CFA News

CFAnews Update – March 20, 2019

CFA Joins in Lawsuit Against Fuel Economy Standards Roll-Back

In response to the Trump Administration’s effort to roll back reasonable fuel economy standards, CFA filed an amicus brief with the D.C. Circuit last month in a lawsuit against the Environmental Protection Agency’s  (EPA) action to withdraw the Final Determination on the mid-term review of the standards for model years 2022-2025 vehicles. The suit, brought by the California Attorney General, 16 other states, and the District of Columbia, is intended to halt the Administration’s plans to substantially weaken fuel economy standards for cars, SUVs, and light-duty trucks.

The Obama-era standards, which were agreed upon by a group of stakeholders that included 13 automakers, unions, environmentalists, and consumer advocates, would gradually increase fuel efficiency of vehicles from model years 2021 to 2025.

“CFA has been championing higher fuel economy standards for over ten years because gasoline is a major household expense,” said CFA Executive Director Jack Gillis. “In fact, right now the average household spends about two thousand dollars per year on gas. The gradually increasing standards currently in place will significantly reduce this household expenditure which is why, in every poll CFA has conducted during the past ten years, consumers have favored keeping those standards in place.”

CFA’s amicus brief focused on three areas:

  • Consumer Savings: Withdrawing the Final Determination significantly harms consumers through the elimination of billions of dollars in consumer savings at the gas pump. While the EPA cites gas price fluctuations as a justification for its reversal, gas price fluctuations are one of the main reasons consumers support the standards.
  • Consumer Preferences: The “EPA is claiming that consumers’ desire for standards has changed since the Final Determination was issued in 2017,” the brief states. However, “the agency’s record, including CFA surveys, reveal that consumers strongly prefer higher fuel economy standards.”
  • Low-Income Consumers: The EPA “claims that low-income consumers will be hurt by higher fuel economy standards because they are forced out of the new car market.” However, CFA argues in the brief that this ignores the reality that only about 2% of low-income consumers purchase new cars. Higher standards will ensure a steady flow of increasingly fuel efficient vehicles into the used car market, which is primarily where low-income consumers purchase vehicles.

“Reversing the ill-considered and illegal withdrawal of the Obama administration’s Final Determination supporting the MY 2022-2025 standards is important because it affirms the evidentiary support for the rule,” noted CFA senior fellow Mark Cooper. It is anticipated that the case will to be heard in the U.S. Court of Appeals for the D.C. Circuit this summer.  “CFA will continue to vigorously fight for higher standards and their enormous benefits for hardworking American families who depend on their vehicles for work and family transportation,” he added.

Public Interest Groups Call on FTC to Investigate Facebook for Deceptive Practices

Consumer advocacy groups, including CFA, sent a letter to the Federal Trade Commission (FTC) last month asking the agency to “investigate whether Facebook has engaged in unfair or deceptive practices.”

Consumer advocates are making this request based on new information that came to light following a class action lawsuit in 2012. The lawsuit’s plaintiffs allege “that Facebook tricked children into making in-game purchases and then made refunds almost impossible to obtain,” violating Section 5 of the Federal Trade Commission Act and the Children’s Online Privacy Protection Act (COPPA), the letter states.

In the letter, the consumer groups argued that Facebook’s practices had resulted in substantial injury to consumers. Examples include one teenager who “incurred $6,500 of charges in a few weeks.” In just one three-month period, “consumers lost hundreds of thousands of dollars they did not intend to spend,” the groups wrote.

Not only did Facebook target young people just trying to play games, “consumers could not reasonably avoid these purchases, which appear to have been made largely without knowledge, let alone informed consent,” the groups wrote. Many of these disputed purchases were designed so that “children did not realize they were spending real money,” they added. There was often no authorization for use of the parent’s credit card, with parents expressing surprise “that the child wasn’t prompted for some sort of authorization first.” Facebook even encouraged game developers to follow business-as-usual practices, according to the groups, which encouraged children to spend money, a practice Facebook termed “friendly fraud.”

Citing these and other violations to COPPA, the groups are urging the FTC to investigate what personal information Facebook has collected from children. While Facebook maintains that children under 13 may not use its service, unsealed documents showed that Facebook was aware that many of the games it offered were popular with children under 13, the groups wrote. Moreover, Facebook does not provide a children’s privacy policy, nor does it give any notice or obtain consent from parents for the collection and use of personal information from users under the age of 13, they added.

“As Facebook and other online platforms for entertainment are increasingly trying to attract younger users, it is crucial for the FTC to act to protect their privacy and make clear that appropriate and harmful commercial practices will not be tolerated,” said Susan Grant, CFA Director of Consumer Protection and Privacy.

CFA Urges HHS to Strengthen Food Safety Goals

With the Department of Health and Human Services (HHS) recently proposing its Healthy People Objectives for 2030, CFA submitted comments to the agency earlier this year detailing concerns regarding the objectives and urging the agency to set more ambitious food safety goals.

Developed by the HHS Advisory Committee on National Health Promotion and Disease Prevention Objectives for 2030, the Healthy People goals are intended to “guide public health authorities in addressing challenges including foodborne illness and antibiotic resistance.” However, CFA Director of Food Policy Thomas Gremillion expressed concern that “the most recently proposed goals on food safety are less comprehensive than in previous years, and less ambitious than preexisting guidelines.”

In his letter to the Advisory Committee, Gremillion detailed several shortcomings with the proposed goals. In general, he wrote, the 2030 goals are narrower than the 2020 goals, dropping “prior objectives around compliance with food preparation and storage guidelines… [as well as] the goal of increasing the proportion of fast-food restaurants where food employees do not contact ready-to-eat (RTE) food with bare hands.”  In addition, he wrote, “the 2030 objectives omit several goals related to reducing the burden of antibiotic resistant (ABR) foodborne pathogens.”

Gremillion also offered several suggestions for broadening the scope of the proposed objectives, including: drawing from the data in the National Antimicrobial Resistance Monitoring System for Enteric Bacteria (NARMS), and utilizing the NARMS data to prevent an increase in the proportion of drug-resistant bacteria collected from food.  He also urged HHS to set a target of reducing sales of antibiotics for use in food animals by 50%, adjusted for livestock populations and weight.

With the latest U.S. estimates showing that “each year in the United States, 48 million people are sickened by a foodborne disease, 128,000 are hospitalized and 3,000 die,” Gremillion’s overall recommendation to the Advisory Committee is that “the 2030 objectives should include updated versions of the 2020 food safety objectives unless they are no longer relevant.”

Stronger State Regulations Could Save Americans Billions on Auto Insurance

Auto insurance rates have risen at a significantly slower pace in states that actively regulate auto insurance prices than those with less vigorous oversight, according to an analysis of nearly 30 years of data released by CFA last month. California, the state with the strongest rules in the nation, maintained the slowest pace of growth of any state while also fostering the second most competitive auto insurance market in the nation, according to the analysis.

“The data shows that drivers save more money when insurance companies face scrutiny and are required to abide by consumer protections standards,” said J. Robert Hunter, CFA’s Director of Insurance and co-author of the report.

The report used 2015 data from the National Association of Insurance Commissioners (NAIC) and calculated the change in both total auto insurance expenditures and auto liability premiums around the country since 1989. In addition to looking at the states individually, the report considered how consumers and companies fared under the several different approaches to rate regulation common around the nation.

Overall, states that use a “prior approval” system saw “better consumer outcomes than states with weaker approaches to oversight,” according to the report. “The states that ask insurance companies to demonstrate the appropriateness of rate hikes before imposing them raise rates the least, without sacrificing industry profitability or market competitiveness,” explained CFA’s insurance expert and study co-author Doug Heller.

CFA’s study offers a number of insights to policymakers and regulators for approaching auto insurance price regulation in a more consumer-friendly fashion, including:

  • Adopting a prior approval approach to rate setting;
  • Incentivizing safe driving and loss reduction by requiring that customer premiums rely primarily on driving-related factors, such as driving record and miles driven annually;
  • Enhancing competition by balancing supply and demand, guaranteeing good drivers that they will get auto insurance from the insurer they choose, at the lowest rate that insurer group has for that consumer;
  • Preventing the pass-through to consumers of inefficient company costs, such as bloated executive salaries, fines and penalties, and lobbying expenses;
  • Providing support for consumer involvement in the rate setting process; and
  • Bringing full transparency to the ratemaking process.

“We have been studying America’s auto insurance markets for years, and California has set the standard for savings, fairness, and real competition,” Hunter said. “If American drivers want to see significant auto insurance savings, they should demand the kind of consumer protections that California voters gave themselves 30 years ago.”

Consumers Need Data Protection Policies to Meet 21st Century Privacy Challenges

A group of 16 consumer, privacy, and civil rights advocates released a Framework for Comprehensive Privacy Protection and Digital Rights in the United States earlier this year that calls for comprehensive federal legislation that would ensure a basic level of privacy protections for all individuals in the United States, while still allowing states, as “laboratories of democracy,” to continue to innovate and respond appropriately to rapidly changing technology and new privacy concerns.

CFA was among the organizations to release the framework, which calls on Congress to establish a new data protection agency with the resources, rulemaking authority, and effective enforcement powers that the Federal Trade Commission (FTC) lacks. In addition to the establishment of this new agency, the framework also calls for:

  • Federal enforcement of Fair Information Practices (FIPS) and the widely followed OECD Privacy Guidelines.
  • The ability for consumers to pursue a private right of action that provides meaningful redress without a showing of additional harm should a company violate the federal privacy law.
  • Establishment of algorithmic transparency to reduce bias and discrimination and increase the fairness of automated decision-making, which is used to determine eligibility for jobs, housing, credit, insurance, and other life necessities, so that individuals will have the right to know the basis of an automated decision that concerns them.
  • Prohibition of “Take it or Leave it” terms that require individuals to waive their privacy rights in order to use products or services.
  • Promotion of privacy innovation to minimize or eliminate the collection and disclosure of personal data.
  • Limiting government access to personal data through a clear standard in a privacy law for any data disclosure.

“We face a crisis in the United States with companies tracking our movements, spying on our families, profiling us for profit, and ignoring our basic rights as human beings to privacy and fair treatment,” said CFA Director of Consumer Protection and Privacy Susan Grant. “As Congress considers privacy legislation, it is essential that it provides strong obligations for data holders, rights for individuals, and enforcement powers.

“Our elected officials must also respect the rights of their states to take the steps they deem necessary to protect their constituents’ privacy,” Grant added. “As part of any federal legislation, we want an independent data protection agency that can focus exclusively on establishing strong and sensible rules of the road for data collection and use, provide guidance as new privacy concerns arise, and effectively enforce compliance with data protection obligations.”