Biden Urged to Support Consumer Protections During Pandemic

As COVID-19 continued to spread across the country at alarming rates, CFA sent a memo to the Biden-Harris Transition Team last month outlining urgent consumer protections that are needed so that families can weather this unprecedented emergency. In particular, CFA’s memo notes that, 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.

Although Congress passed an additional stimulus package in late December, and numerous federal agencies slightly extended expiring moratoriums, it is expected that consumers will continue to face unprecedented financial challenges well into the future. Meanwhile, most protections outlined by CFA remain unfulfilled, making quick additional action by the new administration essential. “We look forward to a new Administration and a new Congress that will create new opportunities to enact desperately needed consumer protections created by the public health pandemic and the subsequent economic crisis,” stated Rachel Weintraub, CFA Legislative Director and General Counsel.

CFA’s memo addresses eight policy areas and includes over 20 recommendations that can be implemented to provide relief for American consumers and their families.

Banking and Credit

• Prohibit negative credit reporting. No one should see their credit record harmed as a result of the pandemic. A temporary moratorium on all negative credit reporting related to payments missed during the crisis is drastically needed, as well as longer protections upon request for people who face lasting financial hardship from the outbreak.
• Halt all debt collection activity. Debt collectors should not be allowed to start new lawsuits, and pending cases should be stayed. All new and existing garnishments, setoffs, car repossessions, utility shutoffs, and evictions should be stopped, and all requests to stop automatic payments should be promptly honored.
• Prevent accrual of additional fees and interest. No late fees, default interest, or compounding interest should accrue for any debt until the pandemic eases significantly and normal employment patterns resume. Banks should stop charging overdraft and nonsufficient funds fees.
• Prevent predatory lending by capping interest rates on new loans at 36%. Interest rates on any new credit extended during the emergency should be capped, and there should be clear and enforceable prohibitions against predatory lenders and other profiteers taking advantage of people during a health crisis and severe economic stress.
• Require credit reports to be provided in Spanish and other languages used by consumers who are Limited English Proficient (LEP). Although CFA appreciates the credit reporting bureaus providing free, weekly credit reports during the pandemic, many LEP consumers are unable to access their credit reports, or are significantly hampered in doing so, because credit reports are not provided in the language in which they are proficient.

Housing

• Require payment forbearance and flexible repayment options for all types of payment obligations, whether mortgages are federally guaranteed or not. Mortgage companies, landlords, banks, auto lenders, and other creditors should be required to provide forbearances on payments for the duration of the crisis, and for a period after to allow folks to get back on their feet.
• Establish a national emergency declaration related to the COVID-19 pandemic that specifically includes eviction moratoriums and rental assistance for landlords and tenants as components of the disaster relief granted.
• Place a temporary moratorium on foreclosures and similar actions while a homeowner is in forbearance or seeking post-forbearance repayment arrangements.
• Provide emergency rental assistance to millions of American households who are threatened with severe housing instability due to the pandemic. Rental assistance should preserve housing stability and prevent homelessness via future rent payments, unpaid rent arrearages, and to a limited extent, utility payments and unforeseen operating costs associated with responding to the COVID-19 pandemic.
• Provide temporary payment relief to homeowners facing a financial hardship due to COVID-19 that interferes with their ability to make mortgage payments, regardless of whether the loan is federally backed.
• Ensure that all homeowners receive notice of their options if they are facing a COVID-19 hardship, including in-language communications for borrowers with limited English proficiency and information about housing counseling.

Student Loans

• Cancel all student loan payments for the duration of the crisis. During that time, the government should make payments on students’ behalf. Short of that, the suspension of payments on federal student loans should be extended.

Consumer Protection

• Increase consumers’ access to affordable communications services. Service providers must abandon pricing practices that maximize revenues, suspend overcharges for “excess” data usage, terminate service cut-offs, and increase network availability to the public. The federal government must ensure that no individuals or communities are left behind.
• Ensure access to essential utility services (electricity, water, gas). For those experiencing financial hardship, utilities must provide flexible, deferred (re)payment plans, eliminate customer deposits as well as late payment fees, suspend disconnections, and re-connect customers who were previously disconnected due to inability to pay. Funding should also be increased for energy assistance programs.
• Require big data platforms to promote the public interest. Big data platforms must remove misleading information. Non-commercial pandemic information from public health, safety and governmental entities must be given a prime location on all screens.
• Prevent misleading advertising and price-gouging. Advertisers, and the media carrying ads, must ensure that claims related to the coronavirus are completely accurate. Online marketplaces must reject products and services making misleading claims or that offer basic necessities at unfairly inflated prices.
• Support consumers’ rights to pay for retail purchases with cash.

Travel

• Mandate fairness in the skies. Airlines must waive cancelation and change fees for all consumers who do not feel safe flying during the federal state of emergency. Consumers who are entitled to refunds should receive them without delay.
• Require common-sense safety measures for air travel. The Department of Transportation (DOT) should require that masks be worn by all passengers and workers on airplanes and in airports.
• Reverse new rules that hamstring DOT aviation rulemaking and enforcement.
• Accommodate hotel customers. Hotels that receive emergency funding from the federal government during the pandemic should be required to honor requests for room and event cancelations without penalty and to refund deposits until the federal state of emergency is suspended or travel limit recommendations are lifted.

Privacy

• Build protecting privacy into the government’s COVID-19 response. Technological tools deployed in response to the COVID-19 crisis must be non-discriminatory, effective, voluntary, secure, accountable, and used exclusively for public health purposes.
• Enact comprehensive privacy protection. The pandemic has made clear the need for a comprehensive baseline U.S. privacy law.

Insurance

• Reduce auto insurance premiums to reflect reduced driving. Insurers should be required to provide refunds and discounts to consumers who have substantially cut back on driving due to COVID-19.

Food

• Extend food assistance benefits under the Supplemental Nutrition Assistance Program (SNAP). Maximum SNAP benefit levels should increase, and SNAP time limits should be suspended.
• Provide all workers with paid sick leave. Paid sick leave benefits not only protect workers, they protect all of us. No one should have to choose between paying the bills and exposing their community to a deadly virus. The Families First provisions should be extended and expanded.

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FTC Launches Study of Children’s Online Privacy Practices

Responding to a year-old request from CFA and 30 other advocacy groups, the Federal Trade Commission (FTC) announced last month that it had issued orders under Section 6(b) of the Federal Trade Commission Act to nine social media and video streaming companies, demanding that they provide information about how they collect, use, and present children’s personal information, their advertising and user engagement practices, and how their practices affect children and teens. The companies – Amazon.com, Inc., ByteDance Ltd. (which operates the short video service TikTok), Discord Inc., Facebook Inc., Reddit Inc., Snap Inc., Twitter Inc., WhatsApp Inc., and YouTube LLC – were given 45 days to respond.

In a joint statement, FTC Commissioners Rohit Chopra, Rebecca Kelly Slaughter, and Christine S. Wilson acknowledged that, “Policymakers and the public are in the dark about what social media and video streaming services do to capture and sell users’ data and attention. It is alarming that we still know so little about companies that know so much about us.” They stated that the Commission’s 6(b) study will “lift the hood on the social media and video streaming firms to carefully study their engines.”

In December 2019, CFA and 30 other advocacy groups responded to a request for comments from the FTC about whether changes were needed to the rules under the Children’s Online Privacy Protection Act (COPPA), urging the agency to first use its authority under Section 6(b) of the FTC Act to answer “critical questions about online digital advertising, children on general audience platforms, data brokers, and education technology that will inform the agency’s approach.”

“Websites, apps, platforms, and content providers all have access to a wealth of user information— including classes of information that constitute ‘personal information’ under COPPA,” the groups stated. “Service providers collect this information to deliver functionality, but also to analyze performance and track, predict, and modify user behavior… Unnecessary data collection is common, transparency is rare, and misrepresentations about data practices are far too widespread. A comprehensive examination of these practices is severely needed,” the groups added.

Last month’s request for data “is exactly what we wanted,” said Susan Grant, CFA Director of Consumer Protection and Privacy. “It is crucial for the FTC to understand exactly what these companies are doing with children’s personal information in order to determine whether the current COPPA rules are sufficient and propose effective public policy solutions if they are not.”

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CFPB Finalizes Weak Debt Collection Rule

The Consumer Financial Protection Bureau (CFPB) finalized the second half of its debt collection rule last month in a manner that doesn’t go nearly far enough in protecting the public. CFA joined other advocacy organizations in expressing disappointment that the rule misses critical opportunities to protect consumers.

According to advocates, the rule “does not go far enough to provide needed consumer protections on key issues,” including:

1. Time-barred (“zombie”) debt collection:“In an improvement from the draft proposal, the rule holds collectors to the Fair Debt Collection Practice Act’s strict liability standard and abandons the weaker “know or should know” standard that the CFPB previously proposed… However, the rules fall short of the needed prohibition on the collection of time-barred debt, leaving debt collectors free to pursue collection of debts beyond the statute of limitations. The rule also permits such collection activities without including the prohibition against filing lawsuits on debts after consumers inadvertently revive a time-barred debt with a small payment or acknowledgment.”
2. Language access: “The final rule allows debt collectors to provide translated validation notices to consumers, but it does not require collectors to provide translations, or even to require a short statement in Spanish explaining what the document is. The Bureau has also failed to provide translation of the model validation notice into the languages most commonly spoken by consumers with limited English proficiency.”
3. Validation notices: “The CFPB has expanded the amount of information that must be provided to consumers in the initial validation notice and created a model validation notice for consumers. Unfortunately, the notice adopted is still likely to be confusing to many consumers and needs further testing and improvements.”
4. Parking debts: “The final rule includes a prohibition on parking debts on a consumer’s credit report without first providing notice of the alleged debt to the consumer. However, new communication rules from the first partof the final debt collection rules raise concerns about consumers missing such notices, especially if sent electronically without the consumer’s consent.”

“This two-part rule doesn’t do enough to protect consumers,” said Rachel Gittleman, CFA Financial Services and Membership Outreach Manager. “We are in the midst of a global pandemic with vast financial implications for American families. Consumers are in desperate need of more protections, and this rule simply falls short. More protections are needed to adequately protect consumers during this crisis,” Gittleman concluded.

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USDA Proposal Would Derail School Meal Nutrition Standards

A new rule proposed by the U.S. Department of Agriculture (USDA) in the waning days of the Trump administration would “reverse progress that the National School Lunch and Breakfast Programs have made in serving healthier meals” and would “foist upon the nation’s children a surfeit of junk food products laden with excessive salt, added sugars, and refined carbohydrates,” according to CFA Director of Food Policy Thomas Gremillion.

CFA submitted a comment letter opposing the proposed rule, entitled “Restoration of Milk, Whole Grains, and Sodium Flexibilities,” late last month. In the comment letter, Gremillion noted that the National School Lunch and Breakfast Programs—updated under the Healthy, Hunger-Free Kids Act of 2010 (HHFKA)—“[has] made tremendous progress in serving healthier meals with less salt, less fat (and no trans-fat), fewer added sugars, and more fruits, vegetables, and whole grain.”

For several years, however, industry opponents to healthy school lunches succeeded in blocking full implementation of the rule by persuading members of Congress to pass appropriations riders that prevented the standards from going into full effect. This led to USDA taking the unprecedented step of attempting to carry out anticipated congressional intent, reasoning that Congress’ past “repetitive legislative action manifests a clear Congressional message to USDA.” CFA argued that “this attempt to shield Congress from accountability was unlawful, and earlier this year, a federal court agreed.”

Now, USDA is once again acting contrary to actual Congressional intent enshrined in law, but claiming that its actions are based on science and evidence. In reality, however, science and evidence support doing more to improve school meal nutrition, not less, according to Gremillion.

As Americans continue to grapple with the challenges of the COVID-19 pandemic, the issue of food insecurity is becoming increasingly apparent. Since the pandemic began, the percentage of households with children that are experiencing food insecurity has tripled. For many of the children in these households, school meals represent their most important source of nutrition. Fortunately, research has shown that higher standards for school meals make a difference. For example, “the nutritional quality of school meals increased in the years following the HHFKA’s passage by over 40%, without an increase in so-called ‘plate waste.’ Researchers credit this boost in nutrition with substantial declines in the risk of obesity among children in poverty, and hundreds of millions of dollars in healthcare cost savings.”

“A seven year delay in implementing sodium reduction targets, watering down whole grain standards from 100% to 50% of grains served, and carving out an exemption for chocolate and other flavored milk products, will do little to support struggling school meals programs, while significantly damaging public health. We urge USDA to follow the law and to develop school nutrition standards on the basis of the most recent Dietary Guidelines for Americans,” Gremillion stated.

“The Biden Administration will have its work cut out for it in getting USDA’s school meal program back on track,” he added. “The new leadership at USDA should take early action to make clear that it will implement and continue to strengthen healthy school meal provisions without delay, and that it will work to promote children’s health rather than narrow industry interests.”