Caught in Sallie Mae credit glitch? Tough luck!
Posted: Friday, May 16 at 03:59 am CT by Bob Sullivan
A mistake last week by student loan firm Sallie Mae temporarily wrecked the credit scores of a million loan holders, with some victims saying their scores had sunk 100 points or more. While the scores have since been fixed, the Sallie Mae mishap provides a startling look at the impact of credit scores, how fragile the credit-scoring business is and how severe the punishment can be for one credit-related error: a potential cost of hundreds of thousands of dollars to individual consumers.
Earlier this week, Sallie Mae said it had changed the way it sends monthly payment information to the credit bureaus, and that change inadvertently caused about one million loan holders to end up with a serious blemish on the credit reports. The college lending giants offers borrowers graduated payment plans that allow former students to pay a little less in the initial years after they leave school, and a little more later. Sallie Mae's change caused the bureaus to view those on graduated payments as “arrangements made with credit grantor to make partial payments." That sounded to the credit bureaus as if the borrowers had signed up for a reduced payment plan after being delinquent, which carries with it a serious credit score stigma.
As to whose fault the errors ultimately were, take your pick: Sallie Mae, for changing the payment information provided to the bureaus; the bureaus for reporting the errors; or Fair Issac, the company that invented the formula used to calculate the scores?
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Can't cancel service? Blame 'perverse incentives'
Posted: Tuesday, May 13 at 05:00 am CT by Bob Sullivan
The next time you find yourself on the phone with a pushy customer service representative trying to sell you something, remember this: There could be serious cash incentives motivating that hard sell you're getting. And I do mean serious.
One consultant I spoke to recently said that some call-center employees for a national internet service provider were making six-figure salaries, thanks to aggressive bonuses. While customers were infuriated after being deceived while trying to cancel their service, the phone reps were raking in the dough, sometimes doubling or tripling their salaries with incentives.
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Perils of the pocket call
Posted: Friday, May 9 at 05:00 am CT by Bob Sullivan
The other day I got a surprising message from an old source. It was a “declined meeting” notice from Microsoft Outlook. "Bob, Marty is on a flight at that time,” it said. “He could do between 12 and 2 tomorrow."
The problem is, I hadn't invited Marty to a meeting. In fact, I hadn't talked to him in years. So I wrote back to his assistant and said so. She insisted I had, and she had evidence. She wrote again and forwarded my original meeting request. It sure looked as though I had initiated the meeting.
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Less for your money? That’s inflation, too
Posted: Tuesday, May 6 at 05:00 am CT by Bob Sullivan
It's been 25 years since the U.S. has grappled with high inflation -- or has it? There are, after all, two ways to raise prices, but only one involves raising prices. The other involves reducing the value of what you get for your money.
That second method can involve packaging sleight-of-hand, such as reducing the size of a quart jar of mayonnaise by 2 ounces, to 30 ounces. But companies also have an even sneakier way of devaluing your purchases.
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Regulators target credit-card shenanigans
Posted: Friday, May 2 at 04:00 am CT by Bob Sullivan
Federal regulators are taking a stab at reining in "unfair and deceptive" bank tactics. Three federal agencies, including the Federal Reserve, have issued proposed rules that would ban consumer-unfriendly credit card issuer practices like double-cycle billing and unfair interest rate hikes. Some unpopular bank overdraft fee policies would also be banned.
The Office of Thrift Supervision announced its proposals Thursday. The Federal Reserve Board and the National Credit Union Administration made their similar announcements on Friday.
Together, the agencies regulate most banks, meaning new rules would have wide impact. The proposal, however, faces what figures to be a testy public comment period, during which banks are expected to challenge any new rules and ask the agencies to scale them back.
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Did banks collude against consumers?
Posted: Tuesday, April 29 at 05:00 am CT by Bob Sullivan
Did major credit card firms conspire to change their member agreements and limit consumer rights? Consumers may find out now that a federal appeals court has revived a class-action lawsuit alleging such anti-competitive practices by banks.
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Paying cash? That'll cost extra
Posted: Friday, April 25 at 05:00 am CT by Bob Sullivan
Rhonda Payne went to an AT&T Wireless store in Calhoun, Ga., recently to pay her phone bill in cash. She'd been hit by ID theft and was forced to close her checking account, so she was worried she wouldn’t be able to mail a check on time. But when she arrived at the store, she was in for a surprise.
Paying in person, she was told, costs extra -- $2 extra.
Payne objected to the "administrative charge" that was added to her bill but got no sympathy. Instead, she said, she was told she should consider herself lucky because the fee was about to go up to $5.
"I was told that it was a courtesy to take cash,” she said. “I said, ‘Are you kidding me?'”
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Was your LendingTree file hacked?
Posted: Tuesday, April 22 at 03:30 pm CT by Bob Sullivan
LendingTree has told its customers that former employees helped unauthorized mortgage lenders hack into its systems and steal customer information from 2006 to 2008.
The incident reveals just how aggressive the mortgage loan business was during the height of the housing boom, and also raises fears for consumers who share their information with companies that help them shop around for the best deal. And it highlights what experts say is an often overlooked source of data theft -- the inside job.
According to a letter sent to customers recently, former LendingTree LLC employees shared "confidential passwords" with lenders, who in turn used the login information to "access LendingTree's customer loan request forms."
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9 a.m.: Don't forget to read annoying spam!
Posted: Tuesday, April 22 at 05:00 am CT by Bob Sullivan
Thank goodness the reminder popped up at 9:15 a.m., just a few minutes before my "meeting." Otherwise, I might have forgotten to claim my winnings.
"[Invitation] CLAIM PRIZE," the meeting reminder said. And when I opened the appointment, I was reminded of my good fortune. "Attn: Winner, We wish to congratulate you over your email success in our AMSTEL LOTTO balloting. ... You have been approve for the star prize of Euro 750,000."
I've received several such meeting invitations in recent days, and so have e-mail users across the Internet. Combine two of your least-favorite things -- unwanted meeting invitations and spam -- and you've got a major new Net nuisance. Computer security folks have taken to calling it "calendar spam."
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Congress debates new credit card law
Posted: Thursday, April 17 at 03:19 pm CT by Bob Sullivan
A Catch-22 for consumers came sharply into focus Thursday at a testy congressional hearing on a proposed Credit Cardholders Bill of Rights, with several witnesses testifying that they were hit with hidden penalties simply for shopping around for better rates.
Banks often answer complaints about alleged misbehavior by saying that unhappy consumers can simply switch to a new bank. But Steve Autrey, a consumer from Fredricksburg, Va., testified before the House Financial Institutions and Consumer Credit Subcommittee that opening a new credit card and closing an account both hurt your credit score. That leaves consumers faced with sudden, unexplained interest rate hikes with no good options, he said.
"It's an unchallenged scheme where consumers are penalized when they choose to close their account," he said.
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