FCC Targets Unlawful Robocalls
Consumer groups submitted comments to the Federal Communications Commission (FCC) last month to offer strong support for the creation of a reassigned number database. When a consumer no longer uses a phone number, it is assigned to someone else who requests a number. The reassigned number database would enable robocallers to check to ensure that the numbers they are calling still belong to the people who agreed to receive such calls from them, not to new users of those numbers. In their comments, the consumer groups made a number of suggestions for what an effective reassigned number database would entail and emphasized the need to maintain liability for robocalls to cell phones made without consent.
“We heartily commend the Federal Communications Commission for its creativity and leadership evidenced in this proceeding to consider a reassigned number database. An effectively created and managed database will significantly reduce the number of unwanted calls to consumers, and will reduce liability under the Telephone Consumer Protection Act (TCPA) for callers,” the groups wrote.
They noted that unwanted robocalls—and consumer complaints about them—are increasing at an alarming rate, adding that:
- 2 billion robocalls were made during the first four months of 2018.
- This number represent an increase of more than 28% in the number of calls received by consumers during the same four-month period in 2017.
- In 2017, there were over seven million complaints about unwanted calls filed with the Federal Trade Commission, increasing from over five million complaints in the previous year.
- Unwanted calls are the leading cause of complaints to the FCC, triggering over 200,000 complaints yearly.
“This database won’t solve all the problems with robocalls but it would at least provide relief to consumers who are getting robocalls that were meant for someone else,” said CFA’s Director Consumer Protection and Privacy Susan Grant.
Court Dismisses Country-of-Origin Labeling Lawsuit
Despite finding that the absence of country of origin labeling (COOL) caused financial harm to domestic cattle producers that was “fairly traceable” to U.S. Department of Agriculture (USDA) policy, the U.S. District Court for the Eastern District of Washington dismissed a lawsuit challenging the USDA policy. Plaintiffs had challenged the legality of USDA rules that allow imported beef and pork to be sold to consumers without a country of origin label, or in some cases, with a “Product of USA” label. The court, however, ruled that the plaintiffs’ challenge was not timely.
“This decision should serve as wake up call to the Trump Administration,” said CFA Food Policy Institute Director Thomas Gremillion. “Not only is COOL wildly popular with consumers; it helps American farmers and ranchers compete on a level playing field.”
USDA had argued that the cattlemen lacked standing to challenge the COOL rules because they could not show that the policy actually hurt them. The court rejected that argument. Even so, it concluded that the lawsuit was barred by the statute of limitations, because the allegedly illegal policy “became part of the regulatory scheme” in 1989, not in 2016, when USDA repealed broader COOL requirements.
Until 2015, USDA required COOL for fresh beef and pork products, with labels indicating where the cow or pig was born, raised, and slaughtered. USDA had to eliminate these popular requirements, however, because Canada and Mexico sued the United States in the World Trade Organization (WTO). In 2015, an international tribunal ruled that COOL was an unlawful “trade barrier.” Later that year, Congress passed an appropriations rider that eliminated COOL.
Survey after survey has shown that large majorities of American consumers support COOL. For example, in a 2017 poll commissioned by CFA, eighty-nine percent of a representative sample of 1000 adult Americans favored, either strongly or somewhat, requiring food sellers to indicate on the package label the country of origin of fresh meat they sell.
“A new NAFTA could undo the effect of the WTO’s decision, and let USDA get back to serving American farmers and ranchers, and consumers, rather than big meat processing corporations,” Gremillion said.
SEC Makes it Harder for Investors to Receive Paper Fund Disclosures
In a vote behind closed doors, the Securities and Exchange Commission passed a measure that will make it more difficult for mutual fund investors who prefer paper documents to get fund disclosures delivered in their preferred format. The decision allows fund companies to default investors to electronic delivery of fund shareholder reports based on negative consent, an approach that will reduce investor readership of the disclosures without delivering meaningful cost savings.
“The Commission adopted this anti-investor proposal without providing any evidence that investors who prefer electronic delivery face any difficulties in exercising that choice, without taking into account extensive evidence that the change is likely to reduce investor readership of key disclosures, and despite the fact that promised cost savings, to the extent they exist at all, are likely to amount to pocket change for typical investors,” said CFA Director of Investor Protection Barbara Roper.
In its press release on the vote, the SEC presented the move as “an important part of the Commission’s effort to better serve Main Street investors,” Roper noted. In fact, as Commissioner Rob Jackson, the one commissioner to vote against the measure, has noted, reversing the default goes “contrary to everything we know about how individual investors actually behave.”
“An opportunity to improve mutual fund disclosures, as advocated by the SEC’s Investor Advisory Committee, has been squandered,” concluded Roper.
CFA to FTC and DOJ: Real Estate Commissions are High and Uniform
Participating earlier this month in a public workshop on real estate brokerage competition jointly sponsored by the Federal Trade Commission (FTC) and the Department of Justice (DOJ), CFA Executive Director Stephen Brobeck testified that buyers and sellers are charged relatively high and uniform commission rates, a sign that competition is failing.
Commission rates are high and uniform, Brobeck explained, mainly because consumers are at a great informational disadvantage, because buyer broker compensation is coupled with that of listing agents, and because a glut of agents exerts great social pressure within the industry to keep rates high. These factors also help explain why nontraditional brokers offering lower prices and/or price rebates have not yet gained significant market share, he said.
Consumers do not have reliable information about the quality of service provided by different agents and brokers in part, Brobeck noted, because large real estate portals with home listings, especially Zillow, have provided misleading information about agent service quality. In the future, such services could either benefit or harm consumers depending on the services they offer and how they structure these services.
“For several decades, the FTC and DOJ have done consumers a great service by monitoring, and when needed, promoting competition in residential real estate markets,” said Brobeck. “It is essential that the FTC and DOJ continue to closely scrutinize and object to anti-consumer practices, not just by traditional agents and brokers but also by large real estate portals.”
CFA Celebrates a Half Century of Accomplishments at Its 50th Anniversary Dinner Tonight
This year marks CFA’s 50th anniversary, which will be celebrated this evening at the Capital Hilton in Washington DC. The dinner will feature remarks from Senator Ed Markey, President and CEO of LeadingAge Katrinka Smith Sloan, Executive Director of Massachusetts Public Interest Research Group Janet Domenitz, Executive Director of Maryland Consumer Rights Coalition Marceline White, and President and CEO of Consumers Union Marta Tellado. The dinner will also recognize retiring CFA Executive Director Steve Brobeck and welcome incoming Executive Director Jack Gillis.