Articles from March 2021

The need for early access to your wages is not a new concept. Early wage access programs might be helpful to workers with unexpected expenses because it is an alternative to high-cost payday loans.

Basically, these programs allow workers to access wages they have already earned ahead of the regular payday — much like payday loans.

If providers charge workers high fees or provide early access to such an extent that it allows what ends up just like repeated balloon-payment loans, it is not so helpful.

Early wage access might be a good thing when used occasionally,  but if there are charges, interest and other fees, they can add up, and result in a situation much like what we see in payday loans.   

The National Consumer Law Center has outlined the differences in the types of earned wage access services as follows: 

Employer-based or direct-to-consumer
Employer-based services operate through a contract with the employer that allows the program to access time-and-attendance records to determine actual earned wages.

Direct-to-consumer programs have methods of estimating earned wages but not with certainty, and they do not need employer approval.

Repayment method
Employer-based services usually are repaid by payroll deduction or other mechanisms through the employer.

Direct-to-consumer and some employer-based services debit bank accounts and can trigger nonsufficient funds (NSF) or overdraft fees when the timing or estimate of the paycheck is off.

Fees. Some providers charge no fees to the worker.

Fees in other programs range from $2.50 per day to $6 per month.

They can be per advance, per pay period, or monthly for a package of services.

Fees may be higher if you want the wages right away.

Some direct-to-consumer models actually rely on purportedly voluntary “tips” but may make it difficult not to tip.

Some of the other options are frequency of access and limits on how much you can access

Frequency of access. Many employer-based services limit access to once or twice a pay period, but others may allow access on a daily basis.

Access limits. Many services OR employers limit access to 50% of gross or net earned wages, ensuring that the worker will receive at least half of their paycheck on payday.

Others allow (and even encourage) “use-it-or-lose-it” access up to 100% of wages earned in a given day.

Although many providers claim their programs aren’t providing loans, if they are fee based and not restrictive, a worker can end up in a cycle of debt much like a payday loan.  The only difference in the early wage access program and living paycheck to paycheck is that your paycheck might get reduced more and more with each pay period with an early wage access program.  State and federal lending laws include fee and rate limits and require certain disclosures. Providers may claim their program is not providing loans and not subject to those laws that protect consumers.

NOTE:  A bill (S. 532) was recently introduced in South Carolina focused on allowing the employer-based model of early wage access programs to operate here.  Providers would have to register the S.C. Department of Consumer Affairs and post a bond. The Department would receive complaints from consumers as they do in other consumer matters. Under the law, the early access services would not be considered a form of lending.

There are two types of warranties when you purchase a new or used car.  There are express warranties and implied warranties. The express ones apply to specific items or the performance of the car. They can be written or verbal but they have to be “expressly” communicated to the buyer. Most express warranties are in writing and probably come in a special package. But all express warranties don’t have to be mentioned in a special package.

Express warranties could be created by just a simple description of the car like it’s a 1995 Ford Explorer. The dealer or  manufacturer is warranting that it is the make and model the contract says it is. If in fact  that car is a different model or different model year, then the express warranty has been breached.

A verbal representation by the dealer or the dealer’s salesman can be an express warranty. You should not automatically assume it is an actual warranty because a representation by a salesman could be what is called “puffing”.  For example, “this is a great car, it runs really smooth”. That’s not really any specific representation. So, the statement is not a warranty. If the salesman makes a more specific statement, it can be difficult to prove that the verbal statement was actually made. Also, the written warranty will often state that the warranty is the only warranty and any verbal representations are not part of the contract or part of the warranty.

Almost every new car and most used cars, come with some type of written warranty so you should be sure to take the time and effort to read and understand exactly what is being covered and not covered under the warranty. Take note of who has the duty to make warranty repairs. Is it the dealer’s duty or the manufacturer’s duty? That’s found in the warranty.

You should note the difference between a warranty and an extended service contract. Sometimes the difference in these can be confusing.  A warranty and a service contract might require someone to repair problems with the car, but they are just not the same thing. A warranty is really a promise about specific items and the performance of the car. It becomes part of the sale. An extended service contract is a separate contract that is sold for an additional amount of money.

Implied warranties do apply to a sale.  They are not expressed verbally or in writing but are implied by law. There are three types: the warranty of title, the warranty of merchantability and the warranty of fitness for a particular purpose. The warranty of title says that the dealer or manufacturer has good title and they can legally transfer that title to the buyer.  Also, it warrants that there are no liens on the car that the buyer hasn’t been told about. With the implied warranty of merchantability, the dealer or manufacturer warrants that the car is fit for the ordinary purposes for which cars are used. In other words, it is fit for driving. For example, a broken automatic door lock may not be considered as a breach of that warranty of merchantability because the car is still in good driving condition.

Lastly, the implied warranty of fitness for a particular purpose. In that situation the dealer or manufacturer by implication warrants or promises that the car is fit for a special purpose. For this warranty to come into play the seller must know what specialized purpose the buyer has for the car.  The buyer is going to rely on the dealer’s skill or judgment in recommending that the car is fit for that particular purpose.

Most dealers and even some manufacturers have clauses in their contracts that try to limit warranties or even prevent them from being given at all.  This is what we call a disclaimer. The law does allow the use of disclaimers, but they have to do it properly.  For example, express warranties cannot be disclaimed at all.  Implied warranties of fitness for particular purpose can be disclaimed, as long as the contract provides clearly and conspicuously that all implied warranties of fitness for a particular purpose are disclaimed.

So be sure to read all the warranties and disclaimers in a contract before you sign it.  Of course, be especially careful when buying a used car because the warranties are most likely limited or completely disclaimed in the sale of a used car. Federal law requires dealers to give basic warranty information on the window sticker of a used car as well as a new one.  If the window sticker says the car is being sold “as is”, the dealer is giving no warranty at all. That means that the dealer does not even warrant that you could drive the car off the lot. So be very careful when you are buying a car that has a sticker that says it’s being purchased “as is” because you’re really going to have little, if any, recourse against the seller.

People often think they have 3 days to change their mind on any purchase. It’s often called the right to cancel or the right of rescission. We think of it as buyer’s remorse.  The Federal Trade Commission (FTC)  regulations refer to it as the cooling off rule.

This especially comes up in car sales. Many states just like South Carolina do have laws that will give the buyer the right to cancel on certain types of purchase contracts but it’s very limited. The one most often misunderstood is the car sale. The three day right to cancel does not exist in the purchase of a car or other vehicle. The rule exists because consumers will sometimes get caught up in a persuasive sales pitch and make a purchase they later regret. 

Under South Carolina law there are specific, though limited, circumstances where the right to cancel arises: door to door sales, sale of a health club or gym membership, refinance of a home mortgage and the purchase of a vacation timeshare unit. Let’s take a closer look at these.

1. Any kind of service or product that was sold to you at your home by someone coming to your door and selling it to you is subject to your right to cancel the purchase.  You’re entitled to a full refund if you notify the seller that you are cancelling the sale within three business days. But that doesn’t apply when you bought the item in the store or online and it’s delivered to your home. That is not considered a door to door sale. Likewise, if you go to the premises of the business and you buy it from them there and they are going to deliver it to your house that is not a door to door sale and the right to cancel within three days doesn’t apply.
2. Gym and health club memberships sold in South Carolina are subject to a three day right to cancel. That right of cancellation applies no matter where the transaction purchasing the membership takes place.
3. If you refinance a mortgage on your primary residence you have a three day right of cancellation. That doesn’t include a second home or commercial property.
4. Finally, in South Carolina the purchase of vacation timeshare units are subject to an even longer right to cancel of five days.

The FTC cooling off rule which is essentially the same, provides the three day right to cancel a sale that’s made at your home, your workplace, a dormitory, or a temporary location. Keep that in mind if you go to a sale in a hotel or motel room, convention center, fairground and so on, you do have the right to cancel sales at those type locations. Certain types of sales can’t be canceled, even if they take place in places normally covered by the Rule. The Cooling-Off Rule does not cover sales that are:

• under $25 for sales made at your home;
• under $130 for sales made at temporary locations;
• for goods or services not primarily intended for personal, family or household purposes. (The Rule applies to courses of instruction or training.);
• made entirely online, or by mail or telephone;
• the result of prior negotiations at the seller’s permanent place of business where the goods are sold regularly;
• needed to meet an emergency;
• made as part of your request for the seller to do repairs or maintenance on your personal property (purchases made beyond the maintenance or repair request are covered).

Also exempt from the Cooling-Off Rule are sales that involve:

• real estate, insurance, or securities;
• automobiles, vans, trucks, or other motor vehicles sold at temporary locations if the seller has at least one permanent place of business;
• arts or crafts sold at fairs or places like shopping malls, civic centers, and schools.

How do you cancel?

You don’t need to have a reason for cancelling. You have the right to change your mind.

To cancel the sale, you just need to sign and date one copy of a cancellation form that should have been given to you at the time of the sale. But if they didn’t give you a form you can just write a cancellation letter. The notice needs to be mailed to the seller and postmarked within three business days of the sale. That means weekdays and Saturdays but, not Sundays and federal holidays.

If you cancel the purchase, that seller has 10 days to cancel and return any check you signed, refund all your money and tell you whether any of the products that you still have will be picked up and return any trade-in that you may have provided in a particular sale.

Within twenty days the seller must either pick up any items you have or reimburse you for mailing expenses if you agree to send the items back by mail.

If you did receive the actual goods from the seller before you did the cancellation, you do have to make them available to the seller in as good a condition as when you got them.

If you think a seller has violated the FTC’s cooling off rule, you can file a complaint at consumer.ftc.gov and here in South Carolina you can file a complaint for violations of state law with our S.C. Department of Consumer Affairs and that is at consumer.sc.gov.