What is National Consumer Protection Week & How Can it Help You?

This week, March 1-7, 2009, is National Consumer Protection Week. This week focuses on helping consumers become more aware and more proactive about their financial situations.  It is a week-long national campaign aimed at providing intensive consumer education. These resources are provided by federal, state, and local government agencies, along with consumer advocacy organizations.

Eileen Harrington, the Director of The Federal Trade Commission’s Bureau of Consumer Protection stressed that “Practical information is one tool that retains its value, especially in tough economic times.”

In this section, ComparedForMe.com examines what the official website says this week is all about-and how its free tools can help you as a consumer make more informed financial decisions.

The National Consumer Protection Week Website (http://www.consumer.gov/ncpw/index.html) is divided into several helpful sections that are free to access.  Let’s break the website down to give you a clear idea of how the tools they offer can be applied to your own financial and business situation.

Consumer Info

• This section of the National Consumer Protection Week website is divided into the following sub-sections: Banking, Credit, Consumer Rights, Identity Theft & Fraud, Investments, Money, and Mortgages.
• Upon clicking on one of the above-mentioned topics, you are taken to a page that gives you the following free resources: Websites, PDF’s, and Online Articles & Tools.
• These websites, PDF’s, and Online Articles & Tools are presented to you from an unbiased source that has one goal in mind: to arm you with educational information that will help you become more proactive in your financial decision-making.

Business Info

• This section of the National Consumer Protection Week website is divided into the following sub-sections: Websites, Video, PDF’s, and Online Articles & Tools.
• Within the Videos section, website visitors are given free access to a video entitled “Protecting Personal Information: A Tutorial for Business.” This is no boring PowerPoint presentation; instead, an attorney for the Federal Trade Commission appears on the screen, speaking to you and walking you through an animated informational session. The simple, “no fluff” language suggests 5 easy-to-follow steps that business owners should take to protect their personal information. A helpful question and answer dialogue is weaved throughout the video as well.
• In the PDF’s section, the site offers a business-focused Identity Theft Toolkit, courtesy of the Federal Trade Commission.

International

• The first section gives you access to an international directory of dispute resolution providers (www.econsumer.gov.)
• The second part links you to The International Consumer Protection and Enforcement Network (ICPEN) (www.icpen.org.) ICPEN is made up of governmental organizations worldwide; it oversees fair trade practice laws and encourages consumer protection.

Outreach Toolkit

• The final section of the site offers the following tools to help your business promote its support of National Consumer Protection Week. These template are extremely user friendly-all you have to do is insert your business information and you’re good to go:

o        Sample Press Release: get your business more exposure while promoting National Consumer Protection Week
o        Sample Newsletter Article: use National Consumer Protection Week as a topic for your company newsletter
o        Sample Event Flyer: use your business to promote events in your own community that encourage consumer              awareness and protection
o        Radio Public Service Announcements:  gives you the option to listen and download them (or follow the transcript and record your own)

Actively participate in National Consumer Protection Week by visiting their website.  The tools they provide will give you a concrete action plan that will help you achieve your short and     long-term financial goals-no matter who you are!

It may have happened to you or to a close friend. Unexpectedly, for no apparent reason, the terms and payments on your credit cards has dramatically changed!  You always paid your bills on time-you always paid more than the minimum payment and were a long time customer.  Suddenly you go to the mailbox and find that your credit line has been cut in half, even as your interest rate doubles or triples!  Recent surveys are saying this could be happening to as much as 30% of Americans with credit cards!

So what are your options if the credit card companies do this to you?

• Call the credit card company directly to see what options you have.  If you have a solid payment history with this creditor, voice your disagreement regarding the reduced limit or rate change.  Argue that you have always made your payments on time, emphasizing that you are a long-term customer
• If you are in good credit standing, you could have the luxury to shop around for a card with an even better interest rate.  You have the ability to take advantage of the fact that banks are lending again.  Balance transfer credit cards can provide time periods with low or 0% interest rates.
• People are either hesitant to borrow or have too bad of a credit situation to qualify for a new card.  If you are unsure of where your credit stands, sign up for free credit monitoring.  There are a few websites that compare credit cards based on credit score requirements.  You can use the Federal Reserve website for more information about what to look for when credit card shopping.
• Do not close your current credit card accounts.  Doing so can actually affect your credit score negatively, limiting your ability to borrow if your situation gets worse.  You also have no idea if the cards you keep will one day change their terms and limits.

So how do you know if your credit card company will spontaneously change your terms and payments?  Honestly, you don’t.  While there is a law that governs consumers’ rights with credit cards, unfortunately, most of us sign a contract with the lender that gives them the right to make these changes to our credit lines and credit cards.  Continue to monitor your monthly statements and online accounts to see if changes are coming.  Aside from rate and term changes, pay attention to news of your bank being acquired by another.

We should take action to lessen our dependency on credit cards.  We need to learn to live within our limits and buy only what we can afford.  Altered payments and interest rates is the first sign that times are changing; as a result, our old spending habits have to change.

Obama has expressed the importance of our country coming together and making the effort to better the current financial and economic situation.  He called in state governors and city mayors, vowing to hold them accountable for every dollar they receive from the federal government.  He used his State of the Union address this past Tuesday to reiterate the importance of every individual moving forward; more importantly, he explained how his plan will work to help everyday Americans.

The message the White House has been sending this past month has been that today is the day that change has come.  Tuesday’s speech was no different.  We need to change our ways as people when it comes to spending, lending, and borrowing. More importantly, President Obama told congress that today was the day they have to stop putting off reform.  In order to better understand the situation, we have to realize how we got to this point.  Congress allowed banks to exercise past lending practices and to push bad loans Reform was put off.   Discussions about Healthcare and Educational reform was put off for the next year and for the next administration

As the leader of this next administration, Obama has given us access to a website, recovery.gov, as a place to go and follow exactly where every tax dollar is being spent.

The importance of credit in our economy has never been so visible.  Obama said if credit isn’t flowing, then the process of recovery we must go through twill not begin.  If people cannot get loans then they cannot buy homes or cars. Aspiring students will not be able to apply for student loans.  If credit is not freed, stores cannot stock their shelves and sales cannot be made.  If lending is not opened up, then businesses cannot make payroll and people get laid off.  So banks stop lending to individuals and each other and eventually credit dries up.

We need to put an end to this destructive cycle and restore confidence and lending.  President Obama has laid out a three part plan to do this.  The first part of the plan comes in the form of the new lending fund, the largest effort ever made to increase lending to the following people: auto loans for consumers, business loans for entrepreneurs, and education loans for students.  The second part of Obama’s plan is a housing program to help responsible home owners lower their monthly payments and refinance their mortgage.  The third part of the plan aims to restore money and confidence to the banking system.

From the top, this plan looks like an effort on all fronts to encourage lending, the true question is just how much will this cost us over time?

I can hear them crawling out of the woodworks again.  Just like a pest, they smell the lure of the quick money.  Just when you thought the days of the sub prime mortgage broker were over, they are beginning to resurface upon hearing about Obama’s new housing plan.  Even before Obama’s housing plan was announced a few days ago, sub prime brokers began planting their seeds in the television and radio ads along with numerous sites on the Internet.  More and more these website are appearing on a daily basis.

When this financial crisis began to escalate last year, I started to see many more debt settlement companies pop up.  Are these former debt settlement agencies now the loan modification brokers?  It appears that these backroom brokers may be back again, ready to prey on the SAME unfortunate individuals whose upside down mortgages they brokered.

In my first post, I mentioned that one my goals for this blog is to help prevent people from falling victim to the same lending practices that put our economy in the situation it is in today.   Well, here is my first attempt to offer protection in the form of knowledge.

When loan modification first revealed itself, it was sort of hush hush.  Congress was slow to wrap its hands fully around loan modification; as a result it continued, while the majority of the public had no idea.  Advertisements offering “Foreclosure Prevention” and “Foreclosure Avoidance” began to gradually appear.  As banks stepped forward and announced their plans to allow certain mortgages to be modified, more loan modification companies started to appear.

Some of these early loan modification brokers had their clients pay up front costs to renegotiate their mortgages, doing little to nothing to help their clients.  Some ended up being scams, robbing the home owner of the fronted cash.  Even though your bank rewrites the loan terms, the bank still has to outsource the work on a loan, as each case can take up to 12 hours to review.

I guess we will have to see how it all plays out as more and more banks announce that they will modify existing mortgage terms.  I am curious to see how Obama’s new housing plan will protect and deal with the loan modification brokers and business as a whole.

How can you protect yourself?

1.  Always request to see all proposals before agreeing to anything.  This will save you in the long run when rates and terms magically “change.”

2.  Know your home value. Being honest and sharing the exact home value with the lender will save you both time. The lender can only provide you an honest solution if you give them an accurate value.

3.  Know your financial situation.  Be honest about your income.  Always know where your credit stands.  Sign up for credit monitoring or for identity theft protection to make sure companies are not pulling your credit without your knowledge or against your will.  Too many hard pulls by the lender can ultimately change and lower your credit score.

4.  As long as you have you have the right numbers, know your financial situation, and are being cautious with your social security number, it is OK to shop around.  Knowing your options is key for getting the best possible deal.  .