CFA News

CFAnews Update – February 25, 2021

Groups Urge USDA to Take Action on Poultry Pathogens

Consumer Federation of America, along with partner groups Center for Science in the Public Interest, Consumer Reports, and members of Stop Foodborne Illness, submitted a petition to the U.S. Department of Agriculture (USDA) calling for the agency to develop enforceable standards to reduce foodborne infections caused by Salmonella and Campylobacter in poultry.

“For too long, the regulatory system for protecting consumers from these food safety risks has been broken,” said Thomas Gremillion, CFA Director of Food Policy. “Poultry producers need to step up their game, but without enforceable performance standards and supply chain control requirements, the companies that invest the least in food safety get rewarded.”

The petition, submitted late last month, urged USDA to take two actions to address the issue of foodborne infections caused by tainted poultry.

  1. Adopt Enforceable Standards

“The current performance standards used to assess Salmonella and Campylobacter in finished products have had only limited effectiveness in bringing down product contamination rates, while not impacting human illness number,” the groups wrote. “One of the reasons these standards may have failed to achieve the desired public health outcome is that they aim to reduce the prevalence of all Salmonella equally despite well documented variability in health risk among human Salmonella infections as a result of differences in virulence among individual Salmonella serotypes, strains, and genotypes, including presence of genes associated with antibiotic resistance… This non-specific approach means that much of the effort invested into Salmonella control may have the effect of eliminating the most common Salmonella serotypes that are highly prevalent in poultry but not be sufficient for those commonly associated with human illness in the United States… The current system also fails to ensure clear consequences for establishments that fail to meet the existing prevalence-based performance standards… Thus, greater gains are possible with Salmonella if the agency takes ambitious steps to target the most harmful Salmonella types, removing them from inspected products.”

  1. Require Supply Chain Controls

“FSIS officials, as well as other United States food safety experts both within and outside of government, have repeatedly recognized the need for ‘comprehensive farm-to-table’ risk management and the potential for pre-harvest interventions to enhance public health,” the groups wrote. “Such an approach recognizes that pathogens are not limited to a single production environment and can move from livestock and poultry to produce and other commodities without regard to regulatory oversight… We therefore urge FSIS to require establishments to adopt supply chain programs, following similar steps already undertaken by the FDA in its regulations establishing preventive controls for processed food. Specifically, these FDA regulations include a requirement that a ‘supply-chain program’ be established for raw materials and other ingredients that a receiving facility identifies as ‘containing a hazard(s) reasonably likely to occur and in need of control.’”

“A supply chain program would help FSIS expand past its current narrow regulatory focus on slaughter and processing, which misses a critical upstream opportunity to minimize bacterial contamination of live birds prior to receipt at slaughter establishments…Evidence from other countries has established the effectiveness of a more holistic, multi-hurdle approach that sets targets for reducing Salmonella contamination at every step in the supply chain, including live production,” the groups added.

“Given the continuing public health burden of Salmonella and Campylobacter, individuals and families in the United States deserve food safety standards that protect them from the risks posed by the foods inspected by this agency. In the interest of protecting public health and meeting the reasonable expectations of America’s consumers, the time has come to set enforceable finished product standards and extend necessary reforms to the U.S. poultry industry based on a risk-based approach,” the groups concluded.

Critical Consumer Protections Needed in Next COVID Package

Over 80 advocacy groups, including CFA, sent a letter to President Biden earlier this month calling for the President to include critical consumer budget-related items in the upcoming COVID relief package.

“Over the past eleven months, we have seen the COVID-19 pandemic wreak havoc on the lives of Americans. Our coalition has written many times to urge Congress to protect people’s homes, cars, bank accounts, income, and benefits so that they can weather this crisis,” the groups wrote. “Unemployment remains alarmingly high, and many families find themselves in precarious situations as state governments struggle to catch up with the backlogs of unemployment applications. Due to underlying health and socioeconomic disparities, low- and moderate-income families and communities of color, especially Black, Latinx, and Native American communities, have been hit particularly hard by illness, unemployment, and economic instability.”

The letter highlights budget-related consumer protections that could be included in a reconciliation package and that would have an immediate impact on consumers.

The groups called for President Biden to support three specific actions:

  • Halt garnishment and offset of tax refunds, which contain stimulus payments, EITC, and Child Tax Credit payments. “While a full wage and bank account garnishment moratorium and longer-term reform of garnishments are needed, at a minimum, we must prevent reductions in this season’s tax refunds…Protecting tax refunds from offset or garnishment will stimulate the economy, protect families by allowing the funds to be used to cover necessities as Congress intended, and mitigate the need for additional federal benefit or stimulus spending.”
  • Provide funding for a Housing Assistance Fund and housing counseling. “This funding would provide support for homeowners who need cash assistance to avoid foreclosure beyond available programs and would help stabilize the housing market and prevent unnecessary foreclosures. Support for struggling homeowners is an important step for racial equity at a time when, according to the Household Pulse Survey of the U.S. Census Bureau, 24.7% of Black borrowers and 19.8% of Hispanic borrowers are not current on their mortgage payments, compared to 8% of white borrowers.”

“While the House has included funding for housing assistance, the fight is far from over,” said Mitria Wilson-Spotser, CFA Director of Housing Policy. “The Senate should act immediately to support housing assistance in the final COVID relief package. Housing relief is essential to ensuring that consumers and the economy can successfully recover from the pandemic.”

  • Cancel student debt. “The President has the authority to cancel federal student loans without legislation, and a large and growing coalition of advocates continue to urge him to use it. Congress should consider both pausing student debt payments and providing debt cancellation to those who have been left out of the payment pause: private student loan borrowers, and those with commercially-held loans and Perkins loans. Cancelling student debt would stimulate the economy, reduce the racial wealth gap, and provide much needed stimulus to help all Americans weather the pandemic and financial crisis.”

“Americans will continue to struggle with unique and unprecedented financial challenges well into the future,” said CFA Legislative Director Rachel Weintraub. “Although Congress has passed numerous packages to address the economic and health fallout from the pandemic, Americans need more help. We do hope that bipartisan consensus can be reached on a stimulus package, but if reconciliation is used, we encourage President Biden to provide critical protections to homeowners from foreclosure, consumers from garnishment, and both private and federal student loan borrowers.”

CFPB Urged to Give Consumers True Control over Their Data

In response to a Consumer Financial Protection Bureau (CFPB) proposed rulemaking regarding consumer access to financial records, CFA and five other advocacy groups sent a comment letter to the CFPB earlier this month urging the agency to take action on a number of data security and consumer data choice issues, including issuing a strong rule mandating true consumer control over their own data, substantive limits on how companies can use and share data, and meaningful consumer choice over whether consumers want to share that data.

The groups’ comment letter urges the Bureau to take action in five areas:

  1. The CFPB should issue a strong rule to ensure protections for consumers accessing their own account data. “The potential benefits for consumers of authorized data access, assuming strong provisions for consumer control, security, and use limitations, are significant, as consumer use of their own data could provide a better alternative and provide true competition to the Big Three credit bureaus,”
  2. The CFPB must issue strong rules mandating true consumer control over their own data, substantive limits on how companies can use and share data, and meaningful choice over whether consumers want to share that data. “Consumers face the dangers of losing control over the data, having it used against them, and having their privacy invaded. The type of consent currently obtained by data aggregators and the lack of limits on use of that data leave consumers vulnerable to abuse, exploitation, and security risks.”
  3. The CFPB should encourage aggregators to move away from screen scraping and should encourage financial institutions to accept data sharing through application programming interfaces (APIs), they recommended. However, “the Bureau cannot prohibit screen scraping until all consumers at any financial institution have the ability to access their own data through APIs,” they wrote. “The CFPB should set broad-based standards for authorized data access, such as a common data dictionary, or require the establishment of industry-wide standards. The CFPB should ensure data security through supervision of data aggregators and data users; also, aggregators should be governed by the FTC Safeguards Rule issued under the Gramm-Leach-Bliley Act.”
  4. The CFPB should guarantee that consumers are protected when their account data is accessed and used by companies. “It should exercise supervisory authority over data aggregators, and ensure application of strong protections under the Electronic Funds Transfer Act, Equal Credit Opportunity Act, and the Fair Credit Reporting Act.”
  5. The CFPB should “adopt rules under Section 1033 to give consumers the right to information beyond deposit account data, such as: (a) a copy of the consumer report or risk score that a covered person used in connection with providing the consumer a financial product or service; (b) records retained by a covered person pursuant to Regulation Z or Regulation B; and (c) behavioral data sold by the credit bureaus to covered persons for marketing purposes.”

“Consumers assume that third-party data aggregators to whom they provide access to their financial accounts will use this sensitive information appropriately and keep it secure, but they’re unlikely to discover problems until it’s too late,” said Susan Grant, CFA Director of Consumer Protection and Privacy. “It’s up to CFPB to exercise strong oversight to protect consumers in this fast-growing financial services sector.”

As Some Life Insurers Deny Coverage, NAIC Urged to Protect US COVID Patients

According to recent reporting in Europe, some life underwriters are imposing waiting periods before COVID-19 patients, even those who have recovered, can apply for coverage. Further, some insurers are limiting coverage for certain age groups as part of their response to the pandemic. Others are postponing applications for anyone who had COVID-19 or lived with someone who got the disease.

“People who had COVID-19 and recovered who need life insurance coverage to protect their families should be able to get it under clear underwriting rules publicly available for them to review,” said CFA Director of Insurance J. Robert Hunter. “We understand reasonable precautions are needed, but to harm COVID patients and their families again is unacceptable,” Hunter continued.

As a result, Hunter and James Hunt, CFA Life Insurance Actuary, sent a letter to state insurance regulators calling on them “to step in and issue a rule to protect consumers from arbitrary insurance company practices.”

According to their letter, the NAIC should “adopt a model rule for life underwriters who might delay or deny life insurance coverage because an applicant had COVID or may have had it previously. [Further,] The rule should require that the underwriting rules employed be made public prior to use, be totally transparent and meet standards for reasonability as to what would trigger delay or denial of coverage.”

“This rule is also important for current policyholders who may be considering dropping their coverage for a period to save some money to help the family get through the economic consequences of COVID. These policyholders need to know the possible danger of such action,” Hunt stated.

New Bill Would Reboot Antitrust Enforcement

A new bill introduced earlier this month by Sen. Amy Klobuchar (D-MN) would address the necessity for strong enforcement and modernized antitrust legislation in the face of growing corporate concentration and market power abuse. The bill, titled “the Competition and Antitrust Law Enforcement Reform Act” (S. 225), received support from CFA Director of Research Mark Cooper and Antitrust Advocacy Associate Amina Abdu in a press release earlier this month.

“Sen. Klobuchar’s bill is an important step in the right direction,” said Abdu. “For decades, market power has been allowed to grow unchecked, with little scrutiny given to blatantly anticompetitive mergers or conduct. This bill is a long overdue effort to redress these harms and protect consumers from rampant market power abuse.”

Cooper and Abdu recently outlined the steps necessary for “Rebooting Antitrust and Regulation for Digital Communications” in an article in Competition International. According to their work, if the U.S. is to “restore effective oversight and pull the strands of policy into a coherent overall approach… [The] effort will require a mix of regulatory and legislative actions,” including:

  1. Reversing the theory of “sufficient” competition and the deregulation to which it gave rise,
  2. Asserting full Title II authority over nondiscrimination and universal service,
  3. Bringing the full weight of Title II authority to bear on achieving universal service to broadband, and
  4. Restoring full dual jurisdiction by repealing the Trinko decision “that quashes antitrust even when there is only a whiff of regulation present.”

“Enforcement has always been the cornerstone of antitrust,” Cooper stated. This bill “reaffirms and clarifies goals, encourages and supports enforcement, and weeds out practices and defenses that should never have been allowed but have become embedded in antitrust practice. Importantly, it does all of this without setting specific limits or picking winners and losers among companies…We commend Sen. Klobuchar for proposing a balanced and thoughtful approach to rebooting antitrust. Congress needs to enact this legislation and let the agencies do their job before it tries to micromanage the structure of this vital sector,” concluded Cooper.

CFA Predicts Impacts of Uncoupled Real Estate Commissions

Three major lawsuits have been filed against real estate industry leaders for “coupled” commissions that are paid by home sellers to both listing and buyer brokers involved in the sale. Industry attempts to dismiss the first two lawsuits have been rejected by judges, and experts believe this litigation may well lead to the courts requiring uncoupled commissions. Uncoupling would require buyer brokers to charge commissions to their clients and free sellers from paying these buyer broker commissions.

Stephen Brobeck, CFA Senior Fellow, offers ten predictions as to how uncoupling commissions might impact consumers and real estate brokers:

  1. “Mortgage lenders and the GSEs (Fannie Mae and Freddie Mac) will quickly accept the desirability of buyer broker commissions being financed, then work with brokers to facilitate this transition. These lenders will understand that to afford a new home, many buyers will need these fees to be included in their mortgage. Lenders will also know that these fees are currently largely or wholly included in the sale price, so the size of loans will not change appreciably.
  2. Listing and buyer brokers will need to revise sales forms. With the help of the [National Association of REALTORS (NAR)], they will do so quickly and at a relatively modest one-time expense.
  3. Consumers will remain focused on the sale and the sale price of the home or homes, not on commission levels. And they will depend on their real estate agent to help them sell or find a property at a desirable price.
  4. For some time, probably well over a year, average commission levels will not decline. Many sellers will think they benefit by being charged commissions of 2.5-3 percent rather than 5-6 percent.  Buyers will accept the fact that they now must pay their brokers 2.5-3 percent when brokers explain to them that this commission was previously included in the sale price.
  5. A flurry of press coverage about uncoupling will not be seen or fully understood by most consumers; however, sporadic but continuous coverage of new opportunities for negotiating commissions will eventually be heard by many. These opportunities will be amplified by stepped-up marketing from discounters who no longer will be constrained by anti-rebate laws or compulsion to offer commission splits.
  6. Over time, average commission levels will decline but not for most successful, full-time agents and brokers. The many marginal agents, a large percentage of some two million licensed agents whose median annual gross income is less than $50,000, will feel pressure to cut commissions. Confident in their long-time success serving clients, well-established agents will not feel such pressure.
  7. As marginal agents increasingly have difficulty generating even modest incomes, a number will cease active practice. Their clients will then be available to established agents, whose expanding clientele will allow some reduction in commission levels while maintaining gross incomes. Overall, clients will receive better customer service.
  8. Discounters will increase market share but this share will remain relatively small because most consumers want effective personal service from a single agent. While technology can routinize much paperwork, most buyers and sellers will still desire the assistance of a professional who can guide and reassure them.
  9. Increasingly, entry to the profession will be gained through internships, apprenticeships, and administrative positions. The current trend to shift routine work to salaried administrators will accelerate.
  10. To a greater extent the industry will look like a profession – with well-established, full-time agents dealing with clients and their issues while delegating routine tasks to salaried administrative staff. As a professional association, NAR will continue to lead a more economically efficient and respected industry that provides better overall value to consumers.”