Wisconsin Court of Appeals Upholds Arbitration Clause Despite Its Class Action Ban

Posted by on January 20, 2012 Comments Off

In Cottonwood Financial Ltd v. Estes, Wisconsin Court of Appeals, Case No. 2009AP760, decided Dec. 20, 2011, the court enforced an arbitration agreement against a consumer despite the ban on class action proceedings contained within the agreement. The Wisconsin court followed the holding of a recent U.S. Supreme Court decision in AT&T Mobility LLC v. Concepcion, 563 U.S. __, 131 S.Ct. 1740 (2011), which it summarized as holding that “a state law that ‘classif[ied] most collective-arbitration waivers in consumer contracts as unconscionable[,]” and thus unenforceable, was preempted by the Federal Arbitration Act (FAA).’” Although the pre-Concepcion decision out of the same court of appeals found the agreement unenforceable, Concepcion caused this court to reverse its earlier decision and now uphold the agreement in its most recent opinion.

The bottom-line of this decision is that forced arbitration agreements that preclude consumers from bringing their claims in court, before a jury, regardless of whether its is brought as a class action or an individual claim, can be forced into privately held, confidential arbitration proceedings without the ability to raise the claims on behalf of all similarly harmed consumers. This will tend to preclude small dollar claims from ever being enforced to the benefit of unscrupulous businesses.

Consumer Mobile Fairness Act Proposed in U.S. Senate

Posted by on October 6, 2011 Comments Off

Senators Blumenthal (D-Ct) and Al Franken (D-MN), who are sponsors of the Arbitration Fairness Act, have introduced a bill to the U.S. Senate to prohibit mandatory arbitration clauses in cell phone contracts.

Mandatory arbitration clauses force you to bring claims in arbitration, rather than in court. These clauses are generally anti-consumer because it keeps information about claims hidden from the public as well as the outcome of claims. The clauses also take away your right to have your dispute decided by a jury of your peers in open court. Many arbitration panels are viewed as biased, in favor of industry, as industry is in arbitration with these panels repeatedly while the consumer is before them maybe once in a lifetime, among other reasons.

More information on this bill is at:

http://blumenthal.senate.gov/newsroom/press/release/blumenthal-franken-introduce-legislation-to-provide-justice-to-wireless-customers_

http://www.washingtonpost.com/blogs/post-tech/post/franken-blumenthal-bill-would-allow-cell-phone-users-to-sue-carriers/2011/10/04/gIQANrueLL_blog.html

U.S. Senate Banking Committee Approves Cordray to Lead Consumer Financial Protection Bureau

Posted by on October 6, 2011 Comments Off

On October 6, 2011, the U.S. Senate Banking Committee approved Richard Cordray to lead the Consumer Financial Protection Bureau, the new agency created to watch out for consumer protections in the financial industry. The vote was straight party line, with Republican senators opposing his nomination and Democrats supporting it.

The nomination now moves to a vote on the Senate floor.

ABA GP Solo Magazine Article on Credit Reporting by Expert Evan Hendricks

Posted by on September 23, 2011 Comments Off

The American Bar Association published in its GP Solo Magazine an article authored by Evan Hendricks on credit reports, credit checks and credit scores. Mr. Hendricks is  an expert on credit reporting and the credit reporting industry as recognized in federal and state courts around the country. The article is available online at www.americanbar.org/publications/gp_solo/2011/july_august/credit_reports_checks_scores.html.

In the article, Mr. Hendricks discusses what a credit score is “a number that reflects your credit worthiness at a given point in time.” Higher credit scores is meant to reflect a better risk for the lender, so people with higher scores get loans at more favorable rates. Mr. Hendricks further explains the scoring models used by several agencies and ranges assigned to consumers that put them in certain risk categories.

Renting and Your Credit Reports

Posted by on February 12, 2011 Comments Off

Rejected for renting a house or apartment? Did the landlord use a credit report or background report? If so, you have certain rights under the Fair Credit Reporting Act. Tenant screening companies are now using your credit reports and background checks to decide whether to rent to you.

Credit Reports Are Used in HAMP Mortgage Modifications to Verify Monthly Expenses

Posted by on January 19, 2011 Comments Off

To qualify for a Home Affordable Modification Program ( HAMP ), a home loan / mortgage servicer must consider your monthly expenses, according to the Handbook for Servicers of Non-GSE Mortgages, version 3.0, of December 2, 2010. One method the servicer will use to verify your monthly expenses is your credit reports / consumer reports from Experian, Equifax or Trans Union.

An excessive amount of monthly debt showing on your credit reports may cause you trouble in qualifying for the HAMP modification under the eligibility requirements. So you want to make sure that your credit reports are accurate, in that your credit reports do not contain any inaccurate accounts, inaccurate balances, or inaccurate payment information.

When preparing to apply for a HAMP modification to your home mortgage, it would be helpful to request your credit reports from Experian, Equifax and Trans Union to review them for any inaccuracies. If inaccuracies appear on your credit reports, you can dispute them. By correcting your credit reports before you apply for the HAMP modification, you may save yourself some time, energy and headaches by avoiding a servicer finding you ineligible for the modification based on inaccurate credit reports.

You can request your credit reports at www.annualcreditreport.com, which is set up for the purpose of each consumer getting his or her free annual credit reports from Experian, Equifax and Trans Union once every 12 months. If you already got your free credit report, you can still purchase a consumer disclosure through this site.

For more information on disputing inaccurate information on your credit reports, you can visit our website at www.wis-celc.com.

Credit Reporting Once You Enter a HAMP Trial Mortgage Modification When You Were Current on the Mortgage Before the Trial Period

Posted by on January 19, 2011 Comments Off

If you enter a modification of your mortgage through the Home Affordable Modification Program ( HAMP ), it affects how the loan is reported to the consumer reporting / credit reporting agencies. According to the MHA Handbook v. 3.0, if the borrower was current with payments prior to the trial period, and you, as the borrower, make all your trial period payments on time, the servicer of the loan must report you as current during the trial period by marking the Account Status as “Account Status 11.” The servicer must also report a Special Comment Code “AC”, which indicates “Paying under a partial or modified payment agreement.” The servicer must then also report the modification when it is completed.

If the loan is not reported in this manner on your credit reports, the reports are inaccurate and you can submit a dispute relating to the mortgage entry. Your credit report should not reflect that you were late, delinquent, that the loan is a charge off, or otherwise indicate that you did not pay the loan on time or according to the modification.

If you were current at the time the trial period began, but you had some late payments in the past, that late payment history on your credit report is not affected by the modification, so any actual late payment notations would not be altered simply because of the HAMP modification.

Credit Reports Are Used In HAMP Mortgage Modification Applications to Verify Principal Residence

Posted by on January 19, 2011 Comments Off

Your credit reports are typically obtained by the company servicing your mortgage loan if you apply for a Home Affordability Modification Program ( HAMP ). The credit report is used under HAMP mortgage modifications during the application process to verify your eligibility for the HAMP modification. The credit report is used to verify the borrower’s principal residence, ensuring that the loan relates to a mortgage on your principal residence.

HAMP Supplemental Directive 09-07 contains the requirement that the loan is one “secured by a one-to-four property, one unit of which is the borrower’s principal residence.” Supplemental Directive 10-01 tells servicers of loans to use a credit report to confirm that the property securing the mortgage is the borrower’s principal residence.

Therefore, if you are preparing to apply for a HAMP modification to your home mortgage, you may be well served by obtaining your consumer reports from Experian, Equifax and Trans Union beforehand to ensure that each consumer reporting agency accurately reflects your home as your primary residence. If the reports are inaccurate, you can send the credit reporting agencies disputes to correct the information. You can also obtain these reports from www.annualcreditreport.com, which you are entitled to a free annual credit report every 12 months from each credit reporting agency. Otherwise, you may have to pay a small fee to get your current credit reports. This may save you some time, work and headaches in trying to explain any discrepancy that arises after you make the application.

Why You Should Not Request A Consumer Report Online

Posted by on January 18, 2011 Comments Off

Many people ask me, How do I get a copy of my free credit report? I frequently tell people that you can get one free copy of your credit report from each credit reporting agency once every 12 months. Then I am asked, Should I order it online? I always discourage online ordering except when there is an immediate need to review the report. Why? Continue reading, as an online request for your credit report can cause unintended consequences to a consumer.

The FTC required the 3 major credit reporting agencies, known as consumer reporting agencies under the law, to set up www.annualcreditreport.com for consumers to request a free copy of their consumer file or consumer report as many call it from each agency. When you visit the site, it gives you the option to click to get your report, meaning you can order it online. So why shouldn’t you use the online ordering? Several reasons.

1. When you try using the online ordering system, it is confusing. You are directed out to each agency, then you have to return and get redirected. In the process, each agency is trying to sell you its credit monitoring, credit insurance and other products, including a copy of the other agencies’ reports in an all-in-one credit report format. There is much debate over whether you should buy any of these fee based services. Also, the all-in-one report is not a true consumer disclosure to you, as it is in a different format and does not include the same information you would get when the agency must provide you with your consumer file. Since you are not getting a true consumer file, your rights under the law are not the same simply because you elected to order an all-in-one credit report online rather than get through the confusing and difficult process of going back and forth through the electronic maze.

2. These online ordering systems, in a less than conspicuous manner, typically attempt to force you into mandatory arbitration for any violation of your rights related to the reports you obtain. They have opt-out provisions, but you have to be knowledgeable enough and attentive enough to catch the mechanism for opting out and it is an additional burden placed on you. As a result, you may unknowingly waive your rights to have any violations of your rights heard by a trial court and jury.

Bottom line for most consumers is that requesting your free annual credit report should be accomplished by getting the paper ordering form and sending it in by mail. As a result, you won’t get any solicitations for services you may not want or need, you won’t inadvertently waive any rights you have and you will get a true consumer disclosure from which all your legal rights will be available. This form is available at www.annualcreditreport.com and also at the website for the Consumer & Employment Law Center of Wisconsin, www.wis-celc.com.

Identity Theft in Auto Loans is Down

Posted by on December 7, 2010 Comments Off

Good news. The Financial Crimes Enforcement Network, part of the U.S. Department of Treasury, reports after a recent study that conscientious automobile dealer staff and finance companies are helping to reduce fraudulent vehicle loans obtained through identity theft. Although suspected cases of identity theft are on the rise since 2004, fraudulent auto loans due to identity theft appear to be declining significantly. The SCE and attributes the significant decline to the new Red Flag Rules of the Fair Credit Reporting Act to deal with identity theft. The study notes that credit card fraud continues to be the biggest problem in terms of identity theft crimes. The full report is available at www.fincen.gov/news_room/nr/html/20101015.html, and it is titled "Identity Theft-Trends, Patterns, and Typologies Reported in Suspicious Activity Reports (SARs) Filed by Depository Institutions."

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