New Traps for Consumers
As of October, the U.S. Electronic Signatures Act, 15 USC 7001, is law. Congress wanted to show that it was "with it" on Internet commerce. But there are severe problems for consumers.
The Act provides in general terms that electronic "signatures" bind consumers, trumping most laws requiring an actual signature. The act does not define what a permissible signature is. A mouse click may qualify. The act excludes wills, divorce agreements, foreclosure and eviction notices, and a few others.
While the law is OK for buying a book on the Internet, what
about car sales and home mortgages? What about non-Internet loans?
Congress has given away the store to banks and commercial interests.
When you install software, you see only the top of a complex
contract, with most terms not visible. To click on [Accept] is
to sign for hidden terms which few read. You can't change any
term. The bad parts of the new law will let banks and lenders
make contracts and disclosures: Truth in Lending Act,
monthly credit card statements, electronically, if you agree.
To get a loan, you may agree to a contract with terms and essential
disclosures which are largely invisible. The potential for unfair
contract terms is enormous.
Dealers Inflate Interest
At the National Consumer
Law Center's Consumer Litigation Conference, held recently in
Colorado, attorneys shared their expertise on auto fraud.
When you walk into an auto dealership, you are walking into a minefield of potential consumer frauds. One trick to lure you is mailed coupons with offers to cut $1,000 off the price. When you get in, the salesmen tells you your credit is not good, and the dealer won't honor the offers. (Walk out!)
After you agree to buy a car at a price, watch out that the finance manager doesn't raise the price! The finance man is actually paid on commission, so his salary depends on cheating you. He may also insert charges you didn't request, and don't need, like extended warranties, rustproofing, and expensive credit insurance. It is illegal for a dealer to make you buy credit insurance or anything you did not request. By the way, the dealer will also be inflating the price of the extended warranty, which will overlap the manufacturer's warranty. He won't tell you that the bank approved you for lower interest, at a lower "buy rate."
So how do auto dealers deceive consumers into signing contracts filled with frauds? They make you wait hours for "credit approval." Then they rush over and ask you to sign a contract without reading it, sometimes with no numbers filled in! Then they take the contract with them, not giving you your copy. They treat consumers nicely (until you sign the contract). Consumers trust them, and don't read terms and numbers. Most consumers focus on the monthly payment. Tell a dealer what you can pay, they will soak you for that amount, and more. Shop instead for the lowest APR, and reject unwanted extras. Be willing to walk out! Don't let yourself be blinded by a shiny new car. Don't bring the kids when you shop for cars. The salesman will sell the kids, and you will have kids pressuring you to sign and go home. (Continued next col.)
The consumer must under law be given, in hand, a filled-in copy of the credit contract/Truth in Lending disclosure. Read it carefully before you sign it. Then hold onto your copy. If you are leaving the dealer with the car, but without a your copy of the contract, you likely have been swindled. Time to see an attorney who is versed in the N.J. Consumer Fraud Act, and the federal Truth in Lending Act.
Tired of telemarketing
calls in the middle of dinner? You are not alone. If you live
in New York State, you should immediately register with the state's
"Do Not Call" list, at www.consumer.state.ny.us,
Home Loan Protection Act
The National Consumer Law Center, Boston, has a model bill for consumer protections against predatory mortgage lending. This bill prohibits the terrible credit terms which are used to make mortgages impossible to pay, leading to losing one's home to foreclosure. Poor, elderly, minority and inner city home owners are the typical targets of predatory lending.
The NCLC bill would prohibit points and fees higher than 3
% points or $800. Fees would include all mortgage broker fees
and credit insurance. The bill would ban prepayment fees if a
consumer pays his mortgage early. (Some predatory lenders end
a mortgage early, charge a penalty, then refinance the consumer
and charge all their fees over again.) The bill would ban "flipping"
which is the repeated refinancing of mortgage to run up the fees.
It would limit late charges to reasonable amounts, and prohibit
the "pyramiding" of late charges. It would prohibit
a clause which lets the lender "call" (end the loan
abruptly by demanding full payment). The bill bans the financing
of mortgage credit insurance.
Dept. of HUD-approved
counselors. No lending to persons who did not have the ability
to repay would be allowed. (Right now homeowners on Social Security
are a prime target, and actually get mortgages because the predatory
lenders predict the seniors will default and lose their homes
to foreclosure.) No home repair contractor could receive loan
payments unless the check was jointly payable to the consumer
(to give the consumer a way to ensure that the work was actually
done, and done right.)
Whitman Signs A.298
I wish to become a member of the Consumers League of New Jersey, and/or the Consumers League Education Fund.
Annual dues of $20 include a subscription to the Consumers League Newsletter. Contributions to the Education Fund (only) are tax deductible. Thank you for your contribution.
________Consumers League Millennium Circle $2,000
________Consumers League Life Member, $1,000
________Consumers League Century Club, $100
________Consumers League of New Jersey, annual dues $20
________Consumers League Education Fund, $20
________Newsletter subscription only, $10 (not a member)
________Additional donation to help CLNJ: Enclosed is:
_____$1,000,_____$100, _____$50, _____$25, _____other.
CITY, STATE ZIP
we have a simple plea:
if you can, please send us $100 for our next 100 years!