On a regular basis, the Consumer Federation of America, in cooperation with the National Association of Consumer Agency Administrators and the North American Consumer Protection Investigators, publish a report on the state of consumer protection and consumer experience in America. This report includes the Top Ten Consumer Complaints, based on surveys of 33 state, county, and city agencies in 18 states.
The report concludes that state a local government agencies are at the front line of consumer protection. “State and local agencies are vital components of the consumer protection system in the United States. The issues they deal with run the gamut from sleazy auto sales to shoddy home improvement work, bare-knuckled debt collection tactics to bogus health products and services, fraud on the Internet to gouging at the gas pump.”
Unfortunately, despite consumers’ increasing need for protection, services have continued to drop. According to the survey, concerns over budget cuts are widespread. Declining revenues from sales taxes, property taxes, and other sources, result in tighter budgets for the agencies and ever-shrinking available services to mediate consumer complaints.”71 percent reported that they experienced cuts just prior to or during the survey period, compared to 47 in our previous report,” the groups say.
Apparently, the trend that was reported in the last survey continues: complaints went up at many agencies in 2009 and the resources available to help consumers went down. This is a list of the top ten worst-rated categories based on consumer reports. They are ranked in order of the amount of complaints they received.
Misrepresentations in advertising or sales of new and used cars; lemons; faulty repairs; leasing and towing disputes
Cash for Clunkers and Chrysler’s bankruptcy ensured that auto industry complaints topped this year’s list. Dealers exploited the Cash for Clunkers program by having customers sign “Contingency Agreements,” guaranteeing that the customers would have to pay the $4,500 rebate if the federal government failed to do so. Several dealers also refused to give customers their cars before the government approved the sales. Chrysler’s bankruptcy caused concern among car owners, fearing that the “new” company would not honor refunds or exchanges for poorly performing vehicles. Although arguably not the company’s fault, that didn’t stop the complaints.
Billing and fee disputes; mortgage-related fraud; credit repair; debt relief services; predatory lending; illegal or abusive debt collection tactics
With the recession underway last year, it is not surprising that credit and debt complaints were the fastest growing category. Hundreds of complaints were issued by consumers against a Georgia-based law firm for harassment, breach of confidentiality, and collection of misattributed debts. Foreclosure rescue scams were also a huge problem, resulting in a federal effort aimed at reversing the trend called “Operation Loan Lies.” One company deceived many customers by offering to help obtain loans – billing them $1,800 for the service. After charging desperate customers, the company did nothing to help them secure financing.
3. Home Improvement/Construction
Shoddy work; failure to start or complete the job
Fraudulent contract work was widespread this year. One Sacramento couple was charged $252,650 for a $40,000 remodeling deal, effectively cleaning out their life savings. Another couple was charged $323,605 for a home that was originally priced $297,000. Worst still, the couple found out that the money they were paying their contractor was never passed down to the subcontractors, who, not surprisingly, quit working after they didn’t get paid.
Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas services
Cable and telecom companies evoke a high rate of complaints. This year’s greatest offender was Vonage, which reached a settlement with 32 states stemming from customers’ dissatisfaction over their inability to cancel their service. Forced to cancel over the phone, customers spent disproportionate amounts of time on hold, only to find out that they didn’t have the option to cancel. Apparently, this was a result of incentives offered to service representative for retaining customers. The company also advertised “free” first month of service. The “free” first month included an activation fee, shipping and handling costs, taxes, and other hidden charges.
5. Retail Sales
False advertising and other deceptive practices; defective merchandise; problems with rebates, coupons, gift cards and gift certificates; failure to deliver
Michelin North America claimed that customers could save money by using the company’s fuel-efficient tires. However, the company neglected to include “the initial cost or average life-span of the tires” in their calculations. Another example comes from Stop & Shop Supermarket, the largest food retailer in New England, which was found to be labeling their ground beef as containing less fat than it actually did.
Misrepresentations; shoddy work; failure to have required licenses; failure to perform
Service work also gave rise to charges of fraud. Maryland received many complaints about several different companies offering to clean air ducts. Apparently, these companies lied about the customer’s need for their services, the prices they would charge, and how effective the service would be. In the end, the services provided little benefit to customers.
7. Internet Sales
Misrepresentations or other deceptive practice; failure to deliver online purchases
One significant cause of Internet complaints was “free trials.” Products for teeth whitening or colon cleansing turned out not to be free at all. Consumers who provided credit card information for shipping purposes, would find themselves being charged $80 to $90 a month. Worst still, they would receive and be charged for additional products that they did not even purchase.
8. Household Goods
misrepresentations; failure to deliver; faulty repairs in connection with furniture or appliances
Many customers were upset with transactions dealing with household goods and delivery commitments. One Maryland resident purchased a mattress with “complimentary” items and 90-day user guarantee. When she returned the mattress during the 90-day period she was charged $1,200 by the store for the complimentary items.
Unhealthy or unsafe conditions; failure to make repairs or provide promised amenities; deposit and rent disputes; illegal eviction tactics; Home Solicitations: Misrepresentations or failure to deliver in door-to-door, telemarketing or mail solicitations; do-not-call violations
The landlord/tenant relationship has always been one to produce a number of complaints. One tenant in Virginia was unhappy when she found a bed bug in her apartment just one month after moving in. After promptly reporting the bug to her landlord, extermination options were proposed. Unfortunately, the extermination options required that all of the tenant’s possessions be covered in “plastic bags and containers for an extended period of time.” The tenant sought to terminate her lease and the landlord refused.
Tied with landlord/tenant complaints are home solicitation complaints. One example of solicitation abuse which stands out was committed by Pinnacle Security, LLC, who, according to the CCS Report, allegedly used “deceptive sales tactics to get customers of a rival company, ADT, to sign up for Pinnacle’s security products and services.” By lying, Pinnacle’s salespeople would then leave customers with contracts for both Pinnacle and ADT. Also, they were “accused of falsely telling consumers that there would be no installation fee and misrepresenting the cost of [their] services.”
10. Health Products/Services
misleading claims; unlicensed practitioners; failure to deliver
A retailer in Florida was caught advertising “swine flu purifiers” during the swine flu panic. These “products” ranged in price from a few hundred to several thousand dollars. Unfortunately for consumers, the air purifier’s effects on the swine flu were totally unfounded.
-Charles B. Stockdale