CFPB Sues Auto Lender For Aggressive Debt Collection Tactics Against Servicemembers

(frankieleon)

By now it should come as no surprise that lenders shelling out thousands of dollars to help consumers make purchases for things like houses and cars often use lies and threats in attempts to recoup those funds. And while those tactics might result in some payments, they will also likely draw the ire of federal regulators.

Just ask Ohio-based Security National Automotive Acceptance Company: the latest shady lender facing a lawsuit from the Consumer Financial Protection Bureau over allegations it violated consumer protection laws in order to collect debts.

According to the CFPB complaint [PDF], since July 2011 SNAAC – which specializes in lending money to active-duty and former military to buy used motor vehicles in more than two dozen states – collected millions of dollars from thousands of servicemembers using unfair, deceptive, and abusive practices.

Both active-duty and former servicemembers tell the CFPB that they encountered trouble with the company if they missed or were late on payments.

The CFPB claims that in order to collect on debts, SNAAC routinely exaggerated the potential impacts on servicemembers’ careers if they remained delinquent on their loan obligations, often telling borrowers they could face demotion, loss of promotion, discharge, denial of re-enlistment, loss of security clearance, or reassignment. The suit claims that these repercussions were almost certainly unlikely.

In many attempts to collect debts, the CFPB claims SNAAC would threatened to contact the servicemember’s commanding officers or chains of command.

The suit claims that in some cases, the company did contact servicemembers’ commands by telephone and in writing, disclosing details of the servicemembers’ debts and delinquencies and requesting assistance in bringing the accounts current.

According to the CFPB, the correspondences suggested that the borrower was in violation of military law and other regulations, such as the Uniform Code of Military Justice. The CFPB claims that SNAAC took advantage of the servicemembers’ inability to protect their interests, because many were unaware or did not fully understand the law’s provisions.

SNAAC also allegedly made false and misleading threats to garnish servicemembers’ wages, despite the fact that no such allotments can be made without first obtaining a judgement.

Additionally, the CFPB suit claims the company threatened to take legal action against several borrowers, even though SNAAC never actually intended to do so.

Through the lawsuit, the CFPB is seeking compensation for harmed consumers, a civil penalty, and an order prohibiting the company from committing future violations.

CFPB Takes Action Against Servicemember Auto Lender for Aggressive Debt Collection Tactics [Consumer Financial Protection Bureau]

by Ashlee Kieler via Consumerist

Some Walmart Workers Not Thrilled About Pay Hikes (Because They Didn’t Get One)

(Ben Schumin)

Earlier this year, Walmart pledged to increase its starting wages, affecting about 40% of its workforce, but some employees who’ve been with the company for years and may not be affected by the pay hikes aren’t thrilled.

The wage increases mean that new and recent hires will be earning more. for example, new cashiers are seeing their starting pay go from at least $7.65/hour to $9/hour with the intention of reaching $10/hour by 2016. Newly hired managers, who currently start at $13/hour, will start being paid $15/hour.

But that leaves some longtime employees who already make more than the company minimum out in the cold.

It’s apparently not much different than when you see the cable or phone company you’ve been with for years giving away all sorts of perks, but only to new customers.

One 10-year Walmart worker in Illinois tells Bloomberg that there is growing discontent among workers who see new employees getting raises while their pay remains the same.

“It is pitting people against each other,” she explains. “It hurts morale when people feel like they aren’t being appreciated.”

She says her colleagues now talk daily about looking for work elsewhere.

Walmart acknowledges that it expected some blowback when it announced that less than half the workforce would be getting raises.

The company tells Bloomberg that it’s trying to retain these more veteran employees by giving them more desirable hours and offering training programs to help them advance in their careers.

“We are constantly looking and evolving what the right pay should be and we were aware of the issue,” the company’s head of human resources for U.S. stores explains. “We weren’t prepared to go forward with any additional increases but have continued to look at it to see if there is something else we should do for those in the middle.”

Economists say Walmart may be risking the ire of its workers by doling out raises on such a large scale, and without respect to an employee’s merit.

“Workers appear to pay attention to peer wages,” Laura Giuliano, an associate professor of economics at the University of Miami, tells Bloomberg. “Even a small difference can matter, and whether or not it is going to matter may well depend on whether it appears arbitrary or unfair.”

Likewise, David Cooper, an economic analyst at the Economic Policy Institute, says that if a company is going to bring up the bottom of its pay scale, it follows that you should bring up the middle-earners as well in order to maintain the existing wage hierarchy. Otherwise, “folks are going to leave or start complaining more vocally.”

by Chris Morran via Consumerist

Authors, Booksellers Call For Investigation Into Amazon’s Alleged Anti-Competitive Business Practices

(Micah Baldwin)

Last year, Amazon and book publisher Hachette engaged in a contentious feud that at times saw the online retailer use its considerable clout to make it difficult for consumers to purchase books by Hachette-published authors. Now, eight months after the two companies came to an undisclosed agreement, groups representing thousands of authors and booksellers are pointing to the online book retailer’s actions as reason for the Department of Justice to open an antitrust investigation into Amazon.

The Authors Guild [PDF], the American Booksellers Association [PDF], and Authors United [PDF] sent letters to the Dept. of Justice on Tuesday urging the agency to look into how alleged anti-competitive business practices have allowed Amazon to become the largest seller of books in the U.S., the New York Times reports.

The groups – led by Douglas Preston, a Hachette writer who founded Authors United amid Amazon’s dispute with the publisher – claim Amazon engaged in a plethora of hurtful practices, including predatory selling by offering book titles at what appears to be below-cost, strong-arm tactics against publishers, dictating the pricing of self-published authors and steering customers to its own published books rather than those offered through other publishers.

“In recent years, Amazon has used its dominance in ways that we believe harm the interests of America’s readers, impoverish the book industry as a whole, damage the careers of (and generate fear among) many authors, and impede the free flow of ideas in our society,” Authors United tells the DOJ.

The groups tell the Dept. of Justice they fear that Amazon’s sheer market power constitutes a monopoly as a seller of books and as a buyer of books.

“As with our author colleagues, we are concerned that the mega-book-retailer Amazon.com has achieved such considerable market power with such questionable business tactics that it is undermining the ecosystem of the entire book industry in a way that will be detrimental, especially to mid-list authors, new authors, and minority voices,” the American Booksellers Association wrote in its letter to the DOJ.

Such was the case last year, the groups claim, between Hachette and Amazon. When the two parties couldn’t reach an amicable agreement on contracts for ebooks, Amazon “engaged in various punitive tactics” such as delisting books, delaying delivery, and removing books from pre-order.

The groups point to an industry research study to show just how powerful Amazon has become in the literary world. According to the groups, Codex Group found in May 2014 that the retailer accounts for a 64% market share of ebook sales and a 41% market share of all new book sales.

“Given Amazon’s dominant market share, no publisher — regardless the size — can afford to not do business with them, whatever the cost,” American Booksellers Association writes in its letter. “And no one knows this better than Amazon, which has ruthlessly cut off the sales of publishers large and small when they have not yielded to Amazon’s strong-arm negotiating demands.”

As a result, the groups say they have already seen fewer titles published by major publishing houses each year.

While the groups contend that Amazon’s business practices hurt the industry as a whole, they say the supposed anti-competitive behavior harms American readers more than anything.

Authors United asserts in its letter that Amazon’s practice of routinely selling books below cost in order to bring in business for its other businesses has driven retailers out of business. In turn, this has caused “deflation across the industry and reduced the amount of revenue available for publishers to invest in new books, thus depriving readers of wider choice.”

“Over the years, Amazon has benefitted readers and authors in many ways,” the letter continues. “But no temporary price cut can compensate for the costs to free expression and the health of America’s book industry that have resulted from Amazon’s abuse of its dominance in the world of books.”

According to the NYT, the American Booksellers Association and the Authors Guild – which collectively represent more than 2,200 stores and 9,000 authors – have separately urged the Dept. of Justice to investigate Amazon, but have never done so on a joint scale.

“Our point of view seemed to have been ignored,” Oren Teicher, chief executive of the booksellers association, tells the NYT. “But the climate has changed. There are efforts in the European Union — in Germany and a few other countries — to take a closer look at Amazon’s practices. That has ramifications on what happens here.”

The European Union announced last month that it would formally open an antitrust case into whether Amazon stifled competition in ebooks through the use of restrictive contracts.

Amazon and the Department of Justice did not return the NYT’s request for comment regarding the letters.

Accusing Amazon of Antitrust Violations, Authors and Booksellers Demand Inquiry [The New York Times]

by Ashlee Kieler via Consumerist

Richard Branson on Taking the Entrepreneurial Plunge

"Everyone starts out as a beginner: Successful people are just further along in their careers."

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Two For-Profit Schools Must Pay Students $2.3M Over Unfair Practices

(MeneerDijk)

Hundreds of former students at Kaplan Career Institute and Lincoln Technical Institute in Massachusetts will receive redress from the for-profit colleges after the schools settled charges they engaged in unfair practices with the state’s Attorney General’s office.

The Boston Globe reports that Kaplan Higher Education LLC and Lincoln Educational Services Inc. have agreed to pay millions of dollars to students in order to resolve claims the companies used unfair recruiting tactics and inflated job placement numbers to lure students into enrolling at the colleges.

“We allege these for-profit schools lured hopeful students into enrolling in their vocational programs by promising certain careers, but only left them with substantial debt,” Attorney General Maura Healey said. “Students trying to better their lives through education are instead being left financially ruined. These settlements will provide the relief these students deserve and prevent deceptive practices that put taxpayer dollars at risk.”

The settlements are the result of an Attorney General’s Office investigation that looked at dozens of schools operated by the companies and found, among other things, that the schools falsely reported a 70% job placement rates for graduates.

According to the AG’s office, Kaplan Higher Education, which owned the now-shuttered Kaplan Career Institute schools in Massachusetts, used job listings that were publicly available resources and did not offer any independent services or programs for its students’ job searches.

The company will pay eligible graduates of its medical vocational programs a total of $1.375 million. The Globe reports that the office first opened its investigation into the Kenmore Square school four years ago.

A spokesperson for Kaplan tells the Globe that the school “emphatically maintains that its actions were compliant and in the best interests of students, who were well-served by the institution.”

The company says they agreed to the settlement because of litigation costs, and was not found to have engaged in any wrongdoing.

As for Lincoln Technical Institute, the school’s parent company will pay eligible graduates of its criminal justice program at its Somerville and Lowell campuses $850,000 and will forgive $165,00 worth of private student loans the students took out.

The AG’s office reports that its investigation into the program found that students were unable to find work in law enforcement or private security after graduation.

The school was also found to include unrelated jobs, such as general retail positions, in its placement data, the Globe reports.

According to the AG’s investigation, the school allegedly told recruiters to pressure prospective students to attend the school by establishing unhappiness, creating urgency and to “bring out the pain.” They were also allegedly told to contact students at least seven times within the first three days to convince them to enroll.

In a statement to the Globe, Lincoln Educational Services says the investigation into the school started in 2008, at a time when employment opportunities were limited for all students.

The company contends that for-profit schools are held to higher standards than other traditional universities, despite their differing student bodies.

“Full disclosure and transparency require a level playing field,” the statement said. “We look forward to the day that all post-secondary institutions … are held to the same standards.”

Two for-profit colleges settle lawsuit with attorney general for $2.3 million [The Boston Globe]

by Ashlee Kieler via Consumerist