Auto, credit and debt, and home improvement continue to be the biggest sources of consumer complaints, three years running. According to a report released today, new issues like bed bugs and coupon fraud are also beginning to frustrate consumers.
On Tuesday, the Consumer Federation of America (CFA) and North American Consumer Protection Investigators released their 2011 Consumer Complaint Survey Report, which records consumer complaints across the United States. Based on the CFA’s report, 24/7 Wall St. reviewed the 10 most common complaints.
Consumer protection agencies are busy. In 2011, there were nearly 300,000 reported consumer complaints. According to data provided by 35 of the 37 agencies that receive consumer complaints, agencies recovered more than $145 million for consumers last year.
Many of the same complaints show up every year. Auto-related complaints, which include lemons, faulty repairs and misrepresentation in advertising, were once again the most common, followed by credit and debt fraud, which includes billing fee disputes, mortgage fraud, and predatory lending.
Other complaints which have increased significantly reflect the troubled national economy and unmanageable consumer debt. Debt collection abuses and mortgage-related issues, complaints which continue to fall outside the top 10, were among the fastest-growing last year.
Another type of consumer complaint that grew rapidly last year were those related to home improvement fraud. There were thousands of reports last year of contractors coercing homeowners to get flood protection on their home when it was not needed. Others were convinced by groups claiming to be part of an government energy organization to get unnecessary efficiency upgrades to their home.
Several consumer complaints are entirely new. In some cases, they were related to popular criminal scams. In others, new complaints were the product growing businesses that did not have an audience in prior years. For example, since online discount coupon sites like Groupon and LivingSocial have gained popularity among restaurants and retailers, some have begun abusing the service by failing to honor deals or using extremely short windows of eligibility.
In light of these growing and new types of fraud, the CFA proposed several policy recommendations to curtail the loopholes being used to take advantage of the American consumer. Included in these are making it illegal for landlords to disclaim responsibility for mold or insect infestation and requiring all businesses, including online businesses, to provide identification for themselves, along with a working phone number and the physical location where they are based.
These are the top 10 consumer complaints.
12. (Tie) Home Solicitations
Home solicitations involve misrepresentations or the failure to deliver in door-to door, telemarketing or mail solicitations, as well as do-not-call violations. In fact, do-not-call violations were reported by agencies as one of the worst complaints of 2011, a fact backed up by the Attorneys General of both Kansas and North Dakota. Some of the callers are allegedly ignoring laws by calling people who are on the do-not-call registry and even claiming the firm has a relationship with a customer’s credit card issuer when it doesn’t. Meanwhile, cracking down on telemarketing violations has become difficult since some of the companies use a caller identification trick called “spoofing” to hide its true identity or use voice over Internet protocol to call people overseas. Agencies generally recommended that telemarketers should be required to register in states where the consumers called are located and should be mandated to keep audio recordings of all telephone calls.
11. (Tie) Household Goods
Complaints involving household goods often cite the misrepresentation of a product being sold, the failure to appropriately deliver a home product or poor repair work on furniture and appliances. When arranging for furniture or some other home good to be delivered on a future date, the CFA suggests that customers pay with credit card. This allows a customer to contest charges to their card in case the item is not delivered. The CFA also recommends that customers avoid sellers offering expensive electronics and other expensive items on credit and instead go to a store that allows for payments on items placed on layaway.
10. Real Estate
The complaints in this category involve homes for the elderly, timeshares and other forms of real estate fraud. Real estate is the only category to crack the top 10 this year after having not been in the top 10 last year. The idea of vacations tends to get people very excited and timeshare companies can take advantage of the positive energy by hiding fees or pressuring consumers into making purchases that they don’t want or can’t reasonably afford. The CFA recommends that consumers always make sure that they are dealing with licensed realtors.
Fraud complaints involve check frauds and other frauds such as work-at-home scams.In a time when unemployment is high and people are desperate for money, fraud involving employment becomes more of a problem. An Ohio woman received an email offer for a “senior supply manager” position, and she was told to use her credit card to purchase equipment to ship overseas. The fraudulent employer provided a bank account number for the Ohio woman to be reimbursed, but when the woman tried to draw money from the account, she learned the account had been closed. Fraudsters use several other tricks, which include persuading people to wire money to unknown individuals and convincing people they are entitled to free money by the government.
8. (Tie) Landlord/Tenant
Landlord/tenant complaints arise when landlords don’t provide services or accommodations previously promised, or when there are complaints over issues such as rent, deposits, repairs or evictions. According to the CFA, one of the fastest growing complaints is related to bed bugs, mold, and other problems related to landlords. It was also one of the largest complaints. Bed bug infestations had a major resurgence last year, and with it came a major increase in complaints from tenants whose landlords failed or refused to respond to the infestation. Landlords began including clauses requiring tenants to pay for at least part of the extermination process. The legality of this varies from state to state, but one of the CFA’s key policy recommendations is to make including that clause illegal nationwide. Other common landlord and tenant complaints include unhealthy or unsafe conditions, the failure to make repairs and illegal eviction practices.
7. (Tie) Internet Sales
Included in this category are misrepresentations of merchandise as well as failure to deliver products. Fraud related to Internet sales was one of the fastest-growing consumer complaints in 2011. This type of complaint has been going on since eBay’s earliest days, but new types have appeared. For example, the Georgia Governor’s Office of Consumer Protection had to deal with “penny auctions” in which users are charged for each bid they make. Complaints have surfaced that these sites are failing to disclose automatically charging a more than $100 entry fee. Users also reported not getting the items they had won. According to the Federal Trade Commission, there were more than 80,000 complaints related to Internet services last year. It was the second most common complaint in Washington, Colorado, Nevada and Oregon last year, and the most common in Ohio.
Ranked fifth last year and dropping to sixth this year, services is a catch-all for a number of different types of companies consumers rely on for a host of needs – anything ranging from locksmith to immigration consultants to talent agencies and funeral services companies. Most of the complaints in this category are derived from misrepresentations, poor work quality, lack of a license and not performing the service requested. As a consumer, it is important to check the licenses of these purported service providers and never pay a service in full before all of the work has been finished. The services category is also included on list of the worst complaints for the excessive funeral costs.
Complaints filed against utilities providers, including phone, cable and gas companies, typically center around issues with service quality or billing. Complaints about bundled utilities deals and wireless phone services have been cited by consumer agencies as two of the fastest growing consumer complaints in the country last year. In one incident in Cambridge, Mass. a company called elderly customers of another phone provider and misrepresented themselves as working for the current provider and offered them cheaper service. Customers were unaware they had inadvertently consented to switching phone services and to pay the new company’s undisclosed fees. The CFA reminds customers that, if this happens to them, they are allowed to refuse to pay the charges. Other CFA recommendations include speaking up about poor service and not assuming bundled utilities services are always the cheapest option.
4. Retail Sales
Retail sales fraud includes delivery problems, defective merchandise, issues with rebates and gift certificates, along with false advertising. One of the worst examples of false advertising occurred last year, after the Connecticut Department of Consumer Protection prompted a voluntary recall of FireGel, a self-labeled “Safe Pourable Gel” that caused severe burns to people who poured it on lit fires. With the increasing use of online discounted gift certificate sites like Groupon and LivingSocial, a new type of retail sales complaint appeared last year in Vermont, as a restaurant chain failed to honor certificates and consumers complained the expiration dates were unreasonably short.
3. Home Improvement/Construction
Home improvement/construction complaints generally involve complaints of poor or incomplete performance by contractors paid to do a task. For the second year in a row, home improvement/construction complaints ranks third for frequency of appearance in consumer agency complaint reports, according to the CFA. This also happens to be one of the top five fastest growing complaints and top five worst complaints for 2011. While this regularly appears as a top 10 complaint, the reason for the complaint shifted this year. Two types of issues within this category appeared regularly for the first time this year – fraud related to raising homes above flood level and free energy audits disguising selling services for unnecessary energy improvements to the home. The Consumer Federation of America advises homeowners to only pay a small deposit when signing a contract for home improvement and any payments scheduled should be proportionate to the work done.
Credit/debt complaints involve complaints for billing and fee disputes, mortgage fraud, debt relief services, predatory lending and debt collections, among others. Complaints regarding payday loans and debt collections were considered among the worst type of complaints in the last year. In terms of debt collection, growing problems include creditors obtaining judgments against consumers without ensuring those consumers received proper notification of a lawsuit and credits withdrawing from consumer bank accounts without appropriate authorization. Consumer protection agencies suggested that debt collectors and their practices should be “more tightly regulated,” however more specific suggestions were not reported.
Automotive complaints filed by consumers often point to shady sales tactics used by dealers to sell cars unsuitable for the road. Consumer agencies usually list car sales when asked about which complaints they felt were the “worst” because of the number of incidents they encountered and the financial cost. In one notable incident, an individual in Florida purchased a used car “as is,” and shortly after discovered the car smelled so strongly of mold it made him sick. In order to avoid a bad deal in car buying, the CFA recommends having a mechanic check out a potential purchase before committing to buy a used car and never paying the suggested retail price.
Samuel Weigley, Michael B. Sauter, Lisa Uible and Alexander E. M. Hess