Edgar (aka MrConsumer)

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Scammers Rake in Millions But Only Have to Repay Thousands When Caught

The federal Consumer Financial Protection Bureau (CFPB) announced a series of proposed settlements it made with several companies that had been accused of charging upfront fees to students when signing up to use their debt relief services. However, under the telemarketing sales rule, a fee can only be charged after a debt is settled or renegotiated.

In total, these companies (along with two others who have not agreed to settle) allegedly collected more than $11.8 million in illegal fees. And while the settlements call for judgments in the full amount of money improperly collected, the amount of restitution and civil penalties that these companies actually have to pay may leave you speechless.

*MOUSE PRINT:

In one case, where the full $11.8 million was assessed against this particular defendant, here is all it has to repay:

… full payment of this judgment will be suspended upon satisfaction of the obligations in Paragraph 14 of this Section and …

14. Within 10 days of the Effective Date, Defendant must pay to the Bureau, by wire transfer to the Bureau or to the Bureau’s agent, and according to the Bureau’s wiring instructions, $25,000 in partial satisfaction of the judgment as ordered in Paragraph 13 of this Section.

And to add insult to injury, here is the amount of civil penalties the company has to pay for violating the law.

*MOUSE PRINT:

…by reason of the violations of law alleged in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant must pay a civil money penalty of $1 to the Bureau. This amount is based on Defendant’s limited ability to pay as attested to in his financial statements listed in Section VIII above.

One dollar? That’s the penalty for this multimillion dollar violation?

According to the CFPB, what defendants are required to pay is based on their current financial condition. So $25,000 is all the bureau is requiring. But what about that measly dollar in fines? According to the law, as long as the CFPB assesses even the most minimal of fines — like $1 — that will entitle the bureau to pay some amount of additional restitution to aggrieved consumers taken from their Civil Penalty Fund (a victim compensation fund). It has not yet been determined if each victim will be made whole. (The CFPB failed to provide us even with a sense of what percentage of their losses victims historically are able to collect from the fund.)

It is unfortunately too typical that victims get ripped off, and the alleged masterminds of these schemes get to pocket most of the money even after being caught.

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Is Folgers Exaggerating The Number of Cups of Coffee Each Canister Makes?

J.M. Smucker, the maker of Folgers coffee, has been the subject of several recent class action lawsuits, all claiming the same thing — the company grossly exaggerates the number of cups of coffee that each canister is capable of making. (One case is here, and another case is here.)

Folgers

For this particular Folgers variety, the company claims you get up to 210 cups of coffee (6 ounce size) per canister. And the instructions on the back tell you to use one tablespoon per 6 ounce cup or 1/2 cup of grounds for 10 “cups.”

Well, those crafty class action lawyers measured out the coffee to see what you actually got in each container (see below) and one of them mathematically figured out how many tablespoons weighing about five grams each there were.

*MOUSE PRINT:

For the French Roast coffee pictured above that is supposed to make 210 cups, brewing the coffee by the cup only yielded enough for 156 cups; while making the coffee in batches of 10 cups at time still came up short by yielding only 195 cups.

We asked Smucker how they came up with their yield of 210 cups, and for comments about the lawsuits. Despite multiple requests, the company did not respond. However, in a Florida lawsuit, Folgers argued that the amount a can makes varies greatly because coffee drinkers have different preferences for a cup’s strength. As such, it concluded, their claims are accurate.

Folgers is not alone in getting sued over their yield claims. Last month, the maker of Maxwell House coffee was sued for allegedly doing the same thing.

Thanks to Truth in Advertising for the case.

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More Junk Fees Added to Car Rental Bills

Car rental companies are notorious for advertising low rates but then when you add all the taxes and fees, the price can jump up dramatically.

Recently a friend rented a car from Enterprise in the Boston area and he noticed a number odd extra charges added to his bill.

*MOUSE PRINT:

car rental fees

What these fees are for is not obvious. Poking around online reveals that the Commonwealth of Massachusetts is directly responsible for two of them, and indirectly for the third.

The parking violation surcharge, which one would think is only imposed if you got a ticket, is actually mandated by state law. It says that the rental company will not be liable for traffic tickets if it collects a sixty cent surcharge from the car renter and pays that to the city. (See G.L. c. 90, § 20E(i))

The $2 per rental police training fee is another creature of the Massachusetts legislature. They thought it was a clever way to help pay for police training. (See story.)

And lastly, the “VLC Rec Fee” is a made up fee by rental car companies. It stands for “Vehicle License Cost Recovery Fee.” It is designed to recover the estimated average daily cost per vehicle of the charges imposed by the government for the rental car company to title, register, inspect, and plate all vehicles in its rental fleet. Enterprise charges a whopping $2.80 per day for this.

Interestingly, Illinois has a statute about this particular fee that says if the total fees collected exceed the rental car company’s actual costs of registration, etc., it may keep the excess, but has to adjust the fee charged to renters downward the following year.