The story Web Playgrounds of the Very Young by Brooks Barnes in today's New York Times describes the way that the Web 2.0 interactive social networking version of the Internet has become a newer, more powerful version of the old Saturday morning cartoons for powerful media companies to adapt and indoctrinate kids into commercial culture:
Media conglomerates in particular think these sites -- part online role-playing game and part social scene -- can deliver quick growth, help keep movie franchises alive and instill brand loyalty in a generation of new customers.[...]"Get ready for total inundation," said Debra Aho Williamson, an analyst at the research firm eMarketer, who estimates that 20 million children will be members of a virtual world by 2011, up from 8.2 million today.
The sites allow the children, variously, to create avatars, take care of brand name stuffed animals or penguins that come to life on the computer, spend points or even real money to buy things for their penguins, etc.
The driving force behind this exploding media culture is the exponential rise in children's spending power during the past several decades, prompted in part by the very changes in family structure that are confounding the role of parents. Never before have children and youth played such a powerful role in the marketplace. The Internet emerged as a new mass medium in the midst of an already highly commercialized children's culture. An enormous advertising and market-research industry was ready and waiting to adapt its strategies to the Digital Age. With the promise of e-commerce profits, "Echo Boomers," "the New Millennials," and "Generation Y" became prized consumers in the growing new economy.
The big U.S. papers all have short stories reprising a longer story -- SFO seizes drug giants' documents -- that ran in the London Sunday Telegraph reporting that the UK's Serious Fraud Office (we need one of those) is looking into whether Big Pharma's GlaxoSmithKline and AstraZeneca were involved in illegal "bribes allegedly paid to Saddam Hussein's deposed Iraqi regime." The companies deny all and say they've been cooperating since the Volcker report on the "oil-for-food" scandal listed them and thousands of other firms. From the Telegraph:
The report claimed investigators had uncovered evidence to suggest AstraZeneca had paid $162,000 (£81,000) in bribes to get three contracts worth $2.9m, while GlaxoSmithKline was named as having paid $1m to win nine medicine contracts valued at $11.9m. Both companies vehemently denied the claims at the time.
Oregon's Attorney General Challenges Record Industry Tactics on Downloads
In a story today -- In the Fight Over Piracy, a Rare Stand for Privacy -- by Adam Liptak, the New York Times reports on efforts by Oregon Attorney General Hardy Myers to challenge the bludgeoning legal tactics used by the Recording Industry Association of America in its lawsuits against illegal music file downloading. Essentially, RIAA has insisted that Internet Service Providers (ISPs), including universities, act as its agents and give up information on their subscribers, including students, or pay damages themselves. Now, on behalf of the University of Oregon, Myers is challenging whether the investigative demands and other tactics used are legal under Oregon privacy and licensing laws. From the NY Times:
In the past four years, record companies have sued tens of thousands of people for violating the copyright laws by sharing music on the Internet. The people it sues tend to settle, paying the industry a few thousand dollars rather than risking a potentially ruinous judgment by fighting in court.[...]"Certainly it is appropriate for victims of copyright infringement to lawfully pursue statutory remedies," Mr. Myers wrote last month. "However, that pursuit must be tempered by basic notions of privacy and due process."
A whole lot more information, including court filings, about the case is available at attorney Ray Beckerman's blog. The tech-news website Ars Technica has more. The Electronic Frontier Foundation has helped ISPs and individuals sued by RIAA. Its archive on RIAA vs. Verizon includes a number of interesting documents.
Dutch call for open-source government, Microsoft fumes
According to the article Dutch gov blows open standards raspberry at Microsoft in The UK's Register newspaper, software giant Microsoft is upset that the Netherlands has approved legislation that will require government agencies to use open-source, non-proprietary software, starting in May 2008.
The Netherlands economic affairs ministry said last week that parliament had approved a plan that will mandate the use of open standards and open source software government-wide. It has also set an ambitious May 2008 target by which time all national agencies will be expected to use open software. State and local government organisations will be required to adopt the same rules by 2009.[...]Under the new open standards and open source policy, agencies will need to justify their use of propriety software where there is no obvious alternative. The new rules will be enforced by an "open source police" unit and an open source hotline.
Massachusetts has been leading similar efforts in the U.S. While open source will save governments money on expensive software licenses, there are more important reasons to use it. As governments become e-governments, it is important that government forms, licenses, documents and archives be open-able and usable by any citizen or business on any computer platform.
A few end-of-the-year odds-and-ends--library books, edgy clamshells, lotteries and Sallie Mae
The New York Times has an editorial Throwing the Book at Them rightly questioning the thinking, if any, behind the Queens (NYC) Library's use of a debt collector to collect overdue library fines. Fail to pay, you're reported to the credit bureau and your credit score takes a hit: Late Library Books Can Take Toll on Credit Scores. Of course, as the editorial correctly notes:
We wonder if the officials behind this policy have ever tried to repair a bad credit report -- an experience that rivals Dante's "Inferno."
This holiday season, did you run into any of what the Denver Post calls: Confounding gift packaging? You know, the tamper-proof, and probably bullet-proof, clamshell plastic that requires use of knives or scissors but often results in injury to the present-opener?
Dr. Michael Hunt, emergency physician at Swedish Medical Center, said he has seen injuries from clamshell packages. Lacerations from using a knife are most common. "People get frustrated and vigorous," he said. "That's when the mishaps occur. People don't appreciate the integrity of the packaging. You become rushed and not slow and considered in your approach."
The blog-o-sphere is filled with complaints, why hasn't anything been done? This blog notes that it isn't only the bleeding, it's the wastefulness that consumers don't like.
We always knew that the Poor Pay More. for one thing, it is well-documented that predatory payday lenders make the bulk of their profit from repeat users. Now comes the New York Times with its latest on state-run lotteries, The $50 Ticket: A Lottery Boon Raises Concern:
Whatever the reasons, state lottery officials and the companies they hire to run the games appear to be concentrating on the heaviest players.
And from the feeding at the public trough category, I realize the economy is in a slide. But really, how do you lose money in a killing-fish-in-a-barrel business--making government guaranteed student loans? Even worse, what if that profit barrel was handed to you on a silver platter as an instant success after being propped up on the backs of the taxpayers for many years as a subsidized government-sponsored enterprise? Congratulations to the now-for-profit privatized Sallie Mae for finding a way to put a big leak in the barrel. From the Washington post story
by David Hilzenrath: The planned stock sale is part of an effort to extricate the company from a financial bind -- another link in a chain reaction of trouble set off by the collapse of negotiations to sell the company and the collapse of its stock price. And from the New York Times story Sallie Mae to Sell Stock to Pay Off a Failed Bet by Floyd Norris:
Sallie Mae, the troubled student loan giant, said Wednesday that it would raise $2.5 billion by selling stock in the public market and would use most of the money to pay off a disastrous bet that the company made on its common stock price.
$27,200 leaks out of bottom of hot tub due to mandatory arbitration
Unfair arbitration clauses and the pain and suffering faced by employees, small farmers, franchisees and consumers are at least getting a day in the sunlight if not yet a day in court. In today's latest arbitration story in the Baltimore Sun column Consuming Interests, Dan Thanh Dang reports that Mandatory arbitration stacks deck against you:
"This is the single most important issue for consumers today," [Paul] Bland [staff attorney for Public Justice] said. "These arbitration clauses are popping up everywhere and the problem is that very, very few people are conscious of the issue. The vast majority of Americans don't read the fine print of contracts. Companies know that, rely on that and take advantage of that by slipping these clauses into the fine print." " ... When you sign a contract with an arbitration clause, you forfeit your right to sue. If more people knew it stripped them of their rights, there would be a lot more angry people."
Her story goes on to explain the problem faced by Earl Ross, trapped in an arbitration nightmare after an inept hot tub installer flooded his house:
Earl Ross, a 43-year-old graphic artist, found that out the hard way a couple of years ago after a contractor royally mucked up a hot tub installation at his Owings Mills home. Ross paid the installer almost $8,000 up front to do the job, but when it was completed, Ross said he came home to a spa half-full.
"It leaked about 400 gallons of water every day into the foundation of my house," Ross said. "I had to hire someone else to redo the job. The second said the first guy didn't install a pipeline correctly. The seeping water damaged my stairwell and cinder blocks, which I paid a waterproofing company $7,200 to repair. "I also had to pay the second company $8,000 to fix the first guy's mistake," Ross said.
The story goes on to explain why arbitration is now being included in nearly every one-sided contract (ever try to amend a bank account or credit card or employment contract?):
Back in the day, the Federal Arbitration Act was applied only to settle disputes between two businesses. Instead of duking it out in expensive court battles, the two Goliaths would let a seemingly neutral third party judge the quarrel. In 1995, though, the U.S. Supreme Court expanded the act's scope to consumer cases. Soon, banks started adopting the clauses into contracts. In 1999, credit card companies followed suit. By 2001, all long-distance and cellular carriers joined the bandwagon, Bland said. What started off as an admirable concept to avoid a proliferation of lawsuits has morphed into a system that stacks the deck against consumers.
And we must allow state legislatures and state attorneys general to help police the product safety marketplace. We need 51 consumer cops on the beat, not just one. Congress must listen to the American families who have stopped buying toys because they've lost confidence in their safety. The best gift Congress can give America's littlest consumers this year is to better protect them from dangerous toys.
Former Bush economic adviser Greg Mankiw, now back at Harvard but also advising candidate Mitt Romney, has a column How to Avoid Recession? Let the Fed Work in today's New York Times. Mankiw reiterates all the old money-supply arguments and says in regard to the possible "painful" economic downturn we face that "Sometimes, bed rest and wait-and-see are the best we can do."
The problem, of course, is that Mankiw sticks to his Economics 201 discussion of the Fed's central bank role and fails to admit that Alan Greenspan and later, Ben Bernanke, may have mis-played the dot-com and mortgage bubbles. Worse, Mankiw doesn't even discuss that the Fed has other roles than monetary policy that it failed to fulfill. While we can argue about monetary policy choices, there is certainly no argument that the Fed has never performed its consumer protection role adequately. The Fed has long had discretionary authority to rein in unfair lending practices. Since the Fed is loathe even to implement Congressionally-mandated consumer protection rules, you can see the problem in relying on its discretionary authority.
As the Center for Responsible Lending pointed out last week when the Fed finally reacted to the crisis by proposing new rules under 1994 high-cost loan legislation:
An unregulated market has led to irresponsible lending practices where lenders often don't even assess ability to repay. The resulting high rate of foreclosures due to this abusive lending may well bring this country into recession--yet the FRB has chosen to issue rules that leave out many loans or will be unenforceable.
At least the Times also runs a series of letters-to-the-editor today that are highly critical of the Fed. As former SEC Commissioner Bevis Longstreth says:
By averting its eyes to both the dot-com and housing bubbles, the Fed lulled even professional investors into believing that commonplace risks could be eliminated through "new era" designs.
It is high time for the Congress to conduct additional oversight of the adequacy of the so-called consumer protection efforts of the Fed and its federal financial regulatory partners, including the OCC.
NYT: Lead isn't the only chemical in kids' products
In her story Everyday Items, Complex Chemistry in today's New York Times, reporter Amy Schoenfeld points out that some U.S. firms, including Dell, are emulating Europe's and California's precautionary principle approach to chemical hazards in their products, no matter where they are sold. A flack for the American Chemistry Council, formerly the Chemical Manufacturers of America (but that name sounded bad, even though it was accurate), predictably whines in the story, but scientists she interviews have a more reasoned approach:
"We have enormous gaps in our understanding of how these chemicals affect health and the environment." said Michael P. Wilson, a public health scientist at the University of California, Berkeley. "And where we do have information, we see cause for concern."
She goes on to speak with Joel Tickner:
[...]director of the chemicals program at the Center for Sustainable Production at the University of Massachusetts, Lowell. "For some chemicals we may never be certain that they cause harm."
In our November Trouble In Toyland report, we identified not only toys that pose the threat of lead exposure, but also toys and children's products that threaten exposure to chronic chemical hazards including xylene, toulene and phthalates, which are a class of chemicals that cause long-term developmental and other disorders. Recently, Environment California (the new home of CALPIRG's environmental work) helped pass a law banning toxic phthalates in children's products. Smart firms will comply worldwide with the strongest health and safety laws. Here is more from the PIRG-backed Transatlantic Consumer Dialogue or TACD.
The CPSC has recalled the panda and cat "Super Magnets" identified in PIRG's November 2007 Trouble In Toyland report. We found many of the packages had loose, tiny magnets floating inside the package. In others, the magnet from one toy would pull the magnet right out of the other. These are not refrigerator magnets that barely hold a one-sheet of paper shopping list. I can hold two of these on opposite sides of my finger. These powerful small magnets can attract to each other across intestinal walls, causing perforations and blockages. At least one little boy, Kenny Sweet, is known to have died from swallowing small powerful magnets; another two dozen have had emergency surgery. Previous recalls involving powerful magnets include Rose Arts Magnetix building toys and Mattel Polly Pockets and Barbie and her dog Tanner dolls. As passed by the Senate Commerce Committee, S. 2045 to reform the CPSC would subject small powerful magnets to mandatory third-party testing; unfortunately, the House-passed HR 4040 would not. One of our primary goals is to make sure that final legislation signed into law includes the Senate provision.
US judge rejects airline preemption claim in NY case
On Wednesday, U.S. district judge Lawrence Kahn ruled against (decision) the Air Transport Association in its lawsuit seeking to overturn New York State's first-in-the-nation airline passenger bill of rights law, holding that federal law does not preempt New York from granting passenger rights. Excerpt:
The field of health and safety is one of the most established areas of state police power.[...] Like regulations governing blood collection, or the protection of groundwater, the Passenger Bill of Rights is an exercise in state protection of the public health. Fresh air, water, sanitation and food are necessities in the extreme situation in which this act applies. It threatens the public health to contain people on grounded airplanes for hours without these necessities, particularly, though not exclusively, if passengers include diabetics, young children, the sick or the frail. Because the Passenger Bill of Rights involves the historic police power of New York State, Plaintiff bears a heavy burden in seeking to overcome the presumption against preemption. [citations omitted]
In a victory for air travelers, a federal judge in Albany upheld on Thursday a state law that would penalize airlines that fail to provide adequate services to passengers trapped on the tarmac for more than three hours. The decision, which the Air Transport Association, an airline industry group, opposed, paves the way for other states to write similar laws. It also means that beginning Jan. 1, airlines operating in New York can be fined up to $1,000 a passenger if they do not supply water, fresh air, power and working restrooms during lengthy delays.
The Coalition for an Airline Passengers' Bill of Rights (flyersrights.org) intervened on behalf of the state. This is a big victory, but the case will likely continue on appeal.
USA Today: FTC's lax credit bureau regulation adds to subprime woes
On Monday, Byron Acohido and Jon Swartz had a story in USA Today -- FTC under fire as credit bureaus sell consumers' data -- explaining that the FTC is being blamed for exacerbating the subprime crisis by allowing credit bureaus to aggressively market so-called lead generator or trigger lists. Excerpt:
In February, the National Association of Mortgage Brokers lambasted the FTC for giving the credit bureaus tacit approval to keep selling listings -- called "trigger lists" -- containing personal and financial data of prospective borrowers. Some unscrupulous lenders used trigger lists to contact people who recently filled out a loan application, and then pitched them subprime mortgages, higher-priced loans aimed at people with spotty credit histories but also marketed to borrowers with good credit.
Also see my previous blog and this New York Times blog which describe the problem through the lens of Lowermybills.com, an Experian subsidiary selling these lead generator or trigger lists based on supposedly private consumer credit reports. Lead generator lists appear to take advantage of the so-called pre-screening exception that allows the sale of credit reports for credit or insurance marketing without an actual credit or insurance "permissible purpose." In the view of many, the lists do not meet the criteria to qualify for the special exception. But the FTC claims that they do, in some very thin letters and fact sheets lacking any buttressing legal authorities.
Incredibly, the FTC, the credit bureaus, and the subprime mortgage crisis are also linked to the Internet advertising bubble. Lowermybills.com was and may still be one of the biggest web advertisers.
You do have a right to opt-out of pre-screened lists. You can call 1-888-5-OPTOUT or find out more about doing so by mail or on the web from the FTC.
Stephanie Mencimer of Mother Jones has a detailed follow -- Cheney: No Justice for Jamie Jones -- on the alleged gang-rape of Jamie Leigh Jones by fellow Halliburton/KBR employees while she was stationed in Iraq. The story provides more details about Halliburton's employee contract limiting her legal rights and forcing her into arbitration instead. Excerpt:
At the time of the alleged attack on Jones, KBR was a subsidiary of Halliburton, the behemoth military-contracting and oil-technology firm. (KBR was sold off earlier this year.) So Jones is covered by the Halliburton dispute-resolution program, which was implemented when Cheney was Halliburton's CEO. The system bears the markings of Cheney's obsession with secrecy and executive power. On his watch, Halliburton, in late 1997, made it more difficult for its employees to sue the company for discrimination, sexual harassment, and other workplace-related issues.
The FTC has voted 4-1 not to block the Google-DoubleClick merger on competition grounds, denying a petition from U.S. PIRG, the Center for Digital Democracy and EPIC. Concurrently, the FTC staff have issued a call for comments on a proposed set of "possible self-regulatory principles" on behavioral advertising. In our view, this merger's tremendous transformative impact on online markets and the well-evidenced privacy harms that the Google-DoubleClick combination create should have resulted, at a minimum, in conditions if not denial. We're also disappointed that the full FTC didn't understand, as dissenting Commissioner Pamela Jones Harbour did, that this merger has numerous anti-competitive network effects. We'll read the proposed privacy rules more closely before we comment further. Here is an excerpt from our Center for Digital Democracy colleague Jeff Chester's statement:
By permitting Google to combine
the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus. The FTC is supposed to protect the privacy of Americans in the digital age. The excuse offered by the majority of the commission --that consumer privacy can't be addressed by current antitrust law--reveals a lack of leadership and determination to protect U.S. consumers. It's clear that this merger--and the ones that follow--will be about companies creating the twenty-first-century's equivalent of railroad, steel, and oil monopolies in the past. The FTC was created to protect Americans from the dangers of such monopolies, something the agency failed to do today.
Commissioner Jon Leibowitz concurred with the majority, but described several competition and privacy problems in his separate statement, in which he suggests that opt-in as the default for tracking cookies and other privacy invasive tools may be the best solution. We'd agree.
Bush EPA denies California, 16 others right to control emissions
In another move that shows its political philosophy has more to do with whatever powerful interests want, rather than long-standing conservative principles, Bush EPA administrator Stephen Johnson denied Clean Air Act waivers that would have allowed California and 16 other states to impose PIRG-backed stricter clean cars global warming standards. From the story E.P.A. Says 17 States Can't Set Emission Rules by John Broder and Felicity Barringer in the New York Times:
The E.P.A. administrator, Stephen L. Johnson, said the proposed California rules were pre-empted by federal authority and made moot by the energy bill signed into law by President Bush on Wednesday. Mr. Johnson said California had failed to make a compelling case that it needed authority to write its own standards for greenhouse gas emissions from cars and trucks to help curb global warming.
Our previous blog on the clean cars litigation. Here is Environment America's release on the passage of the energy bill (Environment America is the new home of U.S. PIRG's environmental work.) More information from Environment Maryland on clean cars.
ATT's naked DSL offering continuing to get complaints
Michael Sorkin, who writes the Savvy Consumer column for the St. Louis Post-Dispatch, points out in his story Naked DSL arrives -- but you'll get a better price next month that AT&T continues to do a sloppy, self-serving job offering the low-cost naked-DSL (no phone package required) broadband product that was required by the FCC as a condition of its competition-eliminating purchase/merger with BellSouth:
AT&T finally is offering "naked" Internet service to people without the company's landline phone service. Meanwhile, scores of angry customers say AT&T is still making it hard, if not impossible, to sign up for two nonadvertised money-saving services: $10 a month DSL and "uSelect3," one of the company's cheaper phone plans.
Today the House passed its version of CPSC reform on a 407-0 vote. Excerpt from our joint statement with other leading consumer groups:
We appreciate the hard work that has gone into crafting H.R. 4040, the Consumer Product Safety Modernization Act, and thank the House Energy and Commerce Committee and the House Leadership for their prompt action today. Our current product safety system is in dire need of comprehensive reform, and this bill represents the first concrete effort to help protect consumers while addressing industry concerns.[...]We also commend both houses for the anticipated final passage later today of provisions in the Omnibus package providing CPSC with an $80 million budget for FY08 -- $17 million more than the Commission received last year, and $16.75 million than the Administration's request.
The Senate will not act on its CPSC bill, S 2045, this year. Senator Mark Pryor (D-AR), our lead Senate sponsor, has pledged early action in 2008. Nevertheless, the increase in CPSC appropriations to $80 million is a major holiday present for America's littlest consumers. That will become law as soon as the president signs the omnibus package.
The House bill reauthorizes the CPSC for three years, increases its civil penalty authority to $10 million, lowers allowable lead levels in children's products significantly and requires testing of all children's products subject to mandatory rules.
Our support for the House bill was tempered by the fact that the Senate Commerce Committee-passed bill was significantly stronger although we expect it to be modified and weakened in floor negotiations. Nevertheless, the House did get to the goal line first. Measures that are stronger in the Senate bill include the following: higher civil penalties for wrongdoers, better limits on secrecy of CPSC information, stronger language on preemption and attorney general enforcement and higher funding authorization for CPSC.
Key provisions that only appear in the Senate bill include a provision extending new testing requirements to all toys, including those under voluntary standards (such as small magnets and strangulation hazards) and a new provision protecting whistleblowers.
The House bill includes a provision requiring third party testing of infant and durable products (such as cribs); the Senate bill does not.
FCC chief Kevin Martin jammed his proposal to weaken media newspaper/television cross-ownership rules through a sharply divided FCC today on a 3-2 vote. Longtime consumer champion and dissident FCC Commissioner Michael Copps issued a long and extremely critical statement (excerpt):
Let's get beyond the weeds of corporate jockeying and inking up our rubber stamps for a new round of media consolidation to look for a moment at what we are not doing today. That's the real story, I think--that the important issues of minority and female ownership and broadcast localism and how they are being short-changed by today's rush to judgment.
Previous blog. Ben Scott of Free Press issued a statement disputing Martin's claims that consumer groups, including Free Press, U.S. PIRG, Consumers Union and others, somehow supported the actions we opposed.
Barney Frank: Fed is no consumer advocate and there is no Santa Claus
Today the Federal Reserve proposed extremely modest high-cost mortgage rules in an attempt to fight the foreclosure crisis. House Financial Services Committee chairman Barney Frank (D-MA), following up on a statement last week, had this to say in response:
The staff of the Financial Services Committee and I have had a chance to review the Federal Reserve's proposed rules regarding abusive subprime loans. We now have confirmation of two facts we have known for some time: one, the Federal Reserve System is not a strong advocate for consumers, and two, there is no Santa Claus. People who are surprised by the one are presumably surprised by the other.
Over at the Consumer Law and Policy blog, professor Jeff Sovern has a detailed post on the rules. Here is the Center for Responsible Lending's statement.
With the holidays fast approaching, the House Energy and Commerce Committee finalized its CPSC improvement/product safety/lead limits/China toys reform bill, HR 4040, late today. We view the bill as a positive step but hope to strengthen the bill in negotiations with the Senate, which has a stronger bill, S 2045 (although that bill passed by the Senate Commerce Committee has been somewhat weakened in pre-floor action negotiations). There is still a slight, very slight chance, that Congress can give America's littlest consumers safe toys for the holidays. But it will need to move quickly and may need to do so by tomorrow, which may be adjournment day.
FCC to vote today to weaken media ownership-Take Action!
Despite public and Congressional pressure, FCC chief Kevin Martin has not yet canceled today's scheduled vote on media ownership. Go to the PIRG backed StopBigMedia.com to take action. Yesterday, Sens. Byron Dorgan (D-ND) along with Chairman Dan Inouye (D-HI) and ranking member Ted Stevens (R-AK) of the Senate Commerce Committee and 22 others sent Martin a letter threatening legislation to reverse any FCC action to weaken the rules today. The Martin proposal would partially lift a longstanding newspaper-television cross-ownership ban in local markets (Washington Post). The ban has helped preserve a media landscape with a diverse set of competing voices providing localized news and comment. The FCC, on a positive note, will at the meeting likely strengthen a cable television ownership cap.
Non-bank gift cards an even better deal than before
Thanks to vigilance by state legislators, state enforcers and the FTC, store-issued gift cards have even fewer fees than before and are an even better deal than high-priced fee laden bank and mall issued cards, according to a story Gift Cards Coming With Fewer Strings by Nancy Trejos of the Washington Post. The story goes on to also point out:
Many retailers have responded to consumer complaints that gift cards are too laden with fees and expiration dates, experts said. In its fifth annual gift card survey, Montgomery County's Office of Consumer Protection found that 18 of the 22 retail cards examined had no fees and no expiration dates and could be replaced if lost or stolen or had scratch-off PINs for security.
The FTC regulates financial institutions that are neither banks nor subsidiaries of banks. Meanwhile, most mall cards (usable at more than one store) are actually issued by national banks. National banks also issue their own various Visa or Mastercard branded gift cards. National banks are regulated by the bank regulator known as the OCC, which is more of a national bank "non-regulator" (previous blog). The OCC continues to allow and encourage banks to impose punitive fees against unused gift cards. While we wish that the FTC had done more to force companies to disgorge profits taken from gift card fees, its actions, unlike those of the OCC, have made the marketplace better.
Following the defeat of two pro-consumer amendments Thursday, and plagued by a rolling series of interruptions caused by floor votes, House Energy and Commerce Committee Chairman John Dingell (D-MI) suspended consideration of HR 4040, to reform the CPSC. The measure is scheduled to be put back before the committee Tuesday. We lost important amendments to strengthen the bill's lead standard (Eshoo-D-CA) and subject fixed site amusement park rides to CPSC oversight (Markey-D-MA), with the committee leadership, Dingell and subcommittee chair Bobby Rush (D-IL) continuing to honor their pledge that they and Republican leaders Joe Barton (R-TX) and Cliff Stearns (R-FL) would only vote as a block. They all opposed the amendments. We continue to look for ways to get a final CPSC reform bill before the President before Christmas, but time is running out.
In my testimony Wednesday before a House Financial Services subcommittee. I had some harsh criticism for the Federal Reserve Board, which has failed on numerous occasions to use existing authority to protect consumers. Incredibly, on Wednesday, the Fed even opposed a measured, incremental proposal by subcommittee chair Carolyn Maloney to require the federal bank regulators to implement a shared hotline to help consumers. Even the notoriously anti-consumer OCC supported the bill, with what former Fed chairman Alan Greenspan might have even called "exuberance." But it is always tough to beat Financial Services Committee chairman Barney Frank, who had this to say to the Washington Post about the Fed's latest voluntary mortgage reform proposal:
"If I was going to list the top 87 entities in Washington in order of the history of their efforts on consumer protection, the Fed would not make it," Rep. Barney Frank (D-Mass.) said.
CPSC committee vote Thursday; CPSC releases toy death chart
Tomorrow the House Energy and Commerce Committee will vote on its version of CPSC reform, HR 4040. We haven't seen the committee substitute yet but remain concerned that it fails to solve all the problems we have identified, including those posed by dangerous small magnets. Meanwhile, the CPSC has finally updated its annual report on toy deaths and injuries. Toy injuries are up.
We testified today in support of legislation by Rep. Carolyn Maloney (link to hearing record) that would require the federal bank regulators to create a shared complaint hotline (HR 4332, the Financial Consumer Hotline Act of 2007). We proposed a number of amendments to force the regulators to do a better job handling consumer complaints.
We urged that the hotline have a Complaint-busters advertising campaign (think "Ghostbusters: Who Ya Gonna Call?") with posters in bank lobbies.
We proposed that a portion of regulatory fees paid by banks to largely captive regulators be used for the complaint-buster organization, which would be an advocate for victims of unfair practices.
Our other ideas to solve the "toxic regulatory culture" at the bank agencies and improve consumer redress are in our testimony.
According to a horrific story on the ABC News website, Victim: Gang-Rape Cover-Up by U.S., Halliburton/KBR, not only are the U.S. government and its military contractor Halliburton attempting to cover up the alleged brutal Baghdad gang-rape of Jamie Leigh Jones by her co-workers, but Halliburton is blocking her efforts to sue the firm and instead attempting to force her into private arbitration. The story explains:
In arbitration, there is no public record nor transcript of the proceedings, meaning that Jones' claims would not be heard before a judge and jury. Rather, a private arbitrator would decide Jones' case. In recent testimony before Congress, employment lawyer Cathy Ventrell-Monsees said that Halliburton won more than 80 percent of arbitration proceedings brought against it.
PIRG-backed legislation introduced by Sen. Russ Feingold and Rep. Hank Johnson, the Arbitration Fairness Act, would eliminate forced arbitration as a condition of consumer, small farmer and most employee contracts (those not subject to collective bargaining).
At the Center for Policy Alternatives Summit on the States
My colleague Phineas Baxandall, our tax and budget expert, and I are speaking this weekend at the national Center for Policy Alternatives Summit on the States conference (agenda). State legislators and other organizations concerned with better public policies will be attending.
I speak today Saturday at a panel on fighting back against unfair bank interchange fees. Everyone, whether they pay with cash or plastic, pays more at the store or more at the pump due to the anti-competitive fees that the credit card networks and banks sock to merchants.
Phineas speaks Sunday on Stopping the Privatization of Public Assets & Services. Here's our campaign page on Bad Road Privatization. Excerpt:
Elected officials in Indiana and Chicago recently sold off public roads to private toll-road companies. Tempted by short-term cash, these governments relinquished public control over the management and planning of transportation networks and failed to receive fair value for these assets.
Watching the detectives: Private eyes indicted for massive id theft ring
Update: Here is the indictment making the charges of wire fraud, fraudulent elicitation of Social Security records, solicitation of federal tax information and aggravated identity theft.
Private detectives are among the groups (another is the information brokers) seeking exceptions from privacy laws. The detectives claim they deserve special access to information due to the purported purity of purpose of their work, such as looking for lost children or other noble causes. We've always been concerned about these exception requests, and...we have our reasons. This just in from today's Seattle Times story by Mike Carter, Private eyes indicted in ID-theft case:
State and federal agents have broken up a nationwide "pretext" identity-theft scheme involving private detectives who obtained personal information about their targets --from financial and medical records to tax returns --through deceit and lies, according to a federal grand-jury indictment unsealed Thursday. The confidential records were purchased by attorneys, law firms, collection agents and others, and federal agents are "actively investigating" whether they might have broken the law as well, said Assistant U.S. Attorney Kathryn Frierson.
Thanks to Rob Douglas of privacytoday.com for pointing this story out to us.
We joined SEIU leaders today in a telephone news conference to announce their new campaign to hold the biggest banks more accountable (news release):
"We've passed the point where an 'anything goes' motto can be tolerated for the biggest and richest banks in the country," said Andy Stern, SEIU International Executive President. "We're sending a message today on behalf of all working families: enough is enough."
We'll have more posts on this important campaign by an important ally in the fight for justice, the 1.9 million men and women of the Service Employees International Union.
Tonight, we'll be appearing live on CNN's Lou Dobbs Tonight, probably sometime in the first half of the show, which airs 7-8PM in the eastern time zone. We'll be talking about the latest on lead toys, along with representatives of Public Citizen and Consumers Union.
CRL estimates the President's plan will only help about 7% of subprime borrowers--about 145,000 families--because of the program's limited scope. [...]The plan relies on voluntary decisions by individual mortgage servicers and investors, does not remove the strong financial and legal incentives servicers have to foreclose on loans rather than modify them, and ignores the obstacles to modification posed by "piggyback" second mortgages.
Put another way, too much of the plan is like looking at a house on fire and handing the firehose to the arsonist.
Due to consideration of the energy bill on the floor, the House Energy and Commerce Committee did not act on HR 4040, its proposal to reform the CPSC today. Earliest date of action is Tuesday. While we are grateful that the committee is trying to move a bill that includes some good parts, the current version fails to include many critical provisions. Today's Washington Post summarizes some of our concerns about what's missing or not good enough in the newest version of the bill, the full committee manager's substitute. The bill, incredibly, would not regulate dangerous small magnets, fails to adequately improve the public's right to know about hazards, fails to increase allowable civil penalties enough, fails to grant state attorneys general enough authority to protect their residents and aid the CPSC, fails to preserve the right of the states to enact stronger state laws and fails to grant protection to whistleblowers.
Also this week, 35 state attorneys general sent a strong letter to the hill urging that the final bill have lower lead limits and stronger state attorney general enforcement provisions. And, 75 local and national public health groups, including U.S. PIRG and Environment America, sent a similarly strong letter on the need to tighten the lead section. We will continue to work with the committee.
Facebook saves face, admits it was wrong on privacy
Hundreds of stories (LA Times, CNET, San Jose Mercury News) are reporting that Facebook's 23-year old billionaire (on paper) founder Mark Zuckerberg has finally admitted Facebook was wrong to automatically track and then share data about Facebook user web purchases with their own social network "friends" through its Beacon online advertising system. (Our previous blog). Our colleague Jeff Chester of Center for Digital Democracy points out that Beacon is just the tip of the iceberg of the privacy invasions around the Facebook model: Excerpt:
"Today's announcement that Facebook users will be able to turn off Beacon, following last week's opt-in changes, is a step in the right direction. But Mr. Zuckerberg isn't truly candid with Facebook users. Beacon is just one aspect of a massive data collection and targeting system put in place by Facebook."
On a voice vote yesterday, the Senate Commerce Committee approved PIRG-backed bi-partisan legislation by Byron Dorgan (D-ND) and Trent Lott (R-MS), S 2322, to require FCC chairman Kevin Martin to slow his mad rush toward a vote to weaken the media ownership rules that protect localism and diversity of voices on publicly-owned airwaves. As Congress Daily reports:
"The measure would require the agency to first complete proceedings examining broadcaster commitments to local news and ownership opportunities for women and minorities before tackling any rule changes."
CPSC reform may move in House committee, groups launch new safety website
While a notice hasn't yet been posted to the Energy and Commerce website, staff have been noticed that the CPSC bill, HR 4040, will be considered in committee tomorrow Thursday. We and other advocates remain concerned that the versions of the bill we have seen fail to adequately protect the public health as much as S. 2045, its Senate counterpart, does. We are working to improve its deficiencies, including the following:
HR 4040's provisions on third party testing of toys, civil and criminal penalties for wrongdoers, the public right to know about product hazards and state attorney general enforcement of the federal law are all weaker than the Senate bill's companion provisions.
It totally lacks Senate provisions guaranteeing that consumers injured by products will have common law rights to recover damages and to protect product safety whistlebowers at CPSC and private firms.
In other news, a coalition of environmental health groups has launched a new website -- www.healthytoys.org -- with a searchable database of lead-laden, and other toxics-laden toys. As the Washington Post's Annys Shin reports in Toy-Safety Data Released On Web Site:
Parents worried about toy safety after a record year of recalls can now look through a list of more than 1,200 items that a coalition of public interest groups has tested for lead and other harmful chemicals, though toy industry officials say the list may cause unnecessary alarm. The coalition, led by the Ecology Center of Ann Arbor, Mich., found more than 200 items that contained unsafe levels of lead, as well as hundreds of others that had little or no lead. The results are scheduled to be released today in an online database at http://www.healthytoys.org.
We are co-amici, with AARP and other leading groups, in an important case before the Supreme Court today, Riegel vs. Medtronic. The case against the medical device manufacturer is being argued by Allison Zieve of Public Citizen Litigation Group. Over at the Consumer Law and Policy blog, her colleague Brian Wolfman has posted an entry linking to key resources on the case, including this previous post.
Another blockbuster hearing today on unfair credit card practices
UPDATE 10:05Am: The hearing is live on Senate TV and the consumers are telling powerful stories. Here is Senator Levin's news release and here is his list of exhibits explaining the problems of the 3 consumer witnesses and 5 other consumers as well. Here is an AP story.
Expect Senator Carl Levin's Permanent Subcommittee on Investigations to hold a blockbuster hearing today at 9:30am. His witnesses include "a panel of cardholders who experienced interest rate increases, as well as representatives from credit card companies." The last time Levin held a hearing, Citi gave up one unfair practice and Chase gave a sort of half-hearted public apology to a consumer it had previously thrown under a bus. Chase also decided that it had already dragged him under the bus long enough, so it waived the remainder of the punitive interest and fees he still owed. Well, since he had already paid back more than double his original balance in interest and fees, Chase did OK on that loan, so don't feel sorry for them. We summarize Wesley Wannemacher's story at our truthaboutcredit.org site. He unknowingly borrowed just $100 over his $3,000 limit, to pay unexpected costs at his wedding. He then paid unexpected costs in recurring over-the-the limit and late fees at punitive penalty interest rates. He paid back well over $6,000 in principal, interest and fees but still owed another $3,500. Chase waived it on the eve of the Levin hearing in March. We're looking forward to more stories today about the unfair ways big credit card companies make money. Here's a hint-- they don't earn it, they take it.
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