It might be a new decade but old tactics for cheating consumers are still around. Keep yourself safe in 2020 and beyond with the Consumers Ascending New Year’s Resolutions:
1) Stop abbreviating 2020. Write out the full date on your checks and documents. Consumer advocates, law enforcement, and government agencies have a simple but important tip to protect yourself from scammers this year: stop abbreviating the year. Let’s say you date a document “1/7/20”. A fraudster could add a few numbers to the end of the date and suddenly it’s “1/7/2019” or “1/7/2021.” By changing the date, a scammer can try to get you on the hook for an unpaid debt or reactivate an uncashed check. Save yourself the future legal and financial headaches and write out the full date.
2) Read the terms and conditions. Reject forced arbitration when you can. Corporations use forced arbitration to stop consumers from suing when they’re harmed and push them into secretive proceedings with a private arbitrator the corporation chooses and pays. The unfair practice made headlines last year when the U.S. House of Representatives voted to ban it. The House vote was only the first step towards ending forced arbitration; we’ll be watching for a Senate vote this year.
Until it’s gone for good, look out for forced arbitration clauses in the fine print of any contracts you enter into, such as for credit cards, cell phones, streaming services, etc. so you know what you’re getting into. Some companies may let you opt-out of forced arbitration. Take that option if you get the chance, don’t sign away your rights if you don’t have to.
3) Ask debt collectors for proof. Getting letters and phone calls from debt collectors demanding payments can be scary and confusing. New regulations proposed by the Consumer Financial Protection Bureau (CFPB) last year won’t make things any better going forward: collectors will be allowed to send you texts and emails and keep calling you way too much.
But don’t get pressured into paying debts you don’t owe. Any time a debt collector contacts you to try and collect on a debt, ask them for a validation notice sent by certified mail. This will give you and the collector a chance to confirm that 1) you owe the debt; 2) the debt is for the correct amount; and 3) the debt is not too old to be sued on.
4) Do your research on products that seem too good to be true. In financial services circles, fintech, or financial technology, was one of the big buzzwords of 2019 and we predict it will stay that way in 2020. The term encompasses a wide range of products including reverse layaway services that let you pay for online purchases in installments, investment apps, online banks, and more.
It’s easy to get swept up in exciting new products that harness the power of the internet and mobile technology to offer you easier-than-ever access to money. However, proceed with caution. Because of how new they are, fintech products may not be properly regulated to keep consumers and their finances safe. In fact, the Consumer Financial Bureau and several states may allow fintech companies to introduce new products without adequate regulations. Researching the products will help. Look up reviews, complaints, and articles about online financial services before signing up.
5) Need a short-term loan? Know this: Payday loans are a debt trap. Consumers strapped for cash after the holiday season should be aware: payday and car title loans are a surefire way to sink borrowers deeper into debt.
Payday loans have an average interest rate of 391% and most borrowers end up taking out more loans to pay back the original loan. The bipartisan Veterans and Consumers Fair Credit Act, recently introduced in Congress would cap interest rates on high cost, small dollar loans at 36%. It would give all borrowers a crucial financial protection rightfully enjoyed by current military members under the Military Lending Act (MLA), which was passed to protect service members from predatory and usurious high-cost loans.
Until we get MLA for all, consider other alternatives, such as personal loans offered by credit unions. There are other options to help borrowers avoid the payday debt trap.
6) Make a plan if you have student loans. Are you one of the 45 million Americans with student loan debt? If so, 2020 is sure to be an interesting. Lawmakers put forth various plans in 2019 to tackle the student loan crisis including the College Affordability Act, which aims to revamp student loans to be more affordable and make repayment easier. We’ll see which proposals take off this year.
If you haven’t already, it’s a good time to sit down and figure out your loans. You might find out that you have more options than you think. For instance, you might qualify for Income Based Repayment. Or, you might qualify for Public Service Loan Forgiveness (PSLF) and could have your loans forgiven within 10 years. If you believe you might be eligible for PSLF, here are some tips. For PSLF and student loan repayment generally, take your time to understand your rights and obligations.
5) Keep up with consumer news and take action with Consumers Ascending. It’s no secret that big corporations use their money and influence to get their way in Congress and beyond. But we have the power to fight back and protect consumers if we work together. Our lawmakers care about our voices, it’s up to us to use them. Join Consumers Ascending to stay informed on the latest consumer news and to receive action alerts when your voice is needed.
