Federal Judge Rules CFPB Unconstitutional

Contrary to precedent established by the D.C. Circuit and other jurisdictions, a senior status federal district court judge in New York City struck down the Consumer Financial Protection Bureau (CFPB) as unconstitutional last month. Noting that “every other jurisdiction in the country has held that the structure of the CFPB is constitutional,” CFA Financial Services Director Christopher Peterson called on CFPB Acting Director Mick Mulvaney and the New York Attorney General to act immediately “to protect consumers by appealing this order to the Second Circuit Court of Appeals.”

The decision arose in a joint law enforcement case by the CFPB and the New York Attorney General against a New Jersey-based lender named RD Legal.  The CFPB and the State of New York alleged that the company deceived 9/11 first responders with cancer and other illnesses as well as NFL football players with brain injuries out of millions of dollars. According to federal and state enforcement attorneys, RD Legal lured its customers into costly advances on settlement payouts with lies about the terms of their deals. The judge’s decision did nothing to reject the CFPB’s view that RD Legal deceived its customers.

Peterson explainedthat the opinion would likely be overturned if the CFPB appeals, since it “cobbles together some of the most extreme views of the CFPB and also severability jurisprudence.”

“The greater risk to the CFPB is that the political opponents of consumer protection law will use this decision as an excuse to deny consumers the benefit of their legal rights,” he said.

Pruitt Effectively Reinstates Polluting Truck Loophole

On his last day as Environmental Protection Agency (EPA) Administrator, Scott Pruitt announced that the agency would not enforce its own laws limiting glider trucks, allowing these trucks to avoid meeting the efficiency and emissions standards required of all new truck manufacturers. These glider trucks, which have inefficient diesel engines in new truck “shells,” use far more fuel and produce far more emissions than the engines in newly manufactured vehicles.

“By effectively reinstating the glider loophole for heavy-duty truck fuel efficiency standards, the EPA is refusing to fulfill its most basic responsibility to the American people. Allowing the unmitigated sale of these dirty, inefficient trucks will seriously harm consumers’ health and pocketbooks,” said CFA Executive Director Jack Gillis. “It will also hurt the companies and thousands of workers who are designing and building new, efficient, clean technologies aimed at meeting our strong, national truck efficiency standards.”

According to the Union of Concerned Scientists, Pruitt’s refusal to limit glider trucks sales will result in:

• More pollution per year than all of the vehicles involved in the Volkswagen emissions-cheating scandal;
• Just 5 percent of the fleet producing one-third of diesel emission from long haul trucks;
• Up to 12,800 deaths and countless other health issues including chronic breathing problems and asthma.

In addition to the detrimental environmental impacts, Pruitt’s decision essentially weakens a standard that saves consumers money. Fuel costs associated with shipping goods significantly impact the price of everything we buy, from a carton of milk to a flat screen TV. The glider loophole will diminish the 50 percent reduction in fuel consumption that the heavy-duty truck standards were projected to deliver, which would have saved Americans $29.5 billion dollars.

“CFA polling shows that Americans understand that they pay the price of big truck fuel costs. In fact, the average American household spends $1,100 a year to cover the cost of fueling trucks. If the standards are fully implemented, American households will save $250 dollars per year in the cost of goods and services,” explained Gillis.

Groups Urge FTC to Investigate Tech Company Privacy Practices

Eight consumer and privacy groups, including CFA, wrote to the Federal Trade Commission (FTC) in June, urging the agency to investigate the misleading and manipulative tactics of the dominant digital platforms in the United States, which steer users to “consent” to privacy-invasive default settings.

As the new General Data Protection Regulation (GDPR) was being implemented across Europe, users of digital services have been asked to consent to new privacy settings through numerous “pop-up” messages. As illustrated by a report from the Norwegian Consumer Council, Deceived by Design, the pop-up messages used by Google and Facebook manipulate users into accepting settings that will disclose personal information far beyond what is needed to use the service.

“The report analyzes the practices of three of the world’s largest technology companies, which process billions of people’s data,” the groups wrote. “There is the added risk that where these companies lead (or in this case fail to lead), others will follow.” They called on the FTC to investigate the issues highlighted in the report in greater detail.

“Consumers shouldn’t be tricked, misled, or forced to take multiple steps in making their privacy choices,” said CFA Director of Consumer Protection and Privacy Susan Grant.

Groups Oppose Petition to Weaken Dishwasher Efficiency Standards

CFA has joined with the Appliance Standards Awareness Project, Natural Resources Defense Council, and Northeast Energy Efficiency Partnerships in opposition to a petition filed by the Competitive Enterprise Institute with the Department of Energy (DOE) to establish a separate category for dishwashers operating one hour or less.

In a joint comment letter filed with the DOE in June, the groups argued that a separate category for short cycle dishwashers could lead to weaker efficiency standards. That, in turn, would lead to more energy and water consumption and thus, higher bills for consumers.

“There is no need for a separate standard for dishwashers that run an hour or less – there are many dishwashers already on the market that have a short cycle. What is important to consumers is that their dishes are clean when done, washed efficiently using less energy and water, and that the dishwasher runs quietly,” said Mel Hall-Crawford, CFA Director of Energy Programs and Special Projects.

Hazardous IKEA Furniture Remains in Homes Two Years After Recall

Two years after the Consumer Product Safety Commission (CPSC) initiated the largest product recall in history, millions of IKEA Malm and similar hazardous dressers remain in consumers’ homes. Safety advocates including CFA, Kids In Danger (KID), Shane’s Foundation, Consumers Union (CU) and parents Jeremy and Janet McGee continue to call on IKEA and the CPSC to take further action to get more of these dangerous products out of homes.

“All companies must publicize a recall of hazardous products as widely as possible, especially since the CPSC does not always require companies to notify consumers directly,” the groups warned in a statement to the press. “Every means possible must be used to reach consumers who are using this unstable dresser and may be unaware of its history or the danger.”

The CPSC initiated the recall in 2016 due to the dressers’ propensity to tip over onto children and crush them. In 2017, the death of a ninth child prompted IKEA to re-announce the recall of its dressers. Additionally, IKEA revised the number of units said to be affected downward, from 29 million to 17.3 million. Despite requests from CFA and other safety advocates, IKEA has not provided any updated recall information dated after January 1, 2017.

The most recent data from IKEA includes the following:

• 175,000 refunds provided to consumers;
• 268,000 consumers provided with anchoring straps following the recall; and
• 439,000 anchoring straps sent out by IKEA prior to the dressers’ recall, in a program that began in July 2015 following the deaths of two children.

“Overall, IKEA’s information indicates that consumers have been left to fend for themselves,” explained the groups. “At best, only around 1% of consumers have had the unstable furniture removed and been issued a refund. Many of those counted as ‘participating in the recall’ were issued anchoring straps prior to the recall. And in the cases where IKEA has sent consumers straps, it has no way to know if the furniture left in homes actually has been anchored.”

In addition to withholding information from safety advocates, IKEA has also kept consumers in the dark. Following the 2016 recall, IKEA only posted the recall on its Facebook page a handful of times, along with occasional general reminders to consumers to secure their furniture as part of IKEA’s broader “Secure It” campaign – not specifically letting consumers know that the unstable furniture in their homes was recalled.

“Our groups call on IKEA and the CPSC to provide updated data on the effectiveness of the recall, a complete accounting of action taken to date to alert consumers to the recall, and a renewed concrete effort by both to reach consumers who currently possess this deadly furniture and urge them to remove the recalled product from their home and get a refund. In addition, IKEA and the CPSC should join our organizations in working for a strong mandatory standard that covers all clothing storage units, includes requirements for test weights that reflect the risk of injury or death to all children under six, and better replicates real-world use,” concluded the groups.

CFA Calls on USDA to Promptly Adopt Common Sense GMO Labels

The U.S. Department of Agriculture (USDA) has proposed a rule to require labeling of genetically engineered or “GMO” foods, but the rule needs extensive revisions, CFA wrote in a comment letter filed with the agency earlier this month.

“Upwards of nine out of ten Americans want the right to know whether the food they buy contains GMO ingredients,” said Thomas Gremillion, Director of CFA’s Food Policy Institute. “USDA should act expeditiously so that these consumers no longer remain in the dark.”

According to Gremillion, the labels need to be comprehensive, comprehensible, accessible, and timely. That means they should cover all GMO food, use terms that American consumers understand, provide information to all consumers, “not just those who have a smartphone, the latest apps, and reliable internet access, or the time to send text messages soliciting information about food ingredients,” and avoid unreasonable delay, such as a proposed implementation exemption that would allow some companies to put off labeling until 2022.

As described in greater detail in the CFA comment letter, the USDA proposal raises significant concerns on all four counts.