Why Do Consumers Have To Be Savvy?
Just reading some of the headlines from the Consumerist site made me realize the importance of providing students with the tools to make sound financial decisions and avoid these all too common pitfalls.
What do they need to watch out for?
- Debt Collectors (How a $1,130 debt turned into an $83 million verdict against the debt collector):
A jury in Missouri recently awarded $251,000 in damages to a local woman who was wrongfully sued by a debt collector — more than 222 times the amount she’d been sued over — but that’s nothing compared to the additional $82.99 million in punitive damages assessed against the collection company. It all started several years back, when Portfolio Recovery Associates claimed a Kansas City, MO, resident owed $1,130.14 in credit card debt.
But she didn’t owe this debt — in fact, it belonged to a man who lived in the other Kansas City (the one in Kansas). Like many debt collectors, Portfolio lacked the proper documentation for the debt it purchased but pursued it anyway.
The Consumer Financial Protection Bureau alleges that online payment platform PayPal signed up customers for PayPal credit accounts without authorization, forced customers to use this credit line instead of their preferred payment methods, and failed to address disputes. As a result, PayPal will pay a total of $25 million in refunds and penalties.
The CFPB announced today that it filed a complaint and proposed consent order against California-based PayPal for illegally signing customers up for PayPal Credit without their permission and deceptively advertising the benefits of the credit service.
Federal regulators, state officials and prosecutors and law enforcement officers from all 50 states and the District of Columbia partnered today to charge four cancer charities and their operators for running a scheme that swindle consumers out of $187 million in charitable donations. Two of the charities have agreed to settle the charges and dissolve their businesses, while two other plan to fight the charges in court.
The struggle to protect students from potentially harmful for-profit college chains continued today as Illinois Senator Dick Durbin urged the Department of Education to investigate the business practices of three of the country’s largest propriety education companies – ITT Educational Services, Career Education Corporation, and Education Management Corporation.
A class-action lawsuit that accuses JCPenney’s of violating consumer protection laws by using deceptive discount practices received the go-ahead from a federal judge on Tuesday.
Reuters reports that a U.S. District Judge in Los Angeles certified the class action over claims the retailer marked up prices on items to dupe customers into believing they were getting a good deal on apparel and accessories.
The judge said it was possible to determine through the California suit whether or not JCPenney’s pricing practices caused consumers in the state to buy items at fabricated discounts.
Here’s our Financial Detectives Activity that helps to build consumer savviness in students.
…and that was just today’s news.
How about asking your students to read one of the articles and answer the following questions:
- What unethical/illegal practices are these companies being accused of committing?
- What are some actions that you as a consumer could have taken to protect yourself from the situations that occurred?
- Have you ever been put in a situation where you felt a company acted unethically or illegally?
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.