work with consumers and offer a payment plan where the initial payment is affordable, for example, no greater than 20% of the amount owned up front, with the balance to be paid over at least a year.⁴

Emergency Rules to Help Consumers Maintain Essential Utility Services

1. Disconnection Protections: Utilities should suspend disconnection for non-payment following a natural disaster. It is foreseeable that consumers will fall behind on their utility bills as they face the financial challenges of rebuilding their homes and lives after a natural disaster. Yet access to utility service is essential for habitable housing, so this rule will help provide some stability for consumers as they rebuild their lives.⁵
2. Waiver of Late Fees: Similarly, utilities should be prohibited from assessing late payment fees on consumers after a natural disaster so that consumers, who are facing the financial challenges of rebuilding their lives, are protected from even larger debt due to fees during this fragile period.⁶
3. Low-Income Assistance Programs: To the extent that there are low-income utility consumer bill assistance programs, those program implementation rules should be reviewed to avoid inadvertent loss of benefits due to an inability to re-certify eligibility due to loss of access to documentation or change in address due to temporary or transitional housing situations. Community-based organizations should be enlisted to help increase enrollment in the low-income assistance programs as more households may now qualify due to the sudden drop in financial resources due to the natural disaster.⁷

Emergency Rules Regarding Billing to a Household Hit by Disaster

Disasters often result in the displacement of households, sometimes for indeterminate periods of time. Household displacements can be caused by mandatory evacuation orders, damage to the home, loss of employment and other factors stemming from a disaster. Consumers will benefit from the following emergency billing rules:

1. Discontinue Billing: When a family is forced to relocate due to a natural disaster or the home is uninhabitable due to the disaster, the utility should discontinue billing and not charge the consumer a disconnection fee.⁸ This protects the homeowner from being charged for services that were not used and from additional fees tied to discontinuance of service.⁹
2. Adjust Estimated Billing: In cases where a utility estimates a consumer’s bills, the utility should be prohibited from billing for energy usage estimates for the time the home was unoccupied due to the natural disaster.¹⁰ This protects utility consumers by having bills that reflect reduced consumption stemming from the natural disaster.
3. Adjust Minimum Bills: In cases where utilities charge monthly access charges or minimum charges, utilities must prorate such charges to account for periods where the consumer’s home was unserviceable due to the natural disaster.¹¹ This protects consumers from paying utility charges when their home is without service due to the natural disaster.

Obligation to Notify Consumers of these Emergency Protections

Utilities should be required to advertise these emergency protections and to work with other disaster relief agencies and community-based organizations to ensure affected consumers are aware of their rights under the emergency protections.¹²

OVERARCHING DISASTER RELIEF DESIGN ISSUES

1. What should trigger the emergency disaster relief consumer protections? One of the issues in California’s utility commission proceeding to develop disaster relief protection rules is defining a trigger for disaster relief. This is an ongoing rulemaking and one of the recommendations is to use a governor’s state of emergency declaration in cases affecting the delivery or receipt of utility service or serious degradation in service quality.
2. How long should the protections be in place? Another cross cutting issue is the duration of the disaster relief protections. Consumer advocates in the California utility commission proceeding are advocating that emergency consumer protections be in effect for one year from the declaration of emergency, subject to flexibility to extend or shorten this period if circumstances warrant such modification.
3. Who should be covered by these protections? This is an issue of how you define the protected class of consumers. Consumer advocates in the California utility commission proceeding have argued that residential consumers and small businesses that have been affected by the disaster should be covered by the protections. The protections should cover residential consumers broadly, not just utility customers of record. For example, tenants in a master-metered building who have been displaced and need to start utility service should receive protections. Furthermore, consumers who may not live in the disaster area, but whose place of employment was destroyed or damaged, may fall behind on their utility bills and should be protected by the disaster relief rules (for example, more lenient payment plans).
4. How should utilities implement the protections/demonstrate compliance? The California Utility Commission Proceeding Rulemaking 18-03-011 will explore lessons learned from the utilities implementation of the emergency consumer protections required in Resolutions M-4833 and M-4835 and addresses these questions.
5. How should the costs of these protections be recovered? In California, the Commission allowed utilities to track the incremental costs from implementation of these consumer protections in Wildfire Customer Protections Memorandum Accounts or Catastrophic Event Memorandum Accounts for review in a General Rate Case or other proceeding.¹³

PICKING A FORUM

In general, state utility commissions¹⁴ have jurisdiction over the larger, investor-owned utilities (e.g., investor-owned electric and natural gas companies) in a state as well as smaller, investor-owned utilities (e.g., investor-owned water company). By seeking disaster relief consumer protections at the state utility commission, advocates can potentially protect a large number of consumers throughout the state. Some utilities are publically-owned and fall under the jurisdiction of a local government (e.g., municipal power or water service). Securing consumer protections with a muni will require a more local effort targeted to the local government entity with jurisdictional oversight. Some utilities are membership-based (e.g., an electric cooperative). With very few exceptions, it will be much harder to change the billing and termination rules if the utility (electric, gas, water) is a cooperative or municipally-owned and the protections will cover a smaller pool of consumers. Moreover, some utilities, such as voice and internet service are lightly regulated/ largely unregulated. Therefore, in practice advocates are most likely to succeed in getting disaster-related changes to rules if the utility is an electric, gas or water company regulated by a state utility commission.

SAMPLE PETITIONS/LETTERS/RESOLUTIONS/DECISIONS

1. 1. Petition for Emergency Rulemaking to Provide Customer Protection Rules for Continuing Support of Victims of Hurricane Harvey, Texas Legal Services Center, Texas Ratepayers ‘ Organization to Save Energy, City of Houston, AARP of Texas, One Voice Texas: Collaborative for Human Health and Human Services, Texas Association of Community Action Agencies, Public Utility Commission of Texas, Project No.47674 (October 4, 2017).
   2. The Utility Reform Network letter to the Commissioners of the California Public Utility Commission requesting emergency consumer protections to assist wildfire victims (October 24, 2017).
   3. California Public Utility Commission Resolution M-4833 (November 9, 2017) providing emergency utility consumer protections in response to the 2017 wildfires in California.
   4. California Public Utility Commission, Decision 18-08-004, Decision Affirming the Provisions of Resolutions M-4833 and M-4835 as Interim Disaster Relief Emergency Protections (passed August 9, 2018).

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1 On October 24, 2017 The Utility Reform Network (TURN) filed a letter with the California Public Utility Commission (CPUC) requesting emergency consumer protections to support the victims of the October 2017 wildfires. This request resulted in two CPUC resolutions, M-4833 and M-4835 which required regulated electric, natural gas, telecommunications and water utilities to take reasonable steps to help Californians affected by devastating wildfires. There is an open proceeding at the CPUC, Rulemaking 18-03-011, to develop permanent emergency disaster protections using the protections in these two resolutions as a starting point. Around the same time, advocates in Texas had filed a similar petition in response to hurricanes. They were not successful, but their petition provides a good template for disaster relief. See Texas Legal Services Center, Texas Ratepayers’ Organization to Save Energy (Texas ROSE), AARP Texas Office, City of Houston, One Voice Texas and Texas Community Action Agencies, Petition for Emergency Rulemaking to Provide Customer Protection Rules for Continuing Support of Victims of Hurricane Harvey, Project No. 47674 filed with the Public Utility Commission of Texas on October 4, 2017.

 2 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.5.

3 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.5.

 4 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at pp.6-7.

5 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.7.

6 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.7.

7 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at pp.7-8.

8 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.6.

9 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.6.

10 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.6.

11 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at p.6.

12 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at pp. 32-33.

13 See e.g., CPUC Resolution M-4833 (Nov. 9. 2017) at pp.8 and 16.

14 These commissions have different names in different states (e.g., Public Utility Commission or Public Service Commission). For a list of state utility commissions, visit https://www.naruc.org/about-naruc/regulatory-commissions/ .

FOR IMMEDIATE RELEASE: August 10, 2018 ||  Contact: Jan Kruse (jkruse@nclc.org); (617) 542-8010

BOSTON – Abby Shafroth, attorney with the National Consumer Law Center’s Student Loan Borrower Assistance Project , issued the following statement regarding the U.S. Department of Education’s proposal to abandon the “gainful employment rule”:

“The gainful employment rule is a basic, commonsense safeguard designed to protect students and taxpayers by ensuring that federal dollars do not flow to schools that consistently fail to deliver sufficient value to students to enable them to afford their student loans. The rule protects millions of Americans enrolled in career training programs and provides incentives for schools to reduce their costs and increase their value. Today the U.S. Department of Education proposed to abandon the rule entirely.

The Department’s proposal would demolish safeguards that prevent low-value schools from taking advantage of the federal aid system to line their pockets with taxpayer dollars at the expense of students working to build better lives for their families. Remarkably, in attempting to justify its proposal, the Department claims that doing so will benefit students by providing more educational choices, particularly for women, students of color, and low-income students. As an attorney who works with low-income student borrowers, primarily women and people of color, I could not disagree more strongly. Students don’t need access to more failing schools; they need a student loan system that doesn’t set them up to fail.

Taxpayers will also be harmed by abandoning the rule: The Department estimates repealing the rule would cost taxpayers over $5 billion over the next decade, and that estimate fails to account for all the costs associated with loading students up with loans that they are unlikely to be able to afford. Who would benefit? The for-profit college industry and its wealthy investors who have been lobbying the government to rescind the rule to keep the federal aid spigot flowing.”

FOR IMMEDIATE RELEASE: August 7, 2018
CONTACTS:
Ryan Karerat, ACLU Campaign for Smart Justice, (212) 284-7388, rkarerat@aclu.org
Jan Kruse, National Consumer Law Center, (617) 542-8010, jkruse@nclc.org
Troy Blackwell, Color of Change, (646) 828-0844, Troy.Blackwell@berlinrosen.com

WASHINGTON — Sens. Cory Booker (D-N.J.) and Sherrod Brown (D-Ohio) yesterday sent a letter to insurance companies that underwrite over $2 billion a year in bail bonds expressing concern about potential predatory practices in the bail industry. The letter also requests information on the steps these companies take to protect consumers and curb abusive practices.

The companies contacted yesterday were featured in a report released last year by the American Civil Liberties Union’s Campaign for Smart Justice and Color of Change that shed light on how the for-profit bail industry fuels mass incarceration and perpetuates racial inequalities.

Kanya Bennett, senior legislative counsel at the ACLU, issued the following statement:
“Sens. Cory Booker and Sherrod Brown are asking all the right questions of the bail bonds industry — an industry generating between $1.4 and $2.4 billion a year. Congressional oversight is desperately needed on the corporations driving cash bail, and today’s letter from Sens. Booker and Brown should just be the beginning. The bail industry must provide answers on the policies and practices that keep poor people and people of color indebted and incarcerated simply because they can’t afford not to be.”

Brian Highsmith, attorney at the National Consumer Law Center, issued the following statement:
“Commercial bail imposes oppressive financial costs on heavily-policed low-income communities, especially communities of color. Senator Booker and Senator Brown’s letter puts the insurance companies that underwrite these contacts on notice that lawmakers are paying attention to the abuses occurring in this industry — and that every company involved in commercial bail has a responsibility to ensure compliance with state and federal laws designed to protect consumers.”

Scott Roberts, Senior Campaign Director at Color Of Change, issued the following statement:
“Commercial bail is a massive industry that had been given free rein to engage in violent exploitation of brown, Black, and cash poor people with little to no oversight or regulation. We can no longer allow the most fundamental questions of justice – who is allowed freedom and whose rights must be respected – to be made by private industry. We commend Sens. Booker and Brown’s attempt to hold them accountable.”

For more information about the ACLU’s Campaign for Smart Justice: https://www.aclu.org/issues/mass-incarceration/smart-justice/campaign-smart-justice
Written Testimony of NCLC attorney Brian Highsmith before New York State’s Department of Financial Services, Division of Consumer Protection and Division of Criminal Justice Services on Bail Bond Reform, June 1, 2018: https://www.nclc.org/images/pdf/criminal-justice/testimony-highsmith-ny-bail-bond.pdf

For Immediate Release: August 2, 2018

WASHINGTON, DC — Today, U.S. Senators Corey Booker (D-N.J.) and Sherrod Brown (D-Ohio) introduced the Stop Overdraft Profiteering Act to crack down on unfair overdraft fees. The bill would establish reasonable safeguards for checking account holders; restore transparency to the checking account market; and ultimately encourage banks to expand responsible small dollar loan offerings rather than perpetuate harmful overdraft fee practices. Abusive overdraft fees strip billions every year from the pockets of American families, often through practices designed to maximize overdraft revenue for banks. Overdraft fees, typically $35 each, are frequently triggered by small debit card transactions that are much less than the fee itself.

“Financial institutions drain billions of dollars annually from their customers through abusive overdraft fee practices, severely impacting those who can afford them the least—poor and working class families living paycheck to paycheck. Even one overdraft can trigger hundreds of dollars in fees in just a few days, driving a bank customer deeper in the hole and often out of the banking system altogether,” said Center for Responsible Lending Senior Policy Counsel Rebecca Borné. “Senators Booker and Brown’s bill is a crucial step in addressing this important issue and we commend their efforts.”

“Banks advertise ‘free checking’ but make their money through tricks and traps that can result in hundreds of dollars of overdraft fees a year,” said National Consumer Law Center Associate Director Lauren Saunders. “Thank you to Senator Brown and Senator Booker for introducing this bill, which would stop banks from manipulating people into overdrafting their accounts.”

“We have long known that communities of color are underbanked at rates far higher than the population as a whole, and abusive overdraft policies have made a bad situation even worse. Debit card overdrafts are essentially extremely high-cost loans that too often leave borrowers worse off, even forcing some out of the banking system altogether. We commend Senators Booker and Brown for moving forward on setting reasonable limits, especially now that the Consumer Financial Protection Bureau refuses to use the authority that Congress gave it to stop these abuses,” said Vanita Gupta, president and CEO, The Leadership Conference on Civil and Human Rights.

“Overdraft fees are unfair, deceptive, harmful, and outrageously high—and they hit consumers of color the hardest,” said Hilary O. Shelton, Senior Vice President for Policy and Advocacy / Director to the NAACP’s Washington Bureau. “Senators Booker and Brown recognize that the runaway cost of this practice and our current economic environment make overdraft reform crucial and urgent. Financial institutions rake in billions annually through overdraft fees, often at the expense of their most vulnerable customers, ultimately driving many out of the banking system altogether. These abusive practices have been going on for far too long already, and it’s time that we crack down on them.”

“It’s time for our country to move past ‘gotcha’ banking fees. Consumers deserve reasonable reform of overdraft fees and this proposal is a step in the right direction,” said Christopher Peterson, Director of Financial Services at Consumer Federation of America.

“Overdraft fees trap low income families into a deep cycle of debt by preying on their precarious financial situations. We commend Senator Booker and Senator Brown for introducing a bill that will prevent financial institutions from unfairly taking advantage of vulnerable consumers,” said Americans for Financial Reform Senior Policy Counsel Linda Jun.

Specifically, the Stop Overdraft Profiteering Act would address the central problems with today’s overdraft fees by:

• Requiring that overdraft fees be reasonable and proportional to the institution’s cost of covering the overdraft;
• Requiring that any overdraft charge on debit card purchases and ATM withdrawals be in the form of traditional interest, rather than upfront fees;
• Limiting overdraft fees to one per month and six per year; and
• Stopping banks from engaging in processing that re-orders transactions to generate more overdraft fees.

The bill comes soon after the Consumer Financial Protection Bureau (CFPB) leadership announced that the agency will halt its rulemaking plan to address bank overdraft fee abuses. The agency had studied abusive overdraft fee practices since 2012 and the results have been clear: overdraft programs use unfair and abusive practices to exploit financially vulnerable customers.

Last August, the CFPB released a study that exposed the extent to which large banks’ abusive overdraft fees drain working families’ checking accounts. The study found that nearly 80% of bank overdraft and non-sufficient funds (NSF) fees are borne by only 8% of account holders, who incur ten or more fees per year, with many of those customers paying far more. For one group of hard hit consumers, the median number of overdraft fees was 37, nearly $1,300 annually. The study also confirmed that overdraft fees on debit cards can lead to extremely high cumulative fees for consumers.

Over the last 15 to 20 years, many financial institutions have betrayed the trust of their account holders by replacing what was once an occasional accommodation with an exploitative system of routine high-cost overdraft fees that drive account holders deep into debt.

Learn more about harmful overdraft fees here (CRL) and here (NCLC).

Press Contacts:

Ricardo Quinto (Center for Responsible Lending): ricardo.quinto@responsiblelending.org

Jan Kruse (National Consumer Law Center): jkruse@nclc.org

Shin Inouye (The Leadership Conference on Civil and Human Rights): inouye@civilrights.org

Carol Kaplan (NAACP Washington Bureau): ckaplan@naacpnet.org

Christopher Peterson (Consumer Federation of America): cpeterson@consumerfed.org

Carter Dougherty (Americans for Financial Reform): carter@ourfinancialsecurity.org

FOR IMMEDIATE RELEASE: August 2, 2018
National Consumer Law Center contacts: Margot Saunders (msaunders@nclc.org) or (202) 595-7844; Jan Kruse (jkruse@nclc.org) or (617) 542-8010

Senate Democrats Urge FCC to Strengthen the Rules to Limit Robocalls; Senate GOP Seeks Leniency for Robocallers

WASHINGTON – Seven Republican Senators, led by Senator John Thune of South Dakota, sent a letter to the Federal Communications Commission (FCC) urging changes to the Telephone Consumer Protection Act (TCPA) that would allow Wall Street banks, payday lenders, retailers, and other large businesses to robocall consumers’ cell phones with impunity. The GOP Senators’ letter stands in contrast to a recent letter to the FCC from 15 Democratic Senators and one Independent, led by Senator Ed Markey of Massachusetts, who urged stronger rules to stop all unwanted robocalls and hold bad corporate actors accountable.

“Robocalls are universally disliked by voters, and stopping abusive and unwanted calls is truly a bipartisan issue,” said Margot Saunders, senior counsel at the National Consumer Law Center. “While senators from both parties acknowledge the pervasive nature of robocalls, it is disappointing to see the GOP senators’ letter urge the FCC to dial back consumer protections at a time when they are so desperately needed.”

According to the YouMail Robocall Index, which tracks the volume and extent of robocalls in the United States, 4.1 billion robocalls were made to numbers nationwide in June of this year alone.

At issue is the TCPA’s definition of an automated dialing system (autodialer) and the prohibition on autodialed robocalls to cell phones without prior consent. A recent decision from the U.S. Court of Appeals for the District of Columbia in ACA International v. FCC set aside the FCC’s current autodialer definition deeming it too broad. The court ordered the FCC to revisit its definition and the Commission turned to the public for comment.

A chorus of corporations and their Washington lobbyists, including the Student Loan Servicing Alliance and the Community Bankers Association, urged the FCC to water down its “autodialer” definition so that virtually none of the modern equipment and software used to autodial robocalls would be covered. They also hope to nix the prohibition against autodialed calls and texts to cell phones without the consumer’s consent, and strip consumers of the right to tell the robocallers to stop calling.

“Lawmakers of all political stripes should be firmly opposed to rule changes that would lead to more unwanted robocalls,” Saunders added. “Instead of unity on the issue, we see division, as Democratic senators seek to defend consumer protections while top-ranking GOP senators echo robocalling industry talking points.”

For more information and for tips on how consumers can stop robocalls, visit NCLC’s Robocalls & Telemarketing page.