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Consumer Protection: Advice from The Bucks County Consumer Advocates

October 2009

Q.  I’m getting up in years and I’m alone since my husband died six years ago.  I’m starting to panic because I’m running out of money to spend on food, prescriptions and anything else that I may need to live.  I was told about reverse mortgages and was wondering if that was the way for me to go.  Can you tell me a little bit about reverse mortgages?   G.B., Perkasie      

A.  Reverse mortgages can help homeowners who are house rich, but cash poor remain in their homes and still meet their financial obligations. To qualify for a reverse mortgage, you must be at least 62 and have paid off all or most of your home mortgage.  The amount you can borrow depends on your age, the equity in your home, the value of your home, and the interest rate. But, in some cases reverse mortgages can end up being more costly than traditional loans because they are rising debt loans.  The interest is added to the principal loan balance each month, so the total amount of interest owed increases significantly with time as the interest compounds.  Also, reverse mortgages use up all or some of the equity in your home which leaves fewer assets for you and your heirs.  Lenders generally charge origination fees and closing costs and some may charge for their services.  Because you still retain the title to your home you would still be responsible for taxes, insurance, fuel, maintenance, and other household expenses.  Consumers need to be aware that there are some unscrupulous lenders out there.  It would be worth your while to get advice from some non-profit organizations that can council consumers on reverse mortgages.  Please contact Bucks County Consumer Protection at 1-800-942-2669 for more information.

Q.  I received something in the mail to help with debt consolidation.  My bills were stacking up to the point that I knew I needed help.  I contacted this consolidation company and signed a contract with them.  It turns out that they do not pay off the debt up front, but pay with the payments that I send.  I have sent three payments of $275.00 each, but the companies that I owe are saying they have not received any money.  I have not received anything from the consolidation company concerning my payments.  This company is in Florida so I cannot go there to find out what is going on.  What can I do?  C.H., Newtown    

A.  Stop sending the company your money.  Our Office read over your contract.  There has been no reduction in your interest rates, or late/over the limit fees.  You are paying this company $45.00 a month to pay your bills, which you could do yourself, and the fact that they have not even made a payment is worse.  Many credit-counseling companies are for profit and do not have your interest in mind.  Consumer Protection asked you to write a letter to this company to say that you would not send another payment.  The letter also stated that the three payments you made should be sent to your creditors or refunded to you immediately.  There are credit counseling services right in this area where you can go and see who you are dealing with, not someone in Florida you dealt with over the phone or by fax.  Why give your money to someone you never met.  Contact Bucks County Consumer Protection at 1-800-942-2669 for information about credit counseling agencies in the area. 

Q. After many years of buying used cars and getting what little miles I could out of them, I decided that I would like to own my very first new car.  I’m very nervous because this is such a big step for me.  Could you give me some tips on what to watch out for when buying a new car?  T.R., Quakertown

A. You are absolutely right when you say it is a big step.  A new car is second only to a home as the most expensive purchase many consumers make.  First think about what car model and options you want and how much you’re willing to spend.  Do some research.  You’ll be less likely to feel pressured into making a hasty or expensive decision at the showroom.  Know exactly how much you can afford on the car and don’t allow a sales person to sell you a more expensive car or extra features you really didn’t want or need.  Search the internet and objective publications, such as Consumer Reports and The Car Book, for information about the features, performance, durability, and costs of the models which interest you.  Take the time to shop around from dealer to dealer to get a competitive price.  It’s best to conduct this shopping process by phone.  If you try to do it in person you’ll waste many hours and you’ll have difficulty persuading sales people that you are really serious about leaving and getting other dealers’ prices.  If the dealers don’t want to work with you over the phone let them know that if they don’t bid, they have no chance for your business.  Be businesslike and persistent.  Wait to discuss any extra matters like used car trade-in, paint sealant, or any other add-ons until you have settle on the price of your new car.

If you plan on financing your car, be aware that the financing obtained by the dealer may not be the best deal you can get.  Contact lenders directly.  Shop around for the best deal, comparing the annual percentage rate and the length of the loan.  Be careful when it comes to extended warranties.  Many new cars are very reliable, so there are few service claims.  Also many cars now carry long manufacturer warranties, so many service problems are covered by the warranty, leaving little to be covered by the extended service contract.  If you would like a free copy of brochure on buying a new car, please contact Bucks County Consumer Protection at 1-800-942-2669.

Fraud Alert: Veterans Scam

The Department of Veterans Affairs (VA) is warning Veterans not to give credit card numbers over the phone to callers claiming to update VA prescription information.  Veterans have become targets in an inexcusable scam that dishonors their service and misrepresents the Department built for them.  VA does not call Veterans and ask them to disclose personal financial information over the phone.

Scam artists are misrepresenting the VA to gain personal information over the phone.  They say VA recently changed procedures for dispensing prescriptions and ask for the Veteran's credit card number.  Once the scammer has this information, they either purchase items online or sell the information to other scammers.  The VA has not changed its processes for dispensing prescription medicines, nor has the VA changed its long-standing commitment to protect the personal information of this nation's Veterans."

Veterans with questions about VA services should contact the nearest VA medical center, connect with a representative by calling toll-free at 1-877-222-8387 or contact a member of the Bucks County Task Force.

Fraud Alert: Home Energy Scam

With billions in stimulus money being released for green energy programs, and millions of Americans eager to help the environment, scammers are trying to cash in.  Among their ploys:

• Tax credits.  Credits up to $1,500 are available through the American Recovery and Reinvestment Act for making certain energy-efficient home improvements.  However, do not believe claims that any improvement qualifies.  For a list of products that do, visit www.energystar.gov/taxcredits.
• Also, pass on any offer to file the “necessary paperwork” for a fee.  “You don’t need any assistance to take advantage of the green home improvement tax credits being offered by the federal government,” says Alison Southwick of the Better Business Bureau.  And ignore any e-mail message claiming to be from the Department of Energy promising a refund.  Opening its attachment could unleash computer malware or gather your personal information for identity theft.
• Power companies.  Some local utility companies offer rebate programs for energy-saving measures, so scammers pose as employees offering to do energy audits or make energy-saving repairs.  Sometimes, it’s a ruse to get into your home; be especially suspicious of pairs of workers, one diverts homeowners while the other steals valuables.  The pair may offer to make “needed” renovations on the spot, charging you for the work or collecting a rebate you are entitled to.
• Gizmos.  Beware of pricey gadgets such as “magnetic power generators” or certain “energy saver” devices.  They do not work, say officials, and do not qualify for tax credits.  Also, installing them could be against the law because it requires tampering with a power meter.
• Door-to-door deceit.  Scammers may claim to be contractors, a representative of an “off-grid” utility company or salesperson of energy-efficient home products.  What you will get: high-pressure tactics, false promises and maybe even an attempt to collect personal information.

To validate legitimate contractors, ignore the “references” offered and contact your state’s licensing board, check with the Better Business Bureau or your local Office of Consumer Protection.  Remember to always contact your utility company if a self-described employee comes knocking at your door.

Bucks County Crimes Against  Older Adults Task Force ~   www.crimesagainstolderadultsbucks.org
Bucks County District Attorney’s Office 215-348-6344	Bucks County Area Agency on Aging 215-348-0510
Bucks County Consumer Protection 215-348-6060	Network of Victim Assistance 1-800-675-6900
Bucks County Register of Wills 215-348-6265	Bucks County Coroner 215-348-3852

 

Q. I’m sick and tired of putting up with the problems that I’m having in my apartment.  My landlord doesn’t seem to want to fix any of my complaints and I want to withhold rent, but I’m not sure how to go about doing that.  Can you give me any ideas?  P.D., Levittown    

A. Withholding rent may be appropriate for you only if your repairs would cost more than one month of your rent or your problems are so serious that you home is uninhabitable.  Be very careful because withholding rent is not often the most appropriate choice, and many courts do not look favorably on it.  If you decide to withhold rent you should be looking for another place to live.  Understand a serious matter for withholding rent would be no hot water, no heat in the winter or dangerous conditions in the structure of your home or sewage system.  It would not be for things like torn carpeting, leaky faucets or toilets that won’t stop running.  The safest way to withhold rent to try to get the landlord to improve conditions is to put the rent money into a separate bank account from your other funds.  This way, if your landlord tries to evict you or sue you for the money, you can prove to the court that you were not using the money for any other purpose.  The first step in this process would again be to write to your landlord via certified mail, tell him about your problem and ask him to fix it.  Do not skip this step.  You must tell him in writing, even if you’ve already told him before about the problem.  Be detailed about the problem and how it affects your family and if you can, take pictures of the problem.  Always keep copies of all your letters.  If he doesn’t fix the problem, you need to write to him again via certified mail.  Tell him that because he has not fixed your problem, your home is uninhabitable, and therefore you intend to withhold your rent.  Tell him that you will begin paying rent again after he fulfills his obligations as a landlord.  Do not spend this money.  Put the money into a separate account.  You can ask your local bank how to do this.  This way if your landlord takes you to court and wins a judgment against you, you will have the money to pay it back

 

Department of Consumer Protection /
Weights and Measures
Michael D. Bannon
Director
50 North Main Street
Doylestown, PA 18901
Phone: 215-348-7442
Fax: 215-348-4570
Canny Consumer Hotline 1-800-942-2669