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Mortgages were the leading source of 72,000 complaints to the Consumer Financial Protection Bureau from consumers 62 years of age and over, followed by complaints about credit reports and debt collection, according to a new report from the Illinois PIRG Education Fund. Further, legislation passed by the U.S. House and awaiting U.S. Senate action intends to cripple the Consumer Bureau, placing older consumers at greater risk of harm from financial scammers.
The bill, HR 10, the so-called Financial Choice Act, but more aptly called the “Wrong Choice Act,” rolls back the powers, funding and independence of the Consumer Bureau and it also weakens its pioneering Office for Older Americans. The bill also eliminates many other financial system reforms of the 2010 Dodd-Frank Act enacted after the second-worst financial crisis in the nation’s history
“The Consumer Bureau has already taken numerous major enforcement actions against financial firms targeting older consumers, said Abraham Scarr, Illinois PIRG Director. “Gutting the Consumer Bureau makes it easier for financial scammers to move against older consumers, threatening their homes and retirement savings.”
Older consumers can make tempting targets for predatory behavior in the financial marketplace. Scammers may look to take advantage of their savings, home equity, or guaranteed income. Older consumers facing a savings shortfall may be harmed by low-balance or overdraft fees at banks, or be tempted to take on credit or use products such as reverse mortgages, whose risks may not be fully understood, Mierzwinski added.
“Older Americans face many challenges when it comes to home-ownership, financial management and paying off medical debts, leaving them vulnerable to financial predators,” US Senator Tammy Duckworth said. “That can mean the difference between enjoying a comfortable retirement and having to choose between food, housing, health care, transportation or other necessities. This report confirms why leaders at every level of government must work together to ensure every American has the opportunity to retire with dignity and respect.”
“The CFPB has helped millions of consumers across the country, especially older Americans who are prime targets of scams and predatory financial practices,” Illinois Attorney General Lisa Madigan said. “Older consumers benefit from the CFPB uncovering and stopping fraud that undermines their financial security.”
Among the key findings of the Illinois PIRG Education Fund and the Frontier Group report “Older Consumers in the Financial Marketplace: An Analysis of Complaints, and Results, From the CFPB” are the following:
- Mortgages account for thirty-one percent of complaints by older consumers. Other leading complaint categories were credit reporting (seventeen percent) and debt collection (seventeen percent).
- Eighty percent of mortgage complaints concerned existing mortgages, but five percent of complaints were about reverse mortgages, loans solely available to older consumers that allow them to use their home equity as security. The risks of such products are not always fully understood by consumers.
- At the time data was pulled for the report, 2,199 Illinois consumer complaints were lodged in the database, ranking Illinois twenty-seventh in number of complaints per population 62 and older
- The Consumer Bureau has taken numerous enforcement actions against companies ranking high in complaints in the study:
- Mortgage complaint enforcement actions have been filed against at least 3 mortgage companies ranked in the top ten of the report’s finding, including Ocwen Loan Servicing, Nationstar Mortgage, and a company (Green Tree) that later merged with Ditech, which ranked sixth.
- The Consumer Bureau has taken actions against all three of the major consumer reporting agencies (credit bureaus) ranked by complaint volume (Equifax, Experian and TransUnion).
- The Consumer Bureau has taken actions against the top two debt collection companies ranked by complaint volume, Encore Capital Group and Portfolio Recovery Associates.
- The Consuer Bureau provides valuable resources through its Office for Older Americans, which works full time to help older consumers avoid bad deals, and find restitution when they are wronged.
“Research shows that older Americans are frequently targeted by unscrupulous companies with consumer and financial products. The CFPB is vital to protecting older Americans from financial abuse,” said Dory Rand, President, Woodstock Insitute.
"After the Equifax data breach, we looked closely at complaints from older Americans about credit reporting companies," said Gideon Weissman of Frontier Group, report co-author. "We found that for older consumers, credit reporting is the second-most complained about type of financial product. And two-thirds of those complaints allege inaccuracies on credit reports."
In conclusion, Scarr noted that “The so-called Financial Choice Act is the wrong choice for older Americans and all consumers because it takes away the Consumer Bureau's tools to protect us, allowing financial predators to run amok.”
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