Consumer Fraud Archive
Wells Fargo Mortgage Fine: Largest Ever & No Wrongdoing
July 29th, 2011. By Hunter West
Well, it’s a big one.
Wells Fargo—the fourth largest bank in the country in terms of assets—was assessed the largest fine ever issued by the US Federal Reserve (The Fed) for allegedly pushing borrowers into more expensive mortgages, and in so doing helping to foster the sub-prime mortgage mess.
These were borrowers with good credit and cash flow, and could have easily qualified for conventional mortgages at prime, according to a report yesterday in CNN Money.
Instead, they were allegedly nudged into mortgage products that would have proved more expensive in the end. Wells Fargo Financial, a subsidiary that closed last year, was also accused of pushing through loan applications that would otherwise not have qualified due to income restrictions. It is alleged that the income information was ‘doctored.’
We say ‘alleged,’ because even though Wells Fargo agreed to pay the largest fine ever handed out by The Fed—$85 million—the banking juggernaut was not required to admit to any wrongdoing.
In fact, Wells Fargo explained in a statement that the alleged wrongdoing occurred at the hands of a few ne’er do well former employees, and that such conduct is not within the mandate or policy of Wells Fargo.
That’s like parents claiming they are not responsible for the actions of their children.
Come on…
And what does that say about ethics in the banking industry?
I was doing a story on personal finance some years ago and a banking executive was very frank in her assessment of the lengths some banks will go to get loans on the books—in other words, generate business for the bank.
To paraphrase:
“If you come in looking to borrow, say, $15,000 to buy a new truck and the loans officer realizes that you have the cash flow that would accommodate $25,000—you’re going to be pushed to borrow that $25,000. It will be a polite push. But it will be a firm push, and a push just the same. All you want is fifteen grand.
“But the bank seems to know what’s better for you, than you do.”
That interview took place around 1991 or so—20 years ago.
So look what that policy got us into (and I’m not picking on Wells Fargo here, this applies to everyone…)
It was the banks that helped fuel the sub-prime mortgage meltdown by pushing people into more expensive mortgages beyond their comfort zones (or their financial contingencies). It was the banks or their agents that allegedly doctored income statements. The stories of individuals who qualified for a mortgage without the capacity to confirm their income at all are legend, and the stuff of modern financial folklore.
The bank is supposed to say, ‘whoa…wait a minute…you may not be in a position to afford that truck, or that big house. C’mon now, take a good hard look at your finances. You have to dial your expectations back a notch.’
But no. The opposite proved true. Or, at least in one case, the opposite is alleged to have proven true. Wells Fargo will pay $85 million in fines, plus compensate up to 10,000 borrowers to the tune of between $1,000 and $20,000 apiece.
They can afford it. Earlier this week Wells Fargo reported $3.9 billion in net income for Q2 from revenues totaling in excess of $20 billion.
An $85 million fine? Millions more to compensate victims?
That’s nuthin’…
What’s something, is that they didn’t have to admit they (allegedly) screwed up…
8 Questions for Quack who filed Chuck E. Cheese Gambling Lawsuit
May 25th, 2011. By AbiK
Never thought “Chuck E. Cheese’s” and “Gambling Addiction” would live in the same sentence—or headline—but this, I believe, is what happens when someone who claims, in court documents, to have taken her children (ages 3 and 5) to Chuck E. Cheese’s numerous—got that? NUMEROUS—times finally wakes up and realizes what a fool she’s been, and subsequently, what to do? Many of us would just lay low for a while by sitting a sort of self-imposed shiva-for-shame (with all due respect for those of the Jewish faith out there)—you know, cancel a few playdates, that sort of thing. Not so Denise Keller. Her way to deal with self-loathing and mortification? Sue the source of it all: Chuck E. Cheese’s of course. So here we are…
The Defendant: Chuck E. Cheese’s restaurants (I use the term loosely—they do serve food).
The Allegations: Some of the games at Chuck E. Cheese’s are actually illegal gambling devices and could foster addictive behavior in children. (At least that’s what Denise Keller, a mom and local real estate agent from San Diego, who’s sued CEC Entertainment—owners of Chuck E. Cheese’s—thinks.)
The Questions: As a mom—and one who’s been to a Chuck E. Cheese’s birthday party or two—I have some questions about this lawsuit. Particularly if I’m going to need to line up some psych assessments for my kids in about fifteen years—was Chuck E. Cheese’s the root of all evil in their lives?
See, it’s not like there’s been a causal relationship established between Chuck E. Cheese’s and gambling compulsion—like with Mirapex. And even though I was not a proponent of the Kill the Happy Meal lawsuit, I get it. There’s real harm if a lax parent feeds a child a steady diet of Happy Meals. So I’ve got some serious questions—8 of ’em for Ms. Keller regarding this lawsuit. Here they are:
1. How often do you take your kid to Chuck E. Cheese’s?
Please define “numerous”. My kids have gotten several birthday invitations for parties there. We’ve gone to two. One would’ve been enough. And for damn sure it wouldn’t have been because Read the rest of this entry »
Did You Use FreeCreditReport.com? There’s a Class Action…
April 19th, 2011. By AbiK
So a couple years ago you were kicking back listening to the “F to the R to the E to the E…” Free Credit Report dot com commercial and thinking these guys were pretty funny acting out every wannabe’s worst nightmare: being relegated to the ranks of the uncool for being duped by a lousy credit score.
I’m sure a few—hell, quite a few—folks made a mental note of that web address (freecreditreport.com) and checked it out. Who wouldn’t want to know their credit score? Especially when it’s “free” and it could keep you out of a sub-compact car, your inlaws’ basement digs, or a Renaissance Faire. So you were game. And you headed over to freecreditreport.com with visions of a tricked out Ferrari in your head.
Ahh…but you didn’t quite notice a few things—red flags—that the savvier credit score hound might’ve. Like, the score you get is not the one lenders use to determine whether they’ll cough up a loan or let you drive that sleek cherry tomato red Porsche off the lot. No, the score you’ll get at freecreditscore.com is called the PLUS score, and according to Experian—one of the big 3 credit score companies along with Equifax and TransUnion—the PLUS score is not the one that is sold to lenders. (Your FICO score is the one lenders use.)
Translation: while your PLUS score may be a barometer of your creditworthiness, it’s basically worth squat when you’re sitting at the dealership desk waiting for Mr. Carsalesman to ‘talk to his manager’. I should mention here that it’s Experian who owns ConsumerInfo.com…which owns…freecreditreport.com and freecreditscore.com.
Say what? Yes, the folks you rely on to provide lenders with your credit score have been advertising a service—that’s “free” but not really free—for you to get your credit score—but not THAT credit score; not the one you really need to know. The service isn’t free as it’s really a come on for a credit monitoring service that you pay for after an initial trial period of 7 days. If you cancel before then, there’s no charge; if not, you get charged.
Thankfully there are some savvy consumers out there and as LawyersandSettlements.com recently reported, a class action has been filed against ConsumerInfo.com. No one knows ConsumerInfo really, so I’m sure this one will be known as the freecreditreport.com class action or the class action about that credit score site with the cool commercials. Regardless, if you got your credit score from freecreditreport.com or freecreditscore.com, then you may be part of the class. Here’s what you need to know…
FreeCreditReport.com Class Action or FreeCreditScore.com Class Action Details
Class Members: Any one who purchased services from ConsumerInfo.com, FreeCreditReport.com or FreeCreditScore.com during the class period
Class Period: March 22, 2007 to present
For More Info: Read more about the FreeCreditReport.com class action and/or submit your ConsumerInfo.com – FreeCreditReport.com complaint.
Closing tidbit—the front man of the band on those commercials was musician and actor Eric Violette from Canada. ConsumerInfo.com has since not only shifted their focus from credit “reports” to credit “scores“, they’ve also brought in a new band, which from comments I’ve seen, has upheld the maxim that sequels are typically never as good as the original.
Are For-Profit ‘Career College’ Credits Worth Much? Maybe Not
March 16th, 2011. By LucyC
Adults seeking to re-educate themselves through for-profit educational facilities may need to educate themselves about their school of choice first—before parting with any cash. Recently, there have been numerous lawsuits against career colleges, many over allegations that this high-turnover—bums in seats—market sector has a tendency to over promise and under-deliver.
Reports indicate that the for-profit education sector represents about 12 percent of higher education, and it’s growing because there’s money to be made.
For people who are looking for a new career and either don’t have several years or tens of thousands of dollars to invest in a university degree, a short program at a vocational college seems like a reasonable, sometimes preferred alternative. Many promise a fast track to success—who doesn’t want that? But if it sounds too good to be true…
Recently, a report in STLToday.com, in St. Louis, MO, revealed the plight of one unfortunate student who got caught out by the spin. Jean Lilley, of Staunton, enrolled in an 18-month medical assistant program at Sanford Brown’s Collinsville campus. She thought it would help her in reaching her goal of becoming a registered nurse. Reasonable, right? Well, Lilley apparently went almost two semesters before finding out that her credits wouldn’t transfer. So she dropped out and started at Lewis and Clark Community College. Those two semesters cost her $9,000, which she obtained through loans and financial aid, making it very difficult to obtain financing for courses at Read the rest of this entry »
TMI: California Zip Codes a No-No at the Check-out
February 16th, 2011. By AbiK
Can I have your zip code?
Can I have your phone number?
Can I see your card for the secure code?
It’s the barrage of questions you get at whatever check-out you happen to be at when you’re paying by credit card—or even debit card. You’re never quite sure if it’s really as a “protection” for you, the consumer, against possible credit card fraud, or whether it’s just some ploy to grab more data about you, the potential repeat purchaser whose personal info will help “Marketing” map out its next advertising plan (“Let’s do a mailer!”) and sales forecast.
While we all appreciate some safeguards against credit card theft, some retailers use such info either for their own marketing purposes, or to sell the info to third party marketers or businesses who then use it themselves. What do you get out of it? A catalog in the mail. A discount coupon from a company you’ve never done business with. That sort of thing. The end of the world? No. But it does beg the question of why someone is soliciting you without your approval to do so. And why should they be tracking where you shop and where you live? Isn’t that a privacy issue?
It’s certainly a Song-Beverly Act issue.
You could just wear the above t-shirt from zazzle.com every time you shop—but if you live in California, it’s your lucky day as cnn.com reports that the California State Supreme Court has unanimously voted that retailers do not have the right to ask for cardholders’ zip codes—it violates their right to protect their personal information; and asking for a zip code can now lead to a fine.
So from now on—and it only applies to retailers in CA—Californians shouldn’t be asked for their zip code numbers when buying something with a credit card. What’s interesting though, is it isn’t really just the practice of the retailer seeing (or hearing) your personal information. At issue is the fact that they record that information—that is, they punch it into the register keypad.
So, for security purposes, a cashier could just as easily ask to see a driver’s license or other form of identification, and of course, he or she would see exactly where you live (and perhaps your height and eye color, too). But, should that cashier go to punch in any of that information…uh-uh-uh…then they’re stepping over the line. Recording the information clearly shows intent to not only verify you as the cardholder, but to also then use that info for some other future purpose.
Making a purchase online or want that in-store purchase delivered? That’s still not a problem and not impacted by this latest ruling. If you really don’t want a retailer to have a record of where you live, take whatever you bought home yourself, and heck, pay cash. And certainly don’t shop online where everything from your IP address to your credit card info and email (“we’ll send you an email confirmation”) are recorded, and used.
This ruling by the CA Supreme Court overrules an earlier Court of Appeals decision, and, as the cnn.com article states, stems back to a 1971 state law “that prohibits businesses from asking credit cardholders for “personal identification information” that could be used to track them down.”
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