Consumers in a Festive Mood as the Holiday Season Approaches
Published: November 21, 2007 ACA International

     U.S. households are expected to spend an average of $471 on gifts during the holiday season, up from last year's estimate of $449, according to The Conference Board.
     The survey of Christmas gift spending intentions covers a nationally representative sample of 5,000 U.S. households. It was conducted for The Conference Board in November by TNS, the world's largest custom research company.
     The top Christmas spenders will be East South Central households (Alabama, Kentucky, Mississippi, Tennessee), who intend to spend $583. Lowest Christmas spending will be in the West North Central region (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), where consumers intend to spend $397 on Christmas gifts.
     One-third of all households will spend $500 or more on Christmas gifts, with 35 percent spending $200-$500 and the remaining 31 percent planning to spend less than $200.
     This year, 38 percent of all consumers will buy Christmas gifts on the Internet, the same percentage as a year ago. Books top the list of online Christmas buying, with 40 percent saying they will buy books as gifts. Apparel and footwear came in second with 39 percent of consumers intending to purchase these gifts online. Toys/games rank third as online Christmas buying choices, followed closely by movie videos and DVDs.
     Of the 38 percent who said they purchased Christmas gifts last year on the Internet, 91 percent said they were satisfied with their online buying experience.
Other key findings in The Conference Board survey:
— Households headed by individuals aged 45-54 intend to spend the most this year, with $485 the average expenditure.
— Households headed by those aged 35-44 intend to spend $479 on gifts.
— Households whose incomes top $50,000 intend to spend $612 for Christmas gifts.

Top Compliance Question The two most common compliance questions received by ACA’s Compliance Department concerned leaving voicemail messages for consumers and whether more than one entity may attempt to collect on an account at the same time.

     The top compliance question received by ACA’s Compliance Department in August, once again, concerned leaving voicemail messages for consumers. As stated in previous Top Compliance Question articles, several courts have concluded that a message left on a consumer’s answering machine or voicemail constitutes a "communication" under the Fair Debt Collection Practices Act (FDCPA).
     In the opinions of these courts, the messages were required to include the Mini-Miranda disclosure, as required by Section 807(11) of the FDCPA. Additional information on related court decisions and compliance suggestions is available to members at E-Compliance document #429.

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Bargain Hunting at Your Nearest Department Store or Hospital?
Hospitals are trying to make pricing for consumers less confusing. They’re trying to make their "Byzantine pricing," which is normally meant for insurers, understandable to patients.

     Gone are the days of hidden medical prices. In a time of high out-of-pocket healthcare costs, high deductibles and rising medical debt, consumers are using transparent pricing information to shop around.
     The topic of price transparency, and consumers who use this information to price shop, was recently covered in a StarTribune article published Oct. 1, 2007. The article profiles price shopper Bob Braschler who needed cataract surgery. After calling multiple hospitals to get quotes on the procedure, Braschler found a place that would perform the surgery for $10,000 less than the initial estimate he received.


 

     Braschler's story is one way consumers are dealing with high healthcare costs. But consumers are not the only ones changing the way they do things: Hospitals and insurers are also finding new ways to react to the
price shopping epidemic.

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Students and Parents Spend Big on College

     Students and their parents are expected to spend a combined average of $956.93 on back-to-college merchandise this year, which surpasses last year’s $880.52, the National Retail Federation reported in its 2007 Consumer Intentions and Actions Survey.
     The survey, conducted by BIGresearch in early August 2007, found students and families will spend an estimated $47.3 billion in preparation for college. Student and parent spending on clothing and accessories, laptops, digital cameras and cell phones is expected to increase this year, with electronics in general remaining a big seller.
     Spending on clothing and accessories is expected to increase $7.41 billion from last year’s $5.78 billion.
     Electronic purchases are expected to reach a total of $12.8 billion, while other essentials such as shoes will reach up to $2.96 billion. School supplies such as notebooks, folder and pencils could get up to $3.14 billion.

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"Sicko" Gets Many Talking About Healthcare

     If the potential impact of Michael Moore's documentary "Sicko" was dependent solely on those who have actually seen the film, the result might be a passionate but narrow conversation among the 4 percent of adults who said they watched it, according to a new Kaiser Family Foundation poll.
     But with a big free media bounce reaching beyond the movie reviews to the news and talk shows, the new poll finds that almost half (46 percent) had seen the movie or heard or read something about it a little over a month after its national release. This is not much less than the share of adults (61 percent) who were aware of "An Inconvenient Truth," the documentary on climate change featuring former Vice President Al Gore released in May 2006.
     Among those familiar with "Sicko," 45 percent said they had a discussion with friends, co-workers or family about the U.S. health system as a result of the movie; 43 percent said they were more likely to think there is a need to reform the health system; 37 percent were more likely to think other countries have a better approach to healthcare; and 27 percent said they were paying more attention to the positions of presidential candidates on healthcare. About equal numbers of those aware of the movie thought it accurately represents problems in the U.S. health system (36 percent) versus overstating them (33 percent), and positive impressions of "Sicko" outweighed negative ones 48 percent to 33 percent.

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National Banking Survey Reveals Consumers Not Following Simple Savings Strategies
One-third of U.S. adults unaware of rate paid on their savings account.

     A nationwide survey this month shows that many Americans with both a checking and savings account (71 percent) tend to group those primary accounts at one institution, perhaps out of convenience, when they could keep them separate and potentially earn a higher annual percentage yield on a savings account at a different, savings-focused bank. Additionally, 67 percent of adults with both accounts at the same financial institution said they have never considered the concept of keeping these accounts at separate banks.
     The survey was conducted by Harris Interactive(R) for Countrywide Bank, FSB, the third largest federal savings bank in the U.S.(1) and a member of Countrywide Financial Corp.'s (NYSE: CFC) family of companies.
     According to the poll of adults who have a savings account, most respondents (61 percent) have not established an automatic savings plan, whereby a designated dollar amount is regularly deposited into a savings account. The survey also revealed that 32 percent of adults with a savings account do not know the interest rate on their account, and a full 45 percent know they are earning less than five percent.
     The findings indicate that there are areas where Americans can improve their financial circumstances by using basic savings strategies -- separating their accounts, establishing an automatic savings plan and always seeking the best rate possible, according to Countrywide Bank Managing Director for Deposits and Investment Services Pierre P. Habis.

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Consumer Trends

     Nonfarm payroll employment was basically unchanged in August, and the unemployment rate remained at 4.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported Sept. 7, 2007.
Unemployment
     The number of unemployed and the unemployment rate remained at 7.1 million and 4.6 percent, respectively, in August. Overall jobless rates for the major workers groups were as follows:

• Adult men—4.1 percent.
• Adult women—4.1 percent.
• Teenagers—16.1 percent.
• Whites—4.2 percent.
• Blacks—7.7 percent.
• Hispanics—5.5 percent.
• Asians—3.4 percent, not seasonally adjusted.

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Communications with a Consumer’s Attorney
One of the purposes of the Fair Debt Collection Practices Act (FDCPA) is to protect consumers from abusive and deceptive debt collection practices.

     Under Section 805(a)(2) of the FDCPA, when a debt collector learns an attorney represents a consumer, the collector is required to cease communication with the consumer and instead communicate with the consumer's attorney. A question recently raised in the Seventh Circuit deals with whether a consumer's attorney has a cause of action based on an alleged violation of the FDCPA in a communication between the collector and the attorney.
     The court held "any written notice sent to the lawyer must contain the information that would be required by the Act if the notice were sent to the consumer directly." The court reasoned regardless of the fact that the communication went to the consumer's attorney, the consumer would still be entitled to the information, such as the amount of the debt and the name of the creditor.
     The court also found false representations made to an attorney actionable. The court held that while a sophisticated person is less likely to be misled, it can be as difficult for a lawyer to uncover a false statement as it is for a consumer. Conversely, the court did not find deceptive acts actionable under the FDCPA when made to a consumer's attorney because "a representation by a debt collector would be unlikely to deceive a competent lawyer, even if he is not a specialist in consumer debt law."

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The Hidden Costs of Unethical Behavior
TRozanne Andersen and Leslie Bender discussed how credit and collection businesses can develop a code of conduct.

     In light of the ACA Board’s passage of a new code of ethics for the credit and collection industry, ethical conduct was a frequent topic of conversation at the ACA Convention last week.
     In the Ethical Considerations for the Credit and Collection Industry workshop on Saturday, July 28, 2007, presenters Rozanne Andersen and Leslie Bender discussed why ethical standards are necessary and how credit and collection businesses can develop a code of conduct.
     "The Federal Trade Commission expects this industry to self-regulate," Andersen said.
     Bender outlined several of the hidden costs of unethical behavior:

• Harms client relationships. A recent survey indicated that 80 percent of people purchase goods or services based on perception of a company’s ethics.
• Worsens risks from scandal. Unethical activity can lead to poor publicity, increased civil or criminal penalties and an unrepairable stain on the company’s reputation.
• Worsens employee fraud. Unethical behavior costs employers nearly 20 percent of every percent of every dollar earned and would drop if managers were better role models and leaders. Employee fraud is nearly twice as common as consumer fraud.

     Additional information about the new ACA International Code of Ethics and developing an effective company code of conduct will be featured in upcoming Collector magazine articles.

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