uGovernment’s Own Budget Analysis Shows That Allowing Debt Collection Robocalls Is Pointlessr

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  In response to the news that the bipartisan budget deal currently before Congress includes a loophole that would allow the federal government to make debt-collection robocalls, some might say “Well, if it helps the government get back some of the money it’s due, then maybe it’s a necessary evil.” But the government’s own analysis of the budget proposal currently shows this clause as having no measurable impact on our federal finances.

  This is according to the latest review [PDF] from the Congressional Budget Office, which found that Section 301 of the law — the one that supposedly improves the government’s ability to collect debts — will have zero effect over the next ten years.

  See those stars in the above chart? Those indicate instances in which the CBO estimates somewhere between an annual cost of $500,000 or annual revenue of $500,000.

  Even assuming the maximum amount of revenue for each of the ten years, you’re still talking about a total of $5 million.

  The Hill reports that this part of the budget actually comes from the White House, where the Office of Management and Budget had estimated $120 million in revenue over ten years.

  Even if that much higher figure is accurate, it wouldn’t even put a dent in the amount of money owed to the federal government. Student loan debt in the U.S. (a good deal of which is from federal loans) has long passed the $1 trillion mark. Then there are the billions of dollars outstanding to the IRS, FHA, and other federal agencies. Reducing that by an average of $12 million a year seems a bit like using a mop to clean up Lake Michigan.

  Meanwhile, think of the hundreds of thousands — possibly millions — of Americans who will have to endure obnoxious robocalls that may not even be for them.

  We wonder if the government will be held to the same standard that businesses are when they mistakenly call wrong numbers.

  If you want to tell lawmakers how you feel about this issue, our colleagues at Consumers Union have put together this form that identifies your relevant members of Congress and allows you to easily send them a message expressing your concerns.

  Some lawmakers are already speaking out about the robocall clause.

  Sen. Claire McCaskill of Missouri said during a hearing this morning that she had no idea how this section of the bill made its way into the proposal.

  “If anybody knows, I would love to find out,” said the senator. “I just think it is a really bad idea that we put something in this budget deal that’s going to allow the federal government to participate in robocalls to collect debt.”

  
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by Chris Morran via Consumerist

uFeds Win Default Judgment Against Corinthian Colleges Over Predatory Lending Schemer

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• In September 2014, just seven months before Everest University, WyoTech and Heald College closed their doors, federal regulators sued the for-profit colleges’ parent company Corinthian Colleges Inc claiming it duped thousands of students into taking out costly, predatory, and often financially devastating, private student loans to finance their post-secondary education. This week, the Consumer Financial Protection Bureau won a default judgment against the for-profit educator for engaging in a predatory lending scheme. 

  The CFPB announced today that a federal court entered a final default judgment [PDF] finding CCI liable for more than $530 million in loans taken out by students since July 21, 2011.

  However, because CCI filed for bankruptcy in early 2015 and liquidated its assets, the company cannot pay the judgment.

  The Bureau says it will continue to pursue relief for consumers harmed by CCI’s unlawful conduct.

  “The CFPB remains concerned about efforts to collect on loans made in association with Corinthian’s illegal conduct,” the Bureau said in a statement.

  Tuesday’s decision put an end to the lawsuit [PDF] filed after an investigation by the CFPB that found that since July 2011 Corinthian has lured tens of thousands of students at Heald College, Everest University, and WyoTech to take out private student loans to cover expensive tuition costs by advertising bogus job prospects and career services.

  According to the complaint, CCI advertised their education as a gateway to good jobs and better careers for students coming from economically disadvantaged backgrounds, of which many are the first members of their families to attend college.

  To entice these students, CCI schools used sham job placement rates to lead students to think that when they graduated they were likely to land good jobs and sufficient salaries to repay their private student loans.

  However, the CFPB found that CCI inflated these rates by creating fictitious employers and reporting students as being placed at those fake employers. Additionally, the company allegedly counted a “career” as a job that merely lasted one day, with the promise of a second day.

  Other inflation tactics included the company paying employers to temporarily hire graduates long enough for them to be counted among those with a career.

  And finally, the company’s career services were often difficult to get in touch with and available job postings were culled from websites like Craigslist.

  Once students were tempted by the promise of long-lasting careers with CCI degrees, they were pressured to take out costly and predatory private loans, known as Genesis Loans, issued by the company.

  The CFPB alleged that CCI then used illegal debt collection tactics to harass students into paying back those loans while still in school.

  Under the Genesis loan program, students were required to make monthly loan payments while attending school.

  By making students repay their loans while attending classes, CCI was allegedly able to take advantage of their position of power to engage in aggressive debt collection tactics – and that staff received bonuses for successfully collecting payments from students.

  The CFPB’s investigation found that efforts to collect payments included shaming students by pulling them out of class. In one case, a financial aid staff member was known as the “Grim Reaper” because the worker routinely pulled students out of class to collect debts.

  While the court’s judgment won’t result in refunds for consumers, the CFPB and Dept. of Education previously secured $480 million in debt relief for former students.

  
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by Ashlee Kieler via Consumerist

uMath Professor Wants To Use Cheaper, Better Textbook, Clashes With Departmentr

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  The argument over a textbook at Cal State Fullerton combines many different issues in academia: the cost of textbooks, deference to authority, and academic freedom. A math professor wants to do something really simple: use different textbooks from other faculty who teach the same course, because he thinks that a different pair of books is better. It also costs less. However, the standard $180 textbook happens to have been written by the chair of the department.

  The controversy dates back to 2013, when the professor was officially reprimanded for teaching a course on linear algebra and differential equations from a pair of books that cost $75 and $0. Students probably preferred this to having to pay for and carry around one larger book that costs $180, but the rest of the department still prefers the other book.

  This has led to a department-wide argument over rules, including a rule made in 1984 that all professors had to use the same textbook. The book that they chose––the one written by the department chair and vice-chair––was published seven years after that, and has been the default text since.

  Now the book is mandatory for that particular course, but that doesn’t mean they can afford it. One student who CBS Los Angeles interviewed explained that she has trouble affording textbooks, and has to borrow them on site at the library and take photos with her phone to complete assignments. Harmonizing required books might have resolved the departmental squabbling, but doesn’t help students who don’t have $180 to spend on books for every course they took.

  Cal State Fullerton Math Professor Clashes With Department Heads Over Textbook [CBS Los Angeles]

  
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by Laura Northrup via Consumerist

uAuto Lender Must Pay $3.28M In Refunds, Penalties For Illegal Debt Collection Tactics Against Servicemembersr

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  Four months after federal regulators filed a lawsuit against an Ohio-based auto loan company over allegations it violated consumer protection laws – including those protecting servicemembers – in order to collect debts, Security National Automotive Acceptance Company (SNAAC) will pay $3.28 million in refunds and fines to resolve the case. 

  The Consumer Financial Protection Bureau announced Wednesday that it had filed an administrative order against SNAAC– which specializes in lending money to active-duty and former military to buy used motor vehicles in more than two dozen states – for allegedly using lies and threats in attempts to coerce consumers in to paying their debts.

  According to the CFPB complaint [PDF], since July 2011 SNAAC collected millions of dollars from thousands of servicemembers who defaulted on their loans by using aggressive collection tactics that took advantage of borrowers’ special obligations to remain current on debts.

  Among other tactics, the Bureau claims that in order to collect on debts, SNAAC routinely threatened to contact servicemembers’ superiors and exaggerated the potential impacts on their 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

  SNAAC reportedly buried a provision within the fine print of contracts saying that it could contact commanding officers about servicemembers’ debts.

  When customers were unable to pay their debts, the company suggested that the servicemembers were in violation of military law and other regulations and threatened to notify their commanding officers about the purported violations.

  In other instances, the company allegedly told customers that their failure to pay could result in action under the Uniform Code of Military Justice, as well as a number of other adverse career consequences, including demotion, loss of promotion, discharge, denial of re-enlistment, loss of security clearance, or reassignment. In reality, these consequences were extremely unlikely.

  In order to recoup some of the loans it issued, SNAAC also threatened to garnish servicemembers’ wages.

  According to the CFPB, the company implied to borrowers that it could immediately commence an involuntary allotment or wage garnishment. But because of the military pay system, the Bureau, says these threats were empty and garnishments would not have occurred.

  Under the CFPB’s order [PDF], SNAAC must pay $2.28 million to thousands of harmed servicemembers and other consumers.

  The amount that each borrower receives will correspond to the amount of debt they were allegedly unlawfully pressured into paying. A written compensation plan must be submitted to the CFPB for approval.

  Additionally, the company must pay $1 million to the CFPB’s Civil Penalty Fund and is also banned from using threats and misstatements.

  
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by Ashlee Kieler via Consumerist

uTeen Shoppers Can Get Drunk Without ID On CVS Homeopathic Laxativer

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• CVS might have stopped selling cigarettes, but you can still buy booze at the drugstore chain — without even getting carded. Just head over to the homeopathic medicine section and pick up some store-brand “constipation relief,” which just happens to be 40-proof.

  In a piece for Slate on homeopathic medicine, chemist and blogger Yvette “Sci Babe” d’Entremont notes that this particular CVS product is 20% ethanol, meaning it contains more alcohol by volume than beer or wine.

  Yes, the product is sold in 1 ounce containers, but at 20% alcohol and without any age requirement, it might be easier than trying to refill mom and pop’s vodka bottle with water.

  In a recent YouTube clip, d’Entremont — an adult — put the product to the test, downing six ounces of the supposed constipation reliever.

  After 20 minutes, she was legally drunk:
  

  Well, lots of drugs have side effects and can be abused, but at least they still do what they’re supposed to, right?

  If you consumed six servings of a constipation-relieving medicine, you probably would be too busy in the bathroom to worry about your intoxication. But according to d’Entremont the only thing she experienced from her experiment was a buzz.

  “It doesn’t do what it claims to do and it got me drunk,” said d’Entremont. “I want people to be a little more discerning when they go to pick up a medication because you might end up with something with no medicine and a lot of alcohol in it.”

  That’s because the product is really nothing more than alcohol and water:
  

  And yet, as NBC Los Angeles confirmed, anyone can walk into a CVS and buy the product without being carded.

  A news producer sent their 15-year-old daughter into a CVS, where she was able to purchase the product without any issues:

  Most over-the-counter drugs are limited in the amount of alcohol they can use as an inactive ingredient, but according to federal law, homeopathic medications are exempted from these limits.

  CVS’s response to NBC Los Angeles was to point out that “Homeopathic products are regulated by the FDA. The alcohol content in this type of product is not unusual and our products should only be used as directed.”

  
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by Chris Morran via Consumerist

uWhy Are Used Clothing Marketplaces Hot All Of A Sudden?r

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  The recession is over, but maybe Americans have retained the frugal streak that it gave us. A hot new category of Silicon Valley startups are marketplaces for used clothing, especially those that make it easier to list clothing for sale. A recent promotion between marketplace ThredUP and Target sold out almost we were even to tell readers about it. Why are people into old clothes all of a sudden?

  Well, at the moment, it’s not that consumers are into the marketplaces as much as investors are. After some initial resistance and confusion from venture capitalists, now investors are throwing money at used-clothing marketplaces. While there might be plenty of Lululemon flippers, they’re meant for regular people who want to sell their old clothes quickly and easily. The catch: they might lout on some money on thee deal.

  The marketplaces offer varying levels of help and automation and market niches, and eventually the Old Clothes Wars will end and a few sites will emerge victorious. What they have in common is that they’re filling a gap in both the used-stuff market and the fashion market.

  Because of the variety of sizes, colors, and styles, standard e-commerce marketing doesn’t work so well, especially when inventory coming from sellers can be erratic.

  Why Is Silicon Valley Pouring Millions of Dollars Into Old Clothes? [Bloomberg]

  
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by Laura Northrup via Consumerist

uHyatt In Talks To Buy Rival Starwood Hotels Brandr

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  A merger craze seems to be taking hold this month: first there was the mega beer merger between Anheuser-Busch InBev and SABMiller, then news this morning that pharmacy giants Walgreens Boots Alliance and Rite Aid were headed down the aisle. Now, it looks as if the need to grow by expanding one’s portfolio has trickled into the lodging industry. 

  Hyatt Hotels is reportedly in talks to purchase Starwood Hotels and Resorts Worldwide – the operator of brands like Sheraton, St. Regis, W, and Westin, Reuters reports.

  Sources familiar with the talks say the deal could be announced in coming weeks and that Hyatt’s management would likely retain control of the combined company.

  While a price for the potential deal wasn’t provided by the sources, analysts say the hotel company could be valued at more than $17 billion.

  Both hotel companies declined to provide comment on the potential deal.

  Starwood first announced in April that it had decided to explore a sale. Several months later the company had reached out to potential bidders such as InterContinental Hotels Group Plc, Wyndham Worldwide Corp and sovereign wealth funds, Reuters reports.

  The company announced on Wednesday that it had sold its vacation ownership business to Interval Leisure Group for $1.5 billion.

  Hyatt in talks to buy Starwood Hotels – source [Reuters]

  
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by Ashlee Kieler via Consumerist