Thursday, July 30, 2015

The Biggest Consumer Complaints in America

Health care billing issues, IRS impostor scams and student loan consolidators were among the biggest consumer headaches last year, joining more familiar complaints about identity theft, home repair and debt collection. The definitive survey of consumer gripes, which includes data from 37 agencies in 21 states, was released Wednesday by the Consumer Federation of America. Together, they shared 282,000 complaints with the consumer advocacy group. As was the case last year, auto sales and repairs attracted the most complaints, but debt collection issues were rated the most serious problem by the consumer agencies.

The Consumer Federation of America’s top 10 list is full of old standards like landlord/tenant disputes and bogus sweepstakes or auto sales and repair. But a number of new issues cropped up in the complaint data, and consumers should be most wary of growing questionable practices:

  • “Curbstoning,” in which small auto dealers try to pass off used car deals as private sales
  • The tech repair scam, in which consumers are called by telemarketers claiming the victim’s PC has a virus
  • The phone IRS agency scam, in which a caller threatens the victim with arrest for alleged unpaid taxes
  • Student loan consolidation offers
  • Solar power installation promising rebates that consumers don’t qualify for

The fastest-growing complaint on the list was identity theft, no doubt in part because of all the high-profile hacking incidents during the past year.

“Considering the epidemic of data breaches that we’ve been experiencing in the last year, it’s not surprising that more consumers are contacting state or local consumer agencies for help to resolve the problems that identity theft can cause,” said Susan Grant, Director of Consumer Protection and Privacy at CFA.

When CFA asked agencies to describe their “worst” complaints, based on the dollar amount involved or the impact on consumers, debt collection was ranked first, followed by immigration service scams, do not call violations, door-to-door sales and used car sales.

“One consumer received an email with what appeared to be an arrest warrant from the United States District Court and stating ‘In the Matter of Arrest for NON-PAID LOAN AND CHEQUE FRAUD,’“ the CFA said. The letter demanded a $3,783 payment. “Courts do not send warrants by email, and the word ‘cheque’ is another red flag of fraud; that is how ‘check’ is spelled in Canada, where many scammers that target U.S consumers are located.”

Bogus offers of help for those with credit trouble remained a big concern, such as foreclosure assistance requiring up-front fees. One example shared by the Los Angeles Department of Consumer and Business affairs was particularly egregious.

“The homeowners paid a ‘foreclosure consultant’ $7,950 but, despite the consultant’s constant assurances that he was working with the lender to get the loan modified and stop the foreclosure, he didn’t actually perform any work,” the report said. “By the time the homeowners contacted the agency for help, the property had already been sold at auction.”

The other major growth area for complaints involved health care billing disputes, the CFA said. Many of those issues involved disputes between insurance companies and health care providers that ultimately hurt consumers – such as one case involving 40 speech therapy visits for a child that was supposed to be covered by insurance, but wasn’t. The victim consumer ended up with a $9,000 bill and, four years later, ruined credit, until the Georgia Department of Law’s Consumer Protection Unit intervened.

“Access to justice is an important principle in the United States,” Grant said. “State and local consumer agencies help consumers obtain justice by educating them about their rights and how to assert them, providing mediation services to resolve complaints and, in some cases, taking formal action to right wrongs in the marketplace.”

Consumers whose credit may have been affected by any of these types of situation may want to check their credit reports for any errors or signs of fraud (such as unauthorized accounts) that they need to resolve. Consumers are entitled to a free credit report every year from each of the major credit reporting agencies through AnnualCreditReport.com. They can also get a free credit report summary updated every month on Credit.com to monitor for important changes.

Top 5 Consumer Complaints (and the previous year’s ranking)

  1. Auto (1)– Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, leasing and towing disputes.
  2. Home Improvement/Construction (2) — Shoddy work, failure to start or complete the job.
  3. Credit/Debt (3) — Billing and fee disputes, mortgage modifications and mortgage-related fraud, credit repair, debt relief services, predatory lending, illegal or abusive debt collection tactics.
  4. (Tie) Retail Sales (4) False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver; and Utilities (6) Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas service.
  5. Services (5) Misrepresentations, shoddy work, failure to have required licenses, failure to perform.

Related Articles

This article originally appeared on Credit.com.

This article by Bob Sullivan was distributed by the Personal Finance Syndication Network.


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