CFA News

CFAnews Update – August 9, 2021

Groups Outline Airline Consumer Protection Priorities for DOT

Consumer organizations, including CFA, called on the Department of Transportation (DOT) to make airline consumer protection a priority in a July meeting with Transportation Secretary Pete Buttigieg. At the meeting, the groups presented the Secretary with a list of airline consumer protection priorities.

“The Department of Transportation … is the only consumer protection agency that airline passengers can turn to when they are harmed by unfair and deceptive practices,” the groups wrote. “Given that neither state attorneys general nor passengers themselves can seek recourse through state courts or legislatures, the Secretary should publicly acknowledge that strengthening existing consumer protections and promoting new ones is a priority for the Department. To execute on this priority, the DOT and FAA should seek input from consumer advocacy and passenger rights organizations throughout the policy making process,” they added.

Beyond the general call to make consumer protection a priority, the groups outlined the following near-term priorities for DOT action:

  • ensuring that ticket vouchers issued during COVID-19 will never expire;
  • mandating that families with young children are always able to sit together on flights; and
  • initiating rulemaking for minimum seat sizes and updating emergency evacuation standards.

The list also includes: enforcing clear COVID-19 health and safety protections; reforming the unfair and deceptive practices rule; initiating rules to ensure airfare transparency; improving Federal Aviation Administration (FAA) oversight of aircraft manufacturing and maintenance; and closing a 1953 loophole that allows children under the age of two to fly unrestrained.

In a blog about the meeting, Susan Grant, CFA’s Director of Consumer Protection and Privacy, stated, “After the last four years in the wilderness, during which there was little action to implement airline consumer protections ordered by Congress or to significantly improve the lot of the flying public, we were heartened by Secretary Buttigieg’s obvious interest and his commitment to work with airline passenger advocates in the future.”

Consumer Orgs Call on FIO to Investigate Auto Insurance Affordability

CFA is urging the Department of the Treasury’s Federal Insurance Office (FIO) to update its 2017 study on the affordability of auto insurance in underserved communities and conduct a deeper investigation of discrimination in auto insurance markets. In a July comment letter to FIO co-signed by 21 other consumer organizations, CFA laid out a series of researchable questions and data calls that FIO should take to provide more information about auto insurance affordability and inequities in the market.

The groups cited President Biden’s comments from February that laid bare the problem:

I don’t know what home you live in, but if you go ahead and you want to get insurance, and you’re in a black neighborhood, you’re going to pay more for the same insurance that I’m going to pay for the exact same home.  Your car — you never had an accident in your car.  If you live in a black neighborhood, you’re going to pay a higher premium on your car.

Since most Americans are required to purchase auto insurance by law, “it is particularly important that auto insurance is available, affordable, and priced fairly in the marketplace,” the groups wrote. Yet, the FIO’s 2017 study found that about 18 million Americans live in an area where legally required auto insurance is unaffordable to them. Other research has shown that “even drivers with unblemished driving records may find that the cost of coverage in their community and for people with their socio-economic characteristics far exceeds their family budget,” the groups noted.

Specifically, the groups called on the FIO to update the 2017 study regularly, preferably annually, in order to provide “a longitudinal study of auto insurance affordability in America.” This would enable policymakers to document changes in the affordability and availability of auto insurance, help identify communities where problems with affordability are persistent, or where the problem is growing or receding, and help interpret the impact of changes in law, regulation, and the marketplace on historically underserved communities.

In addition to updating the 2017 study, the groups called for FIO to conduct separate research to “better understand and describe the auto insurance market, particularly with respect to lower-income drivers and communities of color,” including:

  • additional complementary research into affordability and availability, with a particular focus on the prevalence of uninsured motorists; and
  • research related to the use of socio-economic, non-driving factors in personal auto insurance underwriting and pricing.

The groups concluded by asking that “consumer and community organizations continue to be included in the decision-making process and the development of research methodologies.”

“Too often auto insurance is too expensive or even unaffordable for drivers with clean driving records but limited financial resources,” said Doug Heller, CFA’s Insurance Expert. “With the data FIO could collect, federal and state policymakers and regulators will get a better picture of the scope and contours of the problems with the auto insurance market. At its core, we know that people of color pay disproportionately high auto insurance premiums in America, and it’s critical that FIO devote the resources to present an honest picture of this market.”

FTC Urged to Protect Civil Rights, Privacy and Surveillance

The rise of data-driven commerce raises urgent civil rights and privacy concerns that the Federal Trade Commission (FTC) must act to protect, a broad array of consumer, civil rights, and civil liberties organizations wrote in a letter to newly-installed FTC Chair Lina Khan and the FTC commissioners.

The groups, including CFA, called on the FTC to “use all tools at its disposal” to address the problem, including:

  • initiating rulemaking and taking other appropriate actions to regulate unfair and deceptive commercial data practices detailed in the letter;
  • creating an Office of Civil Rights; and
  • committing greater resources to aggressively enforce against unfair and deceptive practices.

Separately but simultaneously, CFA and a broad array of other organizations posted an open letter to the FTC calling on the agency to use its rulemaking authority to ban the corporate use of facial recognition technology, ban continuous surveillance in public spaces, and stop industry-wide data abuses.

“In purchasing smart surveillance devices that record everything we do and say, consumers unknowingly supply Big Tech with endless streams of data,” they wrote. “The data collected fuels and solidifies corporate monopolies at the expense of consumers, workers, and communities. The harms caused by this widespread, unregulated corporate surveillance pose a direct threat to the public at large, especially for Black and brown people most often criminalized using surveillance.”

The letter details particular concerns related to Amazon, but it notes that, “Rulemaking is needed to stop widespread systematic surveillance, discrimination, lax security, tracking of individuals, and the sharing of data. While Amazon’s smart home ecosystem, facial surveillance technology, and e-learning devices provide a good case study, these rules must extend beyond this one technology corporation to include any entity collecting, using, selling, and/or sharing personal data.”

“Consumer Federation of America and many other organizations are urging Congress to create a new Data Protection Agency to address commercial surveillance and other pressing privacy issues,” said Susan Grant, CFA’s Director of Consumer Protection and Privacy. “But in the meantime, the Federal Trade Commission must use all the tools at its disposal to protect consumers from unfair and deceptive data practices.”

Bill Would Protect Consumers from Predatory Lending

Legislation has been introduced in the Senate that would extend the Military Lending Act’s 36% interest rate cap on consumer loans to all Americans, including veterans, Gold Star Families, and unactivated reservists. CFA was among 188 groups and academics, representing all 50 states and the District of Columbia, who sent a letter of support for the Veterans and Consumers Fair Credit Act (VCFCA) to members of the Senate Banking Committee in July.

The bill would address “the problems caused by unaffordable, predatory payday, auto-title, and similar forms of loans” by “reestablishing a simple, common sense limit on predatory lending,” thus reestablishing “usury laws effective in virtually every state throughout most of the twentieth century.” It would also prevent hidden fees and loopholes, maintain low industry compliance costs from rules already in effect under the existing law, and preserve stronger state protections.

“Payday loans disproportionately target and harm those who have historically been excluded from mainstream financial services,” said Rachel Gittleman, CFA’s Financial Services Outreach Manager. “By disproportionately locating storefronts in majority Black and Latino neighborhoods, predatory payday lenders systemically target communities of color, stripping these consumers of wealth and further exacerbating the racial wealth gap. This legislation not only protects Black, Latino and other consumers of color who have been targeted by predatory lenders, but also protects other communities, including veteran, low-income, rural, and senior citizen consumers, targeted by high cost lenders who see their historic financial exclusion as a ticket to exploitation.”

“We applaud Senator Jack Reed, Senator Jeff Merkley, and Chairman Sherrod Brown for their leadership in introducing this critical legislation,” said Rachel Weintraub, CFA’s Legislative Director and General Counsel. “All consumers should be able to access safe, affordable credit without being forced into a downward spiral of high-cost debt.”

Pandemic-Related Issues Impact 2020’s Top Ten Consumer Complaints

Pandemic-related problems were among the top ten consumer complaints made to state and local consumer agencies, and they also topped the list as the worst, fastest-growing, and newest complaints on CFA’s 2020 Consumer Complaint Survey Report.

“COVID-19 generated complaints about everything, from appliance repairs to childcare, trash pick-up to towing,” said Susan Grant, CFA’s Director of Consumer Protection and Privacy. “Business closings, job lay-offs, supply chain disruptions, social-distancing requirements and travel restrictions put huge strains on consumers and businesses, as the survey shows.”

Thirty-four city, county and state consumer agencies across 18 states participated in the survey, which asked about the complaints these agencies received last year, what their biggest achievements were, and what new consumer protection laws were enacted in their jurisdictions.  Out of these agencies, 11 of them listed complaints related to COVID-19 in their top ten.

Price-gouging was the most common pandemic-related issue cited in the report, but the top ten complaints all were impacted by the pandemic. The report noted that the “pandemic forced many businesses to close, disrupted the supply chain, made providing repairs and other services more difficult, led to canceled events and travel plans, and created financial stress for companies and consumers.”

As noted in the report, state and local consumer agencies try to help individuals resolve their complaints through mediation, and some are also empowered to take legal action to stop abuses in the marketplace and obtain restitution for consumers.  Collectively, the 34 agencies that participated in the survey handled 280,413 complaints and recovered or saved approximately $262,973,073 for consumers in 2020.

“State and local consumer agencies had to turn on a dime to change how they worked because of the pandemic,” Grant said. “They continued to provide vital information and assistance to the public without missing a beat.”

In conjunction with the survey report, CFA released tips for consumers on how to navigate COVID-19 and other disaster situations.