• Consumer Protection Law and Advocacy — Chicago, IL

Unfair Practices

Tax Scams Continue to Harm Consumers

Tax scams continue as this year’s tax filing deadline looms.  Just today, the Illinois Attorney General announced a lawsuit against a Chicago-area tax preparation service for fraud.  Costly fees were deducted from consumers’ anticipated tax refunds without their knowledge, as set forth in the office’s press release describing the tax scams:

http://www.illinoisattorneygeneral.gov/pressroom/2018_02/20180227.html

“To disguise the undisclosed fees that the company takes from consumers’ tax refunds, Madigan alleges Su Familia gave customers fake tax returns showing a lesser tax refund amount. When consumers have discovered this inconsistency and confronted Su Familia, the company has threatened to initiate legal action against the consumers. As a result, customers, many of whom are low-income, do not receive their full tax refund.”

So, what can you watch out for to avoid falling for a tax scam?

(1) Beware of immediate refunds because those often end up being high cost loans.

(2) Ask for upfront disclosure of all fees.

(3) Don’t sign an arbitration agreement.  Before you agree to hire the tax preparer, explain you want to opt out of arbitration so you don’t give up your right to sue.

(4) Be careful of online contractual provisions.  Don’t sign an agreement electronically until you’ve seen the full contract printed out and given to you in a form you can keep.

There are helpful resources online for consumers.  The Center for Economic Progress (http://www.economicprogress.org/) has some tax preparation tips and provides free tax help for certain qualifying individuals and families.

Don’t rush this process to ensure a quick refund.  More than likely, a quick refund means you’re losing money you would otherwise be potentially able to obtain.

Be Wary of Wage Assignments

It’s important to be wary of wage assignments as they appear in many payday and other short-term loan contracts. Sometimes, they even appear in vehicle purchase contracts.  Many consumers do not realize they are agreeing to wage assignments until after their paychecks show unexpected deductions.  So what is a wage assignment?  A wage assignment is an agreement between you and the company you owe.  If you don’t make the payments you are supposed to make pursuant to your contract, the company can ask your employer to take the money it is due from your paycheck. Check your contract to see if it includes the words “WAGE ASSIGNMENT,” typically in bold-faced, capital letters.

Wage assignments can be embarrassing as you may have to speak to your employer (including representatives in the payroll department) about your debts to resolve the situation.  And properly executed wage assignments can mean hardship for you because your paycheck ends up being smaller.

Legislators recognized the problems with wage assignments and there are very strict laws governing them.  Most importantly, consumers need to know that in Illinois, you have the right to revoke a wage assignment at any time and for any reason.  Also:

If any person wrongfully: (1) serves a notice on an employee or serves a notice which does not conform with the requirements of 740 ILCS 170/2.2, (2) causes a demand to be served for the wages of an employee, or (3) fails to release a demand, he shall be liable to the employee and the employer for statutory damages in the sum of $500 and all actual damages occasioned by such action including reasonable attorney’s fees.

The law provides a remedy and damages if your wages have been improperly assigned so don’t hesitate to seek legal assistance if you think your paycheck is being deducted unfairly or if you need help stopping a wage assignment.

Overdraft Fees Verdict Upheld By Supreme Court

On Monday, the United States Supreme Court rejected Wells Fargo’s efforts to overturn a $203 million verdict regarding overdraft fees.

Originally, Wells Fargo was charged with violating a California consumer protection law because it “stacked” customer bank transactions.  In a nutshell, Wells Fargo processed larger bank customer transactions first to maximize overdraft fees.  If, for example, a consumer wrote checks for $600.00, $125.00, $40.00, and $25.00, Wells Fargo would process the larger transactions first, rather than arrange them in the order they were written.  This led to additional overdraft fees and other penalties because a customer’s larger transactions were posted before the smaller ones.

“Nearly six years after a federal court ordered Wells Fargo to pay $203 million in refunds to customers victimized by the bank’s overdraft policies — and after years of bouncing back and forth through the appeals process — the U.S. Supreme Court has decided to let that judgment stand.” https://consumerist.com/2016/04/04/wells-fargo-must-pay-203m-to-customers-after-supreme-court-rejection/

This was one of two decisions issued on April 4, 2016 by the Supreme Court relating to class actions. Wal-Mart Stores, Inc.’s bid to defeat more than a $150 million class action judgment for Pennsylvania workers was also rejected.  The justices declined to hear Wal-Mart’s appeal, leaving in place a 2014 ruling by the Pennsylvania Supreme Court that largely upheld a judgment awarding $187 million to the plaintiffs.

Both reflect relatively positive news for consumers generally and we will continue to monitor the class action developments from this divided Court.