The July–August 2014 Clearinghouse Review analyzes consumer-rights problems—concerning car financing, payday lending, payroll cards, limited literacy, and health care—specific to low-income workers. Strategies of prevention are described and remedies for law violations prescribed.
The complexity of car purchases combined with changing dealer incentives has created an environment ripe for consumer abuses such as interest rate markups and yo-yo scams. Regulators can help low-income consumers by prohibiting dealer compensation based on the interest rate and by setting rules on conditional delivery. Advocates can help vulnerable consumers by learning about the issues surrounding dealer scams and from attorneys most familiar with this area of law.
The payday loan is symptomatic of the failure to provide access to reasonably priced credit. By understanding the fallacies in the arguments used to justify payday loans, advocates can help reform laws so that payday-loan borrowers do not fall into a debt trap. Advocates and policymakers might also set the stage for a new system that offers short-term, small-amount credit at reasonable terms.
Employers of part-time or seasonal workers, or those without bank accounts, may use payroll cards to pay wages. Payroll cards are increasing in popularity as the use of traditional banking services, such as checking accounts, decreases. Advocates should know the benefits and risks of using the cards, applicable state and federal laws, including the Electronic Fund Transfer Act and Regulation E, and strategies for helping workers with payroll-card problems.
The Federal Trade Commission collaborates with legal aid programs to make consumer education materials accessible to clients who have low literacy levels or are English language learners. Legal aid attorneys were essential in the creation of Consumer.gov and Consumidor.gov—parallel English and Spanish websites that help low-income consumers understand their rights and how to protect themselves. The content of the websites is shaped by research on using simple language, design elements, and graphics to enhance comprehension by users with low levels of English literacy.
Scams against immigrants are nothing new. But the Affordable Care Act has given scammers a new venue for their old tricks. Confusion around the new law and immigration status leaves many immigrants vulnerable to scams. Language and cultural barriers raise the difficulty of consumer education and outreach to immigrant communities. Immigrant and health care advocates should take pains to educate their clients about and be on the lookout for health care scams.
Empowerment-driven legal practice is a framework for practicing law that requires the client to be engaged in the legal process and relieves the attorney of any expectation to “save” a client. This framework benefits attorneys by making efficient use of resources and protecting against burnout; benefits clients by recognizing their power to take responsibility, set goals, and take action; and benefits the attorney-client relationship with better communication and defined roles. Several tools are available for lawyers who want to shift from “helping” clients to promoting their empowerment.