The Consumer Federation of America has produced a video asking consumers to contact Congress in support of the Consumer Financial Protection Agency. The video can be viewed at:
http://www.youtube.com/watch?v=dTu52TOXtI4
Consumer Federation of America Video
July 16th, 2009Phone-bill crammers thrive because consumers don’t pay attention.
June 22nd, 2009
ST. LOUIS POST-DISPATCH
In an age of paperless billing and online payments, it’s easy to see why many consumers don’t spend a lot of time skimming over their phone bills. Yet with some officials warning that “cramming” scams might be on the rise, it’s time to start scrutinizing those monthly statements.
According to the Federal Communications Commission, cramming is the practice of placing unauthorized, misleading or deceptive charges on your telephone bill. There’s nothing new to the scam, which exploded after federal regulators started encouraging what is known as third-party billing.
Ironically, Washington wanted to help consumers when it pushed third-party billing. The idea was that competition would flourish — and prices would drop accordingly — if local phone companies had to share space on their monthly statements with companies providing Internet service, voice mail and similar services.
Plenty of legitimate companies now bill customers via phone statements, but so do many scammers. Their MO is to keep the unauthorized, monthly fees low — usually less than $20 — with the hope that consumers never notice the charges. The bogus billing usually claims to be for voice mail, cell phone or Internet-related service; but some crammers have charged consumers for unwittingly participating in diet programs, sweepstakes and other services.
On Thursday, Illinois Attorney General Lisa Madigan settled a suit her office brought against a credit counseling company that allegedly bilked more than 9,000 Illinois consumers through bogus charges on their monthly phone bills.
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US Credit Find of Cape Coral, Fla., has agreed to forgo deceptive practices, cancel all current billing contracts and refund Illinois consumers who say they never authorized the $9.99 monthly fees that bought access to an online tutorial designed to improve credit scores.
(Metro East readers, take note: To get paid, you have to file a complaint with Madigan’s office before Aug. 20. The fishy billing seemed most prevalent in the first 10 months of 2008, so dig out those old phone bills to see if you can make a claim.)
Obviously, this isn’t just an Illinois problem. In 2008, Missourians filed 1,961 complaints with the Missouri attorney general’s office about cramming and similar scams.
A Central West End woman said she recently took a close look at her phone bill to find out whether a change in service would make financial sense. Only then, she said, did she discover she had been paying for two separate voice mail services she had never authorized.
The woman, who did not want to be identified, said she called the company that was identified on her statement as the third-party biller. Someone at the firm told her that company was simply an agent of other firms and that she would have to call those companies directly. Needless to say, she got neither satisfaction nor straight answers. AT&T agreed to refund the bogus charges.
That’s not uncommon, said April Borlinghaus, a spokeswoman for AT&T. The phone company removes unauthorized, third-party charges and investigates companies “if we see a pattern of excessive cramming complaints,” she said.
“These companies are required by our contracts to submit only valid charges,” Borlinghaus said. “Violation of this obligation can result in a variety of remedies, up to and including termination of the billing and collection contracts.”
Getting a refund is just the first step. If your phone bill has been crammed, lots of regulators and consumers watchdogs would like to hear from you. You should file a complaint with the state attorney general’s consumer-protection division, as well as the FCC, the Federal Trade Commission and the Better Business Bureau.
To avoid getting ripped off, consumers always should review phone statements. The most suspicious charges might be small, but they add up month after month. Consumers can take other steps to avoid being ripped off in the first place.
— Avoid entering contests and always read the fine print. That’s where crammers sometimes bury authorization agreements.
— Beware free offers. A consumer might be instructed to call a toll-free number, say his name and declare something like “I want the service.” He’s agreeing to more than he realizes.
— Tell your phone company you want to pre-emptively block some services, like 1-900 dialing, international long distance, local toll calls and third-party services.
— Use up-to-date security software if you use a modem. Fraudsters sometimes use malicious software programs to download “dialer programs” to consumers’ computers. The program makes the modem dial international or 1-900 numbers.
Consumers Council Supports Credit Cardholders’ Bill of Rights
May 13th, 2009The House of Representatives recently passed the Credit Cardholders’ Bill of Rights. This land mark legislation is now in the Senate. Consumers Council of Missouri has signed on as a supporter of the Dodd/Shelby substitute to the bill which will curb some of the most arbitrary, abusive and unfair credit card lending practices that trap consumers in a vicious cycle of debt.
The bill prohibits:
* Applying unfair interest rate hikes retroactively to balances incurred under old rates;
* Assessing hidden and unjustified interest charges on balances already paid off;
* Piling on the debt that consumers owe by requiring them to pay off balances with lower interest rates before those with higher rates;
* Charging late fees even though consumers mail their payments seven days in advance of the due date; and
* Charging excessive upfront fees to subprime cards targeted at consumers with blemished credit histories.
Ameren suspends plans for new plant…..
April 24th, 2009Ameren suspends plans for new plant
ST. LOUIS POST-DISPATCH
When Tom Voss asked the Missouri Legislature for help to build another nuclear power plant, the AmerenUE chief executive promised high-paying jobs to help turn around Missouri’s moribund economy.
Pressed by lawmakers, however, Voss acknowledged that even with new legislation, the prospects of a multibillion-dollar nuclear plant — which could take a decade to build — were 25 percent at best.
Now that Ameren’s favored legislation has died, Voss is saying that the nuclear plant option is dead, too. Thursday morning, Voss said the company is suspending its efforts to build a second nuclear plant in Callaway County.
Proponents of the nuclear plant say Missouri missed a critical opportunity to meet its long-term energy needs with a source of power that is cleaner than facilities that burn coal or natural gas. Opponents say the proposed legislation would not adequately protect consumers from double-digit rate increases.
Voss said the legislative effort was about finding a cost-effective funding mechanism to the best power alternative available. “We developed a bill that we thought was the minimum we needed to provide financial certainty,” he said. “We are stepping away from the nuclear option at this time.”
Stepping away, however, is in the eye of the beholder.
“We’ll take that with a grain of salt,” said Kathleen Logan Smith of the St. Louis-based Missouri Coalition for the Environment.
Smith and other AmerenUE critics, including consumer lobbyist John Coffman, say the plant was already several years down the road, meaning there’s nothing to stop the utility from restarting its efforts. After all, Coffman noted, AmerenUE told lawmakers it would not make a decision on whether to build Callaway 2 until at least 2011.
“They’d still have two more sessions after this one to work on legislation,” said Coffman, the representative of AARP and Consumers Council of Missouri.
The plant was estimated to cost $6 billion to $9 billion and produce at least 3,000 union jobs during construction. AmerenUE pushed a bill that would have allowed it to charge consumers up front for certain costs of the new facility even before it was operating, saving millions of dollars in financing costs.
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But critics say the proposal would have tilted the regulatory playing field in AmerenUE’s direction at the expense of consumers. “What I suspect is that they have a multiyear campaign to change how the Public Service Commission sets rates,” Coffman said. “They’re going to continue to hammer away at this legislation.”
In fact, AmerenUE is keeping the door open to nuclear power.
The investor-owned utility has not decided whether to pull its application for a nuclear permit with the Nuclear Regulatory Commission, spokeswoman Susan Gallagher said Thursday. That application, made in July 2008, is one of 17 pending before the NRC.
The nuclear construction industry has been largely dormant in the U.S. for about 20 years, and now several states are considering changes to laws similar to the bill that died in the Missouri Legislature. Florida, South Carolina and Georgia already passed such laws.
But some utility companies, including AmerenUE, are hoping to wait out the first set of projects and learn from whatever mistakes are made. Last month, AmerenUE executive Scott Bond told USA Today that the company did not want “to be in the first wave of plants.”
That point of view was heavily emphasized by critics who said the Legislature did not need to rush the proposal. Voss said the company would not seek new legislation next year.
At a news conference at an energy summit in Columbia, Mo., on Thursday morning, Gov. Jay Nixon criticized the company for not obtaining a nuclear permit before seeking a change in state law.
“I had hoped that everyone involved would have looked at this as a two-step process,” Nixon said, adding, “I don’t think Ameren has ever absorbed that point.”
At his news conference, Nixon announced a new plan to encourage energy conservation in state government. Both Voss and his critics agree on that theme: With the nuclear option off the table, conservation has to be a part of AmerenUE’s strategy.
Voss has maintained that without the second nuclear plant, the company would pursue new gas-fired power plants. They are cheaper to build because they are much smaller in scale, but the cost of natural gas fluctuates and is unpredictable, leading to potential rate spikes for consumers.
Missourians have among the lowest utility rates in the country, in part because of the state’s dependence on coal. But new Environmental Protection Agency regulations on carbon emissions make it unlikely any new coal plants will be built soon, and they might lead to price hikes to pay for pollution from existing plants.
That’s one reason why AmerenUE was pushing nuclear power.
“This was the least-cost option,” Voss said. “All the other options are more expensive.”
Some environmental groups, however, argue that AmerenUE is predicting unrealistic energy growth.
“If they’re serious about pursuing conservation and renewables, then we’re ready to talk,” said Smith of the environmental coalition. “Let’s find some real answers here.”
Post-Dispatch says Do the Math
April 14th, 2009ST. LOUIS POST-DISPATCH
Do the math on Senate Bill 228
Missouri’s largest electric utility wants to change state law so that customers
could be billed for finance charges while a new nuclear power plant is being
built in Callaway County.
No big deal, AmerenUE officials say. The result would be “a 1 percent to 3
percent annual increase in rates several years from now,” AmerenUE President
Tom Voss said in a letter to ratepayers. That sounds trivial.
If you do the math, a 3 percent annual increase, compounded annually, would
hike electric rates by 34.4 percent over 10 years. The average residential
customer, who now pays about $75 a month, would be paying almost $101 a month
at the end of that time.
Or it could be higher. Nothing in Senate Bill 228, the law AmerenUE is pushing,
would cap rate increases for what’s known as Construction Work In Progress
(CWIP).
A 5 percent annual rate hike would increase electric rates by 63 percent over
10 years, from $75 to $122.17. And that’s if rates don’t rise for other reasons.
These are rough estimates. In reality, rates probably would not increase by the
same amount every year. But the cumulative impact still would be significant.
Any increases would come on top of already-rising electric rates. AmerenUE got
a $163 million-a-year rate hike in January. But even before the new rates went
into effect March 1, company officials told investors they would ask for yet
another rate increase this year. They declined to say how much more they’re
seeking.
There’s also the distinct possibility that Congress will pass a carbon
cap-and-trade system later this year. That would increase costs for utility
companies, like AmerenUE, who generate most of their electricity by burning
coal. Added costs would be passed on to ratepayers.
Any way you slice it, electric rates are going up. The question for legislators
and ratepayers is how to minimize those increases.
AmerenUE says the answer is to repeal the state law against CWIP. But utility
experts from the Office of Public Counsel, which represents ratepayers before
the Public Service Commission, disagree. The PSC staff last month agreed with
the public counsel’s assessment.
The public counsel’s office says using a different financing arrangement called
“credit metrics regulation” would cost less. Such a system could allow AmerenUE
to accelerate depreciation on the new plant, thus reducing what it costs the
firm to borrow money.
AmerenUE says financing the new plant during construction would add between 10
percent and 14 percent to customer bills.
Both the public counsel and the PSC staff say it will add far more — as much as
40 percent, according to the public counsel. The PSC staff reckons the increase
at 55 percent.
The actual figure depends on certain assumptions built into the estimate. A
Maryland utility is building an identical nuclear power plant that carries a $9
billion price tag. AmerenUE estimates a cost of just $6 billion, because it
says it will find partners to help with the cost.
AmerenUE estimates it will take six years to build the facility. But Callaway I
took more than eight years and came in more than $500 million over budget.
Lawmakers are expected to take up SB 228 again soon, perhaps as early as next
week. They’d be well advised to do the math before they do. Their constituents
will be living with it for a long time to come.
Write your Senator NOW
April 13th, 2009Next week, the Missouri Senate will likely be
debating SB 228..the CWIP legislation that
has appeared on this website in the recent
past. Now is the time to write your Senator
and say you are opposed to paying for the
construction of a nuclear plant before it
begins to produce. Check the Post Dispatch
editorial which appears below for more facts
and write NOW. Let’s tell them how regular
consumers feel about this travesty!
Protect electric customers, not utilities
March 31st, 2009A Missouri Senate committee is to vote this afternoon on a revised — but still deeply flawed — utility bill that was written to benefit the state’s largest electric company.
AmerenUE has applied for a federal permit to build a new nuclear reactor in Callaway County. Whether you think that’s a good idea or not — whether you support nuclear power or oppose it — SB 228 is a bad bill, and not just for AmerenUE customers. are some of the whys: Please click here to read the full text of The St. Louis Post-Dispatch editorial.
Utility-Backed Legislation is the Worst Bailout Yet.
March 29th, 2009CWIP is among a host of consumer rip-off schemes currently pending in the Missouri Legislature.
written by John Coffman
General Counsel, Consumers Council of
Energy utility lobbyists have been exerting increasing influence over the Missouri state legislature, rewriting the laws that are supposed to protect consumers. Since 2003, investor-owned utilities have successfully lobbied for measures that permit seven unfair surcharges to be added onto our utility bills. Energy monopolies love surcharges because they allow rates to up without a full audit by the Public Service Commission, and even allows rates to go up for one item during a period when the utility’s overall costs are going down.
This onslaught of extraordinary new ways to raise rates for electricity and natural gas has not even stopped in the face of the current deep recession. In fact, 2009 may be the year that politicians succeed in overturning the citizen-led ballot initiative that banned Construction-Work-In-Progress (CWIP). The anti-CWIP statute was passed by voters by a nearly 2-to-1 margin in 1976 and remains one of our most important consumer protection laws, prevents electric utilities from raising rates for power plants that are not yet providing power.
SB 228 and HB 554 would overturn the will of the voters and put in its place a new ratemaking system, one that is heavily tilted against consumers. Large power plants, such as the proposed $6-9 billion Callaway II nuclear plant of AmerenUE, could be “pre-approved” and then new CWIP surcharges could be added to electric bills every three months during the approximate ten-year construction period.
It is estimated that these charges alone could raise current electric rates by as much as 40% before that power plant has even proven it can be operational. And get this—the proposed legislation would even allow the utility to collect these CWIP charges is the power plant is ultimately cancelled and winds up serving no one.
Although the utilities claim that pre-paying saves money for consumers over the life of the plant, their calculations are flawed. Moreover, such overblown claims do not take into account the cost of money for the ratepayers to come up with the extra cash upfront. Their claims also assume that each consumer charged will be around to benefit from the power of a plant that could take more than a decade to build. The legislation violates a bedrock principle of fair ratemaking in that the consumers who are benefiting from a power plant should be the consumers who are paying for that plant.
This legislation is also being supported by Kansas City Power & Light Company and Empire District Electric Company, which will surely be swift on the heels of AmerenUE in taking advantage of such a new rip-off ratemaking scheme. It is important to recognize that these proponents of SB 228 are privately-held, investor-owned monopolies that do not have to compete for consumers and are already assured of an opportunity to earn a healthy profit—an authorized return on common equity that is usually in the double digits. These utilities have also rewarded their CEOs well. AmerenUE CEO Gary Rainwater received a total compensation package of over $5 million last year. KCPL CEO Michael Chesser’s total compensation for 2008 was $3.5 million.
The purpose for allowing such high returns to a monopoly is compensation for managing the risk of providing power. But they want to continue to reap high returns while passing the risk onto the rest of us. In my book, that is the very definition of a bailout. If captive consumers are going to be fronting the money for such large investments, essentially being forced to act as investors, then consumers should, at a minimum, be granted a return for their contribution to future power.
In another outrageous affront to consumers, Missouri’s natural gas companies are pushing legislation that would allow its uncollectible accounts to be expeditiously charged back to everyone else. SB 299 would redefine the bad debt of non-paying consumers as “gas costs” and then be flowed through the purchase gas adjustment charge, which is currently limited to the wholesale cost of natural gas. So as the recession makes it hard for an increasing number of households to pay their heating bills, the rest of us must pick up their unpaid tab even more quickly. The goal is ensure that utility profits do not suffer even a blip.
While all eyes are trained on Congress and its many bailouts, few citizens seem to be aware of these massive bailouts that are under consideration right under our noses in Jefferson City.
MO senators consider bill to pay for power plants
February 11th, 2009JEFFERSON CITY, Mo. (AP) — Senators grilled AmerenUE leaders during a hearing Tuesday on legislation allowing utilities to charge electric customers for the costs of new power plants before they come online.
Missouri law bars investor-owned utilities from passing the expenses of building a power plant to their customers before the facility starts producing electricity.
Ameren is considering construction of a second nuclear reactor at its Callaway County power plant and says repealing the 1976 state law is critical to financing the estimated $6 billion project.
A large crowd attended Tuesday’s Senate Commerce, Consumer Protection, Energy and the Environment Committee hearing on the legislation, which would apply to new plants powered by nuclear energy, renewable sources or new coal technology. Please click here to read the entire AP story by Chris Blank.
Missouri lawmakers debate a bad energy bill
February 10th, 2009A state Senate committee is scheduled to begin hearings today on a deeply flawed bill that would remove key consumer protections for utility customers.
The measure, Senate Bill 228, would repeal a 1976 law that prohibits utilities from charging for the cost of building a new power plant until it starts generating electricity.
SB 228 is designed to benefit utility giant AmerenUE, which has applied to build a new nuclear plant in Callaway County. Whether or not you think that new plant is a good idea — whether you favor nuclear energy or oppose it — SB 228 is a bad bill. Click here and let the St. Louis Post-Dispatch editorial board count the ways.
