Category: Other Consumer Issues

Sen. Boxer Urges GM CEO Mary Barra to Support Rental Car Safety Legislation

Office of Sen. Barbara Boxer, April 8, 2014

Washington, D.C. – U.S. Senator Barbara Boxer (D-CA) sent a letter Tuesday (April 8) urging General Motors CEO Mary Barra to support the Raechel and Jacqueline Houck Safe Rental Car Act, bipartisan legislation that would help protect consumers by keeping unsafe, recalled rental cars off the road.

Last week, at a Senate Commerce Subcommittee hearing on GM’s recall of 2.6 million vehicles, Senator Boxer questioned Barra about GM’s troubling opposition to the legislation – through the industry trade group, the Alliance of Automobile Manufacturers – in light of the company’s promise to cover the cost of interim rental vehicles while customers wait for their vehicles to be repaired. Barra agreed at the hearing to take a closer look at the legislation.

Senator Boxer wrote, “Your support for this bill is critical because right now there is no guarantee that your customers are renting safe cars while they wait for their recalled vehicles to be repaired.”

Senator Boxer introduced the legislation with Senators Claire McCaskill (D-MO), Charles Schumer (D-NY) and Lisa Murkowski (R-AK) after two of Boxer’s constituents – Raechel and Jacqueline Houck, two sisters from Santa Cruz – were killed in a tragic accident in 2004 while driving a rented Chrysler PT Cruiser that had been recalled for a power steering hose defect but had not been repaired. The car caught fire because of the defect while traveling on Highway 101 in Monterey County, causing a loss of steering and a head-on collision with a semi-trailer truck.

In September 2012, Senators Boxer, Schumer and McCaskill announced that all major car rental companies – Hertz, Enterprise, Avis Budget, Dollar Thrifty, and National – agreed to voluntarily stop the renting or selling of vehicles that have been recalled by their manufacturer and endorsed the legislation.

Although the bipartisan bill has the support of the major rental car companies and consumer advocates, the Alliance of Automobile Manufacturers – which includes GM – has opposed the bill and is working to prevent it from moving forward in the Senate. The National Automobile Dealers Association, which includes many GM franchise dealerships, is also opposed to the legislation.

“You testified that ‘When there’s a safety issue, there should never be a business consideration that goes against it’,” Senator Boxer continued. “I hope you will take this to heart as you review this legislation.”

The legislation is also endorsed by American Car Rental Association, Consumers for Auto Reliability and Safety, AAA, Advocates for Highway and Auto Safety, Consumers Union, and State Farm Insurance. The bill also has the support of Cally Houck, the mother of Raechel and Jacqueline Houck.

The full text of the letter follows:

April 8, 2014

Mary T. Barra, Chief Executive Officer
General Motors Company
P.O. Box 33170
Detroit, MI 48232-5170

Dear Ms. Barra:

During your testimony before the Senate Commerce Subcommittee on Consumer Protection, Product Safety, and Insurance, you stated that you had not read S. 921, the Raechel and Jacqueline Houck Safe Rental Car Act, which is named after two sisters from Santa Cruz who were killed when a recalled car they had rented caught fire and crashed into a truck.

This legislation, which was first introduced in 2012, would:

·       Prohibit the rental or sale of rental vehicles subject to a federal safety recall, consistent with existing law for new car dealers, who are prohibited from selling or leasing recalled vehicles.

·       Require rental companies to ground vehicles within 24 hours of receiving a safety recall notice from the manufacturer.  Companies with fleets over 5,000 vehicles would have up to 48 hours.

·       Permit rental companies to implement temporary measures to eliminate the safety risk until parts are available.

·       Allow manufacturers to continue to issue technical service bulletins or customer satisfaction service campaigns for problems that do not rise to the level of a federal safety recall.

Your support for this bill is critical because right now there is no guarantee that your customers are renting safe cars while they wait for their recalled vehicles to be repaired.

You testified that “When there’s a safety issue, there should never be a business consideration that goes against it.”  I hope you will take this to heart as you review this legislation.

Sincerely,

Barbara Boxer
United States Senator

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Starter Cut-off Devices Keep Car Payments Coming But Scare Consumers

St. Louis Post-Dispatch, September 22, 2013

Back in the old days, if you couldn’t make your car payment, you had to watch out for the repo man. Now, the repo man is a robot that rides around in a little device under your dashboard. Miss a payment, and the car becomes a hunk of useless metal immobilized by a starter blocking device triggered from cyberspace.

The owner then has a choice — pay up and get use of the car again, or wait until the human repo man eventually rolls up. He’ll be guided right to the spot by a GPS tattletale in the device.

“Automated Collection Technology,” as it’s known in the business, is becoming a common part of the “deep subprime” auto lending market. That’s the market that finances old used cars for people with little income and poor credit. The industry charges high interest — often more than 20 percent. Not surprisingly, such lenders often have trouble collecting.

The devices, which prevent cars from starting, are sparking a challenge from Legal Services of Eastern Missouri. The legal aid nonprofit agency, which serves the poor, contends they’re dangerous — stranding motorists far from home, sometimes at night and in crime-ridden neighborhoods.

“I call it stranding technology,” said Rob Swearingen, the legal services attorney who recently filed a lawsuit against the practice. The devices don’t stop a car while moving. But once the engine is off, they stop it from restarting. “I had a client who was in an intersection with a child,” Swearingen said. The car stalled, and when she tried to restart it, the starter was blocked. “She had to roll the car to the side of the road, get the child out and beg somebody for money to get on a bus.”

The industry says the devices are a public service. By encouraging prompt payment, the devices help consumers rebuild their battered credit scores, the industry contends. By reducing losses for lenders, it allows them to make bigger loans to borrowers so they can buy better cars. The devices can also foil car thieves by guiding police to the stolen car.

Hosea Robinson said the device did him no favors. He was working as a security guard at a housing project in Wellston. “I was a little behind in my payments. They kept calling and I told them I was going to make a payment when I got paid,” Robinson said. Leaving work at night, he found his 1997 Sunfire wouldn’t start. “I called them, and they said that unless I made a payment, they wouldn’t turn it on.” Robinson got his brother out of bed to give him a ride home. When he returned the next day, the car’s windows had been smashed and the car was dented. “There was $400 or $500 damage to the car. It pretty much wound up being junked,” he said.

Auto dealers think the devices ease their biggest headache — people who pay late, or don’t pay at all. About a third of subprime customers default on their loans, said Ken Shilson, founder and president of the National Alliance of Buy-Here-Pay-Here Dealers. As a result, the industry spends a lot on collectors, who call customers when payments are late.

The devices reverse that process. Fearing that their cars won’t start, people who are going to be late call the collectors to beg for extra time to pay. Some of the devices beep at customers just before payments are due, and whistle when they’re a day away from being shut off.

In a survey by the National Alliance, 91 percent of dealers said the devices cut their collection expenses, and 81 percent think the devices reduce the risk of default. “There are two types of operators — those that are using the devices and those that should be using the devices,” Shilson said. His surveys show that 40 to 60 percent of subprime lenders and dealers are using some type of device. Some simply track the car by GPS, but most can both track and disable it. “It’s the number one business model in use in deep subprime,” Shilson said.

Some customers aren’t happy about riding with a repo robot. Rachael Ward, a dental assistant from Fenton, bought her 2003 Mitsubishi Galant in October 2010 at Auto Credit Mart on St. Charles Rock Road. She put $700 down and borrowed $5,382 from Western Funding.

Western Funding is a major subprime lender, financing cars through 3,000 car lots. It charges an average interest rate of 23 percent, according to the company website. The dealer explained the device and that the lender could freeze the starter if she fell behind. “They said, ‘It’s a benefit to you. If it’s ever stolen, we can track it down and shut it off,’” she recalled. Customers usually sign a paper acknowledging the device.

Ward, a married mother of two, didn’t think much about it until one day that winter. “I got into my car to leave for the doctor, and the car wouldn’t start. When I tried, the key it would make this beeping noise,” she said. “I’m freaking out because I have to get the kids from school.” She wasn’t behind on her payment, she said. She called Western Funding, and they gave her control of the car again after a 30-minute wait. It happened again in March 2011, she said. This time it took more than an hour to restore.

By August 2011, however, she says she was two weeks behind on her car payment. She left work in Des Peres and found her starter frozen. “Your payment was due on the first,” said the representative at Western Funding, according to Ward. “You’re late.” At the time, she lived in Bellefontaine Neighbors, about 25 miles away. After some begging, they let her drive home before shutting it off again.

She fell behind again and was shut off again in November, while out shopping with her family. This time they wouldn’t unfreeze the starter until she paid. In December, her car was disabled again while she was at work. “They laughed at me,” she said. “They said the policy had changed. Now instead of 10 days to pay, you have five days. My husband came with the kids and picked me up.” She later wired in the money to the lender.

After all that, she’s frightened by the device. “It’s a hassle, and I’m constantly nervous,” she said. “What will happen if I have the kids with me and it’s the middle of winter?” But it does concentrate her mind on making on-time payments. “I’m a day late and I’m paranoid. It’s a constant worry,” she said.

That’s the value of a cutoff device from the dealer’s perspective — it keeps customers paying on time. Swearingen, the legal services lawyer, says dealers don’t really want to repossess the cars, which tend to be old and high-mileage with little value. They’d rather have the money.

“Of course you cut delinquencies. People are scared out of their wits,” Swearingen said. In a lawsuit filed against Western Funding, Swearingen says the experience left Ward with “anxiety, loss of appetite, chest pains, loss of concentration at her job and in her personal life, crying, depression, fear of using the car, fear of being stranded, embarrassment … fatigue, headaches, personal humiliation, insomnia … nausea, nervousness, panic attack, restlessness and loss of sleep.”

Swearingen hangs his legal hat on an old common law principle that a lender can’t “breach the peace” in a repossession. That means they can’t put a person in harm’s way. To Swearingen, that would mean “turning off a car in a bad neighborhood, or for a single female at night.”

Western Funding didn’t reply to requests for comment. The lending industry takes pains to prevent such events, Shilson said. “They try to shut them off in the middle of the night so to be minimally disruptive.”

Passtime is a Colorado company that is the biggest supplier of starter interrupters. Its CEO, Stan Schwarz, says it provides a remote control that borrowers can use to get a 24-hour reprieve after the starter has been frozen. “We never want anybody to be stranded,” he said.

Swearingen, the poverty lawyer, also suspects that some companies are violating Missouri’s law on repossessions. Lenders must wait 10 days after a payment is due, then send a letter notifying the borrower of the default. They then give the borrower another 20 days to pay before taking action to enforce its contract. Ward said she never got a warning letter.

Companies such as Passtime supply the devices, along with software that lenders use to decide when to cut a customer off. But the actual cutoff decision is made by the lender.

According to the National Alliance survey, 14 percent start GPS tracking or disable immediately when a customer misses a payment, 30 percent have a short grace period, 54 use discretion and 1 percent use the devices only as a threat.

Schwarz says his company’s software is programmed with Missouri’s legal requirements, including the need for a warning letter. It’s not clear if Ward’s car had a Passtime device. Western Funding used to be a customer, but is no longer, Schwarz said. According to Swearingen, Western Funding’s records, which he received in another suit, indicate that it does send warning letters to customers.

The use of starter cutoff devices began in 1999. It was pioneered by former Detroit Lions football player Mel Farr, who owned car dealerships in Detroit. In local TV commercials, he played a “superstar” flying through the air in a red cape, and specialized in lending to people with shaky credit.

Small, cheap GPS devices arrived over the last decade, and manufacturers began combining them with starter disablers. Prices have come down to the $100 to $275 range. Use seems to be growing.

Sales at Passtime have been growing at 20 percent a year for the past three years. Schwarz expects 30 percent growth this year at his privately held company. Use of the devices is creeping up into the “near-prime” market, where lenders have credit scores below 680 but aren’t considered deeply poor credit risks, he says.

Shilson, meanwhile, says subprime lenders are doing a public service — despite their high interest rates — by lending to people who need cars and who other lenders wouldn’t touch. “These are lenders of last resort. They have to protect themselves,” he said.

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Carmakers Throw Up Roadblock to Prevent Rental of Defective Vehicles

Sen. McCaskill’s Subcomittee on Consumer Protection Holds Hearing

St. Louis Post-Dispatch, May 21, 2013

WASHINGTON • After working for two years to get rental car companies on board, safety advocates encountered a new obstacle today to legislation banning rental of recalled vehicles: opposition from car manufacturers.

With representatives of Clayton-based Enterprise Holdings looking on, the CEO of the Alliance of Automobile Manufacturers testified in a Senate hearing that major American and foreign car companies won’t back a bill as written requiring rental companies to fix defective cars and trucks before putting them on the road.

Mitch Bainwol, representing companies accounting for three-fourths of vehicles sales in the United States, said he worries about carmakers’ liability.

“Once you federalize a voluntary agreement, you’ve introduced absolutely a loss-of-use liability,” Bainwol said, describing his objection to the legislation.

In other words, carmakers worry that rental companies will sue them if defects render vehicles impossible to rent.

Similarly, the president of the National Automobile Dealers Association said his organization opposes the legislation as written, arguing that it would “create friction between large rental companies, auto manufacturers, franchised new car dealers and members of the public who own recalled vehicles.”

Bailey Wood, spokesman for the automobile dealers, said later: “We do not want to stop this legislation. We think a few tweaks can be made.”

They were testifying at a hearing of the Senate Subcommittee on Consumer Protection, chaired by Sen. Claire McCaskill, D-Mo.

The hearing grew heated when Bainwol refused to answer yes or no when asked if he believed rental car companies should fix defective vehicles before leasing them.

Sen. Barbara Boxer, D-Calif., a sponsor of the legislation, called Bainwol’s comments “shameful” and remarked: “I don’t know what planet you’re living on.”

McCaskill, a co-sponsor, said to Bainwol: “I think you’re on the losing side of a very bad PR situation if you’re not careful.”

McCaskill said later she was optimistic that agreement with the automotive industry could be reached.

The legislation in question is the product of a protracted negotiation and is supported by Enterprise, the industry leader, and all of the major rental car companies. McCaskill and Sen. Roy Blunt, R-Mo., have worked to fashion the compromise.

The proposed law grew from the death nine years ago of two sisters in California driving an Enterprise rental car that had gone unrepaired despite a defective power steering hose.

It was the first opportunity for Carol Houck to testify in Congress about the death of her, daughters Raechel and Jacqueline, ages 24 and 20, in the recalled PT Cruiser.

“I received the phone call dreaded by every parent: My daughters had been involved in a terrible traffic collision that took both of their lives in a fiery crash with an 18-wheeler,” she said.

A campaign by Houck and consumer groups led to pressure on industry leader Enterprise last year to drop objections to the bill. In two days time, more than 160,000 people signed an online petition requesting Enterprise to relent, which the company eventually did after changes in the legislation.

The bill requires rental car companies to ground most defective vehicles within 24 hours after receiving notice of safety recalls. In cases of minor defects, companies are permitted to rent vehicles with interim fixes that eliminate safety risks until parts can be secured.

David Strickland, administrator of the National Highway Traffic Safety Administration, offered his support in testimony. He said the efforts of Carol Houck after the death of her daughters “served to highlight a very serious gap in federal law.”

Regarding carmakers worry of litigation, Houck asked afterward: “You may get sued, but you may save somebody’s life. Have you thought about it that way?”

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Senators File Bill Banning Rental of Recalled Cars

McCaskill Will Hold Hearing

Washington, D.C., May 9, 2013

A bipartisan group of U.S. senators, including Claire McCaskill (D-MO), has introduced a bill banning rental car companies from renting recalled vehicles that have not been repaired to consumers.

The bill, the Raechel and Jacqueline Houck Safe Rental Car Act of 2013, would close a dangerous loophole that allows rental car companies to rent or sell unrepaired recalled vehicles that are unlawful for car dealers to sell.  The legislation is named for two young women in California who were killed when their rental car caught fire.  The bill has the support of the rental car industry and will receive a hearing by a subcommittee of the Commerce Committee.

In addition to McCaskill, the sponsors of the bill are Senators Charles E.  Schumer (D-NY), Lisa Murkowski (R-AK) and Barbara Boxer (D-CA).  Supporting the bill are all the major car rental companies – Hertz, Enterprise, Avis Budget, Dollar Thrifty and National – as well as the American Car Rental Association, which together represent virtually 100 percent of the rental car market.

While current law prohibits car dealerships from selling recalled vehicles to consumers, no law bans rental car companies from doing the same or renting them to unsuspecting consumers.  The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 would keep unsafe rental cars that have been recalled off the road.

Later this month, Senator Claire McCaskill, chair of the Senate Commerce Committee’s Consumer Protection Subcommittee, intends to hold a hearing on the bill.  She said, “Our goals for this legislation are twofold — to protect families, and to prevent undue burdens for employers — and this agreement succeeds on both fronts.  Neither side got everything they wanted, but by everybody giving a little, we’re getting a lot — and that’s what compromise is all about.”

Schumer noted, “Rental car companies are rolling the dice with passengers’ lives each and every time they rent a car that’s under a recall.  This practice has already proved tragic.  Most rental companies have now changed their policies, but we need a law to ensure that recalled cars are never again driven off of rental lots.  This bipartisan bill is a common sense safety measure, and I’m very grateful that Senator McCaskill has agreed to hold a hearing on it.”

Boxer said, “This legislation honors the memory of Raechel and Jacqueline Houck – two beautiful girls who lost their lives in a senseless tragedy – by ensuring that no other family will have to fear that the rental car they are driving is unsafe.  Because of the tireless work of their mother, Cally [Houck], we are able to introduce this bipartisan bill today that will make sure that vehicles rented or sold by rental car companies are safe and sound.”

“No other family should have to endure such horrific losses just because a rental car company didn’t bother to ensure that their cars are not being recalled due to safety defects,” said Houck.
Rosemary Shahan, president of Consumers for Auto Reliability and Safety added, “We’re optimistic that Congress will act to stop all rental car companies from playing ‘rental car roulette’ with their customers’ lives.”

In 2004, sisters Raechel and Jacqueline Houck were killed driving a rental car that had been recalled for a power steering hose defect but had not been repaired.  The car caught fire because of the defect while traveling on the highway, causing a loss of steering and a head-on collision with a semi-trailer truck.  The young women died in the crash.

The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 is needed to ensure this tragedy is not repeated.  Getting unsafe vehicles off the road is integral to improving safety and saving lives.  This is why current law requires manufacturers to recall vehicles that have safety-related defects or do not meet federal safety standards.  Current law also prohibits auto dealers from selling a new car under recall unless the defect has been remedied.  The legislation would, for the first time, hold rental companies to the same standard as auto dealers.

Specifically, the bill:

  • Prohibits Rental or Sale of Vehicles Subject to a Safety Recall  Under the senators’ plan, vehicles may not be rented or sold until the vehicles are fixed, consistent with existing law for new car dealers, who have been prohibited from selling or leasing recalled vehicles for decades.  Rental companies would be permitted to sell a damaged vehicle subject to recall for parts or scrap with a junk title.
  • Requires Rental Companies to Ground Vehicles Under a Safety Recall The bill would ensure that vehicles under a safety recall will be grounded as soon as possible but no later than 24 hours after the rental company gets the safety recall notice.  Rental companies will have up to 48 hours for recalls that include more than 5,000 vehicles in their fleet.
  • Permits Rental Companies to Rely on Temporary Measures Identified by Manufacturers  If a manufacturer’s recall notice specifies steps that can be taken to eliminate the safety risk until parts are available, a rental company may continue to rent the vehicle if those measures are put in place but must ground and repair the vehicle once parts become available.
  • Ensures NHTSA Has Tools Necessary to Protect Consumers  The National Highway Traffic Safety Administration will have authority to investigate and police rental companies’ recall safety practices.

The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 is supported by Carol (Cally) Houck – mother of Raechel and Jacqueline Houck, Consumers for Auto Reliability and Safety, Advocates for Highway and Auto Safety, Center for Auto Safety, Consumers Union, Consumer Federation of America, Consumer Action, National Association of Consumer Advocates, and Trauma Foundation.  The bill has been endorsed by all the major car rental companies – Hertz, Enterprise, Avis Budget, Dollar Thrifty and National – as well as the American Car Rental Association. The bill also is supported by the Truck Renting and Leasing Association, representing the vast majority of truck renting and leasing operations in the United States, as well as AAA and State Farm.

Enterprise:
 “Although most of the car rental industry already prohibits renting or selling recalled cars if they haven’t been repaired, lawmakers can further reassure car rental customers across the board by supporting and voting in favor of this important federal legislation.  As a result, we will continue advocating on behalf of this bill and working diligently with consumer advocates, the American Car Rental Association and other key stakeholders to help get it passed.”

The American Car Rental Association: 
“The American Car Rental Association (ACRA) is pleased to join with consumer advocates in support of this legislation, which prohibits the rental of any vehicle that has an unrepaired safety recall and addresses certain practical implementation issues of our industry.  It is critically important that Congress codify what most of the car rental industry voluntarily enacted last year.  By formally creating a uniform standard, both car-rental and car-sharing customers will have even greater confidence going forward no matter where they rent their vehicles.”

Hertz:
 “Hertz supports efforts to prohibit car rental companies from renting or selling recalled cars if they haven’t been repaired.  The major companies do an excellent job handling recalls, and consumers should have confidence that the cars they drive are safe; this legislation will help improve the public’s perception of our industry’s commitment to safety.”

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Missouri AG Releases Top 10 Consumer Complaints for 2012

Missourinet, March 4, 2013 

This week is National Consumer Protection Week. Attorney General Chris Koster has released the list of top 10 complaints reported to his Consumer Protection Hotline by Missourians in 2012. Unwanted telemarketing calls top the list.

The Missouri Attorney General’s Office says it has obtained more than $1.4 million in judgments against telemarketers in 2012, up about $1 million in 2011.

“Complaints about unwanted calls have increased dramatically in the past few years,” Koster said in a press release sent to Missourinet. “While Missouri’s No-Call list provides protection against unwanted calls from many in-state and national businesses, unfortunately, new technology is allowing callers from around the world to place literally millions of calls each day, anonymously, over the internet.”

Koster said these calls over the internet cost virtually nothing for the caller to place. He said these callers also utilize “spoofing,” or fake caller ID information, to make it harder to trace where the calls are originating. The callers often are random-dialing millions of numbers, looking for working phone numbers so they can try to sell a product or perpetrate a scam against the person answering the phone.

Koster’s office works with the Federal Trade Commission and other states to try to track down the illegitimate calls. Missouri also provides information to the Federal Trade Commission for cases in which our state does not have jurisdiction. As a result, the commission was recently able to shut down Pacific Telecom, a telemarketer operating out of Belize that Koster says preyed on people in Missouri and other states.

Complaints about telemarketers targeting cell phone numbers have also increased, Koster’s office reports. Consumers are now able to register cell phones on Missouri’s No-Call list due to a 2012 change in the law.

Below are the top 10 complaints filed with the Attorney General’s Office in 2012:

NO-CALL COMPLAINTS (39,990) – On average, consumers filed 212 complaints each working day, double the amount from two years ago.  The Attorney General’s Office asks consumers to report unwanted calls to the No-Call complaint hotline at 1-866-buzzoff (1-866-289-9633).

DEBT COLLECTORS (1,769) – State and federal laws protect consumers from harassment.  Consumers who believe they are being harassed should report the behavior to the Attorney General’s Office.

MORTGAGE/FORECLOSURE/LOAN MODIFICATIONS (1,648) – Many struggling homeowners have filed complaints concerning foreclosures and difficulties with the loan modification process.  The National Mortgage Settlement provides $25 billion in relief to homeowners whose loans are with the five settling banks: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial.  Consumers should report any concerns that the terms of the settlement are not being met to the Attorney General’s Office.

MAIL AND PHONE SOLICITATIONS (1,432) – Consumers continue to be inundated with mail, emails and telephone calls offering them “valuable prizes.”  Often, the mail looks official, as if it is from a government agency.  Instead, these are scams designed to entice consumers to give out their financial information or to send money.  Foreign lottery promotions are the largest type of sweepstakes scams that affect consumers nationwide.  Consumers should not give financial information to people they do not know or wire money to strangers.  Any consumer who is not sure whether an offer is legitimate should call the Attorney General’s Office before taking action.

TELPHONE CRAMMING and BILLING (1,165) – Cramming happens when a consumer receives charges on phone bills for services not ordered; often the charges are by third parties.  To detect cramming, consumers should thoroughly review their phone bills. Consumers who notice unwarranted charges should contact their phone service carrier to request that unauthorized charges be removed and that they receive a refund.

CREDIT AND DEBIT CARD (1,165) – Complaints involved both charges that the consumer never authorized and double-billing on the card or account after making a purchase.  The Attorney General recommends that consumers be wary of authorizing direct bank account debiting and not to provide bank account numbers over the phone.  Using a credit card does provide some protection under federal law granting consumers the right to challenge unauthorized charges, but this must generally be done in writing within 60 days of the charge appearing on the consumer’s monthly statement.  Even so, consumers are encouraged to provide credit card information only to familiar merchants contacted by the consumer.

HOME REPAIR AND REMODELING (928) – Typical home-repair scammers go door-to-door, offering to do work but asking for money up-front.  The majority of door-to-door schemes involved asphalt driveway scams, roof and chimney repairs, and remodeling work inside the home, often following storms.  Many home-repair scam artists are not licensed, are not from the area, do not provide a detailed contract, and usually demand cash payments.

PUBLICATIONS AND MAGAZINE SALES (823) – In 2012, the Attorney General’s Office saw an increase in this category of consumer complaints.  In some complaints, telemarketing companies offered new subscriptions or renewals at discounted rates, or with the promise of a prize, but once the telemarketer had the consumer’s credit card information it charged inflated rates or failed to provide the magazines.  Other complaints involved door-to-door sales people who claimed to be raising money for college, camp, or charity, but then never received the publication. Concerned consumers should check directly with the school or charity to see if sales are being conducted in the area at that time.

CABLE/SATELLITE SERVICES (670) – Complaints to the Attorney General’s Office ranged from complaints about installation and price discrepancies to channel selections.  Consumers should be cautious when ordering a new service, and should always read the fine print.

AUTOMOBILE REPAIR (641) – While most repair shops are honest, it is very easy for an unethical mechanic to convince car owners that unnecessary repairs are needed.  The Attorney General advises consumers to get a written estimate before repairs are made, have repairs made by a certified mechanic, and verify that the business honors existing warranties and guarantees repairs.

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Car Dealers ‘Yo-Yo’ Practice Irks Customers

St. Louis Post-Dispatch, November 06, 2011

Barbara Webster thought she had bought a new Sorento at Suntrup Kia in the Mehlville area in February. She traded in her old one, signed a credit agreement and drove away.

Now she has no car at all, although she says she made the payments. Suntrup not only took her new car back, but the dealer kept her down payment and didn’t return her trade-in.

“I’m very upset. They’ve taken my car,” she said, “plus my money.”

This is an example of “yo-yoing,” said Rob Swearingen, an attorney at Legal Services of Eastern Missouri, who is representing Webster. It’s a fairly common practice, especially in the used car business, he added.

The practice draws fire from consumer advocates, but dealers who spoke with the Post-Dispatch say criticism is unfair. They say they explain to customers that the deal isn’t final until the financing contract is sold, and customers sign a paper to that effect.

According to consumer advocates, here’s how yo-yoing works:

A consumer drives away having just bought a car and signed a loan agreement, thinking financing is in place. Then the dealer is unable to sell the loan to a finance company, so the dealer wants to renegotiate the deal with the customer or take the car back.

“They’ll want you to come in and they’ll either want to put you in a different car or a higher interest rate,” Swearingen said.

Dealers often refuse to return down payments, using the money as compensation for mileage the customer placed on the car.

The buyers are often people with inadequate income or poor credit who don’t qualify for a prime car loan. Webster, 66, a retiree, agreed to pay 18 percent annual interest to finance her $24,665 Sorento. Other contracts reviewed by the Post-Dispatch charged as much as 24.95 percent. Prime auto loans in February averaged about 4.8 percent, according to Bankrate.com.

Webster, who lives in north St. Louis, said she thought the deal was final when she drove away.

“I thought everything was OK and I had me a new car,” she said.

Her sales and financing contracts show that she put $2,500 down and traded in a 2007 Chevrolet Equinox. The dealer credited her with a trade-in allowance of $11,574, but she still owed $16,000 on the Equinox. So, the difference was added to the amount she borrowed to buy the Sorento.

She signed an installment loan agreement for $24,665 with Suntrup as the creditor. The contract said the dealership would transfer the loan to JPMorgan Chase Bank.

“After I had it about a month, they said I wasn’t financed, and I had to come up with a co-signer,” she said. Webster eventually found a relative willing to sign, and they drove to the dealership. But the relative balked when she saw the loan paperwork.

Then the dealer took possession of the car.

Webster said she asked for the return of her trade-in, but the dealer told her it had been sold. She asked for her down payment. “He said I don’t get that back,” she said.

In a written statement, Butch Suntrup, partner in the dealership, declined to comment, saying he was gathering information on Webster’s case and noting the possibility of litigation.

“I can tell you that we aggressively work to secure lending for each and every customer who desires to purchase a car from us; each individual’s circumstances vary and privacy laws prevent us from discussing any individual customer’s case,” he said.

The dealership said more in reply to Webster’s complaint to the Better Business Bureau. In that response, Suntrup says the bank discovered that Webster had lost her job. Webster says she retired after she bought the car.

The dealership also said it had auctioned off her trade-in.

“We lost on the sale of her car and so we kept the deposit as collateral to our loss and she would still legally owe us money,” the dealership said in the BBB report. “This should be an invalid complaint as we have done everything we could to work with her to get a car she could afford.”

Swearingen, whose agency provides free representation to the poor, says he has a pile of yo-yo cases. “I’m starting to see more and more of it,” he says.

The practice has drawn fire from consumer advocates across the nation.

“It’s been a huge problem all over the country,” says Rosemary Shahan, president of Consumers for Auto Reliability and Safety, an advocacy group in California. “You can have good credit and still get yo-yoed.”

Dale Irwin, a consumer lawyer in Kansas City, said the practice draws its name from comments made by a Kansas City area auto finance manager during a deposition in a consumer lawsuit.

“They view the car as on a yo-yo string and they can get it back,” Irwin said.

Swearingen says he thinks repossessions such as Webster’s aren’t legal under Missouri law. After all, she had a sales contract and a loan agreement with Suntrup as the creditor. The deal was final, he said.

But dealers often rely on another document signed during the closing process. That document, sometimes called a “bailment,” says that the sale is contingent on the dealer’s ability to sell the loan. If it can’t, the purchaser must return the car and pay a fee. Sometimes that is $30 a day. Sometimes it is 50 cents or a dollar for every mile driven.

In July, Stefan Gilliehan and his wife, Olivia McClinton, bought a 2009 Chrysler 300 from Auto Stop in Hazelwood. The St. Peters couple put $1,000 down and signed a loan agreement with Auto Stop, financing $19,911 at 20.95 percent annual interest.

“They said they could guarantee financing for us,” Gilliehan said.

In August, they got a letter from Regional Acceptance Corp. saying they had been denied credit, citing “temporary or irregular employment.” After buying the car, McClinton had lost her part-time job.

Then came the phone call; the dealer wanted the car back. The couple returned it, but didn’t get their down payment back. Worse, they got a letter from the Missouri Department of Revenue, claiming they owed sales taxes on a car they no longer had.

The couple didn’t get their down payment back because they had put 2,500 miles on the car, said Drew, who identified himself as the manager at Auto Stop but wouldn’t give his last name.

He said the couple was told that the deal was contingent on financial approval and that they would be charged for mileage. The buyers signed a paper to that effect, he said.

“We can’t really remember what we were signing,” Gilliehan said. “They kept us in there for probably five hours. It was long drawn out.”

That’s a common problem among buyers in yo-yo cases, Swearingen says. They don’t understand the dense legal documents they sign, often at the end of a long day at the dealership.

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CCM Joins CARS To Urge Enterprise To Drop Opposition To Rental Car Safety Bill

A loophole in federal law allows rental car companies to rent or sell vehicles that are under a safety recall, without fixing them first. Enterprise is the largest rental car company in the nation but admitted in a letter to the National Highway Traffic Safety Administrationm, that it continues to rent vehicles to the public, even after receiving notice they are under a safety recall.

Pending legislation, S 1445, sponsored by Sen.Schumer, Sen Boxer and others, would ground defective rental cars that are subject to a safety recall, until they are fixed. Enterprise is attempting to defeat the bill.

Senator Shumer proposed the legislation after sisters Raechel and Jacqueline Houck of Santa Cruz, CA were killed in 2004 when the Enterprise rental car they drove caught fire under the hood, they lost steering and veered across the median crashing head-on into a semi-trailer truck. Their car exploded on impact, killing them both. Enterprise received a safety recall notice from the manufacturer 30 days before the fatal crash but continued to rent the car to unsuspecting customers.

Consumers Council of Missouri urges concerned citizens to write to Andrew Taylor, CEO of Enterprise, urging him to drop opposition to S 1445. His address is: Andrew Taylor, Enterprise Corporate Office, 600 Corporate Park Drive, St. Louis, MO 63105.

NEWS RELEASE

NEWS for immediate release: Tuesday, February 21, 2012

Contact:
Judi Roman, Consumer Council of Missouri (St. Louis, MO) 314-647-7723
Rosemary Shahan, President CARS (Sacramento, CA) 530-759-9440

Enterprise Tries to Kill Rental Car Safety Bill Advocated by Rival Hertz and Consumer Groups

Enterprise Rental Car Co. is attempting to defeat federal auto safety legislation, despite a historic new compromise agreement struck between a rival rental car company Hertz and a non-profit auto safety organization. Hertz has agreed to support a federal requirement for rental car companies to ground defective rental cars that are subject to a safety recall, until they are fixed.

A major investigative report published today by USA Today, the nation’s largest-circulation daily newspaper, announced Hertz’ stand — unprecedented for a rental car company.

The agreement reached by Hertz and Consumers for Auto Reliability and Safety (CARS) is similar to legislation proposed by Senator Chuck Schumer (D-NY) and championed by Sen. Barbara Boxer (D-CA) that is pending in Congress. Thanks to Hertz’ decision to side with consumers, passage is now more likely, when Congress reconvenes. Under existing law, new car dealers are prohibited from selling recalled vehicles once they receive notice about a safety recall, until they are fixed. Auto manufacturers are required by law to pay for the repairs. However, a loophole in the law allows rental car companies to rent recalled vehicles to the public, without fixing the safety defects first.

Sen. Schumer named the proposed legislation in memory of sisters Raechel and Jacqueline Houck of Santa Cruz, CA, who were killed in 2004, at ages 24 and 20, when the Enterprise rental car their father arranged for them to rent, a PT Cruiser, caught fire under the hood. The car also lost its steering, veered across the median, and crashed head-on into a semi-trailer truck. The car exploded on impact, killing both sisters.

Enterprise received a safety recall notice from Chrysler about 30 days before the fatal crash, warning about a defective steering component that was prone to leaking, causing a risk of under-hood fires and a loss of steering control. But the company continued to rent the car to unsuspecting customers, including three other people before the Houck sisters. The sisters were led to believe they were getting an upgrade. In fact, the PT Cruiser was the last car on the lot. Later, their grieving parents happened to find out about the safety recall from a mechanic who worked with Mr. Houck at an auto dealership.

When the Houcks sued Enterprise, the company fought back, insisting that the young women must have been suicidal. It wasn’t until after five years of litigation that Enterprise finally admitted 100 percent liability — about two weeks before the case went to trial. This meant the jury never heard key evidence, including a statement from a former Enterprise manager that, “When demand called, we rented out recalled vehicles … If all you have are recalled vehicles on the lot, you rent them out. It was a given. The whole company did it. Enterprise’s corporate offices look the other way regarding this fact.”[1]

The jury awarded the Houcks $15 million — peanuts to the largest rental car company in the nation. Despite pressure from Enterprise, the Houcks refused to sign a confidentiality agreement, leaving them free to push for legislation to spare other families the same terrible loss.

Despite the Houcks’ tragedy, Enterprise has admitted to federal regulators that it continues to rent vehicles to the public after they are recalled by the manufacturer due to safety defects, without fixing them first. According to Enterprise, “A committee of senior executives of the parent company, including the executives responsible for vehicle maintenance and repair, evaluates recall notices. If the committee is confident that we can continue to safely rent the vehicle, we may rent the vehicle prior to the recall work being completed.”

Enterprise boasts that last year it took in over $14 billion. So it’s hard to believe they can’t afford to repair unsafe, recalled vehicles before renting them to the public,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), a non-profit auto safety and consumer advocacy organization based in Sacramento, CA. “Particularly when Hertz is supporting the legislation, there’s no excuse for Enterprise to keep putting its customers at risk.” CARS negotiated the agreement with Hertz to support grounding the recalled cars.

“If this law had been in effect in 2004, my daughters would still be alive,” said Carol “Cally” Houck, Raechel and Jacqueline’s mother. “No one else should have to lose a child because the rental car company doesn’t care enough about their safety to ground a car they know is so unsafe it is being recalled.”

Enterprise also admitted that it ordered tens of thousands Impalas from General Motors that were missing standard side air bags. By cutting corners on safety, they shaved approximately $145 off the price of each car. Side air bags have been proven to dramatically reduce the risk of serious injuries or fatalities from side impact collisions. Enterprise then resold the vehicles as used cars, claiming they had side air bags. In order to settle a class action brought on behalf of used car buyers who purchased the cars, Enterprise offered to give the owners a $200 discount.

“I hope Enterprise will put its customers’ safety first, by throwing its full support behind the legislation advocated by Senators Schumer and Boxer,” said Joan Bray, chair of the Consumers Council of Missouri. “Enterprise is a key member of Missouri’s corporate community and we expect it to behave in a responsible and ethical manner.”


[1] Statement of Mark Matias, former Enterprise manager, 2008.

[2] Letter from Enterprise Holdings to Jennifer Timian, Esq., Chief, Recall Management Division, Office of Defects Investigation, National Highway Traffic Safety Administration, April 7, 2011, Page 2.

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Website for Consumer Complaints

If you’re thinking about using a new company that you don’t know much about, you can now find out if the company has consumer complaints lodged against it.  Attorney General Jay Nixon has a new website which will give you a history or pattern of consumer complaints eagainst individual companies. For more information, you can also call 1-800-392-8222.

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In Memory of Consumers Council Founder Alberta Slavin

ST. LOUIS POST-DISPATCH, Michael Sorkin

Alberta Slavin, who founded the consumer movement in Missouri 40 years ago with a group of housewives angry over grocery prices, died Monday (Oct. 27, 2008) at St. Louis University Hospital after a lengthy illness. She was 78 and a longtime Clayton resident. Her Housewives Elect Lower Prices (HELP) group gained national prominence in 1967 targeting supermarkets over high prices in inner city neighborhoods. She then formed the Utility Consumers Council of Missouri after the phone company cut off her service because she wasn’t using a company-approved telephone. Gov. Joe Teasdale named her in 1977 to the Missouri Public Service Commission, calling her the first consumer advocate to head it.For nearly seven years in the 1980s, she was the “On Your Side” reporter at KMOV-TV.

In 2001, Attorney General Jay Nixon named her to the board of directors of the new Missouri Health Foundation and she became its president. Today, the foundation has more than $1 billion on hand to help Missourians improve their health.

In 2006, Mrs. Slavin again became concerned at what she considered the lack of consumer influence to counter utilities and their allies in Jefferson City. She formed the Consumers Council of Missouri, a budding statewide group that speaks for consumers. Today, the group is fighting an effort by AmerenUE to reverse a state law preventing electric companies from charging customers for power plants before they become operational.

Missouri voters approved the law in 1976 and Mrs. Slavin and her first consumers council led the fight.Mrs. Slavin remained president of the newly reconstituted group until her death. “She was Ms. Consumer in Missouri for decades,” said Sen. Joan Bray, D-University City.

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