MoveOn.org has joined the push against Facebook's newest privacy-invasive marketing technique, the one where Facebook broadcasts a "beacon" of your online shopping to all your friends. Oh, without your consent. As Ellen Nakashima reports in today's Washington Post story Feeling Betrayed, Facebook Users Force Site to Honor Their Privacy:

Sean Lane's purchase was supposed to be a surprise for his wife.[...]Without Lane's knowledge, the headline was visible to everyone in his online network, including 500 classmates from Columbia University and 220 other friends, co-workers and acquaintances. And his wife.

On November 12, we had joined the Center for Digital Democracy in a letter to FTC Chairman Deborah Majoras urging scrutiny of "ambitious new targeted advertising schemes on the part of both Facebook and MySpace."

UPDATE: Our coalition letter in opposition.

Along with other advocacy groups, we've been working many months with House Financial Services Committee Chairman Barney Frank (D-MA) to craft a strong bill to prevent mortgage abuses. His efforts have been laudatory, but largely because the Congressional process is so dominated by special interests, his modified compromise bill HR 3915, sponsored with others including Brad Miller (D-NC), no longer achieves the goals he set out for it. In particular, its broad sweep of preemptive limits on state law remedies outweighs its benefits. We are joining with the National Association of Consumer Advocates and the National Consumer Law Center -- expert groups whose lawyers represent in court the low-income consumers who have been most hammered by abusive mortgage practices -- in a letter in opposition to the bill. I will post our letter when finalized. If the bill passes (and those special interests still oppose it from the wrong side so the outcome is not clear) we hope to improve it in the Senate.

Despite 3 months of work, it is truly hard to say just what -- if anything -- is new, what is innovative and what is worthwhile in the Interagency Working Group on Import Safety's new "Action Plan." I guess what's new is they've got the president messaging on it. U.S. PIRG is particularly disappointed in the squishy, weasel-y language regarding safety certification of imported products. The way we read it, the administration is not supporting the concept that all imported children's products be subject to mandatory testing by a truly independent third party lab that is certified by the government for quality.

Also today, we joined Rachel Weintraub's testimony on behalf of her group, the Consumer Federation of America, and a coalition of organizations, in a House Energy and Commerce Committee hearing on its CPSC reform bill, HR 4040. At the hearing, subcommittee chairman Bobby Rush (D-IL) committed to moving forward within two weeks on on a vote on the legislation.

Today, we are signed onto testimony of the Consumer Federation of America's Rachel Weintraub before the House Energy and Commerce Committee at its hearing on product safety reform. (Note-- the committee has even posted a front page link to The Year of the Recall, a new Consumers Union report.) Meanwhile, after years of administration attacks (not mere benign neglect) on protecting Americans from product safety hazards, expect the Michael Leavitt-chaired White House import safety working group to back some sort of modest reforms today (New York Times and AP via Washington Post). We expect it will overly rely on self-regulation and the sort of tortured risk analysis favored by the administration over the more sensible precautionary principle, although press reports indicate positively that it will recommend strengthened recall authority at FDA and CPSC. Don't know just what it will say about the hazards to the public of CPSC officials flying around on the industry's planes or the industry's dime. From the Washington Post story today CPSC's Ethics-Review Process For Travel Criticized by Experts by reporter Elizabeth Williamson:

The $3,730 tab for Faulk and Nord's trip was to be paid by the Toy Industry Foundation, whose mission, according to the ethics memo, is to help at-risk children "by meeting a vital, yet frequently overlooked, developmental need often missing in their lives -- play."

The key ethics review memo states at the top that it came from Faulk, whom it describes as the "Designated Agency Ethics Official." But it was signed by someone the CPSC yesterday called "an alternate ethics officer" because Faulk was the traveler.

Brian Wolfman of the Consumer Law & Policy blog has posted an analysis of yesterday's Supreme Court argument in an important investor protection case, Stoneridge Investment Partners v. Scientific-Atlanta. We filed an amicus brief jointly with AARP and Consumer Federation of America, on behalf of investors. Our brief supports the view that investors would be better protected by making it easier to hold professionals (investment banks, lawyers and accountants) that aid and abet wrongdoers who cook the books (think Enron), accountable.

As Brian explains:

The case may help draw the dividing line between aiding and abetting a violation of the federal securities laws, which does not give rise to a private suit under those laws, and a primary violation, which, of course, does. The question presented, more formally stated, is whether claims for deceptive conduct under Section 10(b) of the Securities Exchange Act of 1934 are barred by the Court's decision in Central Bank v. First International Bank (which rejected aiding-and-abetting liability), when the defendant engaged in fraudulent transactions designed to inflate a corporation's financial statements, but made no public statements concerning those transactions.

We testified (my testimony) yesterday at a hearing on CPSC/China/toy recall issues before Senator Mark Pryor's (D-AR) subcommittee of the Commerce Committee in favor of his bill: the CPSC Reform Act of 2007, S. 2045 (we also suggested improvements) to reauthorize and modernize the Consumer Product Safety Commission.

Obviously, the National Association of Manufacturers opposed the bill, especially its provisions to increase civil penalties, let state Attorneys General police the product safety beat, and eliminate unnecessary secrecy in CPSC activities. But, astonishingly, acting CPSC chair Nancy Nord largely agreed with NAM, especially when she said that eliminating secrecy would be "counter-productive." She essentially said that their relationship with corporate wrongdoers would be jeopardized. Former CPSC Chair, Ann Brown, in Annys Shin's Washington Post story Head of CPSC Opposes Measure on the hearing, said, and we agree:

"She thinks it's the industry product safety commission," said Ann Brown, CPSC chairman under President Bill Clinton. The current law "stands in the way of consumers getting prompt information, and it should be amended and changed."

We testify this afternoon at a hearing of a U.S. Senate Commerce Committee subcommittee on major legislation, the CPSC Reform Act of 2007, S. 2045. The bill has the potential, if improved in a few ways and not watered down in others, to go a long way toward:

The bill is introduced by subcommittee chair Mark Pryor (D-AR), a former state attorney general, along with full committee chair Daniel Inouye (D-HI) and the Senate's #2 leader, Majority Whip Dick Durbin (D-IL), as well as committee members Amy Klobuchar (D-MN) and Bill Nelson (D-FL). Watch on the Internet at 2:30pm.

We joined other leading consumer groups in signing on to testimony by the National Consumer Law Center before the Senate Finance Committee yesterday. The hearing concerned whether banks are failing to protect Social Security recipients from illegal and improper seizure of their exempt benefits. The issue has grown in importance as more and more consumers receive benefits electronically. Excerpt from testimony by Margot Saunders of NCLC:

We estimate that on a monthly basis thousands of low income recipients of Social Security, SSI and other federal payments whose benefits are entirely exempt from claims of judgment creditors are left temporarily destitute when banks allow attachments and garnishments to freeze their only assets. As was illustrated in a recent Wall Street Journal article ("The Debt Collector vs. The Widow -- Viola Sue Kell thought her Social Security benefits were safe in the bank. She was wrong."), when a bank applies an attachment 14 or garnishment order to the exempt funds in a low income recipient's bank account, the consequences are generally devastating. There is no money for food or medicine. Checks written for rent or the mortgage are bounced. People go hungry. They get sick or sicker. They suffer anxiety. They are forced to pay steep bank fees and fees to merchants because the checks they wrote when they had money in the bank now bounce.

The banks (backed by their captive regulators, at least until yesterday's hearing), of course, use the first part of the Bart Simpson defense: "it's not my fault, I wasn't there, I didn't do it." More from our joint NCLC testimony:

We disagree with this assessment as a legal matter and as a policy matter. Legally, the cases have not yet caught up with the technological situation that exempt funds directly deposited in bank accounts presents, but the case law presents no bar to such a requirement. As a policy matter, how can there be any dispute that the funds provided by American taxpayers to keep this nation's elderly and disabled from starvation and destitution should be kept available rather than frozen for the convenience of creditors who have no right to the monies?

Later that same day-- updated to add these two hearing and testimony links. (1) Amina Fazlullah of U.S. PIRG's testimony; (2) link to the full hearing including all witness testimony. Other witnesses included FCC Commissioner Jonathan Adelstein and an AARP representative.

U.S. PIRG staff attorney and telecom expert Amina Fazlullah testifies this morning before the U.S. Senate Special Committee on Aging at a hearing Preparing For The Digital Television Transition: Will Seniors Be Left In The Dark?. The hearing will be webcast beginning at 10:30 AM Eastern. Here is an excerpt from Amina's testimony, which will be posted at the committee site later this morning:

It's been nearly two years since Congress established the official transition date from analog T.V. broadcasting to digital, yet virtually no U.S. consumer knows what will happen on February 17, 2009. On that date, television broadcasters will switch from analog to digital signals. The transition offers the country the return of valuable, "beach front property" spectrum that can be used to enhance emergency communications, spur innovation and improve broadband connectivity.

One other thing will happen on February 17, 2009. Every consumer who watches over-the-air TV with an analog set will have their set go dark. Including in the estimated 22 million consumers in this category are 8 million households with at least one member older than 50.

U.S. PIRG, Consumers Union and Consumer Federation of America have sent a letter to Congressional leaders and the Bush administration outlining actions that must be taken to guarantee the safety of consumer products and food. The proposals would apply to all products, but new protections are proposed for imports:

Clearly, the system of effectively protecting consumers from dangerous and toxic foods and products is broken. [...] We ask that you act quickly to provide more resources and tools to the federal agencies charged with policing the safety of the nation's product and food supply. In addition, we must put mechanisms in place to hold companies accountable for the products they import and sell in the United States including requiring independent third party testing and certification of consumer products.

Along with other leading groups, we joined testimony today by attorney Joanne Faulkner on behalf of the National Association of Consumer Advocates (NACA) before the Senate Commerce Committee's hearing on Oversight of Telemarketing Practices and the Credit Repair Organizations Act (CROA). MORE.

Faulkner's testimony concerned the CROA aspects of the hearing only. It addressed both the vile practices of credit repair doctors and also the interminable, ongoing efforts by the credit bureaus themselves to exempt their actions from CROA (previous post), which regulates the credit repair doctor practices. Credit repair doctors are ripoff artists who make a living claiming that they can fix accurate, but negative, credit report items. Unfortunately, the main reason that CROA was before the committee was only that the credit bureaus seek a self-serving exemption from the act. Why? Because their own deceptive advertising of over-priced ($12-15/month), next-to-useless (don't stop identity theft, only the security freeze can do that) credit monitoring services has gotten them caught up in class action lawsuits for violating the CROA themselves. But, after strong testimony from Faulkner, and opposition to the current industry proposal from the FTC witness, Lydia Parnes, the director of the Bureau of Consumer Protection, we doubt the committee or the Congress will move forward. Although we aren't directly signed onto their testimony, we also strongly support the views of Iowa Assistant Attorney General Steve St. Clair and AARP board member Richard Johnson, who both testified on deceptive telemarketing ripoffs primarily aimed at the elderly (previous post describing how banks aid and abet fraudsters directly debiting consumer accounts).

A series of unwise adverse court and regulatory decisions has preempted state authority to protect consumers from unfair bank practices. Today, Travis Plunkett of the Consumer Federation of America represents (his testimony) U.S. PIRG and a coalition of leading consumer and community groups at a hearing of the House Financial Services Committee on Improving Federal Consumer Protections In Financial Services. Basically, most federal consumer rules are written by the Federal Reserve Board, which could care less and often ignores Congressional deadlines. Worse, most of those rules and laws are enforced by the powerful but obscure Office of the Comptroller of the Currency (see our OCCWatch page), which has a lack of will to offend the national banks which fund its fiefdom. The question, then, is what should Congress do? In our view, the most important things that it could do are to (1) restore authority for dual enforcement by state attorneys general; (2) eliminate the sweeping preemption of state consumer laws; (3) increase oversight of the sleepy (Fed) and aider and abettor (OCC) federal regulators; (4) grant authority to the FTC over banks, as an honest broker regulator not in bed with the banks. Our testimony by Travis Plunkett has more details (excerpt below):

One of the most difficult problems that the Committee will face in attempting to improve consumer protection efforts is a culture of coziness with the financial institutions they regulate at most of the agencies and an insensitivity to consumer concerns. For example, most of the regulatory failures we highlight today are in areas, like oversight of high-cost "overdraft" loans, where federal regulators have existing authority to act and have chosen not to do so. Simply increasing the authority of the agencies to write or enforce rules, or to offer a unified complaint hotline, will not change the culture in some agencies that has caused them to ignore festering problems in the credit arena or to reject adequate consumer protection measures. [...] The key to addressing these root problems is to make the regulatory process more independent of the financial institutions that are regulated. This means allowing the Federal Trade Commission (FTC) to bring enforcement actions against national banks and thrifts for unfair and deceptive practices and to initiate regulation of these entities. It also means granting consumers the right to privately enforce federal laws. Finally, Congress should act to rein in lending abuses where agencies have shown an unwillingness to act vigorously, such as credit card lending, sub-prime mortgage lending and the use of deceptive and high-cost “overdraft” loans by national banks.

UPDATE 24 July: Here's a link to the full hearing and to my testimony last week. I was very impressed with the level of concern evidenced by committee members over the practice of Visa/Mastercard imposing high merchant interchange fees. Rep. Darrell Issa (R-CA), a business owner, expressed disdain over the industry witnesses specious claim that banks would negotiate fees. Rep. Ric Keller (R-FL) was among the many committee members with well-thought-out, insightful questions of the industry witnesses, who included Tim Muris, former FTC chair.

Original post: I testify this afternoon in House Judiciary on credit card interchange fees, which are the fees merchants pay to accept credit and debit cards. I will post my testimony when it is released by the committee. No secrets in it: consumers, whether they pay with cash or plastic, pay more at the store and more at the pump because Visa and Mastercard use their anti-competitive market power to impose high merchant interchange fees. These are passed along to everyone. Here's a link to my testimony last year in House Energy and Commerce.

Despite the joint testimony of all 5 SEC commissioners yesterday that Congress needs to take no action to amend the Sarbanes-Oxley Act, expect a floor amendment from Reps. Scott Garrett (R-NJ) and Tom Feeney (R-FL) today to the Financial Services Appropriations Act for Fiscal Year 2008. Our letter -- with the Consumer Federation of America and others -- in opposition. The Garrett-Feeney amendment is part of the incessant but unsubstantiated bleating from the U.S. Chamber of Commerce to weaken this critical Enron reform law's Section 404, which provides that corporate officers assess and corporate auditors attest to the veracity of financial statements. The amendment would delay implementation of Section 404 yet again for smaller public companies. As our letter points out:

At those companies where it has been implemented, SOX 404 has brought about dramatic improvements. It has uncovered thousands of material weaknesses in internal controls – 1,300 in 2005 and 1,118 in 2006. That drop in material weaknesses between 2005 and 2006 reflected the fact that 404-compliant companies saw a 35 percent drop in material weaknesses.

On Wednesday, the U.S. Supreme Court reversed lower courts that had stupidly given the Phillip Morris tobacco company essentially the same powers as a federal officer to "remove" cases brought against them in state courts to federal courts, under the legal theory that because PM was somewhat regulated, it must be "acting under" a federal officer. We had joined a merits amicus brief to the court prepared by Public Citizen and AARP. Over at the Consumer Law and Policy blog, Scott Nelson explains the issues. One interesting point in Scott's blog: He points out that at the petition stage, U.S. Solicitor General Paul Clement told the Court that the decision below was "dead wrong," but in his brief urged the Court to decline the case as a narrow "fact-bound" ruling. We recently noted that SG Clement had rejected an SEC request to file a brief on its behalf in support of defrauded small investors.

We had a lively credit card hearing today in the U.S. House Financial Institutions and Consumer Credit Subcommittee. The hearing was a response to the Fed's recent issuance of a 700 page proposed re-write to credit card disclosure laws. One panel had six federal or state agency heads; the second had Kathleen Keest (her testimony) of the Center for Responsible Lending and me (my testimony) representing consumers, along with four industry witnesses and a small business representative. The hearing lasted about 4 hours, not including another hour or so of floor vote breaks. A surprising number of Representatives stayed and engaged both panels. Representatives of both parties had detailed and deeply-held concerns about a variety of unfair credit card practices. The bankers were contrite and generally said: "We don't do that anymore." A few highlights: First, Chair Carolyn Maloney (D-NY) announced she would hold a credit card summit with consumer groups, regulators and credit card companies.

To discuss these issues and others, I am planning a Credit Card summit. Among the results I want to achieve from this meeting is a way to use private forces to keep the spotlight on issuers and encourage best practices. For example, what if industry, working with consumer advocates, developed a Gold Standard for credit cards and certified that certain of their products met this standard.

We look forward to working with Chair Maloney on further investigations and inquiries.

Along with our colleague Kathleen Keest of the Center for Responsible Lending, I am representing consumers at a hearing on unfair credit card practices (committee announcement: Improving Credit Card Consumer Protection: Recent Industry and Regulatory Initiatives) Thursday before the House Financial Institutions Subcommittee of the Financial Services Committee. There are apparently six regulators and five industry lobbyist witnesses. Not to worry. The Texas Rangers motto, I think, is "One riot, one Ranger." With me and Kathleen, we've got an extra Ranger. By the way, if you want a preview of my testimony, there's a video excerpt of my interview from a forthcoming documentary on credit cards, UR Pre-approved, available on the movie's "trailers" page. Scroll down.

"Led" by the "visionary" giants of our telecommunications industry and the failed "plans" of former FCC chief Michael Powell, the U.S. has fallen further behind the world in the availability of ubiquitous, low-cost and fast broadband communications. It hurts our economy, our educational opportunities, our culture and our democracy when our citizens and businesses pay more for less Internet than the citizens of South Korea and Slovenia-- when our citizens can even hook up, that is. Many are stuck with dialup as their only choice. Thank you, Michael Powell. This week, U.S. PIRG joined with other leading organizations seeking a neutral, open and affordable Internet to file comments to the FCC (large pdf) on its pending auction of the 700 mHz spectrum airwave band.

The groups calling themselves the Ad Hoc Public Interest Spectrum Coalition (PISC) urged the FCC to take actions that "foster real wireless broadband -- the fast, ubiquitous, and dynamic third pipe everyone agrees our country desperately needs[...]with the freedom to attach any device and run any application." In English, here's what you need to know:

the 700MHz band could potentially do two different things: establish a new competitor in the wireless phone space and create a third national broadband option to rival cable and DSL. From a consumer perspective, either outcome would be hugely desirable, as broadband users rarely have more than two choices and "anyone who says the wireless industry is competitive is joking," says Fazlullah.

[UPDATED SAME DAY: Added link and excerpt from the veto letter from 10 consumer and media reform groups and a link to a Palm Beach Post editorial.] An editorial in today's influential St. Pete Times urges a veto of the so-called cable competition bill enacted by the Florida legislature:

The cable television deregulation bill the Florida Legislature sent Gov. Charlie Crist does what one would expect from a lawmaking process corrupted by special interests. Under the guise of promoting competition, lawmakers would weaken consumer protection, threaten educational programming and enable providers to cherry pick customers and enjoy unfettered access to public rights of way.

The purpose of the bill is laudable--to bring competition to the cable television and broadband Internet marketplace. Yet as currently drafted, HB 529 falls far short of what is required to promote meaningful competition that will deliver lower prices, more competition, and higher quality of service to all consumers. [...] Anti-redlining provisions are insufficient to ensure low and middle income consumers are not left behind. We acknowledge and applaud your efforts to work with legislators to insert an anti-discrimination provision. However this provision alone will not guarantee that new communications technologies will be offered throughout the state to traditionally under-served communities. [...] Every community--rich or poor, rural or urban--deserves the benefits of new technology and competition. Good public policy guides the market to maximize competitive deployment across the board in video and broadband. It also protects an open, thriving and nondiscriminatory marketplace for Internet content and applications. There is currently nothing in HB 529 that gives cable or telephone companies incentives to abide by net neutrality protections.

Recently, the Senate Commerce Committee and the Senate Judiciary Committee approved data security bills. Senate Banking has not acted, nor have any major House committees. While the approved bills have the fingerprints of industry lobbyists all over them, there are a few bright spots.

It is possible that were the bill's original exception from notice for breaches of both credit card and debit card numbers when companies were part of online fraud prevention programs that it might have immunized TJX (TJ Maxx and Marshalls) from notification in its recent 45 million credit and debit card number breach.

In today's Wall Street Journal, in the story How Credit Card Data Went Out Wireless Door (pd. subs. req'd), Joseph Pereira reports that outside a Marshall's store near St. Paul, Minnesota a few years ago:

hackers pointed a telescope-shaped antenna toward the store and used a laptop computer to decode data streaming through the air between hand-held price-checking devices, cash registers and the store's computers. That helped them hack into the central database of Marshalls' parent, TJX Cos. in Framingham, Mass., to repeatedly purloin information about customers.

That purloined information included both debit and credit card numbers. Since consumers are largely unprotected by federal debit card laws, Congress should not pass laws making things worse. Consumers are largely unaware of the risks of debit cards, and are primarily protected only by contractual promise, not by law. While credit cards are protected by the strong terms of the Truth In Lending Act, debit cards (which look the same but access your own accounts) are subject to the weak Electronic Fund Transfer Act, which allows banks unduly long investigation periods before reinstating money into a victim’s account and, under some circumstances, even allows the bank to deny all the consumer’s restitution claims even after fraudulent activity. Conversely, the Truth In Lending Act limits a consumer’s fraud liability to $50, by law. Even the Fed agrees!

Industry groups want a federal data privacy law. The myth, however, is that they need it due to supposed high costs of a patchwork of state laws. Their costs are low and that's a red herring. Their strategy is more Machiavellian -- their ultimate goal is to use the furor over data security and the identity theft crime wave to convince Congress into permanently eliminating all state financial privacy laws and even weakening existing federal laws. That's the wrong outcome. Consumers have been better served by state leadership on privacy, on global warming and on virtually every policy matter. Federal law should always be a floor protecting everyone at minimum levels, never a ceiling preventing states from acting more quickly or going further in defense of consumers and the environment. As we said in our letter to Judiciary members:

States have demonstrated an ability to respond more quickly to privacy and other problems, including global warming. On the matter of privacy alone, seven states (led by Vermont) gave consumers the right to a free credit report before Congress acted, forty states had do-not-call lists before the FTC acted, at least three-dozen states have security breach notification laws (and this bill is weaker than an estimated 23 of them yet would preempt them all), and some twenty-eight states have given consumers the right to prevent identity theft through placement of a security freeze on their credit reports.

Industry claims to the contrary, the states never enact 50 different laws; indeed they tend to enact a few similar laws and then other states perfect those efforts with virtually identical laws. When Congress steps in, it should create a federal floor protecting consumers in the few remaining unprotected states; it should not override the stronger state laws, nor should it prevent further experimentation. Any specious industry claims of compliance costs could be met by simply complying with the strongest state law nationwide, as many firms have done following the first widely-reported breaches.

Three leading consumer groups filed detailed comments this week objecting to a proposed Federal Trade Commission settlement with the retailer Kmart over its practice of deceptively selling gift cards with hidden fees that reduce their value by more than $50 in less than two years of inactivity. The Consumer Federation of America, Consumers Union and U.S. PIRG, longtime advocates for stronger state and federal laws to protect gift card holders, charged that the settlement unjustly enriches Kmart by allowing it to keep its ill-gotten gains. FULL NEWS RELEASE:

FOR IMMEDIATE RELEASE: Friday, 13 April 2007
CONTACT:
Ed Mierzwinski, U.S. PIRG, 202-546-9707
Travis Plunkett or Jean Ann Fox, Consumer Federation of America 202-387-6121
Gail Hillebrand, Consumers Union, 415-431-6747

Leading Consumer Groups Oppose Proposed FTC Settlement With Kmart Over Deceptively “Shrinking” Gift Cards
-- Say Settlement “Unjustly Enriches” Violator--

Three leading consumer groups filed detailed comments this week objecting to a proposed Federal Trade Commission settlement with the retailer Kmart over its practice of deceptively selling gift cards with hidden fees that reduce their value by more than $50 in less than two years of inactivity. The Consumer Federation of America, Consumers Union and U.S. PIRG, longtime advocates for stronger state and federal laws to protect gift card holders, charged that the settlement unjustly enriches Kmart by allowing it to keep its ill-gotten gains.

"Attention, Kmart shoppers, this settlement is unfair to you," said Ed Mierzwinski, U.S. PIRG Consumer Program Director, "It's bad enough that you'll need to jump through innumerable hoops to maybe get reimbursed for your incredibly shrinking gift card, but this sends exactly the wrong signal to other corporate criminals that the FTC is soft on crime."

"Numerous states have taken action to prohibit gift card sellers from even including dormancy or other monthly fees on gift cards," said Gail Hillebrand, senior attorney for Consumers Union. "At the very least, companies should not be allowed to deceive consumers into purchasing cards with hidden fees, and should be punished when they do." [More from Consumers Union on gift cards.]

The proposed settlement was approved on a 5-0 vote, with two commissioners, Jon Leibowitz and Pamela Jones Harbour, dissenting in part over the failure to require Kmart to disgorge its ill-gotten profits. The FTC will now review comments and decide whether to make it final. In their comments, the groups noted that in another recent settlement, against Darden Restaurants, the owner of Red Lobster and Olive Garden, that the FTC ordered automatic reinstatement of card value.

This is the second settlement order in the last few months where Leibowitz has dissented due to a weak, non-disgorgement penalty (see the DirectRevenue decision of 16 February 2007), Mierzwinski noted.

The groups were represented pro bono in this matter by David Balto, a former senior FTC attorney.

"Consumers need greater rights in gift cards and indeed in all plastic cards ranging from other types of stored value cards to debit cards, where rights are vastly inferior to the protections offered credit cards," concluded Jean Ann Fox, the Consumer Federation of America's director of consumer protection. "Taking action against Kmart for deception is a first step, but it should have been a more meaningful step."
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At Wednesday's hearing (See video webcast and all witness statements, including ours and that of three other consumer advocates) on proposed legislation to grant airline passengers basic rights when wrongly "imprisoned" on planes stuck on the tarmac, our champions, Senators Barbara Boxer (D-CA) and Olympia Snowe (R-ME) asked the DOT and the Air Transport Association witnesses some tough questions. Michael Reynolds, DOT's DAS for Aviation, kept telling Senator Snowe that DOT's "market" approach to customer service was working, and when it didn't, not to worry, because of "section 41712 of Title 49 of the U.S. Code, which broadly prohibits unfair and deceptive practices and unfair methods of competition in air transportation." Nice try, Mr. Reynolds, except Senator Snowe wasn't buying it, and sitting next to you was your fellow witness, The Honorable Calvin Scovel III Inspector General, U.S. Department of Transportation, who testified:

The Department should take a more active role in airline customer service issues. ... We found that while the Office has made efforts to enforce civil rights violations, it needs to improve its oversight of consumer protection laws, including its efforts to monitor compliance with the terms and conditions of