New Bank Regulator Leadership Welcome; Congress Still Must Roll Back Rule Promoting Predatory Lending

For Immediate Release: May 5, 2021

Press Contacts:
NCLC: Jan Kruse
(jkruse@nclc.org)
AFR: Carter Dougherty (carter@ourfinancialsecurity.org)
CRL: Matthew Kravitz (matthew.kravitz@responsiblelending.org)
CFA: Rachel Gittleman (rgittleman@consumerfed.org)

Washington, DC –  Advocates welcomed reports that Treasury Secretary Janet Yellen plans to appoint a new acting head of the Office of the Comptroller of the Currency (OCC), replacing Blake Paulson,  in light of the highly deceptive and false claims that the agency, under Paulson’s leadership, put forward as Congress debates overturning the OCC’s “fake lender” rule. The fake lender rule will enable a massive expansion of predatory lending in all 50 states if the rule is permitted to remain in effect. Congress must pass the Congressional Review Act (CRA) resolution introduced by Senators Sherrod Brown (D-OH), Chris Van Hollen (D-MD), S.J. Res. 15, and Rep. “Chuy” García. H.J. Res. 35, to overturn the fake lender rule.

Even with a new acting comptroller and eventually a permanent one, advocates stressed the urgency of Congress repealing the fake lender rule. “Congress must repeal the OCC fake lender rule because it is doing active harm right now, defending a predatory business model that destroys small businesses, homes, and lives,” said Lauren Saunders, associate director of the National Consumer Law Center. “It could easily be two years or more before the rule could be repealed through rulemaking, and families, especially Black and Brown and low-income families, cannot wait.”

Predatory small business lenders are using the fake lender rule today to defend a 268% APR rate on loans totaling $67,000  to a restaurant owner in New York, where the criminal usury rate is 25%. OppLoans (aka OppFi), an online lender offering 160% APR loans in about 27 states that prohibit that rate, cited the OCC’s fake lender rule in defense of its loan to a disabled veteran in California, where the legal rate is 36% plus the federal funds rate.  OppLoans is evading state rate cap laws supported by broad majorities of voters in Arizona, Montana, Nebraska, and South Dakota; and also laws approved by legislatures in Maine, Ohio, and other states.

“Veterans are being harmed by evasive and predatory rent-a-bank loans, which is why groups like the Military Officers Association of America, Blue Star Families, and Veterans for Education Success support overturning the fake lender rule,” said Mike Saunders, director of military and consumer policy for Veterans for Education Success.

“The fake lender rule supports a rent-a-bank model that is being used by predatory payday and installment lenders to make triple-digit interest rate loans that are illegal across the country, including to small business owners still reeling from the fallout from the COVID-19 pandemic,” said Rachel Gittleman, financial services outreach manager with Consumer Federation of America.

“Protecting families from predatory loans by reaffirming state interest rate limits is not only the right thing to do, it is also overwhelmingly popular. Congress should do so by passing the CRA without delay,” said Graciela Apronte-Diaz, director of federal campaigns at the Center for Responsible Lending.

A broad, bipartisan cross-section of experts and officials are calling on Congress to repeal the fake lender rule. They include a group of 25 state attorneys general, Democrats and Republicans, worried it will effectively gut their state usury laws.

“The American public on a broad bipartisan basis supports state interest rate caps and does not want to see them evaded,” said Linda Jun, senior policy counsel for Americans for Financial Reform. “As recently as November, voters in Nebraska approved interest rate caps by overwhelming margins — South Dakota did the same in 2016 — to stop predatory lending. All 45 states with interest rate limits — and others that may join them — now face the prospect that a federal regulation will invalidate their democratic decisions.”

The regulation also runs counter to the widespread goal of rebuilding the economy as we emerge from the pandemic. The previous administration was willing to throw open the doors to predatory lending in any way possible; the fake lender rule was finalized less than two weeks before the 2020 election without any meaningful review of the 4,000 public comments opposing the rule.




Statement on Education Department’s Appointment of Richard Cordray to Oversee Trillion Dollar Federal Student Aid

FOR IMMEDIATE RELEASE: MAY 4, 2021
National Consumer Law Center contact: Jan Kruse (jkruse@nclc.org)

Washington, D.C. – The U.S. Department of Education has appointed Richard Cordray, former director of the Consumer Financial Protection Bureau and Ohio Attorney General, as Chief Operating Officer of the Department’s Federal Student Aid, which oversees $1.6 trillion in outstanding federally-backed student loans held by more than 45 million borrowers

The following is a statement by Persis Yu, director of National Consumer Law Center’s Student Loan Borrower Assistance project.

“As the first director of America’s only agency that focuses entirely on protecting ordinary people in their financial lives, Richard Cordray was a strong voice for the ’forgotten man and woman,’ including older Americans, veterans, servicemembers, students, and average families. For too long, the student loan system has been broken and in desperate need of a consumer advocate at the helm. Servicer, debt collector, and for-profit school abuses have trapped borrowers in unaffordable repayment for years and then denied them access to vital programs like income-driven repayment and public service loan forgiveness. These abuses disproportionately threaten the financial security of Black and Latinx borrowers, and expose them to the government’s draconian collection practices, such as seizing Social Security benefits and the Earned Income and Child Tax Credits. Mr. Cordray’s appointment signals a strong commitment to ensuring a borrower-centric approach with meaningful consumer protections for borrowers and a system that holds companies and institutions accountable for breaking the law.”




Credit Union Regulator Must Not Facilitate Predatory Lending, Groups Say in Comment Letter

FOR IMMEDIATE RELEASE: May 3, 2021
Press contacts: National Consumer Law Center: Jan Kruse jkruse@nclc.org
Center for Responsible Lending: Carol Parish: Carol.Parish@responsiblelending.org
Self-Help Credit Union: Jenny Shields Jenny.Shields@Self-Help.org

WASHINGTON, D.C. – Last Friday, credit unions and advocates registered their strong opposition to a proposal by the National Credit Union Administration (NCUA) that would allow credit union subsidiaries to engage in predatory lending that is explicitly illegal for federal credit unions.  The proposal by NCUA, which regulates credit unions across the country, would do significant harm by permitting high-cost lending to credit union members and consumers. The harm may be especially pronounced for communities of color, which are disproportionately impacted by predatory lending.

The Center for Responsible Lending (CRL), Self-Help Credit Union and Self-Help Federal Credit Union (Self-Help), and the National Consumer Law Center (NCLC) joined in the comment.

The NCUA’s proposal would expand the allowable activities of credit union service organizations (CUSOs), which are credit union subsidiaries that provide a range of banking services that credit unions out-source. While those activities are currently limited, the NCUA proposes expansions that would facilitate lending with annual interest rates above the cap for federal credit unions, which is set at 18% by the Federal Credit Union Act. Thus, the rule appears to allow federal credit unions to participate in lending that the Federal Credit Union Act specifically prohibits — posing severe reputation risk to federal credit unions as well as legal and compliance risks.

In the past, some credit unions used CUSOs to make high-cost predatory loans with effective interest rates ranging from 138% to 876%. In this high-cost lending, lenders are incentivized to make loans borrowers cannot afford to pay off, creating a cycle of harmful debt from which the lender profits. The NCUA proposal would enable this practice.

Exploitative auto lending would also be facilitated under the proposal, permitting CUSOs to be indirect auto lenders and enabling FCU involvement in subprime auto lending that can reach rates of 30%.

From the comment:

The proposal will do significant harm by permitting more high interest rate lending to credit union members and consumers more broadly:

  • Credit unions have historically used CUSOs to engage in predatory payday lending.
  • Payday and other high-cost consumer lending inflicts severe harm on financially vulnerable consumers.
  • The subprime auto lending market is rife with exploitative practices.
  • The proposal will disproportionately harm communities of color and exacerbate financial exclusion, even as the Board elsewhere emphasizes racial equity and financial inclusion.

Find the full comment here.




A New Customer Bill of Rights: Affordable Utility Services

By Karen Lusson, National Consumer Law Center staff attorney.

Co-authored with Deron Lovaas and Larry Levine of the NRDC.   

Utility services–electricity, heat, water, sanitation, telecommunications, and internet access–are essential to health, safety, and daily life. The vital need for uninterrupted utility service was evident before the coronavirus pandemic, but the COVID-19 public health emergency has reinforced the essential nature of utility service and the threats of energy and water poverty. This is why the National Consumer Law Center (NCLC), the Natural Resources Defense Council (NRDC), and our allies and partners have developed a fundamental set of customer bill of rights principles, and guidance for their implementation.

Every struggling family in America knows that falling behind on utility bills comes with the risk of service disconnections.

Washington Post reporter Greg Jaffe wrote an excellent article about the consequences, digging into the data about customers who are behind on their utility bills and facing disconnection and highlighting the stories of people whose income falls far short of covering ever-growing utility bills. He cites this new paper by Tufts University Assistant Professor Steve Cicala that describes the struggles among communities served by Illinois’ two largest electric utilities:

Each month from September-December 2020, about 20% of all accounts were charged non-payment fees, and disconnection notices were served to 3.4% and 2.5% of residential and commercial/industrial accounts, respectively. For each of these outcomes there is a strong disproportionate burden on minority communities.

Nearly 1% of these utilities’ residential accounts (and 72,000 families across Illinois) had their power shut off for nonpayment during just that four-month period. And the pain is not shared evenly across the state. For example, in one Peoria zip code, 300 homes, or 5.4% of all homes, were disconnected. The most jarring example Jaffe lifts up is a 38-year-old woman living in that Peoria zip code, who earns $300 a week washing dishes at a diner, lost electric and gas service last fall for four or five days because of unpaid bills, and now again faces an eye-popping $4,242.44 in overdue utility bills.

Many states and utilities created temporary solutions to help struggling households during the early days of the crisis. One year later, many of these COVID-19 utility protections have lapsed. Yet, the underlying problem remains — essential utility service is unaffordable for too many.

Instead of ensuring that the most vulnerable in our society have access to essential utility services—during a pandemic or otherwise—many states  allow utilities to disconnect even the most economically or medically vulnerable households when they cannot afford their monthly bills. Late fees, deposits, liens, and other punitive charges compound the problem by increasing the amount that struggling households must pay to access, maintain, or restore service.

Available data indicate that utility service disconnections disproportionately harm people of color and older people. Reliance on shutoffs as a collections tool has the effect of punishing people for being poor and ignores the longstanding racial and economic discrimination that has created the disparities that fuel poverty and the unaffordability of utility services.

We Need Post-2020 Policies to Protect People

Policymakers must develop alternatives to this punitive approach to utility debt collections, which leads each year to millions of shutoffs nationwide, leaving physically and economically vulnerable populations without water, heat, and light.

These utility shutoffs are a threat to the health and safety – both for people experiencing disconnections and for the community as a whole. The lives of medically vulnerable people, including people with asthma, infants, children, and the elderly, are particularly at risk without access to electricity. Lack of access to water for cooking and basic hygiene increases hunger and the spread of infectious disease. The threat of shutoffs can force people to choose between paying a utility bill and affording rent, food, medicine, and other life essentials. This is why policymakers, utilities, and consumer advocates in all states have an obligation to take action to ensure that utility service is affordable for all. In addition, everyone — particularly those with extremely limited incomes — should have access to free programs that can help them reduce their utility bills by saving energy and water.

Utility Consumer’s Bill of Rights

The NCLC, NRDC, and other consumer advocates and community-based organizations from a variety of states have developed a utility consumer’s bill of rights entitled a Roadmap to Utility Service as a Human Right that presents bedrock principles of universal, affordable utility service. It describes a set of responsibilities and action items for those who regulate and deliver utility service. Specifically, we describe clear obligations of state and federal policymakers, public utility commissions, investor owned and publicly owned utilities, and advocates — offering a set of regulatory and public policy changes needed to protect universal access to essential utility services.

Consumer advocates and community-based organizations can use – and adapt to their own circumstances – the bill of rights and its accompanying implementation guide to promote federal, state and local policies that protect affordable access to water, power, and broadband. Guided by these principles and policy solutions, utilities and policymakers alike should rethink and revise punitive credit and collection policies and adopt pro-active solutions that ensure essential utility services are affordable to all.

The time is right for significant, permanent policy changes to address the unaffordability of utility services, and to end the punitive approach to utility revenue collection that threatens health and safety, and ultimately punishes people for being poor.




Bipartisan Group of 25 State Attorneys General Urge Congress to Repeal OCC “True Lender” Rule

FOR IMMEDIATE RELEASE: April 21, 2021

Contact:Jan Kruse (jkruse@nclc.org)

Letter Reflects Bipartisan Support for State Interest Rate Caps and the Need to Stop “Rent-a-Bank” Evasions by Predatory Lenders

In a rare form of bipartisan agreement, a group of 25 Attorneys General (AGs)  sent a letter today to Congressional leadership urging it to “use the Congressional Review Act (CRA) to rescind the Office of the Comptroller of the Currency’s (OCC’s) “True Lender” rule in order to “safeguard states’ fundamental sovereign rights to protect their citizens from financial abuse.”

The bipartisan letter included the AG in Arkansas, where voters approved a  17% interest rate cap on payday and installment loans in 2010, as well as AGs from Nebraska, South Dakota and Colorado, where voters overwhelmingly supported a 36% interest rate cap. The Nebraska vote last November was the most recent, with 83% of the voters approving the rate limit. Yet in all of these states, voter-approved rate caps are being evaded by high-cost lenders laundering their loans through a few rogue banks, which are not subject to state rate caps. The true lender rule (more accurately, “fake lender” rule) protects those evasions.

The letter states:

“A growing number of states continue to pass state usury interest-rate caps on high-cost small-dollar loans in an effort to protect their consumers from predatory financial products. The OCC’s Rule would be exploited by lenders seeking to circumvent these state interest-rate caps and invite, indeed welcome, predatory consumer-lending partnerships between banks and lightly regulated non-depository lenders. We urge you to use the Congressional Review Act, 5 U.S.C. §§ 801-808 (“CRA”), to rescind the OCC’s True Lender Rule and safeguard states’ fundamental sovereign rights to protect their citizens from financial abuse.                               

“Numerous courts across the United States have held that non-banks cannot escape state usury prohibitions under the guise of rent-a-bank schemes.2 Courts have not hesitated to apply the “true lender doctrine” when a bank is named as the nominal principal party to a loan transaction but the transaction involves a non-bank participant attempting to skirt state usury limits. …In direct contradiction to reasoned judicial analysis, the OCC has issued a harmful Rule that establishes a simplistic standard to redefine the meaning of “true lender”” 

The letter concludes:

“Americans spanning all political alignments are demanding that lenders who impose unconscionably exorbitant interest rates be subject to more, not less, regulation. Currently, 45 states and the District of Columbia cap interest rates on installment loans, depending on the size, at a median rate of 38.5% for a $500, 6-month loan and 32% for a $2,000, 2-year loan.13 During an unprecedented economic downturn, brought on and exacerbated by Covid-19, the OCC seeks to expand the availability of exploitative loans that trap borrowers in a never-ending cycle of debt. We urge Congress to use its powers under the Congressional Review Act to invalidate the OCC’s True Lender Rule and safeguard the right of sovereign states, and the ability of an independent judiciary, to safeguard our citizens from rent-a-bank schemes designed to work end- runs around essential consumer protections.”

In another sign of bipartisan support for repealing the rule, on March 30, 2021, Maine State Senator Richard A. Bennett (R- ME) sent a letter to U.S. Senator Susan Collins (R-ME) urging her support for the resolution to invalidate the OCC rule.  Bennett, a former chair of the state Republican Party, has sponsored a bill to prevent rent-a-bank evasions in Maine, which was unanimously approved by a committee in March.

Also this week,138 scholars across the nation also sent a letter yesterday urging Congress use of the CRA to overturn the rule, which overturns more than 200 years of case law that allow courts to look beyond the form of a transaction to its substance to assess whether usury laws are being evaded.

LEARN MORE about this issue  by registering for free webinar this Friday, April 23, 12:00pm – 1:30pm ET: Time Running Out: Congress Should Repeal Rule Protecting Predatory Lenders Harming Small Businesses, Veterans, and Consumers

Related Resources
Illinois AG press release

Arkansas fact sheet

Nebraska fact sheet

Maine fact sheet

South Dakota fact sheet
Predatory Rent-a-Bank Loan Watch List by State




Nearly 140 Scholars Call for Congressional Repeal of “True Lender” Rule

FOR IMMEDIATE RELEASE: April 20, 2021

OCC Rule Usurps Role States Have Had Since Founding of the Nation in Protecting Families from Usurious Lending

Contacts:
Prof. Chris Odinet, christopher-odinet@uiowa.edu
Prof. Paul Kantwill, pkantwill@luc.edu
Prof. Adam Levitin, AJL53@law.georgetown.edu

A group of 138 scholars, including professors of banking law and consumer finance regulation, from 43 states and the District of Columbia sent a letter today to Congress urging it to use the Congressional Review Act (CRA) to overturn the Office of the Comptroller of the Currency’s (OCC’s) final rule on National Banks and Federal Savings Associations as Lenders, known as also  the “true lender” rule.

In the letter, he scholars wrote:

“The Rule usurps the critical role of states in limiting the interest charged to their citizens by nonbank lenders—a role that states have held since the founding of this country…. This short-sighted reversal effectively circumvents the long-standing principle of applying a “substance over form” analysis to prevent evasions of usury laws, a principle that has been endorsed by the Supreme Court and state courts since the earliest days of our nation.”

The scholars explained that all of the original 13 states had usury laws, and 45 states currently do, but attempts to evade usury laws are as old as the laws themselves.” The “true lender” doctrine addresses evasions where payday lenders and other high-cost lenders form “superficial arrangements with banks, put the bank’s name as a lender on the loan agreement, and used the bank as the nominal originator of the loan” in order to take advantage of the lack of interest rate limits that applied to banks. “In doing so, these high-cost lenders tried to charge borrowers interest rates that were otherwise illegal if the lender made the loan itself.”

But courts have relied on the longstanding anti-evasion doctrine to determine if the “true lender” is a state-regulated lender covered by state usury laws. For example, the letter cited a West Virginia case, CashCall v. Morrisey, that relied on an 1895 case in finding that CashCall, not the bank, was the “true lender”:

“The usury statute contemplates that a search for usury shall not stop at the mere form of the bargains and contracts relative to such loan, but that all shifts and devices intended to cover a usurious loan or forbearance shall be pushed aside, and the transaction shall be dealt with as usurious if it be such in fact.”

The scholars criticized the OCC for “rejecting this overwhelming history that courts can ignore contrivances and search instead for the truth in order to prevent evasions of usury laws … The result of the OCC Rule will be to strip states of their agency in regulating usurious lending by nonbanks to their citizens. Over 200 years of legal precedent from states and the U.S. Supreme Court will be eliminated by this ill-conceived and overreaching Rule.”

“Iowa, like many states, limits the interest rates on installment loans,” said Professor Chris Odinet, professor of law at the University of Iowa College of Law, who led the letter. “But under the OCC’s rule, a state-regulated lender could ignore our state’s usury laws merely by finding a bank to put its name on a piece of paper.”

“Veterans are not covered by the Military Lending Act, but they are protected by many state interest rate caps. The OCC’s rule could leave veterans exposed to predatory lenders who evade laws passed with broad bipartisan support, like Illinois’ new 36% rate cap,” said Colonel Paul Kantwill, the founding executive director of The Rule of Law Institute at the Loyola University Chicago School of Law and the former head of the Office of Servicemember Affairs at the Consumer Financial Protection Bureau.

“In overturning the ‘true lender’ doctrine, the OCC ignored the doctrine’s deep historic roots in our country’s foundational cases against usury evasions,” said Professor Adam Levitin, the Anne Fleming Research Professor and Professor of Law at the Georgetown University Law Center.

Under the Congressional Review Act, Congress has a limited amount of time following the enactment of a regulation (currently estimated to be May 21) to repeal it through an expedited process that does not permit a filibuster in the Senate.

 




CFPB Will Hold Debt Collectors Accountable to Tenants for Illegal Evictions

FOR IMMEDIATE RELEASE: April 19, 2021

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

NCLC Attorney Praises CFPB for Upholding the Fair Debt Collection Practices Act on Rule that Could Impact up to 9 Million Families Behind in Rent Payments

Boston – Today, the Consumer Financial Protection Bureau announced an interim final rule that will require debt collectors to give tenants a written notice of their rights and allow a legal claim under the Fair Debt Collection Practices Act if notice is not given prior to evicting tenants during the Center for Disease Control’’s eviction moratorium. The written notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed. 

The following is a statement by National Consumer Law Center attorney Andrea Bopp Stark. 

“The CFPB’s action today provides immediate action toward protecting the millions of families that are at risk of losing their homes, families that are disproportionately of color or low income. This action provides tenants with the information they need regarding their rights to stay in their homes and defend against an eviction.  It also reinforces the CDC moratorium on evictions and the importance of families having a safe place to live during the pandemic.”




Report: Social Security Administration’s Reliance on Flawed Data from Private Company Leads to Low-Income People Losing Vital SSI Benefits

Download the report, including several client stories and policy recommendations

Washington, D.C. – Thousands of extremely low-income older adults and people with disabilities have likely had their Supplemental Security Income (SSI) benefits cut off erroneously, bringing many of them to the brink of homelessness, according to a groundbreaking report from the National Consumer Law Center and Justice in Aging. Since 2018, the Social Security Administration (SSA) has used a private database from LexisNexis called Accurint for Government to determine whether SSI recipients had unreported real estate that could disqualify them from receiving SSI. The problem? Many of the LexisNexis reports are riddled with errors, and SSA is using potentially erroneous information to cut people off without conducting any independent investigation.

Mismatched and Mistaken: How the Use of an Inaccurate Private Database Results In SSI Recipients Unjustly Losing Benefits details how, since the advent of SSA’s use of the Accurint for Government (Accurint) product in 2018, advocates representing SSI recipients have reported significant problems with clients being falsely accused of owning real property. People who rely on SSI to survive have received letters suspending their benefits or assessing an overpayment based on supposedly owning real property that puts them over the resource limit. Often the suspension letter does not even identify the alleged real property at issue. Too often, the data relied upon is inaccurate. And the burden rests upon extremely low income SSI recipients, who are either disabled and/or older, to prove that they do not own the real property to the satisfaction of the employees in their local SSA office. Worse, they may lose their benefits or face an offset for alleged overpayment during that appeal process.

“The way the Social Security Administration is using the Accurint reports leads to a Kafkaesque nightmare for SSI recipients falsely accused of owning real property. How are you supposed to prove you don’t own something, especially when you aren’t even told where the alleged property is?” said Sarah Mancini. National Consumer Law Center attorney who co-authored the report. “The inaccuracies in the LexisNexis reports are caused by lax name-only matching standards, which disproportionately harm immigrants and people of color. If both LexisNexis and the federal government adhered to the Fair Credit Reporting Act, it would help to prevent these tragedies.”

“Cutting off a person’s minimal source of income based on inaccurate, incomplete data, and without further investigation violates due process rights and is deeply unjust,” said Kate Lang, Justice in Aging senior staff attorney and co-author of the report. “If LexisNexis does not improve the accuracy of its data, the Social Security Administration must stop using it to make determinations regarding someone’s eligibility for benefits.”

The matching standards being used in Accurint reports are shockingly lax. A first and last name match is sufficient to include a piece of real property in the report. Lexis does not require a middle initial match, Social Security Number, or date of birth. People of color and immigrants are disproportionately impacted, as name-only matching results in even more inaccurate matches among these populations.

Additionally, by asserting that Accurint for Government is not a “consumer report” regulated by the Fair Credit Reporting Act (FCRA), Lexis is dodging requirements to  maintain reasonable standards for maximum possible accuracy. And SSA is avoiding the FCRA’s requirements to provide notices to consumers before taking any adverse action based on a consumer report. If the FCRA applies, consumers would have the right to dispute inaccurate information contained in the report and have it investigated and corrected by LexisNexis.

Recommendations

  • Lexis should acknowledge that Accurint for Government is a consumer report under the FCRA and should implement stricter matching standards in its algorithm to ensure maximum possible accuracy.
  • SSA should stop using Accurint until stricter matching criteria are put in place. Considering the severity of the harm and the inability of SSI recipients to disprove the allegations, the agency must insist on a higher standard of accuracy.
  • SSA should recognize that because the Accurint search is a consumer report, it must issue a notice of adverse action as required by the FCRA, informing consumers of their right to request a copy of the report and to dispute inaccurate information.
  • SSA should ensure that local offices properly protect recipients’ due process rights.
  • SSA should ensure that employees in local offices conduct an independent investigation, including oral and written communication with the SSI recipient as well as a human review of the real property records in question, before suspending benefits or taking any other adverse action.
  • SSA should translate the relevant notices, and LexisNexis should translate the Accurint report, into the top languages spoken by consumers who have limited proficiency in the English language.



Mismatched and Mistaken: How the Use of an Inaccurate Private Database Results In SSI Recipients Unjustly Losing Benefits

Potentially thousands of extremely low-income elderly and people with disabilities have had their Supplemental Security Income (SSI) benefits cut off erroneously, bringing many of them to the brink of homelessness. Lax matching standards in LexisNexis Accurint reports used by the Social Security Administration (SSA)  and a lack of independent investigations by SSA staff lead to improper terminations. Changes must be implemented to ensure due process rights for  SSI recipients. This National Consumer Law Center/Justice in Aging report  includes policy recommendations to rectify the problem and bring both parties into compliance with the Fair Credit Reporting Act.

 

 

 

 

 

Published April 14, 2021

©National Consumer Law Center, Inc

Background

Since 2018, the Social Security Administration (SSA) has used a private database from LexisNexis called Accurint for Government to determine whether SSI recipients had unreported real estate that could disqualify them from receiving SSI. The problem? Many of the LexisNexis reports are riddled with errors, and SSA is using potentially erroneous information to cut people off without conducting any independent investigation . The Accurint reports disproportionately impact people of color and immigrants due to use of lax name-only matching, and the SSA  is denying due process protections for SSI recipients by not providing independent investigations before recipients lose benefits.

Key Recommendations

  • LexisNexis and SSA should acknowledge that Accurint for Government is a consumer report.
  • LexisNexis should implement stricter matching standards to ensure maximum possible accuracy, and SSA should stop using Accurint until this occurs

Related NCLC Resources

Web

Publications




Federal COVID-19 Relief for Water & Sewer Bills

This blog is co-authored by Olivia Wein (National Consumer Law Center) and  Larry Levine (NRDC)

For many of us, the accelerating rollout of COVID-19 vaccines provides hope for a light at the end of the tunnel. But the vaccines are still in a race against time, with COVID-19 again resurging in many states.

Maintaining access to water and other essential utility services remains as vital as ever to safeguard public health, as the pandemic continues. A recent report by Duke University researchers found that, if utility disconnections had been barred nationwide from March through November 2020, COVID-19 infections rates could have been reduced by 8.7% and deaths by 14.8%.

But tens of millions of people are continuing to accumulate tens of billions of dollars of overdue utility bills. Water and other utility services already have been disconnected for at least hundreds of thousands families unable to pay these bills, with more at risk every day. The risk of disconnection disproportionately harms communities of color. According to research at Indiana University that looked at a nationally representative sample of households below 200% of the Federal Poverty Level, 20% of Black households and 28% of Hispanic households reported being unable to pay an energy bill between June and August 2020, compared to just 12% of white households.

The Biden Administration and Congress have not acted on urgent calls to ban water shutoffs during the COVID-19 pandemic. Only eight states have statewide water shutoff moratoria in place today. At least one of those states (Wisconsin) is set to end its moratorium on April 15, placing over 20,000 households at risk of shutoff. Some individual water utilities are continuing to suspend shutoffs, even after state bans expire, while some others never do shutoffs at all for non-payment. But in cities and towns all around the country – in Texas, Ohio, Indiana, South Carolina, Florida, Tennessee, Pennsylvania, North Carolina, Illinois, and more – utilities have resumed cutting off water when people can’t afford to pay.

When the remaining state or local moratoria are lifted, residential water customers who lose shutoff protections will face billions of dollars in arrears. In California and New York City alone, for example, residential water arrears total over $1.6 billion, with over 1.7 million households affected.* Unsurprisingly, when California examined its statewide data, low-income communities of color had disproportionately high levels of household water debt.

The good news is that the recent federal COVID-19 relief packages – including President Biden’s American Rescue Plan enacted in March 2021 – provide billions of dollars that can help low-income families struggling to pay their water and sewer bills.

These funds can help millions keep their water running and dig out from a mountain of utility debt, while helping utilities offset decreased revenue without raising rates. Most of the assistance is provided through new, emergency programs, although some is provided through pre-existing programs.

The National Consumer Law Center (NCLC) and NRDC have just published a new fact sheet summarizing six federal COVID-19 relief programs that are either dedicated to, or can be used for, low income water and wastewater assistance. The fact sheet provides a guide for advocates, utilities, and state and local officials who are seeking to help customers with past due and unaffordable water and sewer bills.

Where available, the fact sheet provides links to federal program webpages and funding allocations to state, territorial, Tribal, and local grantees. It also notes where federal agencies have not yet provided critical details, such as how the program funds will be allocated and how programs will be structured.

Most significantly, for the first time ever, Congress in December 2020 and March 2021 appropriated funds specifically for low-income water and wastewater assistance – a total of $1.138 billion for an emergency Low Income Household Water Assistance Program (LIHWAP). The U.S. Department of Health and Human Services (HHS) has not announced program rules or released funds to the states. The fact sheet describes what is currently known of the program and will be updated as HHS releases more information.

NCLC and NRDC have submitted recommendations to HHS on how to implement LIHWAP equitably and efficiently. We offered specific program design recommendations to deliver assistance to those with the greatest need; maximize public health benefits by using program funds to protect access to essential water service; ensure accountability for program spending by states and utilities; and generate data to evaluate the effectiveness of the program and determine how to improve upon it. States should heed the same recommendations as they set up their own programs to administer LIHWAP funds. (Allied organizations have also submitted similar recommendations to HHS, including a letter organized by frontline advocates that NRDC also joined.)

The fact sheet also describes five other relevant programs:

  • Emergency Rental Assistance ($46.6 billion) – In addition to helping pay rent, state and local governments may elect to use these funds to help low income tenants pay past due utility bills (up to 12 months of arrears) and current bills, including water and wastewater bills.
  • FEMA Emergency Food and Shelter Program ($400 million) – This pre-existing program funds local agencies to provide an array of emergency assistance, including a month of utility assistance to tenants at risk of eviction or homeowners at risk of foreclosure.
  • Homeowners Assistance Fund ($10 billion) – This foreclosure prevention programs includes assistance with utility bills (including water) as an eligible use of funds.
  • Coronavirus State and Local Fiscal Recovery Funds ($350 billion) – Each state and local government may use its share of these funds for a wide range of purposes, including backfilling lost government revenue (such as decreased collections from customers of municipal utilities), providing assistance to households experiencing adverse economic impacts of the COVID-19 emergency, and even “necessary investments in water [or] sewer…infrastructure.”
  • CARES Act – Some state and local governments still have funds remaining from the March 2020 CARES Act. Congress extended the deadline to spend these funds until the end of 2021. Various categories of CARES Act money can be used for low income water and wastewater assistance. Some state and local governments have already chosen to do so.

You can download the fact sheet here.  Check back for updates as more information becomes available.

 

* This combined total for New York City and California is likely a conservative estimate. In New York City, the numbers reported include only water and sewer accounts that are at least 180 days overdue; the total of all overdue water and sewer bills in New York City is certainly much higher. In California, the reported $1 billion in overdue residential bills includes about $600 million for customers of water utilities or combined water/sewer utilities, and about $400 million for customers who receive a combined bill for water and power from the same utility. However, the California data do not include arrears for customers of wastewater-only utilities.