Legislators offer consumers a mixed bag

Maryland residents gained a few more protections against predatory financial practices, such as refund anticipation loans and foreclosure during the 2010 General Assembly session.

But legislators punted on other issues. For instance, they decided to study whether to regulate debt settlement companies and revisit the issue during the next session — leaving customers at risk in the meantime, said Marceline White, executive director of the Maryland Consumer Rights Coalition.

"Failure to act is still an action," she said.

The scorecard for consumers at the conclusion of the 90-day annual legislative session could be considered a tie, advocates said. While some bills long sought by consumer rights groups won approval, others were shelved. White called the session "a mixed bag."

Some of the biggest successes were in the area of environmental health, said Fielding Huseth, an advocate with Maryland PIRG, a nonprofit consumer group.

Lawmakers approved bills banning the chemical bisphenol-A from baby bottles and products and phasing out the use of flame-retardant decabromodiphenyl ether, also known as deca-BDE, which is used in mattresses, furniture and electronics.

"This will assure parents that the products they're buying are safe for families," Huseth said, adding that such victories on the state level put pressure on Congress to change a chemical-policy law enacted in 1976. The new Maryland law "gets us one step closer to an actual overhaul of our chemical policy in this country."

In the financial services area, one bill closes a loophole that allowed payday lenders to circumvent Maryland's 33 percent interest rate cap on loans under $6,000 by requiring consumers to go through brokers that charge additional fees. Lawmakers also passed a bill requiring more disclosures about the fees charged on refund anticipation loans.

And another law requiring foreclosure mediation is aimed at creating a clear structure and a timeline for homeowners who need help. "It will offer a softer landing, so homeowners will have other options before they go into foreclosure and lose their homes," White said.

But there were also disappointments for consumer advocates this session.

White feared that more people would end up in debt while legislators study a proposal to prevent debt settlement companies from collecting fees from clients until they have settled balances.

When consumers work with such companies, they often stop making payments to creditors while they save for a lump-sum payment. The debt settlers often wait to negotiate with the creditors until the payment is ready — but start charging their own fees right away, White said. The process can take months, during which time the consumers' debts are piling up.

"Lots of people would love jobs where you got paid before you perform," White said. "If they get paid upon each debt they settle, it's a better incentive for them, and consumers know what they're getting."

A bill to prevent many kinds of employers from using a credit history to deny employment or fire a worker failed to make it out of committee in both houses of the legislature. Other states, like Washington and Hawaii, have put such bans in place, Huseth said.

Studies have shown that as many as 25 percent of credit reports contain inaccurate information. "People could be judged on hiring decisions based on false information one in four times," he said.

Another failed bill would have given consumers access to information about arbitrators and how they have ruled in past cases between consumers and companies. Many consumer contracts mandate arbitration disputes instead of going to court. Advocates have complained that arbitrators too often side with companies.

But in Maryland, that record will remain unavailable.



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