PIP car insurance, built to curb lawsuits, spurs record pile instead

A no-fault car insurance system that was supposed to reduce lawsuits in Florida has instead produced an all-time high mountain of more than 60,000 of them in 2017, a new report shows.

Source: Florida Justice Reform Institute report.

That represents a stunning rise of close to 50 percent in one year, according to data from The Florida Justice Reform Institute, a group that says it fights against wasteful litigation.

So are insurers rushing to tell legislators to repeal Florida’s Personal Injury Protection system before the session ends in early March? Guess again.

An insurance industry group never mentions PIP in its statement on the lawsuit report and has urged lawmakers to put off repeal another year.

Who benefits from keeping the current system? Florida’s top 25 car insurers have raised PIP rates up to 54 percent since the start of 2017, and on average hiked them 35 percent faster than overall premiums, The Palm Beach Post reported.

Florida drivers pay among the nation’s top six car insurance bills in one of the few states that retain a no-fault system. The state forces drivers to buy $10,000 of PIP to cover the driver’s own injuries in an accident regardless of who is at fault, no matter how much health insurance the consumer already has.

One of the justifications for PIP when it was created the 1970s was to reduce lawsuits after minor car accidents.

Almost half a century later, PIP’s relatively small benefit has hardly changed and in no way kept up with medical inflation, yet it is driving consumer rate increases and, in a final irony, leading the lawsuit parade.

Who’s suing? The lawsuits measured in the report are typically not filed by ordinary drivers but chiropractors, clinics, imaging centers and other medical providers suing insurers to get paid for PIP claims, researchers say.

PIP represents by far the largest source for a type of lawsuit that FJRI officials say is responsible for more than half of the state’s overall insurance litigation and is driving up consumer costs. It’s associated with an arrangement known as “assignment of benefits” or AOB.

It happens when third parties like a repair contractor or medical clinic tell consumers we’ll handle the claim for you if you sign this form assigning us the insurance benefit. It’s not uncommon in health care and other fields. Insurers say the trouble is, Florida’s laws provide too many incentives for some of the third parties take the insurers to court.

Yet you’d never know that PIP was involved in any way from an insurance industry group’s statement on the AOB lawsuit report. The focus is exclusively on property insurance claims representing about one-sixth as many suits compared to PIP, and auto windshield claims representing about a third as many. Insurers say these categories are growing, and PIP repeal must wait for reforms affecting lawyer fees that have stalled in the legislature for half a dozen years and seem likely to deadlock again.

“We are seeing an increase in the number of property and auto glass claims because one-way attorney fees are incentivizing AOB abuse,’’ said Logan McFaddin, the Florida-based regional manager for the Property Casualty Insurers Association of America. “Legislative reform is desperately needed to curtail the number of fake or inflated claims and lawsuits. Now is the time for legislators to protect Floridians from these bad actors and help reduce insurance costs.”

OK, but how about repealing PIP and lopping off the source of the majority of AOB suits in one stroke? Then pursue additional lawsuit reforms? At least two important insurance lobby groups in Tallahassee say no thanks.

The net effect: drivers keep paying rising premiums to insurers. A state-commissioned actuarial report said drivers could save up to $81 per car if Florida repealed PIP and required bodily-injury liability coverage. A bill that passed the House 88-15 would do that. Florida is one of only two states that do not require BI insurance to make drivers responsible for injuries to others.

A Senate PIP repeal bill remains stuck in committee as the session nears its end. Asked by a Post correspondent about the issue, Senate President Joe Negron, R-Stuart, offered a recap of committee stops with no comment on whether leadership believes it merits further attention or a vote on the floor.

“That bill has moved through one committee in the process with a favorable vote and is now in health and human services appropriations (committee), so it would be up to that committee to decide whether they want to take up the bill in the final time we’re here for session,” Negron said last week. “The short answer would be it’s undetermined.”

Instead of championing a chance for driver savings, insurers put out their own report that said rates would go up 5.3 percent under the House bill. The report prepared by Milliman Inc. for PCI acknowledged it used unverified, unaudited data from a subset of member companies that could be “biased” and chose to ignore any savings from eliminating PIP fraud. A group representing trial attorneys blasted it as not credible and inconsistent with the state report and with consumer savings in other states that dropped no-fault systems, including Colorado and Georgia.

So what’s the story? Insurers raise rates up to 54 percent in a year for PIP. Then lobbyists claim late in the session that rates would also go up under the House repeal plan. They encourage legislators not to believe a state-commissioned actuarial report that said drivers could save an average of near 6 percent on their overall bills after PIP repeal.

Now a report shows PIP is responsible for most of the lawsuits insurers are complaining about. It’s the elephant in the room, the biggest part of the mountain.

But apparently it’s not fit for mention.

See an expanded story version of this post here.

 

 

 

 

 

Payday loans: Make ’em bigger in Florida? Senior group says no

For those who think the problem with payday loans is too many government restrictions, bills in the state legislature aim to please by doubling to $1,000 the amount that can be loaned at a time.

Folks who call such products “predatory” might be more inclined to cheer on a senior advocacy group that plans to raise a fuss online today.

“Some borrowers end up in a ‘debt trap’ and lose everything, even their homes,” said AARP Florida state director Jeff Johnson in an email to members. “In fact, payday lenders have already stripped more than $2.5 billion dollars in fees from Floridians since 2005, with more than $311 million collected last year alone. Wealth stripping affects us all and negatively affects our communities.”

The fees can quickly amount to an annual interest rate of more than 200 percent, far higher than anything generally found with homes, cars or credit cards. The borrowers are typically lower-income folks, including a number of seniors, who can get mired in a series of loans to pay off mounting costs, AARP says.

Johnson urged members to contact legislators to oppose HB 857 and join a Facebook Live event 4 p.m. Monday, Feb. 5, at www.facebook.com/AARPFL.

Payday lenders make a different case.

“Millions of American consumers use small-dollar loans to manage budget shortfalls or unexpected expenses,” Dennis Shaul, CEO of the Community Financial Services Association of America, has put it.  Tight regulation will “only serve to cut off their access to vital credit when they need it the most,” he said.

Nationally, payday loans often run between $200 and $1,000, due when a borrower receives the next paycheck. They have been capped at $500 at a time in Florida.

Generous political contributions seem  to be paying off for payday lenders. They gave more than $62,000 in campaign contributions to Trump administration budget director and interim Consumer Financial Protection Bureau chief Mick Mulvaney when he was a congressman, according to gift-tracker opensecrets.org.

Mulvaney suspended tougher federal rules about to go into effect, placing them under review in January.  Legislative efforts at the state level, launched partly in anticipation of tighter U.S. regulations, have continued anyway in Florida.

“The fact that payday lenders are trying to evade a consumer protection rule that may not even go into effect is really beyond the pale,” said Alice Vickers, director of the Florida Alliance for Consumer Protection, which opposes the bill.

The Senate version, SB 920, is sponsored by Sen. Rob Bradley, R-Fleming Island. He said the industry offers a valuable source of credit to 1.2 million Floridians and if regulations get it wrong, it could mean “10,000 jobs threatened.”

Though there are some circumstances in which consumers could pay less compared to current law, the bill would let lenders in other cases roughly double their fees per $1,000 borrowed, from $110 to $214.68, according to a Senate staff analysis.

Update: An industry executive told The Palm Beach Post on Monday that new rules are necessary to update for inflation a $500 limit that has been in place for 17 years. Another reason: to keep the loans viable in Florida under federal regulations  that have been put on hold in the Trump administration, but have not been formally ruled in or out.

“One million people in Florida use this product every year,”  said Ian A. MacKechnie, executive vice chairman of Amscot Financial Inc. “The safe thing is assuming the (federal) regulation is going to be effective.”

MacKechnie characterized reports of harm to borrowers as overblown and said default rates are only about 1.8 percent in Florida.

 

 

 

 

Western Union $586 million claims deadline extended to May 31

Ripped off by scammers who accepted payment by way of Western Union? The deadline has been extended to May 31 to file a claim in a $586 million settlement, federal officials said this week.

Western Union agreed to settle charges it failed to protect consumers adequately from scams and discipline problem agents.

The settlement goes way back. It covers scam payments between January 1, 2004 and January 19, 2017. The deadline to file claims was earlier announced for later this month, but is now May 31, 2018.

What kind of payments? This is about money transfers related to fake lottery prizes, phony family emergencies, fraudulent online romance and other scams. Such schemes generated more than 550,000 complaints.

Western Union said in a statement last year it was “committed to enhancing our compliance programs to prevent illicit activity on our network.”

Where do you file your claim? The Federal Trade Commission says start here:

FTC.gov/WU

You may be asked to provide documentation and your Social Security number, according to an FTC statement. It may take up to a year to verify and process the claims, officials said.

Reminder: Do not pay any money to file a claim, the FTC said. That means you’re in the wrong place and risking exposure to another scam.

 

 

 

Refunds are coming in Boynton tech support scheme, feds say

Refunds checks of more than $668,000 are on the way, U.S. officials said this week, in the wake of federal and state action against what they called a tech-support scam in Boynton Beach.

Big Dog Solutions LLC, also doing business as Help Desk National and Help Desk Global, and affiliated firms and individuals were accused of tricking people into thinking they had malware, viruses or other computer problems and selling them software and services to “fix” dubious or non-existent problems.

The Federal Trade Commission said it will send 3,791 checks averaging about $176 to victims. Got questions about the refunds? Contact Rust Consulting Inc. at 1-877-309-1959.

More than $6.4 billion in refunds for consumers flowed from FTC actions in the year ended last June, the agency said.

Tech support schemes, many with call rooms in Palm Beach County, have left a trail of complaints, enforcement actions and settlements with federal officials and the Florida Attorney General’s Office over several years. Operations in several other states and foreign countries also have been targeted in the crackdown.

As part of the resolution of this case, defendants agreed to turn over more than $700,000 in assets and were banned from providing tech support products or services and prohibited from deceptive telemarketing practices, officials said.

“Scammers like these use incredibly deceptive tactics that make consumers think they are receiving warnings from legitimate technology companies” such as Microsoft and Apple, Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in 2016. “We are proud to work with the Florida Attorney General’s Office to put an end to these fraudulent practices.”

Defendants in the case included BigDog Solutions LLC (doing business as Help Desk National and Help Desk Global); PC Help Desk US LLC (doing business as Help Desk National and Help Desk Global); Inbound Call Specialist LLC; BlackOpteck CE Inc.; 9138242 Canada Corporation; Digital Growth Properties, LLC; Christopher J. Costanza (doing business as CJM Consulting, LLC); Suzanne W. Harris; Muzaffar Abbas; Gary Oberman; Donald Dolphin and Justin Powers.

Defendants neither admitted nor denied allegations in a settlement approved by a federal judge in Illinois last year.

The refund checks expire after 60 days, so don’t delay too long in cashing them. The FTC issued a reminder that it never requires consumers to pay money or provide account information to cash a refund check.

Update: Asked for comment, defense attorney Ruben E. Socarras of Boca Raton said by email, “We do not have authority to comment or provide a statement at this time but we can tell you that the Court record/filings speak for themselves with respect to the outcome of the case.”

 

Do Not Call emails are fake, registrations do not expire, FTC says

Don’t fall for someone pretending to be from the Federal Trade Commission who is sending out fake emails telling people that their Do Not Call registration is expiring, federal officials are warning.

“The emails use the FTC’s logo and send people to a phony Do Not Call website to register their numbers again,” a statement from the FTC said.

If you’ve never signed up for the Do Not Call registry but want to do so, you can add your phone number at donotcall.gov or call 1-888-382-1222 from the phone you want to register.

The point of the list is to avoid unsolicited sales calls, though scammers who hide behind phony “spoofed” numbers and sometimes operate from overseas do not always observe it. You can also consider a variety of phone apps and other options.

 

Hey, insurers got big tax cuts. Florida must cut rates, advocates say

Insurance companies stand to reap a windfall from federal tax cuts but will overcharge customers by an estimated 5 percent or $25 billion unless regulators in Florida and other states take action, a national consumer group says.

J. Robert Hunter, director of insurance for the Consumer Federation of America

“When their corporate taxes go down, insurance companies need less premium, so their rates must come down,” said J. Robert Hunter, the Consumer Federation of America’s director of insurance, a former Texas insurance commissioner and past adviser to Florida regulators. “But unless commissioners ensure that companies lower their rates, drivers, homeowners, and businesses will be stuck overpaying for coverage.”

The group sent letters to insurance commissioners in every state including Florida’s David Altmaier. Florida has the nation’s costliest average home insurance premiums, according the National Association of Insurance Commissioners.

Florida’s Office of Insurance Regulation will “carefully consider” the issue, a spokeswoman said in a statement requested by The Palm Beach Post.

“The Office has reviewed the letter from the Consumer Federation of America and the Center for Economic Justice and appreciates their comments,” an OIR statement said. “As with any development that potentially affects rates, the Office will carefully consider the impact of all of the provisions of the Tax Cuts and Jobs Act of 2017 on insurance rates for Florida consumers.”

CFA’s estimates for consumer savings after tax changes are not necessarily shared by the industry. For their part, insurers in Florida have been focusing more on changes in state law they say are needed to curb claims inflated by contractors and lawyers.

The Florida House passed HB 7015 by Rep. Jay Trumbull, R-Panama City, which makes changes insurers want relating to assignment of benefits and the award of legal fees in property insurance cases.

“It provides meaningful reforms to address the issues of skyrocketing litigation and assignment of benefit abuse that raise rates for our customers,” said Christine Ashburn, chief of communications, legislative and external affairs for state-run Citizens Property Insurance Corp.

Senate legislation would change some rules on AOB but has other provisions insurers do not support, raising the possibility the issue will deadlock again as it has for several years.

Asked about the tax-savings issue, a spokeswoman for the state’s Chief Financial Officer Jimmy Patronis said he “has been an ardent supporter of lowering insurance rates in Florida including working this legislative session to fix the multi-faceted AOB fraud problem in the state. He will continue to support opportunities to lower insurance rates for Florida families.”

South Florida psychic sentenced in $3.5 million case

Maybe this was an unforeseen development. A South Florida woman who promoted herself as a psychic has been sentenced to 26 months in prison for evading taxes and ordered to repay more than $3.5 million to an elderly Martha’s Vineyard resident.

Among the services court records say she promised: Ridding the client of “demons.”

Sally Ann Johnson, 41, also known as Angela Johnson, Angelia Johnson and Sally Reed, was sentenced by U.S. District Court Judge Denise J. Casper in Boston last week.

In an interview, Johnson’s attorney said she is very good at her job, if not always at financial paperwork.

“It might be easy and convenient to lump Ms. Johnson in with bad actors who have come before, but she’s not one of them,” said Miami attorney Paul Petruzzi.

He described her “one of the best spiritual healers or psychics around.”

He added, “Unfortunately Sally wasn’t very skilled at making sure her taxes were filed properly.”

Between 2007 and 2014, Johnson performed “cleansing” and “healing” services for a Massachusetts woman then in her 70s, according to documents filed by prosecutors. At times Johnson resided with the woman, referred to as Jane Doe, and at other times lived in Florida, New York and Illinois, records say.

Johnson arranged for the woman to wire payments to at least three different bank accounts in an effort to “evade the scrutiny of the Internal Revenue Service,” prosecutors alleged.

Federal officials said Johnson owned and operated businesses including Flatiron Psychic, Psychic Match Inc. and Psychic Spiritual Salon Inc. At least two of the firms listed South Florida addresses, in Hallandale and Aventura, according to state corporate records.

“Johnson filed no individual or corporate tax returns reporting the income she received from Jane Doe and paid no individual or corporate federal-income tax on that money,” a federal complaint said.

 

 

Government shutdown: Veterans exchange remains open

A tax-free online shopping exchange opened to veterans last fall including more  than 91,000 in Palm Beach County will remain open during the government shutdown, officials said Saturday.

Former US Air Force pilot Gregg Matous holds a photograph of himself with a U-2 spy plane at his home in Jupiter. (Richard Graulich / The Palm Beach Post)

“Though the Exchange is part of the Department of Defense, the organization is a nonappropriated fund entity, with nearly 100 percent of its operating budget coming from the sale of goods and services,”  a statement said.

The exchange is at https://www.shopmyexchange.com

The government shutdown began after midnight Friday as Congress failed to agree on a budget to fund operations.

Payday lenders get big win after contributions to Trump pick

A consumer agency taken over by an appointee of President Donald Trump who took more than $62,000 in contributions from payday lenders while in Congress said it will suspend landmark rules aimed at alleged predatory abuses in that industry.

Mick Mulvaney serves as the Trump administration’s budget director and acting consumer bureau director. (CNBC).

Florida consumers paid more than $2.5 billion in fees that amounted to an average 278 percent annual interest rate on payday loans over a decade, groups calling for regulatory changes said in 2016.

The move announced by the Consumer Financial Protection Bureau Tuesday represented welcome relief for an industry that insisted the previous administration was going too far, but it came under immediate fire from consumer advocacy organizations.

“As a Congressman, Mick Mulvaney took thousands of dollars from the payday industry,” said Karl Frisch, executive director of Washington, D.C. -based Allied Progress. “Now, as ‘acting director’ of the CFPB, he is returning the favor by sabotaging these important protections that would have guarded against predatory lenders and protected struggling consumers from falling into the cycles of debt with sky-high interest rates.”

The consumer bureau said in a statement Tuesday it will engage in a rulemaking process to “reconsider” the “Payday, Vehicle Title, and Certain High-Cost Installment Loans” rule. That rule would have started Tuesday, though some provisions would not kick in until August.

Payday lenders gave more than $62,000 in campaign contributions to Mulvaney when he was a congressman, according to gift-tracker opensecrets.org. That included more than $31,000 in the 2016 election cycle, when the South Carolina Republican ranked among the top 10 congressional candidates in contributions from the sector. Also in the top 10 in that cycle: Florida Democrats Alcee Hastings and Patrick Murphy, though GOP candidates got about 70 percent of the giving nationally.

While in Congress, Mulvaney called the CFPB a “sick, sad” joke. Trump made Mulvaney his budget director and then asked him to serve as acting director of the consumer bureau last year.

Improper influence or conflict of interest? “I don’t think so, because I am not in elected office anymore,” Mulvaney said in December. He noted different administrations often diverge on key issues.

Industry groups have fought against the rule they slam as a prime example of over-stepping by the CFPB, the consumer agency created by financial reform laws passed during the administration of former president Barack Obama.

“Millions of American consumers use small-dollar loans to manage budget shortfalls or unexpected expenses,” Dennis Shaul, CEO of the Community Financial Services Association of America, said in October. “The CFPB’s misguided rule will only serve to cut off their access to vital credit when they need it the most.”

Payday loans often run between $200 and $1,000, due when a borrower receives the next paycheck. Borrowers average a $15 fee for every $100 borrowed, industry officials have said.

Officials in the Obama administration said payday lenders collected $3.6 billion a year in fees on the backs of low-income people who frequently became trapped in endless cycles of debt. About four out of five borrowers soon took out additional loans with mounting fees, officials said. For many, costs soon approached the equivalent of a 390 percent annual interest rate, they said.

The proposed rules would have required lenders to take greater pains to “vet” borrowers, limit how many loans they could take out in succession and cap penalty fees.

As Frisch sees it, “The CFPB thoroughly and thoughtfully considered every aspect of this issue over the course of several years. There is no reason to delay implementation of this rule – unless you are more concerned with the needs of payday lenders than you are with the interests of the consumers these financial bottom-feeders prey upon.”

 

Equifax tops Florida gripes. Knives are out for credit-freeze fee

Florida officials are pushing to eliminate a $10 fee to freeze a credit report after hacked credit reporting agency Equifax emerged as the most complained-about company in the state in 2017,  in beefs to the federal Consumer Financial Protection Bureau.

RELATED: Advice to freeze your own credit aims at hot problem in Florida

This fall Equifax acknowledged a data breach that exposed the personal data of more than 145 million U.S. consumers, including Social Security numbers, birth dates, addresses and more.

In the wake of that episode, state officials including Chief Financial Officer Jimmy Patronis are pushing legislation to eliminate the $10 fee to freeze credit reports. Such freezes can make it more difficult for fraudsters to establish new credit in a victim’s name.

Indiana, South Carolina, Maine and North Carolina “do not charge this fee and we want to add Florida to that list this year,” Patronis said last week.

Florida law allows credit reporting agencies to charge a fee of up to $10 to freeze credit reports, he noted, “and data breach victims are required to submit paperwork to prove their identity is in jeopardy to avoid paying the fee. No one should have to jump through hoops to get a fee waived.”

Bills including SB 1302 and HB 953 aim to make it so.

Equifax did not respond to a request for comment, but the head of an industry trade group raised concerns.

“We in general oppose the removal of all fees from credit freezes,”  said Francis Creighton, president and CEO of the Consumer Data Industry Association, which represents credit reporting agencies. “This is a process that costs the credit reporting agencies money. They have to have call centers and staff to do that.”

A security freeze placed on your credit file will block most lenders from seeing your credit history, as Consumer Reports has described it. That does not eliminate all fraud but makes it harder for a bad guy to get credit in your name, making a freeze “the single most effective way to protect against fraud,” the publication figured.

But it has drawbacks. Unless you are prepared to do a lot of unfreezing and refreezing on the fly, it also shuts out companies you may want to see your report to get a used car or a new smartphone, buy insurance or get approved as tenant.

Another option is a fraud alert, a notice placed on your credit report warning prospective lenders that you are a victim of or concerned about identity theft. That means they should take “reasonable extra steps to verify your identity,” according to Consumer Reports.

The terminology can get confusing, as there are also a variety of “credit monitoring” services companies offer, sometimes with monthly fees.

In any case, credit reporting and repair companies represented the top category of CFPB complaints from Florida, according to lendedu.com, which calls itself a marketplace for finance products including student loans, personal loans and credit cards. The next biggest categories were debt collection and mortgages.

Creighton said complaint numbers should be kept in perspective, because sometimes consumers are unhappy with other parties involved in the process, not necessarily or exclusively credit reporting  agencies like EquifaxExperian and TransUnion.  These can include lenders who deny credit or charge more. Or they can include outside “credit repair” firms that may offer to improve credit scores by challenging adverse information in a consumer’s report, not always with lasting success if the smudges have a legitimate basis.

Meanwhile the CFPB itself, created by financial reform laws enacted during the administration of former President Barack Obama, faces an uncertain future under President Donald Trump.

The bureau oversees rules for banks and other financial companies. It has produced $12 billion for 29 million consumers in refunds and canceled debts.

Big companies have complained the agency goes too far, has too much independent power and hurts the economy.  U.S. Rep. Jeb Hensarling, R-Texas, has called it “a rogue agency.” Trump has named his budget director Mick Mulvaney as its acting director. Uncertainty extends to the continued public availability of its complaint database.

“For quite possibly the last time ever (because of rumors of President Trump’s shutting it down), LendEDU has downloaded and analyzed every consumer complaint that was filed with the CFPB in 2017,” lendedu.com said.

Florida 2017 complaints to Consumer Financial Protection Bureau

Total Complaints: 21,905
Top Company: Equifax Inc. (2,716 complaints)
By Category
Credit Reporting/Repair Services: 8,701
Debt Collection: 4,819
Mortgage: 2,600
Credit Card/Prepaid Card: 1,850
Bank Deposit or Checking/Savings Account: 1,790
Student Loans: 1,074
Source: lendedu.com