By Eileen Ambrose, The Baltimore Sun
April 21, 2013
Consumer advocates say they didn't get everything on their wish list during the latest meeting of the General Assembly, but the session produced several victories for Maryland consumers.
For example, Marylanders would find it easier to buy auto coverage from a state insurance fund, foster children would gain protection from identity thieves and debtors would be less likely to be jailed under bills recently passed by lawmakers.
Gov. Martin O'Malley is expected to sign these and other consumer-friendly bills next month. Among them:
Debtor's prison relief: A priority for the Maryland Consumer Rights Coalition this year was to ban the jailing of people who fail to show up in court for small-claims cases. This happens when a creditor wins a judgment against a consumer and the consumer fails twice to show up in court as ordered. The judge then might issue a "body attachment," authorizing an arrest. People without the money to post bail are put in jail.
Over a 12-month period, 39 Marylanders spent time in jail — in one instance, for 14 days — in cases involving judgments of $5,000 or less, according to a coalition report this year.
A bill to ban the practice was opposed by Maryland's banks and courts. But lawmakers passed legislation taking effect in October that would require arrested individuals to be brought immediately before a judge or judicial officer. If these consumers are not released on their own recognizance, then the judge or judicial officer must impose the "least onerous condition."
This legislation might not prevent jail time, but it would likely reduce the occurrence, said Marceline White, executive director of the coalition. "It's a high bar."
Insurance installment plan: Residents who can't get car insurance in the private marketplace have been able to buy it through the insurer of last resort — the Maryland Automobile Insurance Fund. One problem: Under law, the entire annual premium has to be paid upfront. This can be difficult, given that the cost of a typical annual premium is $1,800.
Those who can't afford that end up borrowing the money at a high interest rate from premium finance companies.
Legislation that would take effect in July would allow consumers to purchase insurance from the fund in installments. However, the initial premium — 25 percent of the annual premium for policies under $3,000, 20 percent for more expensive policies — can still be a hurdle for some.
"We have been fighting for this for eight years," said Kent Krabbe, the fund's executive director, about installment payments. "It's not an ideal plan. … At the end of the day, we decided not to let perfect stand in the way of good."
The legislation also makes a concession to premium finance companies, which can once more require borrowers to pay the interest on the loan upfront rather than spread it over the life of the loan, Krabbe said. This front-loading of interest had been banned in recent years.
To help consumers make the best financial choice, though, they should receive disclosures that spell out how much they will pay for a policy under the installment plan versus using a premium finance company, Krabbe said.
Foster child protection: Last year, Maryland passed a law allowing parents to create a credit report for their child and immediately freeze it, preventing identity thieves from opening a line of credit under the minor's name.
But the youngsters more likely to be victims of identity theft are those in foster care.
Children moved from placement to placement are tracked by their Social Security numbers, giving more people access to a vital number often used to steal identities, said Robin McKinney, director of the Maryland CASH Campaign.
An estimated 10 percent of foster children have credit report problems, ranging from errors to fraudulent activity, she said.
Lawmakers stepped in, and starting in October, the Department of Human Resources would have to freeze reports of foster children under its care.
Forced-bundling ban: In some states, an insurer can require customers to buy both auto and homeowners' or renters' policies if they want coverage from the company. This limits consumers' choice of policies and prevents them from shopping for the best deal on separate policies.
It hasn't been a problem in Maryland yet, and now it won't be, said Karen Stakem Hornig, deputy commissioner of the Maryland Insurance Administration. State lawmakers agreed to ban forced bundling.
"Marylanders can choose to bundle and receive whatever discounts, but it can't be required," she said.
Insurance disclosures: Homeowners' policies sometimes contain an "anti-concurrent causation clause." This means that if you sustain a loss from a mix of covered and excluded events, you won't receive anything for your losses. For instance, your house might be covered for wind damage but not flooding, so if both occur, you're out of luck.
"These are very common in homeowners' policies," Hornig said. "We do get complaints about that. It's a real surprise for people."
A move to ban such clauses failed. But lawmakers agreed to require insurers starting next year to send a separate notice to consumers whose policies contain such clauses.
Lawmakers also ordered a study that looks at, among other things, complaints about the clauses and the number of states that ban them and why.
Tenants and utilities: If a landlord is responsible for utilities and fails to pay the bill, tenants can find their utilities shut off without notice.
"We saw it the most in situations where landlords are in foreclosure or just walking away from the property," said Matt Hill, a staff attorney with Public Justice Center in Baltimore.
Tenants, suddenly finding themselves without power, would then try to open an account with the utility, which sometimes tried to make the tenant pay the landlord's past-due balance, he said.
Legislation that would take effect in January would require utilities to notify tenants when service is going to be cut off and to allow tenants to open their own utility account without being responsible for the landlord's bill. Tenants also could deduct their utility payments from their rent.
The bill also has an added protection for all utility customers, Hill said. Utilities would mail shut-off notices in an envelope that states on the outside that a termination of service is pending, making sure that tenants and homeowners are aware, he said.
Savings bond purchases: Taxpayers in recent years have been able to request that all or some of their federal tax refund be used to purchase U.S. Savings Bonds. New legislation would allow Marylanders filing electronically to do the same with their state tax refund.
Maryland filers would be able to buy inflation-protected Series I bonds in increments of $50, and a paper bond would be mailed to them, McKinney said.
"You don't have to have a bank account, even," she said. "It's accessible to everyone."
Bond purchases would be available through the state starting with tax year 2015, the returns for which are filed the following year.
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