Car, credit problems top consumer complaints

Billing disputes. Shoddy repairs. Outfits that promise to fix credit woes or stop houses veering toward foreclosure, but then take your money and disappear. Last week, the Consumer Federation of America put out its annual list of the top consumer complaints collected by state agencies and consumer groups.

At the top of the list? Complaints relating to the purchase or servicing of automobiles, followed by complaints involving credit or debt problems and ones dealing with home improvement projects.

In Minnesota, consumer advocates say their list isn't much different. In the attorney general's office, complaints are up, especially in the area of what Attorney General Lori Swanson calls "economic-related fraud -- both companies promising to help people get out of trouble as well as companies who are putting people further into trouble by marketing services that aren't in people's best interest." Examples include foreclosure assistance, credit repair, tax assistance scams and loan modification problems.

Rochelle Barnhart, spokeswoman for the Minnesota Department of Commerce, said complaints relating to discount health plans that don't pay for much are up, as are complaints dealing with debt collection issues. Meanwhile, complaints related to insurance are down.

Automobile purchases always make the Better Business Bureau of Minnesota and North Dakota's top 10 complaints list, BBB vice president Barb Grieman said. The group also receives a high volume of complaints relating to home improvements such as new roofing and siding, window installation and home remodeling. "They're usually big repairs or big purchases and people tend to come to us for that sort of thing," she said.

The fastest-growing area of complaints, according to the Consumer Federation? Foreclosure-rescue scams. In most cases, these scams occur when bad actors claim they can save your home from foreclosure for an upfront fee, but then fail to deliver on that promise. Charging money in advance for such services is illegal in Minnesota, by the way, unless you are an attorney. And just because someone is an attorney doesn't mean they're playing clean, so do your due diligence.

Swanson said she is also wary of a new type of business: the forensic loan audit industry. These companies charge fees for combing through your loan in search of Truth in Lending Act violations, claiming you can use violations to help modify your loan.

To find a housing counselor that can help you for free, register a complaint about a foreclosure-related scam, visit www.lookbeforeyouleap.org, a new local campaign aiming to quash these scams and get people in front of counselors that are trained to help.

Scammers thrive in recession

For Grieman of the BBB, some of the most concerning issues facing consumers are in areas that don't make the group's top 10 list. Tough economic times bring the scammers out in full force. And because people tend to be more desperate when unemployment is high and credit is tight, more people fall victim to their pitches. She shared heart-breaking stories about Minnesotans who lost thousands because they were convinced that if they wired money they really would receive winnings from a foreign lottery. Or the Grandma who was scammed by a person pretending to be someone's grandson in need of emergency cash. Or the unemployed worker that answered the bogus ad to be a mystery shopper.

"When people need to believe in something, they will," she said.

As always, read the fine print. If something sounds too good to be true (say it in unison) it probably is. Never pay upfront, in full for a service. Check out a company before you do business. And hope you have elected officials who are looking out for your best interests.

No more deceptive checks

Fortunately, consumers have one fewer rotten egg to sniff out thanks to the work of the Minnesota Legislature. Last session, a law drafted by Attorney General Swanson was approved that bans so-called live check solicitations. These small denomination checks land in consumers' mailboxes and appear to be a no-strings-attached refund or rebate. But by cashing the check, the consumer is automatically enrolled in a membership program that charges a consumer a monthly fee. In most cases, the company gained access to the consumer's bank account or credit card through an agreement with another company that previously did business with the person.

The attorney general once pointed out to me that the memberships or services that the consumer gets for these sneaky charges are so worthless that few people would voluntarily pay for them. Thankfully, it is illegal for companies to send these deceptive checks to Minnesotans, effective today.

Kara McGuire • 612-673-7293 or kmcguire@startribune.com.