CFA News

CFAnews Update – March 22, 2017

EPA Rescinds Fuel Economy Standards

President Trump announced last week that his Administration is rolling back fuel economy standards, a move that risks increasing the cost of vehicle operation for consumers and making American automobiles less competitive in international markets.

In a press statement reacting to the news, CFA Public Affairs Director Jack Gillis said rescinding the Final Determination that kept in place the current fuel-economy standards “is an attack on consumer protection standards that help all Americans save money. Hard-hit, hard-working Americans are the ones benefiting most from these standards, and are the ones that will be hurt most if Wall Street and Washington lobbyists succeed in rolling back these standards.”

Years of CFA polling has shown that a vast majority of Americans – including Republican, Democrat and even Trump voters – support standards making cars and trucks run on less gas for good reason – it puts hard-earned money back into their pockets.

“These standards, originally agreed to by 13 automakers, unions, consumer groups, and environmentalists, are reasonable, achievable and protect both consumer buying choices and differences in manufacturer vehicle mixes,” Gillis said. “Tragically, the biggest beneficiaries of rolling back fuel efficiency standards will be the foreign oil companies, just as we are reducing our dependency on foreign oil.”

Numerous cost-benefit analyses show that these standards can save consumers thousands of dollars over the life of the vehicle in reduced gas costs, even at today’s lower prices. In addition, they insure that U.S. car companies remain globally competitive and will prevent the need for another government bail-out as happened in 2009 when gas prices caused dealer’s lots to be filled with unsold gas guzzlers.

“It is rare that regulatory standards have such diverse support and produce across the board financial, industry, and consumer benefits. These standards received this support because they considered the needs of both manufacturers and car buyers,” said CFA Research Director Mark Cooper.


House Bill and Executive Order Leave Americans More Vulnerable

Earlier this month, the House voted 246-176 to adopt H.R. 1004, the Regulatory Integrity Act, which limits the ability of federal agencies to inform the public regarding their work on science-based rulemaking. In a letter sent to Representatives, CFA joined public interest groups urging opposition to the bill on the grounds that it would lead to decreased public awareness and participation in the rulemaking process in direct contradiction of the Administrative Procedure Act and agencies’ authorizing statutes, which specifically provide for broad stakeholder engagement.

“The legislation strictly prohibits agencies from issuing ‘public communications’ that ‘emphasize the importance’ of a particular agency action unless the communication has the ‘clear purpose of informing the public of the substance or status’ of the particular action. The legislation applies to a wide swath of regulatory actions including rulemakings, guidance, policy statements, directives and adjudications,” the groups stated.

“While H.R. 1004 assumes that the distinction between informing the public of an agency action and emphasizing the importance of that action is self-evident, in practice the distinction is anything but clear. As a result, agencies are likely to avoid any public communications that risk running afoul of this ambiguous prohibition, no matter how informative the communication might be for the public.”

In separate letter to President Trump, public interest groups, including CFA, urged the President to withdraw his January 30th executive order, which establishes a regulatory budget and requires two regulations to be eliminated for each new one adopted. “This sweeping, unlawful and arbitrary directive cannot be justified on any rational grounds,” the groups wrote. “If implemented, its flawed reasoning and vague drafting would leave Americans more vulnerable to financial, safety, health, and environmental hazards.”

“Consumers expect and depend upon the implementation of safeguards to protect them. Efforts to make it harder to finalize rules or to publicize these safeguards are contrary to the public interest,” said CFA’s Legislative Director Rachel Weintraub.


FCC Delays Critically Important Personal Privacy Protections

In a blow to consumer privacy, the Federal Communications Commission (FCC) has voted to stay data security requirements which were scheduled to go into effect earlier this month. The requirements would have compelled broadband internet providers to take reasonable measures to safeguard customers’ personal information.

The delay leaves broadband customers without any recourse if their data, which can contain very sensitive personal information, is compromised. The FCC has attempted to mollify critics by arguing that consumers aren’t without protection, because many internet service providers have voluntarily pledged to keep their data secure. However, this is a promise which the FCC cannot enforce.

The stay was issued in part because the FCC argues that implementing the security requirements would cost internet service providers too much money, particularly since the requirements may be nullified later if the agency decides to roll back recently-approved broadband privacy rules. Broadband internet providers have been petitioning the FCC aggressively to roll back these rules.

“The broadband privacy rules represent the first time that consumers have really been put in the driver’s seat when it comes to how information gleaned from their online activities is used,” said CFA Consumer Protection Director Susan Grant. Those rules are now in danger, she added, not only from the new majority at the FCC but from members of Congress who want to use the Congressional Review Act to repeal them and prevent the agency from ever issuing similar rules again.

“It was a giant step forward to give consumers these privacy rights, and losing these rights would be a giant step backwards, at a time when we should be working to enact legislation that would put consumers in control of their online privacy more broadly,” Grant said.


DOL Proposes Harmful and Unwarranted Delay of Fiduciary Rule Implementation

The Department of Labor has proposed a 60-day delay of its conflict of interest or “fiduciary” rule, which is due to be implemented beginning April 10. The delay is designed to provide time for a reconsideration of the rule, as required by a Presidential Memorandum issued earlier this year.

In a comment letter filed last week in opposition to the delay, CFA urged the Department to allow implementation to begin as scheduled in April, when the revised definition of investment advice and best interest standard are due to take effect. The Department could conduct its reconsideration of the rule during the transition period between initial implementation of these core principles in April and implementation of the rule’s more technical operational requirements in January 2018.

Moving forward with the delay as proposed would be arbitration and capricious, CFA argued. The DOL’s own cost-benefit analysis shows that the harm to retirement savers from the proposed delay dwarfs the projected cost savings. The letter also chronicles the proposal’s extensive procedural violations, as well as additional evidence that the harm to retirement savers is far greater than estimated in the cost-benefit analysis.

“If this proposed delay is finalized, I don’t see how it will withstand legal scrutiny. The sloppy, rushed, and non-deliberative process the Department is engaging in here stands in sharp contrast to the rigorous process the Department engaged in to adopt the rule,” said CFA Financial Services Counsel Micah Hauptman.

“Enactment of the rule last year represented the most significant advance in investor protection for working families and retirees in at least a generation,” said CFA Director of Investor Protection Barbara Roper.  The rule requires all those who give retirement investment advice to charge reasonable fees, act in the best interests of their customers, and rein in conflicts that encourage harmful advice.

“Although financial firms and their lobbyists fought hard to prevent the rule from being adopted, the majority of firms have been working in good faith over the past year to implement it, and have done so in ways that are already delivering tangible benefits to retirement savers,” Roper said. “If the Department fairly evaluates the rule and its impact on retirement savers, the only reasonable conclusion will be that the rule should be implemented as drafted without further delay.”


Nation’s Largest Funeral Home Company Charges High Prices, Doesn’t Disclose Them On Their Websites

The nation’s largest funeral home company, Service Corporation International (SCI) – whose principal brand is Dignity Memorial – charges high prices on their “death care” products and refuses to disclose these prices on their websites, according to a report released earlier this month by the Funeral Consumers Alliance (FCA) and CFA.

“SCI funeral homes can maintain high prices in part because they fail to disclose these prices,” said CFA Executive Director Stephen Brobeck.  “In today’s marketplace, most consumers begin shopping for expensive products by searching online.  SCI’s refusal to disclose prices on their websites makes comparison shopping very difficult.”

The report is based on research of 35 SCI funeral homes and 103 other independent funeral homes in nine major metropolitan regions.  The research tabulated the prices of three types of service found at every funeral home – simple cremation, simple burial, and a full-service traditional funeral with a viewing of the body.

  • For a simple cremation in nine areas (Atlanta, Denver, D.C., Minneapolis, Philadelphia, Princeton, Seattle, Southern California, and Tucson) the median prices charged by SCI is $2,700, compared with $1,562 for other funeral homes.
  • Similarly, SCI Homes charged $2,845 for a simple burial while other funeral homes charged $1,893.
  • And for a full service burial, SCI Homes charged $7,750 while other funeral homes charged $5,241.

“Consumers charged high prices undisclosed online are not treated with dignity by the many funeral homes operated by Dignity Memorial,” said Executive Director of FCA Josh Slocum.  “Consumers would be wise to patronize those funeral homes that allow easy price comparisons.  And the Federal Trade Commission should facilitate this comparative shopping by extending their required price disclosures to funeral home websites.”