CFA News Update- October 12, 2010
The Obama Administration proposed new fuel economy standards last week that could boost fuel economy to as high as 62 mpg for cars and light trucks by 2025. Last April, the Administration issued new standards for passenger car model years 2012 through 2016. The new proposal, which is still subject to public comment and final approval, calls for additional increases in model years 2017 through 2025.
“A fuel economy standard of 60 mpg by 2025 would be a big win for American consumers,” said CFA Research Director Mark Cooper. “It would give consumers what they want – clear, fuel-efficient cars that take them further on a dollar and curb our appetite for expensive oil that often comes from countries that don’t like us.” Noting that 60 mpg “falls at the high end of the range of future standards contemplated by the Notice of Intent,” Cooper said CFA looks forward “to convincing the agencies that 60 mpg is technically feasible and economically practicable, as well as good for consumers and the nation.”
CFA joined with 21 consumer organizations in writing to President Obama last month urging him to adopt the 60 mpg standard. In addition, a new survey released by CFA in late September found that most Americans support adoption of a 60 mpg standard, and most would be prepared to pay more for a new more fuel-efficient car if they quickly recovered the additional expense through lower fuel costs. “This new survey data not only indicates that consumers want more fuel-efficient vehicles, but they are willing to pay more at the onset for them,” said CFA Director of Public Affairs Jack Gillis.
The House voted 336-82 to pass the Medical Debt Relief Act (H.R. 3421) in late September, setting the stage for possible Senate action during a post-election session. The bill, which is sponsored by Rep. Mary Jo Kilroy (D-OH), would amend the Fair Credit Reporting Act to prohibit paid-off or settled medical debt from appearing on a consumer’s credit report. “This would ensure that Americans who have fully paid their medical bills are not penalized for bad health with a poor credit report,” said CFA Legislative Assistant Darby Hull. CFA sent a letter to all House members prior to the vote urging their support.
In comments filed with the Federal Deposit Insurance Corporation (FDIC) in late September, leading national consumer groups applauded the recommendations made, especially the explicit recognition that frequent use of overdrafts harms consumers, but urged the agency to do more to address excessive overdraft fees. “We applaud the FDIC’s leadership to strengthen overdraft protections and urge other bank regulators to follow suit,” said CFA Financial Services Director Jean Ann Fox.
In the proposed guidance, the FDIC calls for banks to stop manipulating bank transaction orders in order to maximize fees, recognizes that more than six overdraft fees within a 12-month period constitutes excessive or chronic use, and instructs banks not to steer consumers to higher cost overdraft programs when lower cost options are available. In their joint comment letter, CFA, the Center for Responsible Lending, the National Consumer Law Center, Consumers Union, Consumer Action, US PIRG, and the National Association of Consumer Advocates voiced support for these recommendations.
In addition, however, the groups stressed that the FDIC needs to provide stricter guidance to effectively address the harm caused to consumers by excessive overdraft use. In particular, the comments argued that the FDIC needs to take action against deceptive marketing practices aimed at getting customers to enroll in overdraft programs by reviewing opt-in materials during examinations, requiring a more transparent fee disclosure, and providing examples of what constitutes deceptive overdraft marketing. “More explicit standards will set clearer expectations for FDIC-supervised banks and for the account holders who bank with them, will be more easily enforceable, and will be far more likely to address the serious financial harm excessive overdraft fees cause lower and fixed income consumers,” the groups wrote in their comment letter.
Senator Charles Schumer and Representative Luis Gutierrez have introduced strong pro-consumer bills (S. 3264, H.R. 5387) to address debt settlement abuses by imposing a “pay for results” system. In order to ensure that fees are reasonable and that consumers only pay for debt settlement services after they have received the promised results, the companion bills would limit fees to $50 plus five percent of real savings from debts settled and ban fees from being taken before consumers’ debts have actually been settled. The bills would also provide additional protections, such as the right to cancel, clear disclosures, and requirement of a consumer financial analysis to determine suitability before a consumer is enrolled in the program.
CFA and national and state public interest groups wrote to members of Congress in late September urging them to support and co-sponsor the bill. In the letter, they noted that the recent debt relief amendments to the FTC Telemarketing Sales Rule were no substitute for federal legislation because the Rule only applies to phone solicitations and does not cover online or in-person sales.
“Consumers who are struggling financially need to be protected from losing their last dimes to companies that make false promises to solve their debt problems and leave them worse off than they were before,” said CFA Consumer Protection Director Susan Grant.
CFA is participating in the 2010 Combined Federal Campaign. The campaign, which kicked off in September and will conclude on December 15, is the workplace charitable giving drive for all civilian, postal and military employees of the federal government. Federal employees who choose to support CFA should use #52521 to designate their contribution.