FTC calls Sprint on $2.9 million risk-based pricing violation

By: Lesley Fair

Two people walk into a deli and both order a pastrami on rye. When the check arrives, one is charged $8. The other is surprised to get a bill for $15.99.

That’s not the start of an old Henny Youngman joke. It’s an analogy that raises some of the issues in the FTC’s proposed $2.95 million settlement with Sprint for allegedly charging customers with lower credit scores a monthly fee without giving them the proper up-front notice required by law.

The FTC’s lawsuit centers on mobile service provider Sprint’s Account Spending Limit Program. Under the program, consumers with lower credit scores were charged a monthly fee of $7.99 on top of what they already had to pay for cell phone and data service. But here’s the thing: Many consumers didn’t know they had been “enrolled” in the program and weren’t given mandatory information that would have made it possible for them to do meaningful comparison-shopping before they were locked in. The FTC says that by tacking that extra $7.99 fee onto consumers' monthly bills without making required disclosures, Sprint violated the Fair Credit Reporting Act and its Risk-Based Pricing Rule.

Because Sprint bills consumers for services after the fact, the company is covered by the Risk-Based Pricing Rule. Under the Rule, if consumers are offered service on less favorable terms based on their credit report or credit score, the company has to inform them of that fact by giving them what the Rule calls a risk-based pricing notice.

But according to the complaint, in many cases Sprint failed to provide customers it placed in its Account Spending Limit Program with all of the required disclosures. The FTC says Sprint’s notices omitted key information necessary for consumers to determine if their lower credit scores were based on errors in their consumer reports. That’s a particularly important consideration, given FTC studies showing that credit reports often contain mistakes that can have a major impact on what people have to pay for things like cell phone service.

Sprint's timing raised concerns, too. The complaint alleges that Sprint often gave consumers the required notices too late for them to shop around for a better deal without having to cough up a hefty early termination fee.

In addition to a $2.95 million civil penalty, the proposed settlement requires Sprint to comply with the Risk-Based Pricing Rule. But that’s not all. From here on in, Sprint will have to give customers the required notice – this time, with complete information – within five days of signing up for Sprint service or by a date that gives them the ability to avoid recurring charges like those in the Account Spending Limit program. Sprint also has to send corrected risk-based pricing notices to consumers who received incomplete notices from the company.

Do your company’s practices put you at risk for a Risk-Based Pricing Rule violation? One important compliance tip: Make sure your notices give consumers all the information required by law. Read Using Consumer Reports for Credit Decisions: What to Know About Adverse Action and Risk-Based Pricing Notices for guidance.


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FTC and Federal, State and Local Law Enforcement Partners Announce Nationwide Crackdown Against Abusive Debt Collectors

Authorities Announce 30 New Actions Targeting Illegal Practices Such as Phony Debt Collection, Threats of Arrest & Wage Garnishment

The Federal Trade Commission and other law enforcement authorities around the country announced the first coordinated federal-state enforcement initiative targeting deceptive and abusive debt collection practices. This nationwide crackdown encompasses 30 new law enforcement actions by federal, state, and local law enforcement authorities against collectors who use illegal tactics such as harassing phone calls and false threats of litigation, arrest, and wage garnishment. The cases announced today bring to 115 the total number of actions taken so far this year by the more than 70 law enforcement partners in the Operation Collection Protection initiative.
Some of these actions allege that collectors knowingly attempted to collect so-called phantom debts – phony debts that consumers do not actually owe. The illegal practices targeted by authorities also include the failure of some collectors to give consumers legally required disclosures and notices, or to follow state and local licensing requirements.

“Being in debt is stressful enough for many Americans without also being subjected to intimidation and false threats,” FTC Chairwoman Edith Ramirez said. “Debtors have certain rights and rogue collectors that step outside the law will face the consequences of illegal behavior.”

Illinois Attorney General Lisa Madigan said, “My office receives thousands of calls and complaints each year from consumers who are victims of illegal debt collection tactics. Through our partnership with the FTC and states across the country, we are putting scam operations out of business and protecting consumers from abusive practices by legitimate creditors.”
Minnesota Commerce Commissioner Mike Rothman added, “Illegal and abusive tactics by debt collectors are a nationwide problem that requires a nationwide response. By working together in this new federal-state collaboration, we are joining our forces to stop these abusive practices and protect the public.”
As part of the initiative, the FTC announced five new enforcement actions against debt collectors engaged in allegedly illegal practices. The FTC has asked federal courts to halt three abusive debt collection operations. One of the complaints has been filed under seal, and so the Commission cannot yet disclose details of that case. Two other operations have agreed to settle Commission charges:
BAM Financial: The FTC has alleged that the defendants extracted payments from consumers through intimidation, lies and other unlawful tactics. According to the FTC’s complaint, the defendants bought consumer debts and collected payment on their own behalf by threatening consumers with lawsuits, wage garnishment and arrest, and by impersonating attorneys or process servers. They also unlawfully disclosed debts to, or harassed, third parties, failed to identify themselves as debt collectors, and failed to notify consumers of their right to receive verification of the purported debts.
In one instance, the defendants falsely told a consumer’s 84 year-old mother they had a warrant for her daughter’s arrest, and later told the consumer they represented a bounty hunter and would have the sheriff serve her with process. The defendants falsely told another consumer that she would not be allowed to see her children, and that they would garnish her wages and report her to the Internal Revenue Service if she did not pay.
The Commission vote authorizing the staff to file the complaint was 4-0. The U.S. District Court for the Central District of California issued a temporary restraining order against the BAM Financial defendants on October 21, 2015, halting their operations.
Delaware Solutions: In a joint action by the FTC and the Attorney General of the State of New York, the Delaware Solutions defendants are charged with attempting to collect on debts they knew were bogus. The defendants bought payday loans supposedly owed to a company that repeatedly told them to stop collection efforts because the debts were invalid, and ignored consumers’ evidence that they had never authorized a payday loan.
According to the complaint, the defendants also failed to identify themselves to consumers as debt collectors, falsely portrayed themselves as process servers or attorneys, and falsely threatened arrest or litigation. The defendants also unlawfully disclosed consumers’ debts to third parties in an attempt to embarrass the consumers into paying them.
The Commission vote authorizing the staff to file the complaint was 4-0. The U.S. District Court for the Western District of New York issued a temporary restraining order against the Delaware Solutions defendants on October 6, 2015, halting their operations. This is the seventh case against an abusive Buffalo debt collection enterprise that the FTC has filed in the last two years, four of which were filed jointly with the New York Attorney General’s office.
K.I.P., LLC: Under a settlement with the FTC and the Illinois Attorney General, a married couple who ran a phantom debt collection scheme based in Aurora, Illinois, have agreed to a $6.4 million judgment, and a ban on working in any debt collection business.
In April 2015, the FTC and the Illinois Attorney General charged K.I.P. LLC, and Charles and Chantelle Dickey, with threatening and intimidating consumers to pay payday loan debts they either did not owe, or did not owe to the defendants. The U.S. District Court for the Northern District of Illinois, Eastern Division subsequently halted the operation and froze the defendants’ assets pending litigation.
According to the complaint, the defendants used a host of business names to target consumers who obtained or applied for payday or other short-term loans. Claiming those loans were delinquent, they threatened to garnish consumers’ wages, suspend or revoke their driver’s licenses, have them arrested or imprisoned, or sue those who did not pay. Many consumers paid, even though they may not have owed the debts, because they believed the defendants would follow through on their threats or because they simply wanted to end the harassment.
The proposed stipulated final order also prohibits the defendants from misrepresenting financial products and services, profiting from customers’ personal information, and failing to dispose of such information properly. It imposes a $6,403,781 judgment, including proceeds from the sale of a car and the turnover of any assets held by third parties.
The Commission vote approving the filing of the proposed stipulated final order was 4-0. The proposed order is subject to approval by the U.S. District Court for the Northern District of Illinois, Eastern Division.
National Check Registry: The operators of a debt collection scheme agreed to a ban on participating in any debt collection business to settle charges brought by the FTC and the New York Attorney General’s Office in June 2014 that the defendants used lies and false threats to collect millions of dollars from consumers.
The settlement order prohibits the defendants from misrepresenting material facts about any financial-related product or service, including lending, credit repair, debt relief, and mortgage assistance relief services, and profiting from customers’ personal information. One of the defendants, Joseph Bella, will pay $112,000 and surrender certain bank accounts, two cars and two boats.
The Commission vote authorizing the staff to file the proposed stipulated final order was 5-0. The U.S. District Court for the Western District of New York entered the order on October 16, 2015.
The orders involving K.I.P., LLC and National Check Registry impose millions of dollars in judgments, include strong injunctive relief and monitoring provisions, and ban the defendants from working in the debt collection industry for life. With the new settlements, the FTC has now secured final judgments in seven cases so far in 2015, placing 33 defendants under strict federal court orders, securing over $88 million in judgments, and banning 24 defendants from working in debt collection.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge.
To learn more, read Facing Debt Collection? Know Your Rights and Fake Debt Collectors.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

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Their "Debt Collection" Days Are Over!

by 

Amy Hebert

Consumer Education Specialist, FTC

Calling people and pushing them to pay debts they don’t really owe?

Posing as law enforcement and fake government agencies like the “Federal Crime Unit of the Department of Justice”?

Threatening to sue or arrest people — or tell their family and employers about a debt?

Reciting people’s Social Security and bank account numbers to seem legit?

Yup, this fake debt collection scheme did it all, illegally collecting more than $5.2 million in fake payday loan debts.
Today the FTC announced that under a settlement with the agency, defendant Kirit Patel and his company Broadway Global Master, which processed payments for the scheme, will be banned from the debt collection business, and money recovered will be used for refunds. Patel also has pleaded guilty to the real Department of Justice on charges of criminal mail and wire fraud.

So how can you tell if you’re being targeted by a Fake Debt Collector? A caller may be a fake debt collector if:

• you don’t recognize the debt.
• you can’t get a mailing address or phone number for the collector.
• you’re asked for personal financial or sensitive information.
• you’re threatened with arrest or told you’ll be reported to a law enforcement agency.

You have rights when it comes to debt collection. 

Tell the caller that you won’t discuss any debt until you get a written "validation notice," which has to include the amount of the debt, the name of the creditor you owe, and your rights under the federal Fair Debt Collection Practices Act.

If the debt is legitimate — but you think the collector may not be — contact your creditor about the calls. Share the information you have about the suspicious calls and find out who, if anyone, the creditor has authorized to collect the debt. If it doesn’t check out, report the call to the FTC and your state Attorney General's office.

Link to Original Article HERE.

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Reluctant To Be Rude

Great article by

Amy Hebert,

Consumer Education Specialist, FTC

Respectfulness and politeness — they’re valued in many close-knit communities. But when you’re dealing with a scammer, those values can backfire, as we’ve heard during our ongoing effort to fight fraud in every community. Scammers try to take advantage of your politeness to get you to hand over money or personal information.

Here are some situations when it would be just fine to interrupt, hang up, and not give a caller the time of day:
1. They want personal information. Never give your personal or financial information to someone who calls you unexpectedly. If someone claims they are from a government agency or organization, find the number for the agency yourself and call to verify their claims. If you have already given someone your financial information, call your bank or credit card company to stop any transactions.
2. They want you to send money right away. If someone calls and asks you to wire money — like on MoneyGram or Western Union — or buy prepaid debit cards — like Green Dot and others — stop. That’s a sure sign of a scam. Even if the caller says you won a prize, you owe a fee, or your grandchild is in trouble, talk to someone you trust before you pay anybody your hard-earned money.
3. They keep talking. The more questions they ask, the more likely they are to get personal information from you. If someone won’t take no for an answer, just hang up.
4. They’re threatening you. Government agencies won’t call and threaten to arrest you. Debt collectors can’t threaten you. If a caller starts threatening you, it’s time to hang up. If you’re concerned about your safety, call your local police.

Read the complete article from the Federal Trade Commission here: http://www.consumer.ftc.gov/blog/reluctant-be-rude?utm_source=govdelivery

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Fast Credit Score Fixes - To Get The Best Mortgage Rates !!!

This article leans heavily on: Personal Finance 101: Know Your Credit Score

Free Credit Score - See yours at CreditReport.com!


With homes at near-bottom prices and mortgage rates at historic lows, a lot of consumers are jockeying to get into the homeowners market or to refinance their standing loan.

But there's one catch:

Getting approved for today's best mortgage products relies mostly on your credit score.

In addition, mortgage lenders are digging deeper than ever into homebuyers' credit reports, studying not only credit-card spending habits but ordinary bill-paying consistency and debt-to-income ratios.

Here is how to quickly and efficiently address the credit issues that mortgage lenders care about the most.

Typically, a credit score of 720 or above is the bar for qualifying for the best mortgage rates.

Many borrowers with lower scores may think there's nothing they can do to improve their situation, especially in the short-term, but that's a myth.

While there's no quick-fix magic to erase glaring blemishes, a borrower -- even with high levels of debt and a history of delinquent payments -- can start improving his or her score in immediate and dramatic ways.

First, it's important to understand that a credit report is a snapshot of your creditworthiness at the one particular moment mortgage lenders pull the report.

Scores can fluctuate a lot because most lenders update the credit bureaus on a monthly basis. But the amount the scores change is a little more complicated and depends on a series of factors, from your amount of available credit to paying your bills on time to the length of your credit history.

As when being photographed for a portrait, you want to look your best when lenders take a picture of your credit profile while still conveying an accurate record.


See your credit score: CLICK HERE


To help you see a bounce in your score and land a step closer to obtaining an affordable home mortgage, AOL Real Estate talked to some financial experts to find out some fast ways for consumers to address a less-than-desirable credit score and to start seeing results:


Tip No. 1: Pull your credit score

Before shopping for a home, you need to know your exact credit score and determine whether any wrong information has affected it.

According to Joel Ohman, a certified financial planner, around one-third of consumers have errors on their credit report and simply by pulling it, you can rectify those mistakes.

Ohman says depending on the flub, this could cause your score to spring 25 to 50 points.

You should see this adjustment reflected in your credit score before you apply for a home loan.

Cunningham advises allowing at least 3 months time to check your credit report before applying for a mortgage.

This allows for the time it takes to deal with the credit bureau, provide documentation, and then to see your score updated.

Consider subscribing to an online credit-score monitoring service for at least six months before you start applying for mortgages.

This will give you a crystal-clear sense of how different actions affect your score and how quickly your repair efforts register.

One big surprise: Large credit-card balances can hurt your credit score temporarily, even if you pay them off on time.


Tip No. 2: Pay down your debt

Before you take on a mortgage, you need to show lenders you can manage credit responsibly.

About 30 percent of your credit score is based on your available credit, which can be figured by taking the total of your credit card balances divided by your total credit card limits.

As you start paying down your debt and continue to do so over time, you are going to see your credit scores bounce.

But if you are saving up for a bigger down payment or to do a cash-in refinance, you may not have the spare dollars to completely wash away your liabilities.

If this is the case, then try to get as close as possible to the recommended level.

Typically experts suggest consumers use 20 percent or less of their available credit.


Tip No. 3: Target credit accounts that matter most to lenders.

Lenders are scrutinizing credit reports more carefully than ever, so it's important to target the accounts they'll be most concerned about.

Major credit cards are by far the most important.

But be sure not to forget about store credit cards, even those you rarely use.

It's easy to forget to pay a bill on a card you only use once in a while, but mortgage lenders will expect them to be up-to-date before moving forward.

Also, expect payments for doctor's fees, utility bills, and home equity lines of credit to be scrutinized, as well.


Tip No. 4: Piggy-back on good credit -- married couples can start anew when buying a home.

Another strategy to enhance your scores is to utilize the good credit of a significant other, a relative, or a very good friend, says Cunningham.

Get added to a credit card as a joint account holder, and as payments continue to be made on time, your credit scores will increase.

For example, if a husband with good credit adds his wife to his account, his history will be imported into her credit file and in effect, raise her score.

Cunningham says another way is to use a secure credit card, a credit line that requires a cash collateral deposit. This means you put a $1,000 in cash down for a credit card and then you can charge up to exactly that amount on the card.

The purpose is to have the issuing lender reward you for using the card and report back to the credit agencies. Just confirm before arranging for the secure card that your lender is going to report your payment history to the credit bureau.


Tip No. 5: Attempt to increase your existing credit limits, but don't open new accounts.

Most mortgage brokers say you should stay financially static during the application process and avoid starting an new credit lines.

But your score can actually benefit from increasing your credit limits, part of the equation that determines your percentage of available credit.

If you have been a responsible owner of a credit card, you may consider asking the issuer if they will raise your credit card limit.

However, this should not be confused with opening new credit cards and lines of credit, which could have an adverse effect on your credit.

"Someone opening five or six credit cards at one time may have a budget problem," says Ohman. "In the short term, it could be seen as a negative."

Opening up credit -- such as applying for multiple credit cards, a car lease, store cards-- around the time you apply for a home loan can compromise your position as a borrower.


Tip No. 6: DO NOT keep paying bills LATE -- especially your mortgage payment.

Forgo the defeatist mentality, because starting to pay your bills on time can start to correct your dismal credit score. About 35 percent of your credit score is based on whether you pay your bills on time. You just have to meet the minimum by the due date.

For those who are already homeowners, paying bills on time also includes your current mortgage payment. Scott Gamm, founder of a money management website, says that bankruptcies and foreclosures can cause your credit score to drop 150 to 200 points and that this discrepancy will be a fixture on your credit report for the next seven to ten years.


Robert's response: "I will NEVER agree that it will take 7 to 10 years for someone to learn to be responsible with their credit...

Think about it...

How long would it take YOU to learn any major lesson? one or two years... (maybe three...) ???

Why does the system require 7 to 10 years for an item to be removed from someone's credit report? People get out of jail after committing major crimes in less time than that.


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Four Myths About Your Credit History

From Equifax's own: Robin Holland


If you don’t learn how to understand your credit, it will be a lifelong problem.

You most likeley know that you should be checking your credit report at least once a year.

Do you understand what’s included in your credit report and how to read it?

Do you know what your credit score means?

When I work with consumers or lead workshops on financial literacy and credit, I’m always amazed at the misconceptions about credit histories, credit scores, and credit-reporting agencies.

Here are four myths about your credit history that I hear people proclaim frequently as truth:


Myth #1: The credit-reporting agency is responsible for my debt (or credit) rejection.

The credit report is an important part of the decision to grant you credit or not, but it’s not the only one.

Each lender or creditor has a set of criteria it uses to determine whether or not you qualify for that credit.

Think about it: It’s much easier to get a gas card than a credit card or a mortgage.

That’s because the requirements to qualify for a gas card are not as stringent as those for a mortgage.

It’s up to you to establish an on-time payment history and a good mix of credit.

Then when the creditor pulls your credit report, the creditor can look at your history, along with the other information you have provided, to make a decision about whether or not to give you credit.

A lot of the details you may provide, such as your gender, income, and employment history, aren’t on your credit report. But you can take responsibility for your financial identity and make sure the information reported about your credit history will present a positive picture of you to creditors.


Myth #2: The credit-reporting agency put the negative information on my credit file.

A lot of people don’t understand how credit reporting works.

Credit reporting agencies put information in your file when creditors send us details about your payment history.

Credit reporting agencies are not out to get you, and no one pays us to report negative information so they can avoid granting you credit.

We compile the data sent to us about your financial history and present it as a snapshot of your finances.

*** There may be inaccurate information on your credit report (and you should frequently check your file at all three nationwide credit reporting agencies for inaccuracies), and if you find any inaccuracies contact the credit reporting agencies to dispute them.


Myth #3: My credit score is a part of my credit report.

Your credit score is not included with your credit report.

You can access your credit report and credit score from Equifax or one of the other nationwide credit reporting agencies.

Your credit report is a history of how you pay your bills.

It includes your credit accounts—mortgages, student loans, credit cards, and auto loans—and shows if you’ve been late or on time with your payments, the balances on these accounts, and who else has been looking at your credit report.

Your credit score is calculated from a formula based on the components of your credit report.

While the score is a good reflection of you and your financial capabilities, there’s still room for interpretation.

A lender or creditor will look at your score as another element in determining the risk in lending to you or giving you credit.

So you can get your credit score from a credit-reporting agency, but it is not automatically included with your credit report unless you purchase a credit report and score product or subscribe to a credit monitoring service that includes it. (Because like all companies, we need to show a profit).


Myth #4: Credit-reporting agencies make the rules on how your credit history is reported and how long information stays on your credit report.

Nope.

The credit reporting agencies compile and report information about your credit history, but we’re not the decision makers.

A government agency, the Federal Trade Commission (FTC), governs the credit reporting agencies.

The Fair Credit Reporting Act (FCRA) outlines the rules on what credit reporting agencies can and cannot report and how long negative factors stay on your file.

It is helpful for people to understand what a credit reporting agency does and how information gets into their credit report. The more knowledge you have about this and your credit history the more control you will have over your finances.


Robert's comments: This is some good information. As much as I criticize the 3 big credit reporting agencies, we would not have the access to credit that our economy is based on without them.


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