Resolve to be a better consumer in 2011

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

The start of a new year inevitably means many people will be making New Year’s resolutions. Some of the more common resolutions include spending more time with family and friends, getting into shape, quitting smoking, or getting more organized. Unfortunately, according to researchers, while more than half of consumers believe that they will fulfill their resolutions, just 12 percent will actually be successful.

As consumer advocates, we frequently preach the value of setting small, defined and achievable goals. For example, instead of resolving to get out of debt in a single year (a goal that many make, but few achieve), resolve to allocate an extra $30-50 per month towards paying down debt. In this way, you achieve success early (you’re 8.3 percent of the way to your yearly goal there after the first month!), creating a small victory and incentivizing additional work towards the goal.

So, in honor of 2011, here are 11 achievable goals that consumers can resolve to accomplish in the New Year.

1. Pay 1 percent more on top of your minimum monthly mortgage payment. Doing so on a typical 30-year fixed rate mortgage could knock months and hundreds (or thousands) of dollars off the cost of the loan over its lifetime.
2. Don’t make any online purchases from a company you haven’t researched with the Better Business Bureau. BBB.org is a wealth of information on online and “brick and mortar” companies, including complaints made and resolved. Don’t shop online without it!
3. Pay more than the minimum monthly payment on your credit cards. Credit card interest rates are often in excess of 10 percent and may be 20 percent or more. Unless your investments are returning profits at a greater rate than your credit card interest rates, it makes a lot of sense to “invest” in paying down high-interest debt.
4. Check your credit report at least twice. Consumers are entitled to a free credit report from each of the major credit reporting agencies once per year. While these reports may not give you your credit score for free, you can see if there are old accounts or incorrect information that you can fix and (hopefully) improve your credit score. This small step could save you thousands on home or auto loans where credit scores play a big role in interest rates.
5. Do a “communications audit” once per year. Most consumers subscribe to some combination of cable TV, wireless phone, wired phone (with local and long distance) and broadband Internet service. At least once a year, gather the bills for these services and total up what you’re paying for all of them. Then do an honest appraisal of what you actually use. Many consumer will find that they use their cell phones for most long distance calls and don’t need a second long distance plan on their home phone service. Other consumers may find that they rarely watch premium movie channels and can drop them from their cable package.
6. Add any new phone numbers to the federal “Do Not Call” list. Consumers who change residence, switch carriers, or get new cell phones may also get new phone numbers. If you want to limit telemarketing calls to these numbers, consider visiting www.donotcall.gov to add these new numbers to the “Do Not Call” registry. Extra Credit: Some states maintain their own “do not call” lists. Check with your state government to see if such a list exists and add numbers to that as well.
7. Have a “shredding party!” Consumers tend to accumulate lots of paper, including bills, credit card offers, account statements and other materials, which may contain lots of personally identifying information. These can become fodder for identity thieves. Invest in a good shredder then invite friends over with their bills, credit card offers, etc. and shred away. Here’s a great guide to throwing your own “shredding party.”
8. Create a household budget. It’s tremendously difficult to pay down debt if you aren’t living within your means to begin with. For most people, creating a simple personal or family budget is the first step in figuring out what their “means” are. This doesn’t have to be as tedious as it sounds, and having a good handle on the money coming in and going out of family accounts can actually relieve a lot of stress. The BBB has a great guide for creating a budget here.
9. Increase your 401(k) contribution by 1 percent. Many consumers may have been turned off on investing after the recent economic meltdown. However, you still need to save for retirement, and – for most consumers – that means investing in a 401(k) plan. By increasing your contribution by just 1 percent, you probably won’t miss the money and you’ll be investing in your future.
10. Check your privacy settings on Facebook. Let’s face it: It seems like more of us are on Facebook these days than aren’t. Unfortunately, most users never take a look at their privacy settings. You may be sharing more of your personal information with marketers and other users than you’d like. Check out the Electronic Frontier Foundation’s step-by-step guide to maximizing your privacy on Facebook.
11. Don’t give to a charity you haven’t checked out first. The holidays are a season ripe for charity scams – where unscrupulous fraudsters use the names of respected charities to con consumers out of their money. Fortunately, a number of online resources are available to help consumers check out a charity ahead of time, including GuideStar.org, CharityNavigator.org and Give.org. For more tips on avoiding charity scams, check out our tip page by clicking here.

New research showing lack of progress on patient safety front a disturbing trend

By Sally Greenberg, NCL Executive Director

Patient safety should be a paramount consideration when someone is admitted to the hospital, but new research is discouraging on that front. Researchers looked at 10 North Carolina hospitals over the 2002-2007 period. They found many problems. About 18 percent of patients were harmed by medical care, some more than once, and 63.1 percent of injuries were preventable. Most problems patients faced were temporary, but some were serious, and 2.4 percent caused or contributed to a patient’s death.

The thing that is so discouraging is that, in 1999 when an Institute of Medicine report – entitled “To Err is Human” – found that up to 98,000 people each year die, and more than one million people are injured because of medical errors, the medical community made a commitment to try to make a dent in these numbers. It appears that things for consumers and patients haven’t improved much.

Common problems appeared when hospitals failed to use measures proven to avert hazards from devices like urinary catheters, ventilators, and lines inserted into veins and arteries. Medication errors caused problems in 162 cases – computerized systems for ordering drugs can cut such mistakes by 80 percent, the researchers found, but only 17 percent of hospitals have such systems.

These errors not only injure people, but they cost the health care system a bundle. The report estimated that these errors cost Medicare several billion dollars a year. Not only that, but researchers estimate that these numbers are vastly underestimated because reporting medical errors is voluntary.

Latest report on women’s health not pretty

By Mimi Johnson, Director of NCL Health Policy

The National Women’s Law Center and Oregon Health and Science University recently issued its latest report card on the health of women, and it wasn’t pretty.

The United States received an overall grade of “unsatisfactory” and failed to meet many of the government’s Healthy People 2010 goals.

Some of the biggest problems facing women in the United States? Women are binge drinking, or downing more than five drinks at a single occasion, far more than before. In addition to partaking in riskier behaviors, women are seeking screening for such things as cervical cancer far less than before. This can be very dangerous, especially as rates sexually transmitted diseases such as chlamydia are on the rise.

Women today are more obese and have more serious chronic conditions such as diabetes and hypertension than only a few years ago. The report found that one-quarter of women in this country get no physical activity, and the overwhelming majority of women do not eat five fruits and vegetables a day.

Is there hope? The Affordable Care Act prohibits insurance policies from discriminating based on gender or pre-existing conditions, and helps extend Medicaid eligibility to millions of Americans. The Act also allots substantial funding for prevention. One of the major advancements is the elimination of co-pays for preventive services. It might be possible to inch closer to nation’s goal of 90 percent screening rates for pap smears, increase the effective use of mammography, and continue to help women to smoke and drink less with fewer financial and systemic barriers in our way.

So let’s go far a walk, put down the bottle, get to the doctor, and work together to make sure we fare better on the next report card!

Thought you were done with the mall?

Think again. Many of us will be back there tomorrow, bright and early, to take advantage of after-Christmas sales or – gulp – try to return well-intentioned gifts that didn’t go over so great. Are you ready for your returns? Tips from the experts:

• Know a store’s return policy before you go back. Know what you’re getting into — whether the return will be in the form of cash or store credit, at full price, the price that was paid by the purchaser, or some more recent marked-down price. Know whether having the receipt factors into this so you can decide whether politely going back to the gift giver to ask for the receipt is warranted.
• Keep a paper trail. Find your receipts and keep them handy. Having a receipt dramatically increases the chances of an outcome that’s to your liking.
• Don’t open the packaging of anything you know you don’t want to keep, particularly electronics. Policies that don’t allow returns for opened electronics items are common. If they do take it back, they may withhold a certain percentage of the return price and call it a “restocking fee.”
• Spend your gift cards. They may lose value over time, so look at the fine print and spend them before they expire.
• Prepare yourself for the worst. Stores have been tracking customers’ return habits for years. Some retailers subscribe to services that keep track of what consumers are purchasing and bringing back in an attempt to curb consumer return fraud — the returning of stolen goods. For honest consumers, this can cause problems, as some stores limit the amount of return activity to a certain number or value of annual merchandise returns. There’s a possibility if you’ve returned a lot of merchandise, you’ll be denied.
• Be smart. Don’t wear it. Don’t damage it. Increase the chance of having a successful return by taking care of the item on its way back to the store and being a pleasant, polite customer. The holidays are stressful enough. Don’t contribute with a less-likely-to-be-helped attitude.

Too many households neglecting life insurance

By Sally Greenberg, NCL Executive Director

A recent industry review of Americans purchasing life insurance showed a startling trend: the number of American households with life insurance was at its lowest in 50 years.  The drop in insurance is tied directly to the economic downturn, Today only 44 percent of households have an individual life insurance policy, and 30 percent have no individual- or employer-provided life insurance. The study was done by LIMRA, an industry life insurance think-tank and research arm. The study found that 11 million households with children younger than 18, which are the families with the greatest need for coverage, have no life insurance.

Life insurance is part of a social safety net. It protects surviving spouses and children when the sole breadwinner or other income earners in a family dies. Ironically, the cost of life insurance has dropped over the past several decades. A 35-year-old healthy male can purchase life insurance for $25 a month for a 20-year-term policy that would pay $500,000 upon his death, according to statistics from ING. But nevertheless in tough economic times, life insurance seems like a luxury. In truth it is not. It is a necessity for all working families trying to watch out for unforeseen events.

Insurance companies need to do outreach, to let consumers know that term life insurance is affordable. But insurance companies need also to guarantee that premiums and fees will be reasonable and that consumers can make a good investment without fearing they will be ripped off in any way.

This is an area of great concern: ensuring that consumers are taking advantage of relatively inexpensive life insurance to protect their families in the event that they will no longer be around. The life insurance industry has a lot of work to do to get the word out – and to work closely with consumers so that they can understand the critical importance a good solid life insurance policy can have on protecting the interests of American families.

Happy Winter Solstice! Are you ready?

In many parts of the country, late fall has resembled some of the worst winters on record. For those of us who live in colder climates — or even for those of us with more moderate winters and the occasional cold snap – winter weather can mean significant and sudden drops in temperatures and very serious winter storms. It is important to be prepared so that you can stay safe and healthy during the winter months. Infants and elderly are among the most vulnerable to life-threatening health problems when the temperatures drop.

Dangers range from power failures to icy sidewalks and snowy roads. Indoors, space heaters and fireplaces also add new dangers, as they increase the risk of household fires and carbon monoxide poisoning.

Everyone should be prepared for winter. Even if you live in a warmer climate, sudden drops in temperature that are near freezing are considered extreme cold and can be harmful to your health. Check out NCL’s checklist for putting together a winter emergency kit here.

Exciting developments from LifeSmarts.org

By Lisa Hertzberg, LifeSmarts Director

LifeSmarts is an established program in its 17^th year, but it is also a program that strives to be “flat and flexible.” Our goal is to make LifeSmarts and all of our educational resources easily adaptable to meet the needs of the students and educators who use the program.

We regularly hear from creative LifeSmarts coaches who use the program in many different ways:

• Infusing LifeSmarts into their business, economics, family and consumer science, math, or vocational education curriculum
• Using it as an extracurricular activity with clubs or groups such as FBLA, FCCLA, 4-H, and others
• Using LifeSmarts in the classroom but allowing students to self-select whether they wish to advance to live competitions, and then practicing with the team outside of the school day
• Initiating teams at the community level with community educators as coaches

One new tool with many applications is the TeamSmarts online activity, which provides a 100-question quiz each month that students work on collaboratively. Educators can use TeamSmarts in the classroom or with small groups in extracurricular settings. This LifeSmarts practice tool allows students to compete against other teams from across the country, learn about a new LifeSmarts topic each month, and strengthen their teamwork and leadership skills. You can get started at TeamSmarts here.

We have some exciting new projects in the works as well. Our 2011 plans include producing a new LifeSmarts topic list (scope and sequence), an activity box, a LifeSmarts Toolkit, and a comprehensive vocabulary list. All of these components will be designed to help educators easily adapt the “flat and flexible” LifeSmarts program for various groups and settings. Stay tuned for more exciting developments!

Mandated health insurance ruled unconstitutional

On Monday, a federal judge in Virginia ruled that a central provision of the new Affordable Care Act that mandates that most Americans obtain health insurance is unconstitutional. Since the law passed earlier this year, there have been more than 14 challenges to the law; this is the first instance where the case was not dismissed or the law was not upheld.

History tells us that major new laws often face legal challenges. The Civil Rights Act, Social Security Act, and Voting Rights Act all withstood legal challenges. Proponents of the health reform act argue that the new law falls well within Congress’s power to regulate economic activity under the Commerce Clause, the Necessary and Proper Clause, and the General Welfare Clause.

The mandate for most Americans to obtain health insurance is one of the key provisions of the Affordable Care Act that will help extend coverage to more than 30 million people currently uninsured.  Paired with rate regulation, the addition of healthy people to the insurance rolls should make it more affordable for the system – payors, providers, and patients – to treat more expensive and chronic conditions.

The Virginia court found that the mandate that all Americans carry a minimum level insurance by 2014 – exceeds Congress’ power to regulate interstate commerce since it compels individuals without health insurance to involuntary enter the stream of commerce to purchase health insurance. However, individuals who choose to go without health insurance are “voluntarily” deciding to pay for health care out-of-pocket or to seek uncompensated care. Every year millions of those who have chosen to go without health insurance actively seek medical care. Thus, people who make an economic decision to forego health insurance do not opt out of the health care market, but instead shift their costs to others when they become ill or are involved in an accident and cannot pay.

The judge in the Virginia case, Judge Hudson, agreed that the implementation of the health care reform law should continue uninterrupted. In the nine months since the health reform law was passed, there has been progress to strengthen our health care system, including implementing a new patient’s bill of rights to end some of the worst insurance company abuses, such as banning insurance companies from discriminating against people with preexisting conditions.

The Justice Department is considering whether to appeal the ruling to the 4^th Circuit. As this case and others make it through the appeals process, ultimately the Supreme Court will likely decide the constitutionality of the health reform act, and the reach of Congress’ power to regulate interstate commerce.

The Kardashians’ teachable moment

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

Recently, the Kardashian sisters, of reality TV show fame, released a prepaid debit card to significantly less-than-rave reviews. Why? The card, labeled the “Kardashian Kard,” and marketed to teen viewers of “Keeping Up with the Kardashians” was so chock-full of fees that users of the card essentially lost money on the card before they even had a chance to use it, according to a November 26 letter from Connecticut Attorney General Richard Blumenthal (former NCL Trumpeter Award recipient) to University National Bank, the issuer of the card.

A sampling of the fees levied on the Kardashian Kard included:

• $7.95 per month maintenance fees
• $5 minimum deposit
• $9.95 card purchase fee
• $1 fee to add value to the card
• $1.50 fee when the user contacts a live operator
• Bill pay fee of $2.00 per transaction
• $9.95 to card replacement fee
• $6.00 fee to close the account

To their credit, the Kardashians agreed to have the cards removed from the market in response to Blumenthal’s inquiry and the resultant firestorm of negative publicity. However, this episode illustrates the pitfalls for consumers of these prepaid debit cards, one of a fast-growing portion of the consumer credit market. According to the Boston Consulting Group, the U.S. market for branded prepaid cards is expected to nearly quadruple by 2017 to more than $440 billion.

One factor that may be driving the explosive growth of this market is that reloadable prepaid debit cards like the Kardashian Kard are exempted from the gift card rules established by the 2009 CARD Act. For consumers, this means that these cards may have unexpected fees that traditional gift cards do not. In addition, reloadable prepaid cards are not required to provide fraud protection. Whereas with debit cards, the cardholder’s liability for fraudulent purchases is limited to $50 (or $500 if the loss is reported more than two business days after the loss), reloadable prepaid cards offer only voluntary protections provided by the issuing bank.

So how can consumers protect themselves from the hidden fees on these cards?

Our colleagues at Consumers Union have provided a great list of consumer tips regarding prepaid cards like the Kardashian Kard:

• Consider a regular bank account instead—you get a debit card, a monthly statement, and full consumer protections. Don’t opt in for “overdraft protection” to avoid costly overdraft bank fees.

• If you decide you want to use a prepaid card, find and read the fee schedule before you buy one. Your cost will vary widely depending on which prepaid card you pick. Make a list of how you will use the card and compare the fees. Try to figure out the costs for two months so that you can get a better idea of the full cost of using the card.

• Keep track of your balance –you might face high fees for going over. Sign up to receive a written statement in the mail to keep track of your money.

• Don’t get a prepaid card that comes with a credit line or overdraft loan to avoid overspending and going into debt.

• Do not use prepaid cards to purchase gas at the pump, for hotels or rental cars. If you do, you may find you will not have access to more funds than the purchase and for a long period of time.

• See if your card has different fees to choosing signature instead of PIN, or selecting the “credit” option instead of choosing the “debit” option.

• Don’t rely on a prepaid card to build a credit record because most prepaid card issuers don’t report customer information to the major credit reporting agencies

Genetic testing and consumer rights

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

It seems that not a day goes by without headlines announcing another scientific breakthrough related to the study of genetics. The science of genetics has undoubtedly played a key role in addressing many of the diseases that afflict millions of consumers. In addition, genetic testing may help consumers understand the diseases they may be predisposed to and take appropriate action.

A natural worry for consumers, however, is how this most personal of information could be misused, particularly by employers to deny them a job or health insurance companies to deny coverage or make coverage more expensive.

Fortunately, consumers have protections. First, the Health Insurance Portability and Accountability Act (HIPAA) makes it illegal for health insurance companies to exclude individuals from group coverage due to genetic predisposition to disease. The law also states that genetic predisposition to a disease does not constitute a preexisting condition without a current diagnosis.

Consumers can also rely on the Genetic Information Nondiscrimination Act, which prohibits health insurance companies from denying coverage to individuals or raising premiums because of genetic predisposition to disease. The law also prohibits employers from basing decisions on hiring, firing, job placement, or promotions on genetic information.

The Council for Responsible Genetics, one of the leading public interest groups focused on genetics and biotechnology, has developed a very informative Consumer Genetic Privacy Manual, which gives consumers an excellent overview of the issues surrounding genetics and consumers. In particular, consumers concerned about protecting their genetic information from prying eyes should refer to the “Tips for Protecting Your Genetic Privacy” section of the Manual.

Privacy is going to be one of the big issues facing consumer and public interest advocates in the coming year. Perhaps no more personal form of information is a person’s genetic information. It is for this reason that we will be monitoring this issue closely in the months to come.