I am not dead yet: Oregon Unlawful Trade Practices Act and insurance reform

Kudos to Steve Duin of  The Oregonian for this column on Azusa Suzuki’s struggle to prove that she is entitled to Regence Blue Cross supplemental medicare insurance coverage for medical expenses incurred in a motor vehicle collision.

Apparently Regence decided that Ms. Suzuki was dead and–for that reason–Regence decided it did not need to pay her bills. She worked for years to prove she’s very much alive. It sounds almost comical. But if you watch the linked video or read the article, it’s apparent that outrage is the only response.

The Duin article points up a serious problem in Oregon. Consumers are at the mercy of insurance companies. When they do not pay claims, when they violate Oregon law, and when they do not fairly adjust claims, Oregon consumers are virtually out of luck. The problem is a lack of consumer remedies against insurance companies that misbehave.

Senator Chip Shields is trying to fix that. He has introduced a bill–SB 719–which protect Oregon consumers by making insurance companies meet the bare standards set out in Oregon’s Unlawful Trade Practices Act.

In this session of godawful Salem bills, it’s nice to see the champions of consumers are still fighting for the rest of us.  Appreciation is due–as always–to Sen. Shields. Consumers have few friends in the Oregon legislature. He is one of our best.

Comcast Oregon late fee class action settlement–cable TV

We are starting to get calls and emails about the class action settlement with Comcast.

Here is the link to the settlement information

A few recurring questions:

1. The settlement applies to Oregon Comcast subscribers

2. It is limited to subscribers who paid late fees on Cable TV bills.

3. The link above takes you to a claim form which you must open, print, fill out and mail.

4. The mailing address for claim forms and deadline information for filing the claim are also in the link posted above.

More questions?

Contact us here. I am class counsel and will do my best to answer your questions.

Debt trap: for-profit colleges

One of the best articles I’ve seen recently on for-profit colleges. Please, please, please read this if you or anyone in your family is  thinking about a for-profit school.

From the trenches, we continue to pursue our class action against Le Cordon Bleu Portland (formerly known as Western Culinary Institute) and its parent, Career Education Corp. Consumer fraud class actions are difficult cases.

Best to avoid the damage in the first place by saying no to overpriced for-profit colleges.  Don’t let the slick marketing fool you; you’re often better off at a less-costly community college.

One more thing. To our leaders in Congress, your active oversight can fix this problem. But you need to do more than regulate for the future. A generation of students are effectively underwater for life because of lax regulation. Seems to me that you need to fix this problem.

For-profit trade school regulations delayed…follow the money

In late summer–and with much fanfare–it looked like Congress and the Department of Education would finally address the outrageous abuses of bad actors in the for-profit education sector. Predictably, the pace has slowed to a crawl, with Department of Education delaying the promulgation of regulations.

Do you need to wonder why?

According to this report, most of the push back from Congress came from members who received campaign contributions from for-profit trade schools.

Most of the dispute focuses on the Department of Education’s proposed gainful employment rule. The gainful employment rule would put the brakes on bad actors in the for-profit trade school industry. The rules would limit federal student loan monies for those programs that saddle students with debts that cannot be reasonably repaid with degrees granted by the institutions.  Hmm…expensive degrees with heavy debt loads qualifying students for jobs that won’t allow them to pay off the debts. This sounds so familiar.

New Report: For-profit trade school misconduct

The Government Accounting Office released its report today,  GAO Report For Profit Colleges (pdf), highlighting a number of abuses by for-profit trade schools.  The GAO engaged in undercover testing to ferret out the fraud and abuse in for-profit admissions and lending.  Pretty scary stuff.

The GAO Report notes that approximately 2,000 for-profit colleges received federal funds of $24 billion in the 2008-2009 school year. At all 15 of the for-profit schools surveyed by GAO, admissions representatives made deceptive and questionable statements about graduation, employment and financial aid.

I’ve been laboring in a trade school class action against Career Education Corp. and Western Culinary Institute, which is now known as Le Cordon Bleu College of Culinary Arts in Portland.  I’m not particularly surprised by the GAO findings. Maybe the GAO report will spur Congress to take a hard look at these issues. That would be a good thing because we have sentenced a generation of kids to a lifetime of debt.

My view is that the current crisis stems from a nasty mix of deregulation and privatization. Give for-profit schools nearly boundless access to federal money. At the same time, do not regulate their conduct. Those were the first steps to sentencing a generation to a lifetime of debt.

Question: Will we be able to fix this thing, or are we just content to continue fiddling while Rome burns?

Payday loans trap consumers

Thinking about a payday loan? Please check out this article on the hazards of on-line payday loans. The author, Herb Weisbaum, is one of my favorite consumer news resources. He writes the ConsumerMan column for MSNBC.

The Weisbaum article focuses on the nastiness of on-line payday loans. Consumers who are desperate for quick cash can get sucked in to horrible deals with on-line payday lenders who often evade regulation.

The article notes a few horror stories that are worth marking. When on-line lenders charge interest rates of 800 percent, the borrower will be so deep underwater so quickly that the borrower can never pay down interest.

On-line lenders often require the borrower to provide social security numbers and bank information and automatic payment from the consumer’s bank account.  I suppose I could write a long and technical explanation about this using flowery legal language/ Not necessary. This is very simple. Don’t do it. It is a trap.

It’s easy for consumers to assume that regulations protect them in these transactions. Truth is that many states have no real regulations on payday loans.

Some states, like Oregon, cap interest rates. But the cap is 36 percent APR, and that does not include origination fees.  Yikes! For those who like things a bit more concrete, let’s do some basic math to show why these are bad deals.

If you borrow $3,000 for one year at 36 percent interest, your monthly payments will be $302.78 on that loan. That, of course, is a new payment on top of all the other obligations like food, rent, auto and the like. Assuming you manage to pay it off without rolling it over, you will have paide a total of $3,616.68. Not a pretty deal, and it gets worse if you don’t get it paid off and have to roll it over.

So here’s how it gets even worse with the on-line payday lenders. Many will set up shop off shore and claim that Oregon laws don’t apply to their loans. So instead of the high rate of 36 percent, they’ll charge 800 percent annual interest.

Here is what a small 800 percent interest loan looks like. A one-month $300 dollar loan adds over $200 per month in interest. And of course that interest payment is on top of the $300. So borrowing $300 for a month at 800 percent annual interest means you will owe a bit more than $500 in a month’s time.

It’s easy to see how people fall deeper down the hole in that situation. Look at this explanation from the Federal Trade Commission on how payday loans work to see how easy it is to get sucked under. The FTC piece is a bit dense, but it also contains suggestions on how to avoid the traps.

This isn’t a new issue. But the Weisbaum article prompted me to think about it again. In these tough economic times, I have no doubt that these loans are tempting. Just say no.

For further information:

Oregon consumer payday loan information (pdf) from the Oregon Department of Consumer and Business Services.

Oregon statutes relating to payday loans (scroll down to ORS 725.600 – 725.630)

Summary of states’ payday lending laws (Author’s note: I haven’t verified that this is accurate or up to date.)