HUD Goes After Housing Insurance Companies for Discrimination

The Department of Housing and Urban Development has charged Erie Insurance Goup and five independent insurance agencies with violating the Fair Housing Act. According to the HUD charge, they provide inferior products–or no products–to homeowners in predominantly African-American neighborhoods.

Read the full article after the jump.

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TheMobileSolution Sells Consumers on Shifty Cell-Phone Plans

I don’t usually watch Fox news, but tonight I caught an investigative report about The Mobile Solution, a mall-kiosk cell phone store. The problem, of course, is that most cell phone users are already in the middle of a contract with their cell phone provider. The solution? Lie.

Employees of The Mobile Solution claim to have been trained to tell customers that they can pay $10/month rather than an all-at-once cancellation penalty, or that for $6/month, they can put their phone in “vacation mode.” Both of these options are completely made up, of course. Just a way for a company to take advantage of less-knowledgeable consumers.

The Mobile Solution’s weak statement after the jump.

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New “FICO Expansion” Credit Score

Fair Isaac recently launched a new credit scoring model, the “FICO Expansion” credit score. The FICO Expansion score is aimed at providing a credit risk number for the “millions of Americans who have little or no credit information on file at Equifax, Experian and TransUnion.” According to Fair Isaac’s press release, some pretty important lenders have been test-driving the new score for some times, including: DaimlerChrysler Financial Services, Freddie Mac, HSBC, and First Franklin.

So is this good or bad for consumers? As usual, some good, some bad. On the one hand, it probably means that a substantial portion of the population can now get credit even if they have little in the way of credit history. Fair Isaac seems to think the scoring system is a pretty good predictor of good credit. On the other hand, my guess is that anyone with a FICO Expansion score is going to get fleeced on interest rates. Plus, the subprime lending market is large and shady. There are going to be a lot of subprime lenders out there who are salivating at the prospect of the commissions they will be able to earn for writing a lot of high-interest, bad-idea loans.

If this has any effect, I’m guessing it will give a big push to debt collectors, predatory lenders, and the rising tide in home foreclosures because people borrow money they can’t afford to pay back, either on their own or at the urging of unscrupulous lenders and agents.

Auto Insurance Consumers are Shopping Around

According to Progressive CEO Glenn M. Renwick, “[t]here is a power shift to the consumer” prompted by the ease of obtaining insurance quotes online. Auto insurance premiums are going down. That’s right. Down. This is, of course, contrary to nearly every other segment of the insurance market, and great news for consumers.

The full MarketWatch article after the jump.

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Beginning of a Disturbing Trend?

I have received two calls in the last two weeks from people who were improperly served in connection with a debt collection. The first is a college student who has never lived with his mother. The law firm’s process server, however, turned up at his mother’s house with a summons and complaint. She refused to accept service, telling the process server that her son has never lived at that address. The process server told her to take it anyway, that he just needed a signature. And so the lawsuit begins.

In the second case, the summons and complaint just showed up on the porch of the debtor’s father’s house. It was dated some twenty days before it was found, and none of the family ever saw a process server. Plus, the debtor has not lived with her father in nearly a year.

Service was improper in both cases, of course, but under Minnesota’s ridiculous laws, the first debtor’s bank account has been garnished even though he was never properly served and the debt collecting law firm never filed the lawsuit. I’m sure the same fate is in store for the second debtor unless we can move quickly enough to get the case thrown out.
I hope these are isolated incidents, but I am concerned they demonstrate the willingness of debt collectors to shirk the rules in order to increase their financial gain.

The Benefits (?) of Tort Reform

Following up yesterday’s post about tort reform in Texas, TortDeform posted a letter to the editor of the Bluefield Daily Telegraph (WV). West Virginian Gilbert Bailey says “So much for the promise of less expensive insurance premiums . . . .”

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Tort Reform in, Doctors Out

From Tortdeform comes the news that, following the Texas legislature’s 2003 sweeping tort reforms “designed to greatly reduce the frequency of medical malpractice lawsuits, the size of malpractice payments, and physicians’ insurance premiums,” the number of Texas physicians applications granted has actually decreased.

I’m not sure this is a news piece worthy of crowing about, but if it shows anything, it is that tort reform really doesn’t have much to do with the quality of healthcare. If anything, it looks like the quality of physicians applying for licenses in Texas has actually decreased. Or else Texas licensing requirements skyrocketed (unlikely).

New Twist on the Old Scam

Consumer attorney Sonya Smith-Valentine brings a new phone-based credit card scam to light. In this one, the caller behaves like a representative from a credit card company investigating credit card fraud. “We need to verify you are in possession of your card,” the caller will eventually ask, and request your three-digit CVV code from the back of your card.

Of course, the caller already has everything else they need, and can make all the online purchases they want now that they have that crucial last piece of information. Stay on your toes!

Credit Card Payments Rising, but Consumers Clueless as to How Those Payments Are Calculated, Anyway

A University of Illinois at Urbana-Champaign law professor says “A lot of credit-card users don’t have a clue as to how the monthly minimum payment is calculated.” Count me in. I don’t have a clue, but I have a pretty good guess. I think it involves a dartboard.

To solve this problem, California is trying to force credit card companies to include charts in billing statements that tell the cardholder exactly how long it will take to pay off their credit card based on their current payment. This is something Hawaiian U.S. Senator Daniel Kahikina Akaka tried to do on a federal level back in 2004, but I guess it didn’t go anywhere.

At the same time, minimum payments are rising under federal pressure. The goal appears to be a minimum payment that would close out the debt in ten years, rather than twenty or thirty, as has been the case. This is a mixed blessing, of course. If you are deep in debt already, you may find it nearly impossible to climb out if your payment goes up. But it may have been nearly impossible already, and you just didn’t realize it.

West Va. Attorney General Reaches Settlement with Minnesota Debt Buyer

According to the NY Bankruptcy & Consumer Law Blog, the West Virginia AG’s office decided to investigate Pinnacle Credit Services after a consumer complained that she did not owe a debt Pinnacle was trying to collect. The AG’s office discovered Pinnacle was not licensed in West Virginia, and the settlement agreement followed.

Under the agreement, Pinnacle will erase all West Virginia consumers from its records, and will notify the three major credit reporting agencies that they should delete all references to those consumers, as well.

This is a small victory for West Virginia consumers, but a victory nonetheless.