Maine Consumer Protections: A Survey of AARP Members Report Prepared by Cassandra Burton and Katherine Bridges

Transcription

1 Maine Consumer Protections: A Survey of AARP Members June 2006

2 Maine Consumer Protections: A Survey of AARP Members Report Prepared by Cassandra Burton and Katherine Bridges Copyright 2006 AARP Knowledge Management 601 E Street NW Washington, DC Reprinting with Permission

3 AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP Foundation is our affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Acknowledgements AARP staff from the Maine State Office, State Affairs, and Knowledge Management contributed to the design and implementation of this study. Special thanks go to AARP staff including Nancy Kelleher, Phyllis Cohn, Jud Dolphin, Kathy Shulman, Ilene Knight, and Travis Brennan, Maine State Office; Clare Hushbeck, Van Ellet, and Adam Goldberg, State Affairs; and Gretchen Straw, Jennifer Leslie, and Rachelle Cummins, Knowledge Management. FGI Research prepared the data for this study. Katherine Bridges, Knowledge Management managed the project and Cassandra Burton, Knowledge Management wrote the report for AARP. For more information, contact Katherine Bridges at (207)

4 Background Consumers-- particularly those who are older, high-risk borrowers, and of lower incomes-- often fall prey to predatory practices and scams, specifically, payday lending, home repair fraud, investment scams, and identity theft. With the rapid advancements in technology, more and more consumers are becoming susceptible to these misfortunes. In Maine, the numerous older residents living at or below the poverty level are the most vulnerable to these deceptive practices. Given these circumstances, providing consumer safeguards against these scandalous actions is important. Strong legislation to protect the public from consumer fraud can serve as an obstacle to those businesses or individuals that engage in deceitful and fraudulent practices. Furthermore, home ownership rates for those over age 65 nationally and in Maine are high at 78 percent, unexpected changes in health or marital status can quickly strip away the option to age in place. An increasing number of older homeowners risk losing their homes when they enter into deceptive contracts, predatory home mortgages or undertake home repairs with a fraudulent merchant. AARP Maine is concerned about protecting consumers against deceptive and predatory practices often associated with payday loans, home repair fraud, as well as protecting residents against identity theft and financial fraud. Maine Consumer Protections: A Survey of AARP Members highlights the findings from a larger survey, 2005 AARP Maine Legislative Issues Survey, on members experiences with identity theft and home repair fraud, their opinions on how high a priority these issues should be for AARP in the State, and the importance of implementing stronger consumer protections against payday loans, subprime mortgages, and home contractors. The 2005 Maine Legislative Issue Survey was conducted by mail with 2,500 AARP Maine members between August 26 and September 30, Fifty-four percent of the sampled Maine members returned surveys by the cut-off date, providing 1,347 useable surveys for analysis. With a margin of error of plus or minus 2.7 percent, it represents the views of approximately 214,000 AARP members in Maine. 1 See page 12 for a description of the survey methodology AARP Maine Consumer Protections: A Survey of AARP Members, June

5 Overall Findings Maine members think providing consumer protections against fraudulent and deceptive business practices that can reduce their retirement savings and financial assets should be a top or high priority for AARP to work on in Maine. Many members view strengthening consumer protection laws and regulations for the subprime mortgage lending market as important and a priority, particularly laws requiring lenders to prominently display all fees and disclosure of annual percentage rates. Members think it is important to require check cashing outlets to be licensed and registered, prohibit excessive annual interest rates, lower top-limits for check-cashing fees, and require financial institutions to cash government checks. Members feel it is important to strengthen consumer protections by requiring home contractors to be bonded and licensed, and to have insurance for property damages and personal injuries AARP Maine Consumer Protections: A Survey of AARP Members, June

6 Detailed Findings Legislative Priority Maine members say providing consumer protections should be a priority for AARP to work on in Maine. More than eight in ten members think providing consumer protections against fraudulent and deceptive business practices that can reduce their retirement savings and financial assets should be a top or high priority for AARP to work on in Maine. One in eight members think it should be a medium priority and less than five percent say it should be a low or not a priority at all. Priority for Providing Consumer Protections (N=1,344) Top Priority 55 High Priority 29 Medium Priority 12 Not Sure/ No Answer 1 Low/ Not a Priority AARP Maine Consumer Protections: A Survey of AARP Members, June

7 Identity Theft Maine members think strengthening laws and regulations regarding identity theft should be a priority. While only six percent of members report that they or someone else in their household was tricked into giving credit card information, bank account information, a Social Security number, or any other type of personal identification information so that charges could be made without their knowledge, members feel identity theft protections are very important. Identity theft is rated as the top consumer protection issue that members feel needed stronger laws: When asked how much of a priority it should be for Maine to strengthen consumer protection laws and regulate identity theft, more than nine in ten Maine members rate identity theft as a top or high priority. Percent Experiencing Identity Theft in Past 12 Months (Self or Other Household Member) (N=1,344) No 85 No Answer/ Not Sure 9 Yes 6 Priority for Strengthening Laws and Regulations Regarding Identity Theft (N=1,344) High Priority 13 Medium Priority 3 Top Priority 79 Low/ Not a Priority 2 Not Sure/ No Answer AARP Maine Consumer Protections: A Survey of AARP Members, June

8 Payday Lending Maine members say it is important to also strengthen payday lending consumer protection laws. More than nine in ten members view strengthening consumer protection laws for payday lending as extremely or very important, particularly requiring that lenders display all fees prominently, and disclose annual percentage rates to customers. More than eight in ten think it is important to require check cashing outlets to be licensed or registered, prohibit excessive annual interest rates, lower top-limits for check-cashing fees, and require financial institutions to cash government checks. Importance of Strengthening Payday Lending Consumer Protections Laws (N=1,344) Requiring all fees be prominently and clearly displayed Requiring disclosures of annual percentage rate Requiring check cashing outlets to be licensed or registered Prohibiting excessive annual interest rates Lowering top-limit (ceiling) for check-cashing fees Requiring financial institutions to cash government checks Requiring reasonable loan terms Extremely Important Very Important Somewhat/Not Important 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

9 Subprime Loans Members believe it is important for Maine to implement subprime loan protections. About six in ten members view prohibiting excessive pre-payment penalties, requiring minimum notice for foreclosures, and considering the borrowers ability to repay a loan as extremely important consumer protection laws to have in place in Maine. Less than one in ten thinks these protections are somewhat or not important. Implementing subprime loan protections is rated lower as a priority compared to telemarketing and identity theft, presumably because it was seen as less likely to occur. Importance of Implementing Subprime Mortgage Loan Consumer Protections (N=1,344) Prohibiting excessive pre-payment penalties Require minimum notice for foreclosures Consider borrower's ability to repay loan Extremely Important Very Important Somewhat/ Not Important 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

10 Home Improvement Many Maine members have had bad experiences when they hired help to make improvement to their homes. Three-quarters of members have hired a person or company to make repairs or improvements to their home. Of these, 30 percent (or 23 of all members) had a bad experience with the hired help. Interestingly, with so many members who have hired out home repairs and a considerable number reportedly having a bad experience, this issue falls lower (78) as a priority for stronger consumer protection laws than identity theft (92) and home financing (80). Percent Who Have Hired a Person or Company to Make Repairs or Improvements to Home (N=1,344) Percent Who Had a Bad Experience with a Home Improvement Company or Repair Person (n=1,013) Yes 75 No 21 Yes 30 No 67 No Answer 4 No Answer AARP Maine Consumer Protections: A Survey of AARP Members, June

11 Maine members think it is important to strengthen consumer protections for home contractors. More than eight in ten members feel it is important to strengthen consumer protections in Maine by requiring home contractors to be bonded and to have insurance for property damages and personal injuries. About three-quarters feel it is important to require home contractors to be licensed. Importance of Consumer Protections for Home Contractors (N=1,344) Requiring home contractors to be bonded Requiring home contractors to have insurance for property damage Requiring home contractors to have personal injury insurance Requiring home contractors to be licensed Extremely Important Very Important Somewhat/Not Important 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

12 Consumer Protection Priority AARP members say it should be a top priority for Maine to strengthen consumer protections laws and regulations in the State. More than three-quarters of members in Maine say it should be a top or high priority for Maine to strengthen consumer protection laws and regulations in the areas tested in the survey. Specifically, eight in ten members say top or high priority should be given to strengthening home financing and home equity loan laws and regulations. More than threequarters think that priority should be given to laws and regulations regarding home repairs and home repair financing, and check cashing or pay day loan outlets, while three-quarters say Maine should strengthen laws and regulations regarding telemarketing. Priority Ratings for Strengthening Consumer Protection Laws and Regulations in Maine (N=1,344) Telemarketing Home financing/home equity loans Home repairs/ home repair financing Check-cashing outlets pay day loans Top Priority High Priority Medium Priority Low Priority 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

13 Conclusions While identity theft was rated as the top consumer protection issue that Maine members felt needed stronger laws, members also strongly support strengthening consumer protections laws for payday lending institutions, subprime mortgage loans, and home repair contractors. Members feel that it should be a priority for AARP to work in Maine to provide consumer protections against fraudulent and deceptive business practices that can reduce their retirement savings and financial assets Members support consumer protection laws and regulations such as requiring payday lenders to display all fees prominently and to disclose annual percentage rates to customers. They think it is important to require check cashing outlets to be licensed or registered, prohibit excessive annual interest rates, lower top-limits for check-cashing fees, and require financial institutions to cash government checks. Further, members view prohibiting excessive pre-payment penalties, requiring minimum notice for foreclosures, and considering the borrowers ability to repay a loan as extremely important consumer protection laws to have in place in Maine. Many Maine members also feel it is important to strengthen consumer protections in the home repair realm by requiring home contractors to be bonded, have insurance for property damages and personal injuries, and be licensed. Methodology AARP conducted the Maine Legislative Issues Survey from August 26 through September 30, A random sample of 2,500 AARP members in Maine was selected from AARP s membership database. Each sampled member was contacted about the survey in four ways: a pre-notification postcard, the survey itself, a reminder postcard, and a second survey. Fifty-four percent of the sampled Maine members returned surveys by the cut-off date, providing 1,347 useable surveys for analysis. Thus, the survey has a sampling error of plus or minus 2.7 percent. Survey responses were weighted to reflect the distribution of three age segments in the member population of Maine: 50-59, 60-74, and 75 and older. Due to rounding of the weights, the final number of cases for the weighted dataset is 1,344. As of May 31, 2006 the number of AARP members in Maine was 213, AARP Maine Consumer Protections: A Survey of AARP Members, June

14 Demographic Characteristics of Respondents (N=1,344) Age Gender Female 45 Male 53 Income <$20K 25 $20K-<$50K 38 50K+ 29 Education High school or less 38 Some college 18 College grad+ 39 Marital status Married 62 Widowed Other Race White 98 Black Other < AARP Maine Consumer Protections: A Survey of AARP Members, June

15 ANNOTATED QUESTIONNAIRE 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

16 AARP 2005 Maine Legislative Issues Survey 1. To be effective, AARP Maine wants to work on the most important issues facing AARP members in the State. Keeping in mind what is most important to you, how much of a priority should it be for AARP to work on the following legislative issues in Maine? Top. priority High priority Medium priority Low priority Not a priority Not sure No Response a. Ensuring that Social Security continues to provide a guaranteed base for retirement income <.5 1 b. Ensuring that workers age 50 and older have equal access to jobs, promotions, and employee benefits <.5 1 c. Maintaining the affordability of electricity and telephone services <.5 <.5 d. Protecting consumers against fraudulent and deceptive business practices that can reduce their retirement savings and financial assets <.5 1 e. Strengthening Medicare as a base for retirement health coverage f. Making prescription drugs more affordable <.5 <.5 1 g. Expanding Medicaid, the government program that provides health and long-term care for low-income people h. Strengthening Dirigo Health, which provides health insurance coverage for the uninsured i. Expanding funding for alternative transportation services for those unable to drive j. Maintaining Maine s Clean Election laws k. Improving legal rights and supportive services for grandparents raising grandchildren l. Reshaping Maine s tax structure to help pay for expanded health and long-term care services m. Advocating for a state budget that ensures older residents are able to stay in their homes as long as possible AARP Maine Consumer Protections: A Survey of AARP Members, June

17 Work and Retirement 2. Which of the following best describes your current employment status? 20 Not retired employed full-time 3 Not retired employed part-time 4 Not retired self-employed full-time 3 Not retired self-employed part-time 1 Not retired unemployed and looking for work 2 Retired and working again full-time SKIP TO QUESTION 4 10 Retired and working again part-time SKIP TO QUESTION 4 3 Retired and looking for work SKIP TO QUESTION 4 42 Retired and NOT looking for work GO DIRECTLY TO QUESTION 5 3 Other GO DIRECTLY TO QUESTION 5 10 No Answer 3. Which of the following best describes what you plan to do when you reach retirement age: (Check ONE only.) (n=408 Not retired) 26 I want to continue working at my present job/career for as long as I am able 17 I want to continue working at my present job/career but with reduced hours 13 I want to retire and NEVER work again 3 I want to retire from my current job/career and look for full-time work elsewhere 21 I want to retire from my current job/career and look for part-time work elsewhere 0 I want to retire from my current job/career and go back to school 3 I want to retire from my current job/career and start my own business 3 I want to retire from my current job/career and be a consultant in my area of expertise 4 I want to retire from my current job/career and (Other): 10 No Answer 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

18 4. Please rate each of the following in terms of their importance in your decision to be working or looking for work right now. For each reason, please indicate if is it is a major factor, a minor factor, or not a factor at all in your decision to be working or looking for work. (n=611; Working or looking for work) Major factor Minor factor Not a factor at all Not sure No Answer a. Need to pay for health care expenses b. Need to maintain health insurance coverage c. Need to pay for prescription drug costs d. Enjoy the job or enjoy working/enjoy the social aspect of working e. To qualify for Social Security f. To fulfill pension requirements g. To feel useful and productive h. Need the income <.5 7 i. To save more for retirement In your opinion, have you, a family member, or friend experienced any of the following because of age since turning 40? Yes No Not sure No Answer a. Not been hired for a job b. Been laid off, fired, or forced out of a job c. Been encouraged to retire before you or they were ready to leave d. Been passed over for a promotion e. Been excluded from employer-provided training f. Experienced comments on the job about your age or plans to retire AARP Maine Consumer Protections: A Survey of AARP Members, June

19 6. Have you received unemployment compensation at anytime in the last five years? 6 Yes 88 No SKIP TO QUESTION 8 <.5 Not sure SKIP TO QUESTION 8 6 No Answer 7. At the time, was it explained to you that receiving Social Security retirement benefits would cause your unemployment benefits to be reduced? (n=81) 25 Yes 24 No 37 Did not receive Social Security and unemployment benefits at the same time 3 Not sure 10 No Answer 8. Please indicate how strongly you support or oppose each of the following legislative proposals. Strongly support. Neither support nor oppose Somewhat support Somewhat oppose Strongly oppose a. Changing Maine law to allow unemployed older workers to receive both Social Security retirement benefits and full unemployment benefits at the same time b. Creating stronger age discrimination laws c. Allocating state funds to provide retraining programs for older workers, so they can find new employment opportunities No Answer 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

20 State Budget 9. Maine is facing difficult economic choices in the coming months as the Governor and state legislators try to balance the state budget. There are three approaches-- cutting current services, raising revenues, or a combination of these two. We would like your opinion some of the options. First, which of the following possible cuts would you support or oppose to help balance the state budget? Support. Neither support nor oppose Oppose No Answer a. Cut spending on health care and long-term care services for older persons and people with disabilities b. Cut spending on education, including K-12 and higher education c. Cut spending on public safety, courts, and jails d. Cut spending on state grants to municipalities and counties for services such as fire and police protection, senior centers, and parks and recreation e. Cut spending on highway and road maintenance and construction f. Cut spending on health care services to low-income families and their children g. Cut spending on natural resources and wildlife management AARP Maine Consumer Protections: A Survey of AARP Members, June

21 10. Second, which of the following possible ways to raise revenue would you support or oppose to help balance the state budget? Support Neither support nor oppose Oppose No Answer a. Close tax loopholes and exemptions for businesses, and economic development initiatives b. Add a surtax on the income of households with annual incomes of $200,000 or more c. Apply the sales tax to items currently exempt, such as entertainment (movies, concerts, etc.), professional services (accountants, insurance agents, etc.), and personal services (dry cleaning, hair cuts, etc.) d. Increase the sales tax rate on items you currently pay tax on, except for food, prescription drugs, and over-thecounter medications e. Expand the lottery f. Allow gambling and casinos g. Increase state licensing and user fees such as fees for the usage of state parks How strongly would you support or oppose additional funding for programs that expand home care and community-based options and allow older people to remain in their own homes? 65 Strongly support 21 Somewhat support 9 Neither support nor oppose SKIP TO QUESTION 13 2 Somewhat oppose SKIP TO QUESTION 13 1 Strongly oppose SKIP TO QUESTION 13 3 No Answer 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

22 12. Would you still support additional funding for programs that expand home and community-based care, even if it meant an increase in taxes? 66 Yes 31 No 4 No Answer 13. If cuts had to be made to the health and long-term care services budget in the state of Maine and you were in charge of making cuts, how would you personally prioritize the following programs in order to balance the budget? Please write a 1 next the item you think should be cut first, write a 2 next to the item you think should be cut second, write a 3 next to the item you think should be cut third, and write a 4 next to the item you think should be cut last among these choices. 1st Cut 2nd Cut 3rd Cut 4th Cut Prescription drug assistance programs Maine Care, the health insurance program for low-income older adults, children, and people with disabilities Nursing home reimbursements Home and community-based long-term care services provided to residents with disabilities and older adults AARP Maine Consumer Protections: A Survey of AARP Members, June

23 Consumer Protections 14. Consumers who do not have bank accounts or who do not have convenient bank access often use check-cashing outlets to cash their checks. Check-cashing outlets can sometimes charge up to 21 of the face value of the check in order to cash it. These outlets can also give payday loans to customers who write post-dated checks for deposit at a later date. The payday loan outlet will then lend the consumer cash in the amount of the check for a fee and hold the check for the loan term usually two weeks, or until the consumer s next payday. Depending on the length of the loan, interest rates can exceed a six hundred percent (600) annual percentage rate. How important do you think it is for Maine to strengthen consumer protection laws for Maine residents who may receive a payday loan from a financial outlet by implementing each of the following measures? Extremely. important. Very important Somewhat important Not very important Not at all important Not sure No Answer a. Prohibiting excessive annual interest rates for payday loans b. Requiring reasonable loan term to make it easier for customers to pay back the loan c. Requiring that all fees be prominently and clearly displayed for consumers d. Requiring disclosure of annual percentage rate e. Requiring check cashing outlets to be licensed or registered f. Lowering the top limit (ceiling) for check-cashing fees g. Requiring financial institutions to cash government checks for people who do not have a bank account or who do not have access to a financial institution AARP Maine Consumer Protections: A Survey of AARP Members, June

24 15. Sub-prime mortgage loans are loans with higher than average rates that are given to people who are considered to be of high credit risk. Sub-prime mortgage lending companies often operate through mortgage brokers and are usually affiliates of banks, or other finance companies. Currently there is very little legislation regulating these groups in Maine. There has been dramatic growth in the sub-prime mortgage lending industry. How important do you think it is for the state of Maine to implement the following consumer protections on sub-prime mortgage lending companies that grant high cost home equity loans, such as loans with either high fees or a high interest rate? Extremely. Very Somewhat Not very Not at all Not NA important. important important important important sure a. Prohibiting excessive pre-payment penalties b. Requiring a minimum notice for foreclosures c. Considering borrower s ability to repay the loan Have you ever hired a person or company to make repairs or improvements to your home? (n=1013) Yes No No Answer If Yes, did you ever have a bad experience as a result of hiring a person or company to make repairs or improvements to your home? 30 Yes 67 No 3 No Answer 17. In the last 12 months, not counting lost or stolen credit cards, has anyone ever tricked you or someone in your household into giving credit card information, bank account information, a Social Security number, or any other type of personal identification information so that charges could be made without your knowledge? 6 Yes 85 No 7 Not sure 2 No Answer 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

25 18. Maine could provide a number of mechanisms to protect consumers when they sign a home improvement contract. How important are each of the following consumer protection measures for Mainers who hire a home improvement contractor? Extremely important Very important Somewhat important Not very important Not at all important a. Requiring home contractors to be licensed by the state b. Requiring home contractors to have insurance for personal injury to the home owner or others c. d. Requiring home contractors to have insurance for property damages to the home, its contents, or the property of others Requiring home contractors to be bonded so there is a source of recovery for the consumer if the contractor does not complete the work but was paid some or all of the money for the job Not sure NA 19. How much of a priority should it be for Maine to strengthen laws and regulations that protect consumers from unfair and deceptive practices in each of the following areas? Top. Priority High priority Medium priority Low priority Not a priority a. Check-cashing outlets/payday loans b. Home financing/home equity loans c. Home repairs/home repair financing d. Telemarketing Not sure NA e. Identity theft AARP Maine Consumer Protections: A Survey of AARP Members, June

26 About You The following questions are for classification purposes only and will be kept entirely confidential. D1. Are you male or female? 53 Male 45 Female 2 No Answer D2. What is your age as of your last birthday? years Age No Answer D3. What is the highest level of education that you completed? th grade (no diploma) 30 High school graduate (or equivalent) 18 Post-high school education (no degree) 8 2-year college degree 12 4-year college degree 5 Post-graduate study (no degree) 14 Graduate or professional degree (s) 6 No Answer D4. What is your current marital status? 62 Married 3 Not married, living with partner <1 Separated 11 Divorced 17 Widowed 4 Never married 3 No Answer 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

27 D5. How interested are you in Maine state government activities that affect residents age 50 and older? 38 Extremely interested 38 Very interested 18 Somewhat interested 3 Not very interested 1 Not at all interested 1 Not sure 2 No Answer D6. Which of the following activities have you participated in within the last 5 years? (Check all that apply) 40 Phoned or written to a public official to make your views known on an issue 22 ed a public official to make your views known on an issue 32 Contributed money to a candidate or political party 9 Volunteered to work on a campaign for a particular candidate or party 14 Written a letter to a newspaper or called a radio or TV show to make your views known on an issue 45 Attended a political event or town meeting 11 Volunteered with a group working to influence state government 29 No Answer D7. Thinking about your state elections for Maine Governor and Legislators in the last ten years, how often would you say you vote? 76 Always 16 Most of the time 2 About half of the time 2 Seldom 3 Never 1 No Answer D8. What is your race? 98 White-Caucasian <1 Black or African-American <1 Native Hawaiian or Pacific Islander <1 Asian 0 American Indian or Alaska Native 1 Other 1 No Answer 2005 AARP Maine Consumer Protections: A Survey of AARP Members, June

28 D9. What was your annual household income before taxes in 2004? 6 Less than $10, $10,000 to $19, $20,000 to $29, $30,000 to $39,999 9 $40,000 to $49, $50,000 to $74, $75,000 to or more 7 No Answer Thank you for completing this survey. Please use the postage-paid envelope and return it to State Member Research, AARP, 601 E Street NW, Washington, DC 20049, by September 30, AARP Maine Consumer Protections: A Survey of AARP Members, June

29 AARP Knowledge Management For more information please contact Katherine Bridges (207) or