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A new school year, a new resource for parents and kids

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Parents are the strongest influence on how kids learn and think about money, and the back-to-school shopping season is a great time for some major money lessons.

This year, try thinking differently about back-to-school shopping. While you plan and shop, say what you’re doing—your children are listening. You don’t have to give lectures. Just make it a point to talk through your money choices as you make them:

  • Show them how you set a budget and make a list before you leave home.
  • Let them hear you shop around and compare quality, quantity, and prices before you buy.
  • Think out loud about how promotions, special offers, and taxes affect your choices.

It’s never too early to help your kids make smart money choices – and it’s never too late. To help, we’re working in collaboration with the FDIC to collect and share resources for parents. We’ve posted age-appropriate activities, ideas, and links for parents and children, on the topics that parents told us they care most about. We’ll continue to add resources over time, so check back with us often.

Consumer advisory: Virtual currencies and what you should know about them

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You may have heard about virtual currencies like Bitcoin, XRP, and Dogecoin. But what are virtual currencies? What’s this “to the moon!” business on the internet about? And, as a consumer, what risks should you be aware of?

While virtual currencies offer the potential for innovation, a lot of big issues have yet to be resolved – some of which are critical, including:

  • Virtual currencies are targets for hackers who have been able to breach sophisticated security systems in order to steal funds
  • Virtual currencies can cost consumers more to use than credit cards or even regular cash once you take exchange rate issues into consideration
  • Fraudsters are taking advantage of the hype surrounding virtual currencies to cheat people with fake opportunities
  • If you trust a company to hold your virtual currencies and something goes wrong, that company may not offer you the kind of help you expect from your bank or debit or credit card provider

Check out our consumer advisory for more things that you should think about if you’re considering using virtual currencies and links to other useful resources.

Submit a complaint

You can also submit a complaint if you have a problem with a virtual currency product or service. We’ll forward the complaint, along with any documents you provide, to the relevant company and work to get a response from them.

Complaint data helps us understand what business practices may pose risks to consumers. We’ll use the information to enforce federal consumer financial laws and, if appropriate, take policy steps.

Alerting colleges about secret banking contracts

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If you’re a student preparing to head back to campus, you may encounter offers from banks and other companies that promote debit cards, prepaid cards, bank accounts, and other products branded with your school’s name or logo. When your school makes a deal with a company to market a financial product, it’s important for you to have basic information about this agreement and to understand what this means for your options. Last year, we launched an inquiry into financial products marketed to college and university students to determine whether the market is working for students and families.

We called on financial institutions to publicly disclose agreements with institutions of higher education to market financial products to students. Information about these arrangements is already required to be disclosed when marketing credit cards and private student loans to students—these requirements were put in place after companies were found to have paid schools and school officials in order to steer students into these products.

Making these agreements available for all financial products shows schools’ and companies’ commitment to transparency, helping students and their families understand basic information about these products before you sign up.

We decided to take a look at the financial institution partners of a group of some of the largest universities in America – members of the Big Ten conference – to see if they’ve disclosed agreements on their websites. Together, these schools enroll more than a half a million students.

Of the 14 member schools (yes, there are 14 schools in the Big Ten), it appears that at least 11 have established banking partners to market financial products to students. Of those 11, we were able to easily find only four contracts on the partner websites, but three of those four contracts did not contain important information, such as how much they pay schools to gain access to students in order to market and sell them financial products and services.

University Financial partner Contract available on partner website?
University of Illinois, Urbana-Champaign TCF Bank Partially
Indiana University Unknown
University of Iowa Hills Bank & Trust Co. Yes
University of Maryland Capital One No
University of Michigan TCF Bank Partially
Michigan State University MSU Credit Union No
University of Minnesota TCF Bank Partially
University of Nebraska Wells Fargo Bank No
Northwestern University US Bank No
Ohio State University Huntington Bank No
Penn State University PNC Bank No
Purdue University Unknown
Rutgers University Unknown
University of Wisconsin UW Credit Union No

We’re not the only ones to take note. Recently, the Government Accountability Office also noted that “increased transparency for college card agreements could help ensure that the terms are fair and reasonable for students and the agreements are free from conflicts of interest.”

We’re also sending alerts (here’s an example) to schools to make sure they know that their bank partner has not yet committed to transparency when it comes to student financial products.

If you’re starting school this fall, be sure to check out our guide on student banking. You can learn about various options when looking for a bank account. And remember, you can’t be required to use the bank that pays your school to market to you.

Have you been able to find your school’s contract with its bank partner? Tell us your story and tag it as “student banking.”

Rohit Chopra is the CFPB’s Student Loan Ombudsman. To learn more about the CFPB’s work for students and young Americans, visit consumerfinance.gov/students.

Updated August 7, 2014: An earlier version of this post noted that Purdue University and Indiana University had established agreements in place with partner financial institutions, but these agreements are related to real estate. We’ve updated this post accordingly.

Your Money, Your Goals: Financial empowerment tools for social services

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Many people feel overwhelmed by their financial situations, and they may not know where to go for help. For many low-income Americans, frontline staff of nonprofit and public social services programs are in a unique position to provide that help.

Their clients already know and trust them, and in many cases, they’re already sharing financial information with them. Social workers and case managers know, however, that the financial stresses clients face may interfere with their progress toward other goals, like finding and keeping secure housing, staying in school, or even landing a job. As they make progress toward those goals, financial missteps can often erase their hard-fought gains.

That’s why social services programs across the country are taking steps to integrate financial empowerment into the work they do each day with their clients. To support their efforts, we’ve developed and field-tested a toolkit for financial services programs called Your Money, Your Goals.

The toolkit helps frontline staff understand when and how to introduce clients to financial empowerment concepts. It equips them to help consumers when it comes to:

  • Making spending decisions that help them reach their goals
  • Avoiding tricks and traps as they choose financial products
  • Ordering and fixing credit reports
  • Making decisions about repaying debts and taking on new debt
  • Keeping track of their income and bills
  • Deciding if they need a checking account and understanding what they need to open one

As part of a Your Money, Your Goals pilot, since last fall, 26 organizations led educational workshops in 21 states and the District of Columbia that introduced 1,400 case managers and other frontline staff to the toolkit. Workshop participants came from organizations that provide homeless services, veterans’ programs, mental health and emergency services, case management for Head Start, Temporary Assistance to Needy Families and the Supplemental Nutrition Assistance Program, as well from as housing authorities, health clinics, and faith-based organizations.

Most of the case managers who attended are using the information and tools with their clients, and they’ve told us that the training and tools have made them more confident talking about these financial topics. As a result, their clients are feeling empowered to take on challenges like paying down debt and building a spending plan to have more control of their financial lives.

Beginning today, you can download Your Money, Your Goals. Along with the English and Spanish toolkits, you’ll find an implementation guide, PowerPoint slides with trainer notes, and a train-the-trainer video. You can also sign up for news on upcoming training events and updates to the toolkit.

Several national and local organizations are joining us in training social services staff to use the toolkit. Each organization has set a goal of training at least 500 frontline staff. Catholic Charities USA and the Community Action Partnership will offer training to staff of their member agencies and affiliates. The Los Angeles County’s Department of Consumer Affairs will begin training county and area non-profit case managers this fall. The National Association of Community Health Centers Community HealthCorps program is equipping the AmeriCorps members it places in community health centers across the country to use the toolkit. Financial educators at the U.S. Department of Agriculture Cooperative Extension located in counties throughout the country will deliver the training for social services agencies in their communities.

The many staff that will be trained through these nonprofits and government entities will, in turn, share new information and tools with thousands of low-income consumers. We hope this make a difference in their financial lives.

Check out Your Money, Your Goals and see how you can put it to work in your organization and in your community.

We’ve extended the comment period for our complaint narrative policy

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Last week, we proposed a policy to give consumers the option to share the stories behind their complaints in our public Consumer Complaint Database.

Comments to our proposed policy were originally due on August 22, 2014. Based on feedback and requests we’ve received, we’ve decided to provide additional time to comment on the policy. Comments are now due on September 22, 2014, 60 days from the date the proposed policy was published in the Federal Register.

Under our proposal, we would only publish a consumer’s complaint narrative if the consumer gave us their informed consent to do so, which they could withdraw at any time. Companies would be able to publish their own response that would appear next to the complaint narrative and we would take all reasonable steps to remove personal information from both the complaint narrative and the company’s response.

The proposed addition of narratives to the database is a continuation of our efforts to put the voice of the consumer more directly and centrally into the everyday processes of financial institutions throughout this country, and reflects existing practices at other government agencies.

Check out the proposed policy to learn more.

Closing the book on Colfax

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Today, we announce an enforcement action against Colfax Capital Corporation and its subsidiary Culver Capital, LLC for engaging in unlawful lending practices that targeted and financially harmed servicemembers.

Although the name Colfax Capital Corporation might be new to some, this is actually the last gasp of a chameleon-like company with a long and deplorable record of preying on servicemembers.

Formerly known as Rome Finance Co. Inc. and Rome Finance Company, LLC (collectively Rome Finance), this unlicensed lender provided financing that merchants, such as SmartBuy, used when selling products to military members. Rome Finance’s contracts inflated the disclosed prices of the products to hide the true finance charges that the servicemembers would have to pay, typically by military allotment. This trapped servicemembers in contracts that generated millions of dollars for the company and substantial debt for its customers.

Background on the company’s actions

Rome Finance first came to our attention on Veterans Day 2010, when SmartBuy, Rome Finance and other affiliated finance companies operating in New York were sued by NY Attorney General Eric Schneiderman for unlawful practices that targeted soldiers at Fort Drum. A subsequent review of complaints submitted to the Federal Trade Commission’s Consumer Sentinel Network, our consumer complaints, and an investigation by AG Schneiderman’s office revealed that military members were also targeted in California, Tennessee, Colorado, Georgia, North Carolina, Oklahoma, Texas, and even overseas. The NY suit led to approximately $13 million dollars in fines and settlements.

The NY suit was actually not the first time Rome Finance had been called to account for its unlawful practices. Tennessee Attorney General Robert Cooper had brought suit in 2005 against Rome Finance and an affiliated company called Britlee Inc. for unlawful practices that targeted servicemembers near Fort Campbell Army post through their The Military Zone and Laptoyz Computers and Electronics stores. The TN lawsuit also resulted in a multi-million-dollar judgment against Rome Finance and its network of companies.

What it means for impacted consumers

Although Rome Finance was able to continue doing business for some time by filing for bankruptcy, changing its name to Colfax Capital Corp. and Culver Capital, LLC and employing other evasive maneuvers, I am happy to see that we can finally close the book on Rome Finance in all its forms, and see that they never receive another penny from servicemembers.

Since the company is being liquidated in bankruptcy, Colfax does not have enough money or assets to pay back consumers affected by its actions. Instead, consumers will no longer have to pay on the more than 17,000 outstanding finance agreements, amounting to a total of about $92 million in debt relief for consumers. If you have outstanding finance agreements with Colfax should stop making payments immediately and turn off any allotments that were set up to make these payments. The Bankruptcy Trustee will also notify the credit reporting bureaus that consumers’ contracts with the company should be treated as “paid as agreed,” which could potentially help consumers’ credit scores. Also, if you had default judgments against you, you can apply for the judgments to be vacated. If you have questions about how to do this, check with your JAG or the Attorney General’s office in your state.

Defend yourself from deceptive practices

The sad truth is that Rome Finance was not the first and will not be the last company to financially prey on the military community. Servicemembers, veterans and military families need to actively guard themselves against bad business practices and financial scams.

Make sure you know the total price of the product you’re buying, including interest and fees for your loan, not just the monthly payment! Use available resources like your installation Personal Financial Manager, JAG or legal aid office, your state’s Attorney General office, the Better Business Bureau, and even the internet to research the contract terms and company. Demand to take a copy of the sales contract to a financial or legal professional for review before you enter into it. And if the company will only take payments by military allotment, ask why. That could be a red flag.

Federal and state officials worked in this case to protect you, but remember that you are your own most important first line of defense when it comes to consumer financial decisions!

The CFPB blog aims to facilitate conversations about our work. We want your comments to drive this conversation. Please be courteous, constructive, and on-topic. To help make the conversation productive, we encourage you to read our comment policy before posting. Comments on any post remain open for seven days from the date it was posted.