Advocates Head to the Hill for Stronger Consumer Financial Protections

Over 120 consumer advocates from 29 states headed to Capitol Hill last week as part of the third annual Consumer Lobby Day to meet with their members of Congress and urge them to support strong consumer financial protections for all Americans. The effort focused on predatory lending, forced arbitration, and the need for a strong Consumer Financial Protection Bureau to enforce the rules of the road.

Among the specific asks, Consumer Lobby Day participants engaged on the following issues:

• Opposing predatory lending and adopting a universal 36% rate cap for lending products.
• Passing the Forced Arbitration Injustice Repeal Act (the FAIR Act) to eliminate forced arbitration in consumer and employment contracts.
• Refocusing the CPFB on its consumer protection mission including by rejecting anti-consumer rules, such as the recent proposal to roll-back payday protections, and by protecting its independent funding and structure.

”Consumer Lobby Day was a fantastic opportunity to unite advocacy groups from around the country in support of these important issues,” said CFA’s Director of Financial Services Advocacy and Outreach Leandra English. “These advocates – who work every day in their communities on behalf of consumers – brought their experience and perspective to their members of Congress, and emphasized the need for an increased focus on consumer protection.”

DOE Rollback of Light Bulb Standards Will Cost Consumers Billions

The Trump Administration has proposed to roll back lightbulb efficiency standards due to take effect in January 2020 for a wide range of bulbs not previously covered by any standards, a move that consumer advocates argue would cost consumers $14 billion cumulatively, or $115 annually per household by 2025.

CFA and the National Consumer Law Center (NCLC) submitted comments to the Department of Energy earlier this month urging the agency to abandon the proposed rollback. They argued that implementing the “General Service Lighting” (GSL) standard of 45 lumens per watt for these types of bulbs beginning January 1, 2020 is critically important as lighting comprises about 10% of a household’s electricity bill.

“Consumers will be robbed of greater energy cost savings” if DOE proceeds with its proposed rollback, said CFA Director of Energy Programs and Special Projects Mel Hall-Crawford. “It is critical that the Administration supports cost-effective energy efficiency measures.”

An earlier standard for the common A-type, pear shaped household bulbs that went into effect in 2012 already demonstrates that the market can successfully transition to more efficient “light emitting diode” (LED) bulbs, the groups noted. Thanks to that standard, consumers will save almost $8 billion in energy costs by 2025. “As manufacturers invested in the highly efficient light emitting diode (LEDs) bulbs, prices decreased by almost 90% from 2012 to 2016,” they wrote.

For the three-way bulbs not currently covered by the GSL standard, the purchase price of the more efficient LED is nearly twice as much as the inefficient incandescent bulbs. Even with the sizeable price difference, the greater efficiency of the LED makes it 85% cheaper over a 1-year period and would save a consumer almost $100 compared to the incandescent bulb. The difference in price is recouped in less than a year.

There is also widespread consumer support for the light bulb standards. A recent CFA survey found that almost three-quarters (71%) of respondents support federal efficiency standards for light bulbs, compared to only 29% opposing standards, and almost two-thirds (64%) support including several types of light bulbs not currently subject to standards. Not surprisingly, consumers who have had experience with LEDs are much more likely to support lighting efficiency standards compared to those who have no experience with LEDs.

“The bottom line: consumers support light bulb efficiency standards because they save money,” Hall-Crawford said. “Energy saved whether in the residential, commercial or industrial sectors benefits consumers and our economy. DOE’s ill-conceived proposal to roll back the GSL lighting standard should be withdrawn,” she concluded.

Advocates Make Last Ditch Plea to the SEC to Fix Flawed Advice Standards

With the Securities and Exchange Commission (SEC) reportedly close to finalizing its controversial advice standards for broker-dealers and investment advisers, investor advocates met with SEC Chairman Jay Clayton last month to discuss their concerns regarding the proposed standards and the basic changes that would be needed to ensure that the standards are consistent with investors’ reasonable expectations while preserving investor choice. The groups reinforced that message in a follow-up letter to the Chairman in which they warned that the regulatory package, as drafted, does not achieve that goal.

“On the contrary,” the groups wrote, “unless the standards for brokers and advisers alike are strengthened and clarified, they will fall well short of investors’ reasonable expectations.” They outlined concrete fixes that the Commission would need to adopt:

• To ensure that the new “best interest” standard for broker-dealers actually raises the bar over the existing requirements under the FINRA suitability standard;
• To prevent brokers from placing their own interests ahead of customer’s interests and to prevent firms from creating harmful conflicts that would undermine compliance with the best interest standard.
• To preserve protections investors currently receive when they rely on their broker as a fiduciary adviser in a long-term relationship of trust.
• To ensure that key account opening recommendations – such as recommendations to roll over a retirement account or recommendations regarding what type of account to open – are covered by the standard.
• To ensure that investors are better protected from conflicted advice in their dealings with investment advisers.
• To provide investors with informative and comprehensible disclosures on which to base decisions regarding which type of professional to engage and which type of account to open.

“These proposed fixes do not represent the full range of changes we believe can and should be adopted to improve the rule,” the groups wrote. “Rather, we view these fixes as the minimum necessary to ensure that the proposal meaningfully raises the bar on investor protection. All of them can be adopted working within the Commission’s chosen regulatory approach. As a result, they would not require the Commission to go back to the drawing board or restart its regulatory process from scratch.”

“Unfortunately, we see little evidence that the Commission is prepared to acknowledge the extent to which the market for investment advice is broken, that investors suffer real financial harm as a result of pervasive conflicts of interest, and that the proposal is completely inadequate to address that problem,” said CFA Director of Investor Protection Barbara Roper. “While we hope to be proved wrong, and will withhold final judgement until we see a final rule, there is a very real likelihood that investors will be no better protected, and may be worse off, after this rule is adopted than they were before.”

Safe Food Coalition Opposes Plan to Relocate USDA Research Agencies

In response to the U.S. Department of Agriculture’s announcement of a list of finalists for the proposed relocation of the Economic Research Service (ERS) and the National Institute of Food and Agriculture (NIFA), members of the Safe food Coalition called on Congress earlier this month to stop the efforts to diminish the impact of these key research agencies and their efforts to improve America’s agricultural production and ensure the safety of our food supply.

These two research agencies are crucial to developing effective food safety policies. ERS researchers study how consumers react to food safety outbreaks and recalls and examine how private markets and government regulation connect to create the U.S. safety net for meat and poultry products. NIFA is a leading funder of research aimed at advancing agriculture-related sciences, finding innovative solutions to the most pressing local and global agricultural issues, and ensuring the long-term viability of our agricultural systems.

The USDA announcement comes after repeated proposals from the Trump Administration to research budget at USDA. The proposed 2020 budget goes so far as to zero out the entire ERS budget for food safety research. Congress, however, has maintained funding for the ERS’ agricultural and food safety research and continues to support NIFA’s research agenda as well.

The plan to move these research agencies was announced by Secretary Purdue in the summer of 2018. Since then, morale at the agencies has plummeted and veteran staff have left in droves. This has left food policy advocates worried due to the vital role of these agencies in informing food safety policy.

“Economic policy analysis and research on the prevention of foodborne illness is vital to protecting consumers from foodborne illness,” said CFA Director of Food Policy Thomas Gremillion.  “Both ERS and NIFA play a critical role in the translation of food safety science into policy and practice, and Congress should not allow the Trump Administration to devalue the role of these agencies through its ill-conceived relocation scheme,” he added.

Consumer Advocates and Industry Members Come Together for the 53^nd Annual Consumer Assembly 

CFA hosted its annual Consumer Assembly earlier this month with keynote speeches from Rep. Jackie Speier (D-CA), Rep. Katie Porter (D-CA), veteran political commentators Rich Galen and Mike McCurry, Public Citizen President Emeritus Joan Claybrook, MIT Professor and author Simon Johnson, leading consumer reporters Susan Hogan and Herb Weisbaum, and American Enterprise Institute Resident Scholar and author Norm Ornstein. The conference also included numerous general session and breakout discussions on a wide range of topics such as: autonomous vehicles, predatory debt collection, real estate markets, excessive prescription drug pricing, and more.