U.S. Consumers Will Save $30 Billion with Proposed Residential Gas Furnace Standards - National Consumer Law Center

U.S. Consumers Will Save $30 Billion with
Proposed Residential Gas Furnace Standards

June 13, 2022

Resistance by Gas Utilities Has Not Allowed for a Meaningful Update to Furnace Standards in 35
Years

Today, national consumer groups hailed the release of the Department of Energy’s proposal to
increase energy efficiency standards for residential furnaces as a crucial step toward saving
consumers at least $30.3 billion on their energy bills. The Consumer Federation of America, National
Consumer Law Center, and Consumer Reports, upon initial review, are in support of the Biden
Administration’s proposed rule which will benefit the vast majority of consumers who currently have
outdated, inefficient gas furnaces. The rule will save consumers money on electricity bills, and
reduce greenhouse gas emissions that contribute to climate change.

The standards governing gas furnaces have been in place for well over a quarter of a century with
no meaningful improvement. U.S. consumers cannot afford to wait any longer for pocketbook
savings of $30.3 billion. These savings must be delivered post-haste via new standards.

“A strong updated efficiency standard will ensure that the efficiency level of all furnaces on the
market will meet a higher minimum standard,” said Charlie Harak, Staff Attorney at the
National Consumer Law Center. “Many homeowners lack the time or information needed to
choose to upgrade to a more efficient furnace, especially if they are doing an emergency
replacement. Many others are renters – often disproportionately low-income consumers – and
without strong, economically justified furnace standards, their property owners will install less
expensive and less efficient furnaces, burdening tenants with higher bills for decades to come.”

“Strong updated efficiency standards will save consumers money over the life of the furnace,” said
Mary Greene, Senior Policy Counsel for Sustainability Policy at Consumer Reports. “Overall,
Consumer Reports is pleased that DOE is proposing a standard that will help save consumers money,
and bring significant environmental benefits.

“Although the harm done to consumers through years of inaction and stonewalling by the gas
utilities on this standard cannot be undone, by adopting a higher standard today, future harm can be
prevented,” said Richard Eckman, Energy Advocate at CFA. “We will urge the Department to
move with all due speed to finalize a long overdue, much-needed standard that does away with
inefficient, energy-wasting furnaces so that consumers will pay less on their energy bills.”

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The Consumer Federation of America is a nonprofit association of more than 250 consumer groups
that was founded in 1968 to advance the consumer interest through research, advocacy, and
education.

Founded in 1936, Consumer Reports (CR) is an independent, nonprofit and nonpartisan organization
that works with consumers to create a fair and just marketplace. Known for its rigorous testing and
ratings of products, CR also advocates for laws and corporate practices that are beneficial for
consumers. CR is dedicated to amplifying the voices of consumers to promote safety, digital rights,

financial fairness, and sustainability. The organization surveys millions of Americans every year,
reports extensively on the challenges and opportunities facing today’s consumers, and provides ad-
free content and tools to 6 million members across the United States.

Report: Student Debt Cancellation Will Help
Fix Broken Student Loan System, Close
Racial Wealth Gap

June 8, 2022

A new report from CLASP and NCLC explores debt cancellation and other measures to reduce the
harmful impact of disproportionate student loan debt on Black borrowers

WASHINGTON – A new report from the Center for Law and Social Policy (CLASP) and the National
Consumer Law Center (NCLC) highlights the disproportionate impact of student debt on Black
borrowers and provides recommendations for addressing racial disparities through federal policies
and executive action. The report comes as momentum builds for President Biden to announce a plan
canceling some amount of student debt.

“The generations-old racial wealth gap and inequitable employment opportunities, combined with
the high cost of college attendance, present significant barriers to economic stability for Black
workers,” said J Geiman, policy analyst at CLASP. “With these hurdles in place, Black students and
their families face undue hardship in the form of student loan debt.”

The four-year college degree has been marketed to populations with low incomes and Black
Americans as a way to escape the cycle of poverty and close the racial wealth gap. However, the
report, which examines data tracking student loan payments and the amount owed years after
graduation, finds that a combination of higher initial loan amounts and inequitable employment and
earning outcomes, compounded by student loan system design choices, places an undue burden on
Black borrowers.

“The Biden Administration has promised widespread relief and student loan reform, both of which
are critical for Black Americans still struggling to recover from the economic impacts of the
COVID-19 pandemic,” said Alpha Taylor, staff attorney at the National Consumer Law Center. “By
adopting the solutions outlined in our report, policymakers can begin to remediate decades of harm
suffered by existing borrowers and ensure that Black Americans are able to obtain a college degree
without the disproportionate, intergenerational burden of student loan debt.”

The report’s recommended steps to address the dual student loan and college affordability crises
include administrative and congressional action to:

     Provide broad-based student debt cancellation to all borrowers, without an income cap or
     other administrative barriers to access;

Extend the student loan payment pause;

      Ensure a smooth transition of loan accounts to new servicers;

      Provide increased protections for borrowers, particularly those who are victims of predatory
      lending and for-profit colleges;

      Strengthen existing repayment options, including Income-Driven Repayment (IDR); and

      Invest in college affordability through federal initiatives like the Pell Grant, a federal free
      community college program, and support for student basic needs.

Additional resources:

      Group letter calling on President Biden to cancel federal student debt immediately via
      executive action, May 27, 2022

      Abby Shafroth, Op-Ed: “Limiting student loan relief by income sounds sensible – it is not” (The
      Hill, May 12, 2022)

New Report Warns Scam Robocalls Will
Continue As Long As Telephone Providers
Can Rake in the Profits

June 1, 2022

Telephone service providers profit from more than a billion scam robocalls a month placed to U.S.
telephone subscribers

WASHINGTON – A new report from the National Consumer Law Center (NCLC) and the Electronic
Privacy Information Center (EPIC) finds that the tens of millions of daily scam robocalls designed to
steal money from unsuspecting consumers translate into revenue for telephone providers. These
often small, pop-up VOIP telephone providers are paid per call connected even when the calls are
recognizably automated attempts at criminal fraud.

The report, Scam Robocalls: Telecom Providers Profit explains the depth of the problem
(including the number of Robocalls made to residents of each state), the reasons for the problem,
and how the Federal Communications Commission has responded, and recommends several simple
strategies that would dramatically reduce these fraudulent robocalls.

“Even when these providers are told—sometimes repeatedly—that they are transmitting fraudulent
calls, they keep doing it, because they are making money from these calls,” said Margot Saunders,
senior attorney at the National Consumer Law Center. “And even when they are caught and
told to stop, they are not criminally prosecuted, and the fines that are levied are rarely collected.”

Every month well over one billion scam robocalls—calls to defraud telephone subscribers—are made
to American telephones, more than 33 million scam robocalls a day. Criminals make these calls to
scare or trick Americans into turning over hundreds or thousands of dollars. But even when the
scam doesn’t work, the telephone providers profit from letting these fraudsters reach subscribers’
phones.

“Telephone service providers choose whether to accept calls from upstream providers based on what
the provider is willing to pay–and advances in technology coupled with flexible, inexpensive call
routing, have made it cheap and easy for bad actors, based both here and abroad, to find providers
willing to transmit tens of millions of illegal calls every day,” said Chris Frascella, law fellow at
the Electronic Privacy Information Center. “Until it becomes more costly to assist criminal fraud
than to stop it, scammers will continue to find providers willing to accept payment for passing these
dangerous and illegal calls to our phones.”

The FCC has initiated regulatory efforts and enforcement actions aimed at controlling these illegal
calls. Yet, every month, well over a billion scam robocalls still continue to ring on the telephones of
U.S. subscribers.

Last year almost 60 million Americans lost over $29 billion to these scam callers and more than one
million complaints were made to the FTC about scams from calls and texts. The problem has become
so pervasive that 70% of Americans do not answer calls from numbers they do not recognize.

The report recommends several simple principles that would stop many fraudulent robocalls.

      All providers in the call path should have an affirmative obligation to engage in effective
      mitigation against illegal robocalls.
      Providers who knew or should have known that they were transmitting illegal robocalls should
      face clear financial consequences.
      Law enforcement, telephone service providers, victims of scam calls, legal robocallers, and the
      general public should have access to all available information about the sources of the illegal
      robocalls and their complicit providers.

“If these crimes were occurring in the physical world, rather than over the telephone and internet,
law enforcement would not hesitate to arrest the thieves and the providers enabling them,” added
Saunders. “The FCC should provide the same level of protection to American telephone
subscribers.”

Related materials:

      Press release: NCLC, EPIC Urge FCC to Hold Voice Service Providers Accountable for
      Transmitting Illegal Robocalls, Jan. 11, 2022
      NCLC Digital Library: Getting Money Back For Scammed Consumers, Dec. 15, 2020
      Issue Brief: How Congress and the FCC Can Protect Americans from Invasive and Dangerous
      Robocalls and Robotexts, November 2020

The National Consumer Law Center Stands
with the Black Community in Buffalo and
Remains Committed to Advocating for
Economically Marginalized Communities

5/31/22

By Richard Dubois, Executive Director

The National Consumer Law Center stands in solidarity with the Black community in Buffalo, New
York, and condemns the deadly attack by a white supremacist on a Tops grocery store last week. We
offer our sincere condolences to the families and loved ones of the 10 people killed and three others
injured. We also acknowledge the collective trauma of individuals targeted by white supremacist
violence in their places of worship and larger community in Pittsburgh, El Paso, Charleston, Atlanta,
and other communities across our nation.

News reports reveal that the shooter specially targeted this Buffalo community after searching
online for a zip code with the highest concentration of Black people. Decades-long segregation,
economic disinvestment, and other systemically racist practices made this community an easily
identifiable target for a shooter intent on harming Black individuals. This act of violence shines a
light on the consequences of such economic disinvestment and deep segregation as residents of this
impoverished community demanded and organized for years to get a local grocery store to bring
fresh food into what was – and with the store’s closing is again – a food desert. This hateful attack
leaves a deep emotional scar and has health and economic consequences for the wider community.

NCLC is steadfast in its commitment to advocating for policies that support and protect consumers
who have been historically and economically marginalized. As part of our Racial Justice and Equal
Economic Opportunity Project, and in all aspects of our advocacy, NCLC will strive to dismantle
systems that perpetuate systemic racism in housing, credit, and access to economic opportunity. We
encourage everyone in the consumer law community to work to eradicate systemic racism and hate
to create a just and safe society for all people.

NCLC Statement in Response to Latest
Reports on Student Debt Cancellation

May 27, 2022

Today, in response to reports that the White House is planning to cancel $10,000 in federal student

loan debt per borrower earning less than $150,000, Abby Shafroth, director of the National
Consumer Law Center’s Student Loan Borrower Assistance Project, issued the following
statement:

“We urge President Biden to move forward with student debt cancellation, to make it automatic, to
cancel as much debt as possible, and to ensure that cancellation is completed before any borrowers
are asked to make payments.

“Canceling federal student loan debt would provide critical relief to low-income families and people
of color who are disproportionately burdened by the nation’s student debt crisis, and the Biden
Administration should absolutely take action. This bold step is necessary to address a crisis that has
resulted from decades of bad policy choices and has now reached historic proportions.

“As an advocate for low-income and disadvantaged borrowers at government rulemakings, I have
had a front row seat to past Administrations’ attempts to avert the mounting crisis by tinkering at
the margins of the federal student loan system and administering a menu of targeted relief programs
that sounded good on paper but that failed to reach people in reality. We are in this crisis today
because past technocratic fixes failed. Their failure demonstrated the need for simpler, broader, and
bolder action.

“Widespread cancellation holds the promise to deliver relief to the tens of millions of low-income,
economically disadvantaged, and vulnerable borrowers who have not been helped by past efforts to
alleviate their unaffordable debt burdens.

“In order to ensure that this important debt relief reaches low and moderate income borrowers, it
should be automatic, rather than requiring an application. Application requirements have repeatedly
prevented half or more of eligible borrowers from accessing existing cancellation programs.
Cancellation should also be sufficient in amount to provide meaningful relief to all borrowers,
including Black borrowers who shoulder an average of $24,000 more in student loan debt
than white students four years after graduating college.”

Additional Resources:

      Group letter calling on President Biden to cancel federal student debt immediately via
      executive action, May 27, 2022
      Abby Shafroth, Op-Ed: “Limiting student loan relief by income sounds sensible – it is
      not” (The Hill, May 12, 2022)
      Leadership Conference on Civil and Human Rights, Civil Rights Principles for Student
      Loan Debt Cancellation (April 2021)
      NCLC & SBPC, Policy Brief: Education Department’s Decades-Old Debt Trap: How the
      Mismanagement of Income-Driven Repayment Locked Millions in Debt (March 2021)

SafeRent Solution Accused of Illegally
Discriminating Against Black and Hispanic

Rental Applicants

May 25, 2022

Federal Lawsuit Alleges SafeRent Solutions Violated the Fair Housing Act, State Law by
Discriminating Against Black and Hispanic Voucher Holders in Tenant Screenings

SafeRent Employs Algorithm That Assigns Disproportionately Lower “SafeRent Scores” to Black and
Hispanic Applicants

BOSTON– A lawsuit filed today in U.S. District Court for the District of Massachusetts against
SafeRent Solutions, LLC alleges that the national tenant screening provider has been violating the
Fair Housing Act and related state laws for years. SafeRent, formerly known as CoreLogic Rental
Property Solutions, provides tenant screening services that disproportionately give low scores to
Black and Hispanic rental applicants who use federally funded housing vouchers to pay the vast
majority of their rent, causing them to be denied housing. The lawsuit alleges that SafeRent’s
algorithm has a disparate impact based on race and source of income, in violation of federal and
state laws.

“As stated in the complaint, while SafeRent considers applicants’ credit history, including credit-
related information, including non-tenancy debts, and eviction history in calculating SafeRent
Scores,” said Todd Kaplan, Senior Attorney at Greater Boston Legal Services. “SafeRent’s
algorithm does not consider the financial benefits of housing vouchers in assigning SafeRent Scores.
On average over 73% of the monthly rental payment is paid through these vouchers.”

SafeRent assigns disproportionately lower SafeRent Scores to Black and Hispanic rental applicants
compared to white rental applicants, which is due in part to SafeRent’s use of credit history, which
includes non-tenancy debts. SafeRent Scores are designed, marketed, and used to screen
prospective tenants for rental housing. These Scores cause Black and Hispanic rental applicants to
be disproportionately denied housing. These Scores cannot be justified as a necessary business
practice for evaluating applicants with housing assistance vouchers, since a tenant’s voucher
ensures the rent is affordable and uniquely protects their housing provider’s receipt of monthly rent.

“Credit scores and conventional credit history are not accurate predictors of a successful tenancy.
However, reliance on such data in scoring potential tenants has a disproportionately adverse impact
on Black and Hispanic tenants, and those who use housing vouchers,” said Christine E. Webber,
Co-Chair of Cohen Milstein’s Civil Rights & Employment practice. “Moreover, as cited in the
complaint, SafeRent Score algorithm does not disclose all of the data it considers, or how this data is
weighted in score modeling, thereby keeping its inner workings hidden. This means that housing
providers cannot exercise any independent judgment as to the merits of housing applicants and can
only accept SafeRent calculations.”

As a tenant screening provider, SafeRent provides landlords and property owners a SafeRent Score.
The Score cannot be adjusted by the landlord nor can a variable like a housing voucher be weighted
in the Score, yet the Score is used to decide if an applicant will be accepted. SafeRent’s algorithm
does not consider the financial benefits of housing vouchers in assigning Scores. Specifically, when a
housing voucher is used, on average over 73% of the monthly rental payment is paid by public
housing authorities directly to housing providers.

According to a 2022 study conducted by the Urban Institute, as of October 2021, Black consumers

have a median credit score of 612 and Hispanic consumers have a median credit score of 661, as
compared to white consumers’ median credit score of 725, leading to unfair bias in accepting an
applicant’s lease application.

“Racial disparities in credit history and credit scores not only reflect historical racial disparities in
wealth, but also perpetuate wealth inequalities through reduced financial opportunities and fewer
financial safety nets, which hinder a consumer’s ability to accumulate present or intergenerational
wealth through homeownership or other financial investments,” said Ariel Nelson, staff attorney
at the National Consumer Law Center.

For example, in May 2021, Plaintiff Mary Louis, a 54-year-old Black woman who resides in Malden,
Mass., applied for an apartment at Granada Highlands (recently renamed “Altitude Apartments”)
and was denied solely because of her SafeRent Score, which was calculated using her non-tenancy
related debt and did not take into account her housing voucher which would have covered nearly
70% of her rent.

“As a nonprofit that works directly with lower income renters who have housing vouchers, we help
locate, apply for, and secure appropriate homes for hundreds of families a year,” said David Gibbs,
Executive Director of the Community Action Agency of Somerville. “We are bringing these
claims against SafeRent because its actions interfere with our ability to stabilize low-income families
in housing with their vouchers. The tenant screening software makes it almost impossible for us to
place families in many developments because these otherwise qualifying applicants often have non-
tenant consumer debt. This is especially frustrating because our clients always prioritize paying
their rent to keep a roof over their heads.”

Plaintiffs Mary Louis, Monica Douglas, and Community Action Agency of Somerville, Inc., are
represented by Greater Boston Legal Services, Cohen Milstein Sellers & Toll PLLC, and the National
Consumer Law Center.

This is the second AI-racial discrimination lawsuit Cohen Milstein has brought against SafeRent
Solutions, which previously operated as CoreLogic Rental Property Solutions. Cohen Milstein is
currently litigating, as a bench trial, Connecticut Fair Housing Center, et al. v. CoreLogic Rental
Property Solutions, Case No. 3:18-cv-00705 (D. Conn.), in partnership with Connecticut Fair
Housing Center and the National Housing Law Project.

TAB Bank and EasyPay Finance’s Predatory
Loans Harm Veterans and Servicemembers

May 25, 2022

Military servicemembers, veterans, and their families report outrageously high interest rates and
deceptive lending practices

WASHINGTON – The predatory lending practices of EasyPay Finance and Utah-based, FDIC-
supervised Transportation Alliance Bank (TAB Bank) are hurting military servicemembers, veterans,
and their families, according to a new report from a coalition of consumer advocacy groups

released in advance of Memorial Day.

EasyPay Finance, which charges up to 189% APR, is popping up as a financing option at furniture
stores, auto repair shops, pet stores and other retail outlets everywhere – including at shops near
military bases where the loans are more likely to affect servicemembers. For example, EasyPay
Finance is available at numerous auto repair locations and furniture stores that offer EasyPay loans
near a military base.

“The fact that predatory lenders continue to target military families is unacceptable,” said Besa
Pinchotti, CEO of the National Military Family Association. ”Military families make
tremendous sacrifices for our country every day. It’s outrageous that after all the work we’ve done
to protect our military families, they continue to be preyed upon by lenders—especially when they’re
at their most vulnerable—needing money for car repairs, to furnish their homes after a military-
mandated moves or to make ends meet during a deployment.”

Because banks are exempt from state interest rate caps, TAB Bank helps disguise EasyPay Finance
loans as “bank loans,” enabling it to charge exorbitant rates in states that prohibit them. One
Virginia military consumer complained about “illegal” 119% interest that appeared to be far above
Virginia’s legal rate.

“The men and women who have served our country deserve better than predatory loans,” said Paul
E. Kantwill, executive director of The Rule of Law Institute at Loyola University Chicago
School of Law. “At 100% to 189% APR, TAB Bank and EasyPay Finance’s loans evade state interest
rate laws and harm members of the military community.”

The complaints indicate that EasyPay Finance and TAB Bank may be violating or evading the
Military Lending Act, a law that limits the annual interest rate on loans to military servicemembers
and their dependents to no higher than 36%. For example, one servicemember in Virginia got stuck
with 96% APR for an auto repair and couldn’t get EasyPay to fix the rate. Another servicemember in
Nevada advised the pet store that they were military but “I am now paying 189% interest on my
loan. When I called [EasyPay] they were rude and said they do not have to lower my interest rate at
all and they based it all on a loophole.”

“It is unconscionable that TAB Bank and EasyPay Finance are making loans with up to 189% interest
to servicemembers and veterans,” said Lauren Saunders, associate director of the National
Consumer Law Center. “Auto repair shops, pet stores, and other retailers concerned with their
reputation should stop steering customers to predatory loans by TAB Bank and EasyPay Finance.”

“EasyPay and TAB Bank are using the harmful rent-a-bank model to evade state and federal laws
and lure servicemembers and veterans into predatory, outrageously priced loans for auto repairs,
pet adoptions, and other retail purchases,” said Rachel Gittleman, financial services outreach
manager of the Consumer Federation of America.

Numerous military consumers have complained about EasyPay loans to the Consumer Financial
Protection Bureau, reporting:

     Outrageous interest rates of 96% to 189% charged to servicemembers, veterans or
     their family members, sometimes in states that do not allow those rates.
     Payments for months and years that do little to reduce the loan balance.
     Interest rates hidden in fine print. Applications required to be completed on small
     cellphones, making the contract language barely legible, leave consumers in the dark about
     the terms.

Promises of elusive full interest rebates if paid in 90 days, with obstacles that prevent
     consumers from avoiding interest.
     Automatic payments not properly processed, leading to late payments that deprive the
     consumer of the interest rebate.
     Rude and unhelpful customer service and administrative errors, leading to missed
     payments, fees, and loss of the interest-free option.
     Harm to credit reports, including from loans paid in full or reported inaccurately. No
     response to consumer disputes.
     Debt collection issues, with loans sent to collectors after the interest balloons, insults even
     when payments errors happened while the consumer was in the hospital, and collectors failing
     to correct credit reports after the loan is paid.

“The Department of Defense studied high-interest loans like those issued by EasyPay Finance and
TAB Bank and concluded they harmed troops and their families – and undermined military
readiness,” said Nadine Chabrier, senior policy counsel at the Center for Responsible
Lending. “TAB Bank and retailers, such as Meineke, should stop facilitating the sale of EasyPay
loans, which inflict pain upon military communities and consumers across the country. The FDIC is
responsible for supervising TAB Bank and should stop it from abusing its charter by enabling these
predatory loans.”

A recent consumer alert warns of deceptive auto repair financing practices and tells consumers what
steps to take if they’ve taken out an EasyPay/TAB bank loan. Military Families need to read the small
print to avoid costly loans at high interest rates, and know their rights under the Military Lending
Act. Those who have experienced these unreasonably high interest rates and deceptive financial
lending practices should contact the Consumer Financial Protection Bureau for investigation.

The coalition is also circulating a petition to urge the FDIC to stop TAB Bank and other banks from
helping nonbank lenders disguise their loans as bank loans that are exempt from state interest rate
limits. The petition currently has more than 19,000 signatures.

New FedNow Rules Lack Fraud Protection

May 19, 2022

Fed to launch FedNow instant payments service in 2023

WASHINGTON – The final FedNow rules announced today by the Federal Reserve Board lack
protection against scams and fraud, which, if unaddressed, could leave consumers exposed when the
payment service launches next year, warns advocates at the National Consumer Law Center,
National Consumers League, and National Community Reinvestment Coalition (NCRC) warn.

“An instant payments service like FedNow can have a lot of benefits to consumers. The coming
FedNow service will prevent instant payments from being controlled by the largest banks, but fraud
protection is critical and is sorely missing,” said Lauren Saunders, associate director at the
National Consumer Law Center. “The new FedNow rules leave payments exposed to the same
type of fraud that plagues Zelle today. The Fed must take measures before FedNow launches to
ensure that it does not become a haven for fraud, and the CFPB and Congress must enact rules to

make all person-to-person payment services safe.”

The groups appreciate that the discussion of the rules did state: “The [Federal Reserve] Board
believes strengthening consumer protections related to instant payments broadly is a desirable goal
and supports commenters’ suggestions for examining Regulation E as a potential tool.”

“NCL regularly hears from thousands of consumers every year who are defrauded into sending
money to scammers, including many who have lost their life’s savings,” said John Breyault,
National Consumers League Vice President of Public Policy, Telecommunications, and
Fraud. “These crimes work because payment networks – particularly peer-to-peer payment systems
– were designed with speed and convenience, not security, in mind. The Federal Reserve must not
ignore these lessons with FedNow. Doing so will only exacerbate a problem that costs consumers
hundreds of millions, if not billions, of dollars in losses annually.”

“It would be a mistake to underestimate the risk of fraud in FedNow,” said Adam Rust, Senior
Policy Advisor at NCRC. “We appreciate that the Fed is going to offer this service, but it is
important that they get it right. We believe that the use of faster payments, not just to pay other
people but also to pay businesses, will expand greatly in the next few years, which in turn could
trigger even greater fraud. In the United Kingdom, where faster payments were introduced earlier,
regulators report that 96 percent of “sender-authorized” fraud involves a faster payment, and the
UK regulator will be requiring banks to offer scam victims compensation. That underscores why we
cannot have a system in the United States that leaves consumers vulnerable to induced fraud.”

FedNow will be a new bank-to-bank payment rail, similar to The Clearing House’s Real Time
Payments (RTP) that undergirds Zelle, enabling nearly instantaneous payments between individuals
and also to and from businesses. Recent news reports have highlighted the lack of fraud protections
in Zelle, prompting three senators to write a letter to Zelle’s parent company expressing alarm.

In September, 43 consumer, small business, civil rights, community and legal service groups urged
the Fed not to launch the FedNow service until it was safe, and in particular until it had protection
against fraud in the inducement and mistakes. While FedNow payments will be covered by the
Electronic Fund Transfer Act, which provides protection against unauthorized charges and errors,
the EFTA currently does not protect consumers when they are defrauded into send money to a
scammer, and banks interpret the EFTA not to protect consumers against mistakes that are easy to
make in Zelle and similar payment systems.

The Board finalized the rules largely as proposed, and rejected most of the suggestions made by
consumer groups. The Fed did clarify that financial institutions may place a hold on FedNow
payments received where there is reasonable cause to believe that a FedNow payment may be
related to fraudulent activity.

“Banks that allow scammers to receive payments and financial institutions that design payment
services must take responsibility for the fraud they allow into the system. Everyone will be better off
if consumers are protected from fraud and have confidence when using new payment systems, and if
banks and payment providers have an incentive to prevent fraud,” Saunders added.

The House of Representatives Financial Services Committee recently put forward a draft bill, the
Protecting Consumers From Payment Scams Act, to address the issue. Consumer groups have also
called on the Consumer Financial Protection Bureau to issue rules to protect consumers from fraud
and errors in electronic payments.

For more information:

Comments on proposedFedNow rules: Coalition, NCLC/NCRC/NCL and joint industry-
      consumer comments, Sept. 9, 2021

      Written testimony for House Financial Service Committee hearing on digital wallets, Apr. 28,
      2022

Biden Administration Sued Again Over
Languishing Debt Relief Claims
Disproportionately Shouldered by
Communities of Color

May 19, 2022

Advocates aim to secure relief for former Westwood College students

WASHINGTON – A group of student, consumer advocacy, and civil rights organizations today filed a
lawsuit against U.S. Education Secretary Miguel Cardona and the Department of Education on behalf
of former Westwood College students who have been waiting nearly six years for the Department to
award them relief from loans incurred by Westood’s deceptive and misleading tactics. The groups
representing affected borrowers include Student Defense, the Lawyers’ Committee for Civil Rights
Under Law (Lawyers’ Committee), and the National Consumer Law Center. The lawsuit, Hemphill v.
Cardona, was filed in the U.S. District Court for the District of Columbia.

In November 2016, the Illinois Attorney General filed a group Borrower Defense to Repayment
application to the Department of Education on behalf of defrauded students who attended Westwood
College’s criminal justice program in Illinois. The group application followed a settlement reached
between the State of Illinois and Westwood that resulted in the discharge of institutional loans.
However, the settlement did not address federal student loans held by the Department of Education.
The agency has since relied upon the work of the Illinois Attorney General to grant a subset of
students debt relief, but never acted on the Illinois Attorney General’s application, leaving hundreds
or even thousands of students encumbered by unlawful student loans.

Research cited in the lawsuit highlights how students of color were disproportionately defrauded by
Westwood’s misrepresentations. From 2004 until 2015, Westwood’s student population was
approximately 44% Black and 21% Latinx, nearly triple and one and a half times the statewide
average enrollment among these groups respectively. The Department’s failure to act on the Illinois
Attorney General’s application disproportionately denies relief to communities of color who already
face heightened levels of debt and economic insecurity.

“For nearly six years, across administrations, the Department has shirked its obligations, leaving
countless borrowers in the dark about whether or when they’ll receive the relief they’re owed under
federal law,” said Student Defense Litigation Director Eric Rothschild. “The Department has

everything they need to free borrowers from financial limbo and offer them a well-deserved fresh
start. It’s beyond time they act on it.”

Earlier this month, Illinois Attorney General Kwame Raoul sent a letter to the Department urging the
agency to grant the Westwood group borrower defense application. The letter pointed to the
Department’s findings regarding the significant misrepresentations to students who enrolled at the
institution.

“There is no more analysis or evidence needed: Westwood defrauded all students who attended its
Illinois criminal justice program,” Illinois AG Raoul wrote. “The Department – and only the Department
– knows which defrauded borrowers continue to carry federal loan debt for their time at Westwood.
These consumers continue to be harmed by the student loan debt they carry and its negative impact
on their lives.”

“While the Department has delayed responding to the Illinois Attorney General’s application,
borrowers have struggled under the burden of these loans, in some cases being forced to choose
between paying their student loan bill and paying for other necessities like food and rent,” said Kyra
Taylor, staff attorney at the National Consumer Law Center. “The Department of Education must act
quickly when it becomes clear that a school has harmed students. It should not leave students in
limbo, repaying debts that should be canceled.”

This is the second lawsuit filed against the Department seeking to resolve pending group Borrower
Defense claims in the last two months. Last month, a group of consumer and students’ rights
organizations — including Student Defense, the Project on Predatory Student Lending, and the
National Consumer Law Center — filed a lawsuit against the Department seeking to resolve
outstanding group borrower defense claims for students who attended Kaplan Career Institute in
Massachusetts.

 “The Department of Education’s failure to act disproportionately–and unjustifiably–abandons low-
income Black and Latinx borrowers who are particularly burdened by unaffordable and unfair debt
after generations of discriminatory and government-sanctioned policies that strip wealth from
communities of color,” said Genevieve Bonadies Torres, associate director of the Educational
Opportunities Project with the Lawyers’ Committee for Civil Rights Under Law. “By neglecting its legal
obligations to defrauded students who are entitled to relief, the Department’s inaction exacerbates
existing racial disparities in educational outcomes and economic opportunity.”

Student Defense previously highlighted the stories of two defrauded Westwood College Students —
Jaime Murrillo and Luis Tayahua — on “Shattered,” a website chronicling the devastating impact of
predatory for-profit college programs, produced in collaboration with the creators of the documentary
Fail State.

A copy of the lawsuit can be found here.

National Auto Repair Chains Must Stop

Offering Predatory Loans Through EasyPay
Finance and TAB Bank

May 18, 2022

Advocates urge auto repair chains, including AAMCO, Meineke, and Midas, to stop offering
predatory auto repair loans with interest rates of as high as 189%

WASHINGTON – Today, a coalition of consumer advocacy groups sent letters to major national auto
repair chains AAMCO and Precision Tune Auto Care (Icahn Enterprises), Big O Tires and Midas
(TBC Corporation), Grease Monkey (FullSpeed Automotive), JiffyLube, and Meineke (Driven Brands)
urging their stores and franchisees to stop offering financing through EasyPay Finance and Utah-
based TAB Bank, which issue loans at rates up to 189%, even in states where that rate is
illegal. A sample letter can be found here.

The letters follow last week’s consumer alert about auto repair loans and a report highlighting
hundreds of complaints from consumers about the high rates and deceptive and abusive practices,
with many consumers misled and under the impression they were agreeing to interest-free payment
plans. The letters were sent from Accountable.US, Americans for Financial Reform, Center for
Responsible Lending, CLEAR, Consumer Federation of America, and National Consumer Law
Center.

“Consumers struggling to pay for auto repairs repeatedly report being steered into predatory loans
with shocking and often deceptive rates hidden in the fine print of applications, frequently not
known until after the repairs are completed,” the letters state. “These predatory loans have a
lasting impact on consumers, causing harm to their credit reports and leading to debt collection
harassment.” The letter urged each repair chain “to disassociate itself from these practices that
exploit vulnerable families.”

Through auto repair and tire shops across the country, EasyPay Finance ( owned by Duvera Billing
Services) issues loans up to 189% APR. EasyPay advertises to auto repair shops that it can “Increase
Your Shop’s Revenue” and prevent “Losing Your Credit Challenged Customers.”

In states that do not allow predatory interest rates, EasyPay launders its loans through
Transportation Alliance Bank (TAB Bank) because banks are exempt from state rate caps. This
is a scheme for EasyPay to collect exorbitant rates it cannot legally charge directly. In other states,
EasyPay lends directly in its own name, often as a retail installment sale.

Hundreds of consumers have complained about EasyPay auto repair and tire loans. Complaints to
the Consumer Financial Protection Bureau, Better Business Bureau, and Ripoff Reports describe:

      Outrageous interest rates of 100% to 189%, sometimes charged to servicemembers and
      veterans. Consumers are shocked that payments for months and years have little impact on
      the balance.
      Interest rates hidden in fine print or not disclosed until repairs are finished. Applications
      taken over the telephone, or required to be completed on tablets and smartphones, without
      written copies, leave consumers in the dark about the terms.
      Deceptive promises of full interest rebates if paid in 90 days, with numerous obstacles
      that prevent consumers from avoiding interest or knowing their payoff balance.

Electronic debits that were not authorized, differed from the agreed payment, or
      continued after a payment plan was fulfilled.
      Rude and unhelpful customer service and administrative errors, leading to missed
      payments, fees, and loss of the interest-free option.
      Harm to credit reports, including from loans paid in full or reported for the wrong
      consumer. No response to consumer disputes.
      Debt collection harassment and refusal to honor payment plans, including for those
      impacted by COVID.

A petition to urge the FDIC to stop TAB Bank and other banks from helping nonbank lenders
disguise their loans as bank loans that are exempt from state interest rate limits is also being
circulated. It currently has more than 19,000 signatures.

The letters make a strong case for the national auto repair chains to stop their stores from offering
predatory loans from EasyPay Finance and TAB Bank.

###

Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer
justice and economic security for low-income and other disadvantaged people in the U.S. through its
expertise in policy analysis and advocacy, publications, litigation, expert witness services, and
training.

The Center for Responsible Lending (CRL) is a non-partisan, nonprofit research and policy advocacy
organization working to promote financial fairness and economic opportunity for all, end predatory
lending, and close the racial wealth gaps.

The Consumer Federation of America is an association of more than 250 nonprofit consumer and
cooperative groups that was founded in 1968 to advance the consumer interest through research,
advocacy, and education.

Americans for Financial Reform Education Fund (AFREF) is a nonpartisan and nonprofit coalition of
more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community
groups. Formed in the wake of the 2008 crisis, we are working to lay the foundation for a strong,
stable, and ethical financial system – one that serves the economy and the nation as a whole.