At the Kansas City Library’s Bluford Branch, a gathering of community ‘fraudbusters’

The agency formerly known as the Consumer Financial Protection Bureau has only filed two enforcement actions in the past six months. Its acting director, Mick Mulvaney, opposes the regulation of payday lenders and has threatened to eliminate a public list of consumer complaints about banks, credit unions, and other financial institutions. As a Congressman, Mulvaney supported legislation to close the CFPB entirely, and recently signaled his intention to request a 20 percent slashing of the agency’s 2019 budget.

When the agency responsible for protecting consumers from predatory businesses takes a “business-friendly” turn, who’s looking out for the rest of us?

It’s a patchwork, and many of the essential stakeholders converged on the Bluford Branch of the Kansas City Public Library on Wednesday, June 13, to talk about a way forward. It was an apt setting: the Bluford branch is an anchor on the east side of the Kansas City, a predominantly African American community. As the 50 or so meeting attendees learned on Wednesday, African Americans are twice as likely than whites to fall prey to consumer fraud.

That statistic was but one of dozens that emerged from the conference, which was organized by the Federal Trade Commission and moderated by the veteran crusading journalist Sandy Close, formerly the executive director of Pacific News Service and now with Ethnic Media Services.

Kansas City is the 22nd city where the FTC has partnered with Ethnic Media Services to convene media reporters together with a broad swath of individuals from diverse backgrounds and agencies, among them representatives of the Missouri and Kansas attorney general’s offices, the US Postal Service Inspector’s office, legal aid services, local chambers of commerce, community service organizations, the KCK mayor’s office, banks and more. All had gathered to discuss, as the FTC’s midwest director Todd Kossow put it, “the massive scope of consumer fraud in the United States.”

Kossow wasn’t kidding. The numbers boggle the mind. Consider:

*A 2011 study found that 11 percent of Americans were victims of fraud in that year alone.

*The Missouri attorney general’s office received more than 115,000 complaints of fraud in 2017 alone, and nearly 50,000 so far this year.

*The FTC received more than 11,000 consumer fraud complaints in the KC metro area in 2017, and a third of all fraud reports in the Midwest come from Kansas or Missouri — with most concentrated in the cities of Wichita, Topeka, Lawrence, and Kansas City.

Jon Trotter, assistant attorney general for consumer protection in the Kansas AG’s office, ran through the different strains of scam.

“The grandparent scam [where grandparents are targeted by phone calls from people purporting to be their grandchildren] seems to change almost every week,” Trotter said. “Online dating scams are also on the rise, and that’s one where it can be very difficult to convince someone that it’s a scam. The most common scams we saw in 2017 were for card services, computer repairs, car warranties, and even sweepstakes and lottery scams. You tend to think it’s common knowledge that those are scams, but you’d be surprised.”

Also on the uptick: fraud targeting immigrant communities, such as ‘notario’ scams, where imposters contact immigrants, say they’re from the consulate, and tell them their papers aren’t in order and to send money to resolve it.

“Every time there’s a change in immigration policy, scammers come out of woodwork to scam immigrants,” Close said.

Notario fraud has historically been viewed as a big-city problem; immigrants tended to cluster in large American cities like New York, San Francisco, and Los Angeles. But in the age of the internet, and as immigrant communities move more inland, that’s changing. Kansas is full of towns where the immigrant population has risen dramatically over the past few decades, and the scams follow.

“We’ve got a case in Chanute, Kansas, right now,” Marilyn Harp, executive director of Kansas Legal Services, said. “People are spending a lot of money on notarios.”

“We see those teamed up with deportation scams as well,” Trotter added.

Lynn Stoppy, assistant AG for consumer protection in Missouri, said her office has seen a rise in immigrant-targeting scams among the large Bosnian population in St. Louis.

“This [notario scams] is definitely an area where we need to see more victims reporting their experiences,” Kossow said. “We don’t get a lot of these reports at the national level.”

Stoppy echoed the importance of calling in these scams.

“Reporting is the most important thing I hope you guys take from this today,” she said. “Spread this number to friends and family and the community in Missouri. It’s 1-800-392-8222. That’s our consumer hotline. We have Spanish-speaking operators as well. I can’t open a case from somebody just telling me there’s a scam. You have to report it, either through our hotline or at ag.mo.gov under the tab that says ‘Consumer Complaints.’”

The elephant in the room — the ongoing gutting of a CFPB under regulatory capture — went largely unaddressed. Kathleen Daffan, an assistant director at the FTC, told me after the meeting that there’s always been a lot of overlap between what the FTC’s division of financial practices does and what the CFPB does.

“We’ve been working with the CFPB ever since it came into existence, and still do to make sure there’s a sensible division of resources and that we are doing the most we can for consumers,” Daffan said. “So we’re continuing to do that, and we hope that the CFPB will continue to do the great work it’s been doing.”

When the topic turned to the exorbitant interest rates payday lenders are permitted to charge in Missouri — the average annualized rate of a payday loan in the state is an astonishing 452 percent — Joseph Dandurand, a former judge and deputy attorney general who is now the director of the Kansas City chapter of Legal Aid for Western Missouri, seemed to sum up the overarching sentiment of the gathering, one of determination in the face of a frustrating set of facts.

“There’s only one set of folks that can change the laws on payday lending in the state of Missouri, and none of them are in this room,” Dandurand said, referring to Show-Me State lawmakers. “That’s why advocacy is important.”

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