Consumer Protections

The worst consumer abuses often target low- and moderate-income workers and people of color. These unfair and sometimes unlawful practices can impede economic opportunity, destroy financial security and even cause homelessness.

The Justice Center fights to stop these abuses and to increase consumer protections through legislative advocacy and litigation, with particular focus on the following areas:

• Predatory Mortgage Lending that traps people in loans they cannot afford
• Abusive Loan-Servicing Practices that increase a borrower’s debt and can lead to foreclosure
• Unfair Evictions and other abusive practices targeted at renters
• Payday and Small-Loan Consumer Lending that trap low-income families in a cycle of debt
• Affordable Access to Utilities, such as sewer systems and broadband internet, for low-wealth communities
• Improved Manufactured Housing with a fairer sales process and quality installation

Recent Victories

In 2008, the Justice Center helped to secure passage of three bills that will help homeowners avoid foreclosure. One creates a program to assist sub-prime borrowers. The second prevents lenders from giving bonuses to mortgage brokers for steering borrowers into more expensive loans, and the third gives the NC Commissioner of Banks regulatory authority over mortgage servicers, the companies that process mortgage payments for lenders.

The abusive practices of some mortgage servicers have long been on the Justice Center’s radar – well before the media was paying attention. In 2007, the Justice Center led the effort to pass legislation that makes it harder for loan servicers to charge improper and/or illegal fess, makes the foreclosure process fairer, and protects the rights of homeowners to sue over illegal lending practices.

The Justice Center, with the help of other consumer advocates, succeeded in getting payday lenders to leave North Carolina years ago, but the effort to get money back for consumers who were charged illegally high interest rates continues. In 2008, that effort resulted in an important ruling from the NC Supreme Court. In the case of Tillman v. Commercial Credit, the court agreed with the amicus brief filed by the Justice Center and several allies, finding that "mandatory arbitration agreements" in the lending contracts were unfair, unconscionable and could not be enforced. Such clauses require consumers to pursue claims against the lender individually (no class actions) and through an arbitrator, who would charge hundreds of dollars per hour to hear a case. Arbitration clauses are ubiquitous – in contracts for everything from credit cards to summer camp – so this ruling could affect every consumer in North Carolina. Meanwhile, as a result of this decision, the cases against the payday lenders continue.

Justice Center staff members specializing in Consumer Issues: