CFA News Update- December 21, 2010
The Consumer Product Safety Commission (CPSC) adopted a new mandatory safety standard for cribs last week that consumer advocates called the strongest in the world. The action follows recalls of millions of cribs in recent years due to entrapment deaths and injuries. The new standards, which become mandatory in six months, will ensure that new cribs have been tested for safety to rigorous standards. “Parents and caregivers should have peace of mind that when they leave their baby in a crib that their baby will be safe,” stated CFA Senior Counsel Rachel Weintraub in a joint press release with Consumers Union, Kids In Danger, and U.S. Public Interest Research Group. The new standards go a long way toward providing that assurance, she added.
The Senate approved a temporary spending bill Sunday that leaves the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) without the crucial funding increases they need to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. Earlier this month, the House narrowly approved a full-year continuing resolution that would have provided a much needed funding boost to both agencies, but Senate Republicans blocked consideration either of an omnibus spending bill or a full-year continuing resolution.
While the House still has to act on the Senate spending bill, it is expected to follow the Senate’s lead in voting for the temporary continuing resolution that would fund the government at current spending levels through early March. As a result, decisions about funding for these agencies will be deferred until next year, at a time when political divisions between the House and Senate are likely to make it even more difficult for the Congress to adopt a budget.
“It is not enough for Congress to increase the authority and responsibilities of these agencies without giving them the funding they need to fulfill those responsibilities,” CFA Director of Investor Protection Barbara Roper wrote in a letter to all members of Congress. “Unfortunately, that is precisely what Congress has done,” Roper added in the wake of the Senate vote.
In a consumer alert issued earlier this month, CFA warned consumers who have been injured in an automobile accident that the computerized systems used by many insurance companies to process their claims often make unfair, “low ball” claims’ offers. “Consumers should be very vigilant when dealing with automobile bodily injury claims generated by computer programs,” said CFA Director of Insurance J. Robert Hunter. “By adjusting their computer systems to generate claims ‘savings’ without adequately examining the validity of each claim, these automated claims systems can result in unfairly low payments to consumers.” The alert identifies some of the major insurers using such systems and includes tips on how consumers can protect themselves from unjustifiably low claims offers.
In a joint letter to the FDIC last month, CFA, Consumers Union, Consumer Action, the Shriver Center, and the National Consumers Law Center called on the agency to adopt a Safe Transaction Account template for prepaid cards. The groups praised the agency for its decision earlier this year to adopt Safe Transaction and Savings Account templates for the benefit of low- and moderate-income consumers and for having included prepaid cards as a type of product that could be offered through the Safe Transaction program. Because prepaid cards present unique issues, however, the groups called for these cards to be addressed through a specific template. “Consumers need first-class protections as prepaid cards become ‘bank accounts’ on plastic for the unbanked and under-banked,” said CFA Financial Services Director Jean Ann Fox. “Funds deposited onto a card must be protected by pass-through FDIC insurance and Electronic Fund Transfer Act rules on unauthorized use and disputes. Most importantly, prepaid cards must not become debt traps with overdrafts and payday-loan type credit features.”