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Forum Name: - Scams
Topic Title: Looks Like The Live Check Scam Is On-Going
Fri Mar 10, 2006 3:40 pm
In reviewing the settlement between Household International and the states it says they are still permitted to send out live checks but the checks must be clearly marked in 12 point bold font which states that the check is actually a loan.
An HFC or Beneficial loan is actually for a fixed preiod of time. It is to their advantage to add late fees to the back end of the loan because the amount still accrues interest and ALL of the amount is added to the back end of the loan. The overall effect is to give the borrower a bigger payoff than they would otherwise have, but as you stated, your balance barely goes down under normal circumstances.
Let's look at the loan itself. Usually it is called due in 11 years or so, but it may be amortized over 20 years. Again, the net effect is a low payment that barely pays off. After the 11 year payoff point (or what ever it may be) HSBC, HFC, or Beneficial, can offer to refinance. When the balance should be zero with a normal loan, they offer to refinance more than you borrowed in the first place.
Those who get these loans from a branch office (not a broker or a live check) are told that they must pay more to pay off the loan in the prescribed period of time. In a branch office the customer is told AFTER they signed the contract and leave the closing booth. In many cases, as reported to us, the statement is made in front of other employees of the branch office thus they can testify that the customer was told. In many cases the "advice" was totally omitted.
In some cases the loan was described as a "second against real property" - as in a lien against your home. In some cases the lien was never filed at the courthouse, but HFC and Beneficial threatened to foreclose. When William Aldinger aimed the company in a predatory direction, starting about 1994, he thought people would always make their house payments and their car payments. For most people he is right, but there comes a time when a person paid 3 times over for a loan, still owes a balance, and they want to throw in the towel.
Here is one article on why a loan against one's home is a bad idea.
Here is one of our blog articles that described what you are speaking about.
And finally, here is what Household, HFC, and Beneficial were charged with.
As the mortgage business took on a predatory stink for Household, and HSBC bought the company, Household and HSBC were looking for a newer and better way to scam customers. If you notice their merchants, many of them are troubled, with the noticeable exception of Best Buy Stores. Mr. Shea of Shea v. Household contacted us on day and gave us the details. Again, dating back to 1994 when William Aldinger joined Household International and pointed it in a predatory direction, the company failed to credit payments on time, and negated 'interest free' promotions by saying the customer paid late. The techniques were the same as the HFC - Beneficial - mortgage model. The settlement was only $11 million.
In my opinion, neither practice ever stopped. Remember, in both cases the predator never admitted any wrongdoing. In a Los Angeles Times article seen here former Aldinger underling Tom Detelich tells the world how well the company is treating borrowers. Here at Household - HSBC Watch we see a different story. We've had two reports about foreclosures in the last five days. One was in Ohio, the other in Kansas.
HSBC formally announced the exportation of what they call 'The Household Model" (HSBC's wording) to other countries. The penalties are not as bad as the profits, except possibly in countries where they execute bankers found guilty of fraud, lying, and deceptive practices.
Fri Mar 10, 2006 5:09 pm
Thanks so much for the info! The whole affair is a perfect example of how and why class action lawsuits are a bad idea.
Our loan with Household was just as you post--ending up as a Second mortgage against the property, although the paperwork was very confusing (purposely so, no doubt) describing the loan as a Second Mortgage AND a HELOC. I would sarcastically joke later on that one can take his or her pick which it was.
I agree 100% with you that in effect nothing ever stopped with this company. Just over two years ago, my husband received a letter in the mail which stated that the loan he applied for was not possible (NOTE: my husband did not apply for credit of any kind, anywhere) but if he called the number of the local HFC's office maybe something could be worked out.
Although suspicious, I encouraged him to call as it brought up the spectre of identity theft. I have now come to believe that Household was relying on this question of theft as a scare tactic to get people to call.
Anyway, when he called the first thing he was asked for was his Social Security number. Learning what we have over the years regarding theft, we know better then to give our SS numbers to anyone except in the cases of an established legitimate business deal or relationship. In this situation, it raised an immediate red flag, but only if one is aware of Household's history of deception.
Of course my husband angrily hung up on the phone upon confirming this as a Household "trick". The idea was to play on the Identity Theft fear (which is of course a legitimate one and we should always be on the lookout for any signs this is occurring) in order to get potential victims to call the office about the "error". Once they've done that, they can now be given a song and dance and an invitation into the Household Web . And as we know, once in there--well, that's the reason this website is here right now!
That's why no one should feel ashamed or guilty for falling for any of these tricks. These are professionals and they are very good at what they do. When the settlement was announced, the result looked like oh so much money. The public probably never did the arithmetic to learn how little it really meant to the victims. The fact that Household was NOT shut down makes me realize what a sham the whole thing was.
Many thanks and good wishes to Mr. Blake, who is a true crusader for justice. Thank you for providing this outlet for those of us who have suffered and lost so much.
Fri Mar 10, 2006 6:21 pm
I remember talking with your husband on the helpline. You are absolutely right about HSBC's newest marketing scam. The idea that one's application cannot be approved but one should call them "for other available avenues" is a scam that appears to be identity theft. When one never applied for anything in the first place it is an HSBC fishing expedition that should be outlawed. It scares too many people in an age of identity theft and credit card fraud.
The Ameriquest settlement was suggested to model the Household International settlement. Was there no policing of the industry after Household International? Did George Bush and his staff overlook Ameriquest because Bush's buddy was the future ambassador to the Netherlands? And last but not least, would Ameriquest have been brought to task at all if Bush had not named him as ambassador?
What makes our job so difficult at Household - HSBC Watch is that HFC and Beneficial still exist but no federal regulator knows how to deal with their scams. Case in point: "On 3/1/05 I filed a complaint with FTC and on 3/3/05 filed a complaint with State of California Attorney General. The FTC said to file with Comptroller of Currency. The Comptroller of the Currency said to file with the FTC, as they did not regulate the bank because it did not have an NA in the name, but it did have NA in the name (national association) and the bank is Household Bank NV, NA."
Representing Household - HSBC Watch, I called the OCC and asked about the quoted incident, was assured they do regulate Household Bank Nevada, and will take all complaints. Then they said HFC and Beneficial are also subject to state regulations. When I asked about the OCC's position on superceeding state regulations, which incidently met with bad publicity for the OCC in 2005, I got a tap dance instead of an answer. I do not know if I trust the OCC, thus I recommend that everyone notify they state attorney general just in case.
Then I called the Missouri attorney general and was told there are few complaints in Missouri and no pending action. I asked about Best Buy credit card complaints in missouri. No problems there either. But that is not what we see and hear, nor is that what is reported to us via email, telephone, or online postings. We will persist in spite of it. This is our seventh year. Best Wishes.
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