Consumers warned of potential frauds

Professionals discussed a multitude of consumer frauds that cause billions of dollars in losses and protections and resources consumers can use to fight back during a meeting Thursday in Havre. "(This is) part of the effort in highlighting consumer protection issues as such an important public policy issue here in these difficult economic t imes," said Jim Molloy, chief of consumer protection at the Montana Attorney General's Office, which sponsored the event. Molloy said that while campaigning for election, At torney General Steve Bullock made increasing consumer protection one of his main points and has done so since he took office last year. The resources and commitment to consumer protection issues have been "substantially increased" in the Attorney General's Office, he said. The consumer protection forum, the fourth sponsored by Bullock and Auditor Monica Lindeen during National Consumer Protection Week this week, was intended to create mechanisms for decision makers and regulators and create relationships with people "on the front lines and in the communities working with the citizens of Montana on economic issues," Molloy said. The people at the forum — Bullock, who is at a workshop regarding agriCultural issues in Iowa today, did not attend — talked about scams that are literally taking billions of dollars from U.S. consumers going over the Internet, the telephone lines and the U.S. mail. A panel, including Molloy, Montana Deputy Insurance Commissioner Bob Moon, Montana Division of Banking and Financial Institutions representative Chris Romano, Bear Paw Deve l o pment Co r p . Executive Director Paul Tuss and Office of Public Assistance County Officer Valerie Golden, talked about their programs and then questioned presenters about issues. The question period also was opened to people in the audience. Molloy said the forums are being transcribed and will be made available at the consumer protection Web site of the Attorney General's Office, as well as provided to different groups, regulators and the state Legislature. The department also can be contacted toll-free at (800) 481-6896 for more information about consumer protection programs and issues, he said. Many presenters at the meeting encouraged people to visit their agencies' Web sites to find educational material and to find out about how to file complaints. Moon, when talking about the auditor's office, said one of Lindeen's goals is to increase understanding of what the office does — it regulates insurance and securities in Montana. "We really don't do audits," he said. "We're trying to do a little branding this year and come up with commissioner of securities and insurance so people know what the auditor actually does." The staff of the office handle about 40,000 consumer calls that turn into about 1,800 complaints, resulting in the recovery of some $122 million in restitution for securities and $3 million to $5 million in insurance settlements each year, he said. The downturn in the economy seems to have increased activities, he added "We do have a lot of bad actors out there," Moon said, adding that it isn't just a specific group that is victim to fraud. "It happens to everyone, rich, poor, male female, of all races. It's out there and we're on the vigilance to put those people where they need to be through legal action," he said. Tuss thanked Bullock for including Havre in the schedule — the other forums were held in Kalispell, Helena and Bozeman — because consumer fraud is just as likely in rural areas, he said. "It's just as easy to get frauded in a place like Saco, Box Elder or Chester as it is in Missoula, Bi l l ings or Los Angeles," he said. Romano said the mission of the banking division is to protect Montanans by regulating the financial institutions that they are responsible to supervise. That includes state-chartered banks and credit unions, mortgage lenders and brokers, consumer loan companies, title lenders, payday lenders and escrow companies. He added that, although there is a complaint process offered by the banking division, it only processes about a hundred a year. "I know that there are probably a lot of consumers who don't realize we have that process available, and I'm hoping through these panels to get that message out on that," he said. One of the fastest-growing problems, he said, is with Internet payday lenders, a common topic discussed by the presenters. Those lenders often can be hard to track down, often off shore. Romano said his office now is working on a complaint with a lender located in Belize. Romano said people having a problem with online lender — they often will continue to renew loans and continue to add charges and withdraw payments — should close their bank account. Linda Reed, representing the M o n t a n a C o m m u n i t y Foundation, presented that organization's push, along with other groups and organizations, to get a limit on the interest payday and title lenders charge placed on the ballot in this year's election. The initiative would cap the interest at an annual percentage rate of 36 percent. Reed said the issue has repeatedly been defeated in the Legislature, which in 1999 licensed payday and title lenders and allowed them to charge up to 400 percent a year. To compare, at the height of the activity of the Mafia, they were charging 250 percent, Reed said. Part of the problem with payday lending is that it traps consumers — usually already in difficult financial situations — in a cycle of debt, taking out loans every payday or even taking out multiple loans from different lenders during the same pay cycle. Karen Smith, director of outreach for the Montana Credit Un i o n s f o r C ommu n i t y Development, said Montana credit unions are providing an alternative. Credit union members at institutions with the programs can take out short-term loans without a credit check, typically at 18 percent APR. Many other issues also were raised at the forum, including the use of the Internet. Kevin Clark of the Montana Bankers As sociat ion talked about Internet scams, including a new one where suddenly what seems to be a legitimate Web page from a real bank appears on people's computer monitor. If the people enter requested information, they have just given away their financial security to a scam artist, Clark said. Real banks never contact customers to ask for financial information, he said. The banks already have that information, he added. Tim Robbins of Rural Dynamics, which includes the Consumer Credit Counseling discussed debt set tlement advertisements increasingly common on television. The problem with those companies, he said, is the scam artists have people making payments to the debt settlement company that never go to the creditor. He said at the forum in Bozeman the group heard from a woman who had paid $4,000 to a debt settlement company with none of that money going to her creditor. That was a comparatively good story, he added. The woman recovered $1,500 of the money paid, while most don't. That was enough for her to use to file for bankruptcy. U.S. Postal Service Inspector Marcel Korvela talked about scams that go through the mail, typically involving offers or checks sent in the mail with the recipient told to wire money back using Western Union. He warned to never trust an unsolicited request that asks a person to wire money. He made a common comment during the night's forum: People should not expect something for nothing. "If it sounds too good to be true, it is," Korvela said.