NCL supports CFPB’s proposal to remove medical debt from credit reports

September 28, 2023

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

Washington, DC – The National Consumers League (NCL) supports the bold proposal from the Consumer Financial Protection Bureau (CFPB) to remove medical bills from Americans’ credit reports.

According to a CFPB report released in March 2022, $88 billion of outstanding medical bills are currently in collections—affecting one in five Americans. Medical debt constitutes a majority (57 percent) of all collections on credit reports.

“This proposal will help families financially recover from medical crises and prevent debt collectors from coercing people into paying bills they may not even owe,” said Sally Greenberg, CEO of the NCL. “It will ensure that creditors are not relying on data that is often plagued with inaccuracies and mistakes.”

Approximately 20 percent of Americans report having medical debt, according to the March 2022 report, but previous research by the CFPB shows that consumers with medical debt generally paid back their loans or bills at the same rate as consumers with higher credit scores.

If finalized, the CFPB proposal will do the following:

  • Remove medical bills from consumers’ credit reports: Consumer reporting companies would be prohibited from including medical debts and collection information on consumer reports that creditors use in making underwriting decisions.
  • Stop creditors from relying on medical bills for underwriting decisions: The proposal would narrow the 2005 exception and prohibit creditors from using medical collections information when evaluating borrowers’ credit applications.
  • Stop coercive collection practices: As unpaid medical bills would no longer appear on consumers’ credit reports used by creditors in making underwriting decisions, debt collectors would no longer be able to use the credit reporting system as leverage to pressure consumers into paying questionable debts.

Greenberg added, “Medical debt is not caused by profligate spending. Americans incur this debt because of emergencies or because they are uninsured or underinsured. We believe that this proposed rule will allow consumers weighed down by medical debt through no fault of their own and help them to restore their access to sustainable credit.”

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About the National Consumers League (NCL)
The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

 

What will happen to President Biden’s student debt forgiveness plan?

Sally Greenberg

By Sally Greenberg, Chief Executive Officer

Last week, I attended the oral argument in the Supreme Court challenging student debt forgiveness initiative launched by the Biden Administration. The states of Missouri, Nebraska and four others, along with two students, are challenging Biden’s proposal to forgive student loan debt for 40 million Americans.

During his campaign, President Biden promised to reduce the albatross of student debt burdening millions of young Americans through his Department of Education. His proposal only applies to federal loans and is narrowly tailored and means tested. The plaintiff states and students challenging the loan forgiveness plan are arguing that it exceeds federal law, and that “canceling hundreds of billions of dollars in student loans is a breathtaking assertion of power.” The administration countered that Education Secretary Miguel Cardona has the authority to forgive the debt under a 2003 law, the Higher Education Relief Opportunities for Students Act.

The debt forgiveness program would cancel up to $10,000 of debt for those who have federal student loans as long as they make under $125,000 or $250,000 for couples. Those getting Pell grants are eligible for an additional $10,000. Thus, 20 million students could see their debt totally wiped out; all told, it will cost taxpayers $430 billion.

Sitting in the courtroom, I was seeing the new members of the Supreme Court in action for the first time and that was fun. Each of the justices has their own distinct style. Some are far more engaged than others, like the newest member, Justice Katanji Brown Jackson, who fired away a series of questions to the AG from Missouri about whether the state had standing to challenge the law. Even conservative Justice Amy Coney Barrett questioned standing,  asking why those alleging injury weren’t plaintiffs in the case. Justices Sotomayer and Kagan also pressed the plaintiffs on both the broad language in the law and the standing problem.

Solicitor General Elizabeth B. Prelogar, whose argued the case for the Biden Department of Education, argued that the Department’s plan was exactly what Congress had in mind when it passed the 2003 law, giving the executive branch the power to … “waive or modify any statutory or regulatory provision.”  I Wiki’d Prelogar and learned some cool facts: she’s a Harvard Law grad who won Miss Idaho Teen USA of 1998!  She is fluent in Russian, and her father went to my alma mater, Antioch College in Yellow Springs, OH and oh yes, I was delighted to see that her dad served at one time as head of consumer protection for the North Carolina Attorney General.

I realize I’m not an unbiased observer, but I thought Prelogar had the better arguments, First, the law is broadly worded and gives a lot of latitude to the Executive Branch on student loan waivers. Second, the standing issue is a serious hurdle for the opponents. To challenge the loan forgiveness program, they need to show that they have suffered a specific, rather than generalized, injury that can be remedied by relief from the Court. Neither of the challengers can show direct harm.

The bottom line for the National Consumers League and the hundreds of groups that support this narrowly tailored loan forgiveness is that the $10,000- $20,000 debt for 40 million Americans can be crippling to families –the reality is that student debt prevents many young people from buying homes, starting families and getting on with their lives. We are therefore hoping against hope that the Supreme Court throws out this challenge and the student debt forgiveness proposal at last be implemented.

LifeSmarts announces partnership with FICO

During Financial Planning Month, LifeSmarts, the National Consumers League’s teen consumer education program, has introduced a new lesson focused on credit scores and establishing credit.

October 3, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, D.C.— The National Consumers League’s (NCL) youth consumer education program, LifeSmarts, kicked off its 29th year in September 2022. Through LifeSmarts, students learn about real-life consumer issues and compete to win prizes and scholarships at the National LifeSmarts Championship in April each year. October is both Financial Planning Month and the month in which LifeSmarts students focus on personal finance. To kick off the month, NCL is proud to announce a new lesson about credit scores and how to establish credit, made possible through support from FICO and the FICO® Score, the credit score used by 90% of top lenders.

Beginning today, the 125,000 students and 3,000 educators from across the country who participate in LifeSmarts will have access to lessons and activities from FICO’s new Score A Better Future (SABF) Fundamentals program, a credit education curriculum developed for high school students. These lessons will provide students with a firm understanding of credit scores and how to establish and maintain good credit histories throughout their lives.

Thanks to the FICO SABF Fundamentals program, LifeSmarts has created a new lesson on credit scores, with questions that will be featured throughout competition, culminating with the National LifeSmarts Championship in April 2023. New lessons and competition questions are being integrated into the 2022-23 program year.

“We are pleased to work with FICO to help our students and educators learn more about credit reporting and credit scores,” said National Program Director Lisa Hertzberg. “LifeSmarts gives students the skills they need to succeed as adults, and we see students applying what they learn immediately at home and in their communities. We are thrilled to offer this focus into a critical aspect of personal finance, and we look forward to rolling out new resources for educators and opportunities for student participants.”

LifeSmarts is active in all states and the District of Columbia, where NCL is headquartered.

“We are excited to have the opportunity to focus on personal finance for consumers at this age when they are beginning to make decisions for themselves and influencing decisions made by their parents,” said Sally Greenberg, executive director of NCL. “Too often, traditional high school curriculum fails to teach students vital information to become successful adults, and LifeSmarts helps to close that gap.”

“Financial literacy is vital because it’s the foundation to helping students make smart decisions when they navigate their financial futures,” said Joanne Gaskin, vice president of Scores and Analytics at FICO. “Our team created Score A Better Future Fundamentals program to provide valuable free credit education that readies young adults to confidently take control of their financial health.”

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About LifeSmarts

The goal of the LifeSmarts program is to create consumer-savvy young people who will be better equipped for adult life in today’s complex, global marketplace. Visit LifeSmarts.org for more information. LifeSmarts: Learn it. Live it.

About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit https://nclnet.org.

About FICO

FICO is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability, and customer satisfaction.

Learn more at http://www.fico.com.

National Consumers League joins LGBTQ+ coalitions to address credit issues for transgender and nonbinary community

March 17, 2022

Media contact: National Consumers League –  Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, DC— The National Consumers League has joined efforts with LGBTQ, consumer, and legal advocacy groups to address credit-related problems encountered by transgender and nonbinary consumers.

The letter  to the major credit reporting companies, notes that transgender and nonbinary consumers face a myriad of issues after they change their names — with serious consequences for their financial and personal lives. The transgender and nonbinary community have reported to the Consumer Financial Protection Bureau that they cannot get Experian, Equifax and TransUnion to correct their credit reports.

Some issues reported are that their credit report fragments into two or more unconnected files upon their name change or are not there at all. Many times their credit scores drop by hundreds of points, precluding them from accessing banking services, mortgages, auto financing, employment, and rental housing. Transgender and nonbinary consumers find that even when they were able to contact and persuade a customer service representative at one of the Big Three credit bureaus to manually fix their report, a new upload of data reverts their credit histories back to fragmented or incomplete files. Some have even reported serious fallout after their credit histories reflected their “deadname” or former name, thereby outing them as transgender to potential employers, rental agents, car dealerships, or financial institutions.

The letter asks the credit reporting industry to:

  • Utilize consumers’ full 9-digit Social Security numbers in matching algorithms to ensure credit information is associated with the correct credit file.
  • Facilitate name changes by having clear procedures to update a consumer’s name on their credit report when presented with a legal name change order and ensure that staff are sufficiently trained in those procedures and are able to provide culturally competent service to transgender and nonbinary consumers.
  • Reduce the burden on transgender and nonbinary consumers to submit name-change documentation to each credit reporting agency by instituting a “one-stop” system that allows a consumer to submit a single request to have the legal name on their report updated, and ensures the request is communicated to all consumer reporting agencies.
  • Prevent the occurrence and recurrence of fragmented credit files by creating procedures to detect when a consumer changes their legal name with a creditor, to associate the new name with their credit file, and to consolidate a consumer’s credit information in their current and previous names in a single credit file — as the industry presently does when cisgender women and other consumers change their last names.
  • Prevent the disclosure of transgender and nonbinary consumers’ deadnames to landlords, employers, and underwriters by disclosing only a consumer’s current legal name in reports provided to credit report users.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

NCL, H&R Block partner to help consumers prepare for 2022 tax season

By Eden Iscil, Public Policy Associate

This week, NCL partnered with H&R Block to provide a free webinar on recent changes and other items to be aware of as we enter tax filing season. The event included a short presentation by Manuel Dominguez (Tax Agency Analyst at H&R Block) outlining the biggest changes tax filers should know, followed by a Q&A session with the panel of tax experts. Moderater NCL’s Vice President of Public Policy, Telecommunications, and Fraud, John Breyault, was joined by panelists Joanna Ain (Associate Director at Prosperity Now), Dominguez, and Garrett Watson (Senior Policy Analyst at the Tax Foundation). If you missed it, you can watch the event on NCL’s YouTube channel here. 

One of the biggest takeaways from the discussion is this: your tax return could look very different from what you may expect due to changes stemming from the 2021 American Rescue Plan (President Biden’s COVID relief bill). For example, parents who received advance Child Tax Credit (CTC) payments throughout 2021, could see a smaller refund than previous years since part of that credit was given in monthly payments throughout the year. Additionally, consumers who were eligible but did not receive an Economic Impact Payment (a.k.a stimulus checks) could see larger-than-expected refunds. 

Other credits that have seen changes include the Child and Dependent Care Credit, with allowable expenses increased to $8,000 for one dependent and $16,000 for two or more dependents. In addition, the Earned Income Tax Credit (EITC) saw an increase in the credit amount and income thresholds for taxpayers with no qualifying children as well as a “loopback election” which allows filers to use either 2019 or 2021 income for the purposes of claiming the EITC (in order to get the highest credit value). 

Another change that could affect filings involves charitable contributions. Normally, filers who choose the standard deduction cannot claim a deduction for charitable contributions. But this year, single filers can claim a deduction of up to $300 for cash contributions to qualifying charitable entities ($600 for joint filers). 

Given the new assistance provided by the federal government, the IRS will be sending new tax documents that filers need to have available when filing. Letter 6419 relates to any advance CTC payments received in 2021. Letter 6475 relates to the third Economic Impact Payment (stimulus check) which went out under President Biden. These documents are important to keep as they will ensure the information you input when filing taxes matches IRS data; if there are discrepancies, your tax return may be delayed.  

For consumers who do not receive a Letter 6419 regarding advance CTC payments, the CTC Update Portal can help. Filers who do not receive a Letter 6475 regarding the third stimulus check should check their eligibility for the Economic Impact Payment and its correlated tax credit here 

Confused? You’re not alone! 

Fortunately, there are government-sponsored tax preparation services available for free. The Volunteer Income Tax Assistance (VITA) program offers help to people who make less than $57,000, filers with disabilities, and individuals with limited English language knowledge. Additionally, the Tax Counseling for the Elderly (TCE) program is aimed at people 60 and older, with specialization in pensions and other retirement-related issues.  

Lastly, taking the following steps can ensure that you receive your tax return as quickly as possible. First, filing your taxes online is much quicker than filing your taxes by physical mail. Because of backlogs in processing returns from 2021, returns mailed to the IRS will almost certainly result in slower-than-normal refunds being issued. Filing as early in tax season as possible is a great way to reduce the risk of tax identity fraud. Second, keeping those CTC and stimulus check letters (Letter 6419 and Letter 6475, respectively) as well as any previous notices given by the IRS will help avoid any errors and discrepancies which would otherwise cause a lag. Third, using direct deposit to receive refunds can save time by not relying on physical checks sent through the U.S. Mail. 

 If you would like to hear our panelists cover what you should know before filing your taxes in their own words, video of the full webinar can be found here 

Capital One eliminates predatory overdraft charges

By Sally Greenberg, NCL Executive Director

Low- and middle-income consumers suffer serious economic harm when they are forced to pay predatory overdraft fees. These fees are triggered when consumers charge more to their bank account — either on a debit card or by writing a check — than the funds existing to cover the charge. These can mean that a $5 charge —when there isn’t enough money in the account to cover it — costs a consumer more like $40 due to an overdraft fee of $35. And if the customer makes other charges not covered by the balance, each one of them can add a $35 overdraft fee.

Some good news, though, came recently from the CEO of Capital One, Rich Fairbanks. He announced that the company will stop charging these harsh fees and return “simplicity and humanity” to banking.

It used to be that covering an overage was a courtesy extended to bank customers at no cost. Sadly, that changed during the 1990s and 2000s, when overdraft fees became a profit center. And the profits are kind of shocking: $15.5 billion in 2019 for banks and credit unions on overdraft fees alone, according to the Consumer Financial Protection Bureau. For some financial institutions, these fees represent more than half of their profits. Reforms are badly needed.

A recent Washington Post editorial identified overdraft best practices:

  • Don’t charge more than one fee per overdraft
  • Provide at least a day grace period
  • Notify customers with a text or email alert about the overdraft
  • Limit the number of fees per year
  • Don’t assess fees at all if the overdraft is under $50

It’s just plain wrong for any industry to rack up big returns on the backs of low- or middle-income consumers. That’s known as a predatory practice for good reason. The National Consumers League hopes the example set by Capital One — to do away with harsh overdraft fees — will be a model for the industry. Banks are entitled to a fair profit, but overdraft fees are clearly a predatory practice. We applaud Capitol One for taking the first step and urge other industry members to follow suit; if nothing else, we hope the industry will move on its own toward the “best practices” playbook outlined above.

Addendum: As of this writing, Ally Bank, PNC, Santander, J.P. Morgan Chase, and Capital One Banks have either eliminated or reduced overdraft fees. We are very pleased to learn of these very important developments, which will greatly reduce the burden of overdrafts, particularly on low-income consumers. We thank these banks for taking important steps to reduce crippling charges for overdrafts

NCL to Congress: Strengthen fraud protections for users of P2P payment apps

August 3, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242

Washington, DC—With fraud linked to the COVID-19 pandemic at record levels, the National Consumers League (NCL) today cited the use of peer-to-peer (P2P) payment apps by scammers as a significant contributor to the problem. In testimony before the Senate’s Financial Institutions and Consumer Protection Subcommittee, NCL Vice President John Breyault urged Congress to extend key consumer fraud protections to cover victims of scams who are tricked into sending money via P2P apps.

According to a 2020 Nerdwallet survey, roughly 4 in 5 Americans (79 percent) have used mobile payment apps. The explosive growth of P2P apps has accelerated significantly during the pandemic. Research firm Insider Intelligence estimated that the transaction volume for P2P payments will increase by roughly 37% in 2021, with total annual transaction volume over P2P apps expected to surpass $1 trillion by 2023.

“The same factors that are fueling the rapid growth of P2P payment platforms during the pandemic – low-cost, nearly instantaneous payments made via a mobile app – have made P2P a payment method of choice for scammers,” said Breyault. “If these platforms are making the decision to skew their services towards speed and convenience at the expense of safety and protection, then they must take responsibility for those choices.”

In 2020, the Federal Trade Commission received nearly 62,000 complaints from consumers who sent money to fraudsters via payment apps or similar services. Agencies such as the Consumer Financial Protection Bureau and organizations like the Better Business Bureau have seen similar complaint spikes. Data from security firms Sift and Chargeback suggest that fraud rates on P2P apps may be three to four times higher than on credit or debit cards.

To address this fraud, NCL called on Congress to enact legislation that extends the fraud protections debit and credit card users rely on to users of P2P payment apps. In addition, NCL urged Congress to pass new laws to strengthen consumer protections, including requiring P2P platforms to display information about scams targeting P2P apps and maintain toll-free customer support lines.

“The lack of consumer protections for users of P2P payment platforms must not be ignored,” said Breyault. “It is clear that absent regulatory incentives, effective self-regulation by the P2P services will be stymied in the name of protecting transaction volume growth. Congress must act.”

To read NCL’s testimony , click here.

About the National Consumers League

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

National Consumers League applauds House repeal of national banking regulator’s Predatory Lending Rule; Urging Congress to act soon on interest rate cap

June 29, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org(412) 945-3242

Washington, DC—The National Consumers League (NCL) applauds the House for voting for the Congressional Review Act resolution to overturn the OCC’s “fake lender” rule, which allowed predatory lenders to evade state interest rate laws by putting a bank’s name on the paperwork. In a 218-208 bipartisan vote, The U.S. House of Representatives voted to approve SJ Res 15, a resolution under the Congressional Review Act (CRA), which was introduced by Senators Chris Van Hollen (D-MD) and Sherrod Brown (D-OH). A companion resolution was introduced by Rep. “Chuy” García (D-IL). Now that both chambers of Congress have approved this resolution, we look forward to President Biden signing the bill into law.

“We applaud the House’s bipartisan vote to repeal this harmful rule which facilitates rent-a-bank schemes,” said NCL’s Public Policy Manager Sarah Robinson. “This is an important step in preventing predatory lenders from targeting vulnerable communities. We urge President Biden to quickly sign this bill into law to protect consumers.”

NCL was part of a broad coalition of more than 400 organizations representing all 50 states and the District of Columbia calling on Congress to overturn the “fake lender” rule, which threatens to “unleash predatory lending in all fifty states.”

The rushed “fake lender” rule took effect in December and was issued by the Office of the Comptroller of the Currency (OCC). The rule protected “rent-a-bank” schemes whereby predatory lenders (the true lender) launder their loans through a few rogue banks (the fake lender), which are exempt from state interest rate caps. The rule had overridden 200 years’ worth of case law allowing courts to see through usury law evasions to the truth, and replaced it with a pro-evasion rule that looked only at the fine print on the loan agreement.

broad, bipartisan cross-section of experts and officials have called on Congress to repeal the fake lender rule. They include a bipartisan group of 25 state attorneys general, concerned the rule would effectively gut their state usury laws. The Conference of State Bank Supervisors, National Association of Consumer Credit Administrators, National Association of Federally-Insured Credit Unions, Credit Union National Association, Military Officers Association of America, Faith for Just Lending, and many other groups also support Congress overturning the rule.

According to national polling, two-thirds of voters (66%) are concerned about the ability of high-cost lenders to arrange loans through banks at rates higher than the state laws allow.

This victory will stop predatory lenders from charging 100% to 200% APR and make all lenders adhere to state laws.

NCL now urges the Congress to take up the Veterans and Consumers Fair Credit Actand cap interest rates nationally on all consumer loans, including payday and car title loans. It is crucial that the Congress take up this bill that was introduced by Rep. Garcíaand Rep. Glenn Grothman in the last Congress. This is a critical piece of legislation that will protect all consumers from predatory lending. We look forward to working with Congress and our state delegation to pass this important piece of legislation.

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About the National Consumers League

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

The boom in e-commerce has been a boon for fraudsters

The COVID-19 pandemic has greatly accelerated the growth of e-commerce…

NCL joins advocates in applauding Senate for repealing the national banking regulator’s predatory lending rule, urging the House to act soon

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org(412) 945-3242 or Taun Sterling, tauns@nclnet.org(202) 207-2832

Washington, DC—The National Consumers League (NCL) applauds the Senate for voting to overturn the OCC’s “fake lender” rule, which allows predatory lenders to evade state interest rate laws by putting a bank’s name on the paperwork. In a 52 – 47 bipartisan vote this week, the U.S. Senate voted to approve S.J. Res. 15, a resolution under the Congressional Review Act (CRA), which was introduced by Senators Chris Van Hollen (D-MD) and Sherrod Brown (D-OH). Rep. “Chuy” García introduced a parallel resolution, H.J. Res. 35, in the U.S. House of Representatives. Now that the Senate has approved the resolution, the House needs to take swift action to stop the ongoing harm.

“We applaud this bipartisan rejection of rent-a-bank schemes,” said Sarah Robinson, NCL’s Public Policy Manager. “As consumers and small businesses look to rebuild from the devastation of the coronavirus pandemic, they must be protected from predatory lending. We now urge the House to move with urgency to prevent this rule from continuing to do harm.”

NCL was part of a broad coalition of more than 375 organizations representing all 50 states and the District of Columbia calling on Congress to overturn the “fake lender” rule, which threatens to harm consumers nationwide.

The rushed “fake lender” rule took effect in December and was issued by the Office of the Comptroller of the Currency (OCC). The rule protects “rent-a-bank” schemes whereby predatory lenders (the true lender) launder their loans through a few rogue banks (the fake lender), which are exempt from state interest rate caps. The rule overrides 200 years’ worth of case law allowing courts to see through usury law evasions to the truth and replaces it with a pro-evasion rule that looks only at the fine print on the loan agreement. Predatory lenders charging 100 percent to 200 percent APR are already starting to push high-cost installment loans across the country that exceed the rates permitted under states’ laws.

A broad, bipartisan cross-section of experts and officials have called on Congress to repeal the fake lender rule. They include a bipartisan group of 25 state attorneys general, concerned the rule would effectively gut their state usury laws. The Conference of State Bank Supervisors, National Association of Consumer Credit Administrators, National Association of Federally-Insured Credit Unions, and many other groups also support Congress overturning the rule.

According to national polling, two-thirds of voters (66 percent) are concerned about the ability of high-cost lenders to arrange loans through banks at rates higher than the state laws allowed.

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About the National Consumers League

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.