Watchdog Blog

Heritage Foundation Opposes Consumer Information, Well-Working Markets

This piece from Heritage is really rich -- it argues against Senate legislation that would require the Consumer Product Safety Commission (CPSC) to host a public database of consumer complaints.

[Background: Product safety legislation has passed both the House and Senate and is being negotiated in an informal conference. The House provision on the database would require CPSC only to create a plan for the database, then report back to Congress. We and other consumer groups support the Senate bill over the House bill because CPSC should have the authority -- even the requirement -- to create the database as soon as possible, not just develop a plan to create it and then await further instruction. Making this information available to the public would help consumers protect themselves when the CPSC fails to act -- and the agency is notoriously slow to act, whether by informing the public about hazards or issuing new safety rules. With a public database, consumers could do their own research on products to see whether problems exist.]

There are several serious flaws in Heritage's argument, starting with its surprising conclusion. The piece criticizes the Senate's database provision by arguing that the CPSC should not host a database at all, but then it concludes by promoting the House provision, which would require the CPSC to "craft a detailed implementation plan" for a database -- presumably so the agency can implement it. If Heritage really believed its argument, we could expect it to oppose the database all together, not to support the crafting of an implementation plan.

Where Customers are Never Right

Over at Creditcards.com -- a website that helps people pick (you guessed it) credit cards -- there is an article warning consumers about binding mandatory arbitration.  They highlight the dangers of forced arbitration and its differences from the civil justice system. 

One of the most alarming is that unlike court judges, arbitrators do not have to obey the rule of law.  They can ignore key evidence and flout the law because their decisions are usually secret (unless both parties agree to make them public) and are rarely appealable to a real court.  It’s no surprise then that Public Citizen’s report, The Arbitration Trap, uncovered that consumers lose 94 percent of the time in arbitrations in California.

Want to avoid forced arbitration?  Your only choices are to get an AARP card (if you happen to be a senior citizen) or join one of the credit unions that doesn't require it. 

If you get trapped in arbitration, read their tips to help keep things fair.

Nursing Home Arbitration

The Wall Street Journal recently published ($) an excellent front-page article describing one of the more egregious incarnations of binding mandatory arbitration – nursing home admission agreements. The money quote:

Nursing homes' average costs to settle cases have begun dropping, according to an industry study, even as claims of poor treatment are on the rise. The industry notes arbitration is slicing the number of patients winning big punitive judgments, the added penalties for severe negligence that can pump up the size of jury awards. Meanwhile consumer advocates, plaintiffs’ lawyers and even some arbitrators are decrying the practice.

The article goes on to describe the case of one Mary Hight, whose nursing home wouldn’t call an ambulance despite her being dehydrated and ill for days. Her daughter, Janice Cowart, resorted to pushing her uphill to a nearby hospital, where she died the next day. Even though the “arbitrator found the home was negligent both in allowing Ms. Hight to become dehydrated and failing to get her to an emergency room,” he only awarded $90,000. After legal fees from the arbitration, “We didn’t get one cent,” said John Estep, Janice Cowart’s brother.

Will the Pro-Civil Justice Candidates Please Stand Up?

Public Citizen is proud to join the Drum Major Institute and its coalition of organizations to support the “Pro Civil Justice Presidential Platform.”  Our goal is to get the attention of the presidential candidates and ask them to support our civil justice platform:

•Provide counsel for people who cannot afford it any important case;
•Ban forced arbitration in consumer contracts;
•Stop federal preemption of state consumer protection laws;
•Reduce secret settlements that keep health and safety information from the public;
•Ensure injured patients’ right to justice; and
•Effectively regulate the insurance industry to curb unfair practices.

These issues have been conspicuously absent from the candidates’ stump speeches.  We are not sure why, but we are going to find out.

WSJ's Recent Run on Forced Arbitration

by David Arkush and Taylor Lincoln

Wall Street Journal readers have heard a lot about binding mandatory arbitration recently. On Saturday, the newspaper’s editorial board used the Chamber of Commerce's biased survey on arbitration as justification for a fact-twisting polemic against the civil justice system. Today, the paper reported on a lawsuit against the National Arbitration Forum by the city of San Francisco, and readers weighed in with views on arbitration far more reasonable than those of the editors.

The Journal's editorial touted a recent Chamber survey claiming that 82% of voters would prefer to resolve a dispute with a company in arbitration in contrast to only 15% in litigation. Of course, survey participants were not informed that if a company forces you into arbitration, the company picks who resolves the dispute (what would Memphis think if Kansas got to pick the referees for tonight’s NCAA championship game?). Participants also weren’t told that these biased decisions are binding and almost always final -- meaning no appeals even if the decisions contain “silly factfinding” or are just plain “wacky.” (The are quotes from the Supreme Court and a federal appeals court!) Needless to say, the Journal’s opinion writers didn’t mention these flaws in the survey.

U. S. Chamber of Commerce Attacks Arbitration Fairness Act, Surprised?

The U.S. Chamber’s Institute for Legal Reform (ILR) yesterday launched a campaign to scuttle important consumer legislation pending in Congress.  The attack is aimed at the Arbitration Fairness Act (S. 1782/H.R. 3010) which is designed to protect consumers, employees and others from having binding arbitration imposed as the only means by which their disputes may be resolved.  For those of you who don’t know, the current problem with arbitration is its growing use by business to provide an edge in resolving disputes with their customers – and it’s appearing everywhere.  If you have a cell phone, credit card, bank account, auto loan, brokerage account, or a number of other goods services, chances are you’ve signed away your right to sue if things go wrong, without even knowing it!

This recent attack by the Chamber is in response to Public Citizen’s detailed report issued last fall which found that arbitrators employed by the National Arbitration Forum ruled against consumers in 94.7 percent of the 19,000 cases involving credit card holders.

Unsealing Safety

It would have been easy to miss a recent New York Times article about a class-action lawsuit brought by disgruntled consumers against Microsoft for misleadingly marketing Microsoft Vista as being ready for use on certain computers for which it was clearly not ready.  This case became more interesting when discovery led Microsoft to disclose a series e-mails to the company from some customers, who also happened to be Microsoft executives, documenting their own troubles with Vista. (Microsoft’s own Vice President in charge of Windows product management complained that incompatibilities with Vista turned his laptop into “a $2,100 e-mail machine[.]”)

Civil litigation serves the public good in a variety of ways: it helps to create accountability to the public in business, and deters potential bad behavior.  This case is also a prime example of how lawsuits increase transparency.  In the absence of formal legislative hearings, litigation gives the public a unique opportunity to peek into the inner workings of corporations that make obfuscation a routine business practice with the help of restrictive secrecy policies and high-powered PR masters.  Without a class action suit against Microsoft, the public likely never would have learned of the 200 or so e-mail messages and internal reports documenting the Vista marketing strategy and cataloging the various difficulties that Microsoft's own executives had with the program.

A Win in the Senate!

Today the Senate passed the Consumer Product Safety Commission (CPSC) Reform Act by a vote of 79-13.  After about three and a half days on the Senate floor, the bill emerged a bit stronger than it was going into the week.  This is a real victory for consumers.  You can read our coalition press release here and my press statement here.

We hope to see more changes at the CPSC than this bill provides, but we'll leave those for another day.  Tonight, we can relax and celebrate a little!

Consumers Are Winning on Product Safety in the Senate

by David Arkush

Here's an update on the CPSC bill (S. 2663) on the Senate floor this week.  The short story is, consumers are doing very well in the Senate so far this week.  Here are some highlights:

• On Tuesday, pro-consumer senators fought off the first attack on a strong CPSC bill: an attempt to replace the current Senate bill with weaker bill that passed the House in December.  You can view our comparison of the House and Senate bills here.  The attempt lost 57-39.  Not only did this stop a broad frontal assault on the Senate bill; it showed that opponents of the bill cannot muster the 40 votes they would need for any major blocking action.

What is the Hold Up with Product Safety?

The Consumer Product Safety Commission (CPSC) has been "working on" several rules to ensure product safety since at least 2004 (two since 1994!). These rules cover hazards that the agency itself blames for more than 900 deaths and more than $460 million in property damage every year.

These unfinished rules would help protect the public from:

• Bed rails, crib slats and baby bath seats that can suffocate, strangle or drown infants;
• Excessively flammable upholstery, bed linens and clothes that are among the leading causes of fire-related death in U.S. homes; and
• Cigarette lighters that, by the CPSC’s own analysis, fail to meet an industry-created voluntary standard at least 60 percent of the time.

Current law requires the agency to produce a final rule within 14 months of adopting an Advance Notice of Proposed Rulemaking (ANPR), a standard the agency has met only once since President Bush took office in 2001. Since 1990, the CPSC has completed 38 rules; just four of those were during the Bush administration.

Public Citizen’s new report, “Held Back: Incomplete Consumer Product Safety Commission Rules, Class of 2007,” details each of the rules that are in development and the reasons for the delays.

The CPSC is hamstrung by rulemaking procedures that are far more burdensome than those of most federal agencies. The rulemaking procedure established by Congress during the Reagan era requires the agency to provide double the usual amount of notice and opportunity for public comment, to explain repeatedly why it is not deferring to industry’s voluntary proposals, and to prove that any rule imposes as little burden as possible on industry.

Moreover, the agency’s procedures call for it to halt any rulemaking if industry creates a voluntary standard that appears likely to address the problem – even though such voluntary standards are unenforceable. Not surprisingly, industry often derails the CPSC’s efforts by strategically adopting voluntary rules.

These problems point to the need for Congress to reform the CPSC to fulfill its mission of protecting the public from hazardous products.  The Senate is considering a bill now that would give the CPSC some much-needed muscle.  You can write your senators here now.

Learn more and read the report at www.ToyingWithSafety.org.

Industry and Republican Allies Gear up to Fight Moderate Consumer Health and Safety Bill

by David Arkush and Graham Steele

Republicans and Democrats in the Senate recently spent weeks negotiating a moderate, bipartisan consumer product safety bill, the “CPSC [Consumer Product Safety Commission] Reform Act of 2007” (S. 2663). After these negotiations concluded, and with the bill cued go to the Senate floor soon, industry is making a last-ditch effort to derail or further weaken it. This week, Senator Jim DeMint (R-SC) and a few other Senate Republicans, apparently playing the role of mouthpiece for industry, circulated a strategy packet for defeating the CPSC bill. The packet includes a list of “Top Ten Reasons to Oppose the CPSC ‘Reform’ Act,” which is riddled with misstatements about the bill. Apparently, industry knows it can’t win an honest debate against an important consumer safety law, so it’s going dirty.

Wall Street Investors Oppose Arbitration

Who doesn't like binding mandatory arbitration?  In addition to Comcast customers, KBR employees, car dealerships, and credit card holders, now public investors have voiced their opposition.

According to a recent survey by the Securities Industry Conference on Arbitration (SICA), participants in the NASD and NYSE arbitrations overwhelming felt they were unfair and were dissatisfied with the outcome.  The North American Securities Administrators Association offers a glimpse into why--

Currently, almost every broker-dealer includes in their customer agreements a predispute arbitration provision that forces public investors to submit all disputes that they may have with the firm and/or its associates to mandatory arbitration. Securities arbitration cases are heard by a three-member panel that includes one “non-public” or securities industry member, and two “public” members, who may have worked in the industry. Neither of the public arbitrators is required to be an investor advocate, even though the non-public arbitrator is required to be an industry representative.

It's no wonder that many investors could feel "trapped."

Some interesting numbers:

• Nearly half of the customers who expressed their views believed their arbitration panel was biased;
• 62 percent believed the arbitration process was unfair;
• 70 percent were dissatisfied with the outcome;
• 49 percent stated that the arbitration process was too expensive, and;
• A striking 75 percent of customers who compared their arbitration process to their civil litigation process indicated that arbitration was “very unfair” or “somewhat unfair” compared to court.

Download the full report.

Why is Sessions Keeping Bush's Secrets?

Some presidents just have more to hide than others. 

We have been working to expose the secrets of the current administration, but now another senator is standing in the way.  Senator Jeff Sessions is the latest to block a bill that would return the presidential records to the American people.   

Bush's Executive Order 13233 was a direct attack on the Presidential Records Act of 1978, a law passed in the wake of Watergate that makes presidential records the property of the American people.  A president should not be allowed to legislate and lock away his records with a stroke of a pen.

But this is not just about Bush.  It's about the records of ALL presidents.

The bipartisan bill to undo the Bush order has passed the House by a veto-proof margin and is close to becoming a law, but Senator Sessions is still standing in between the people and their right to know. 

What you can do: Call Senator Sessions' office and ask why he is blocking S. 886 and tell him to stop obstructing a vote.

Time to Put Safety First

Defective and dangerous products - from lead-painted toys to vacuum cleaners that catch fire - are being allowed onto our store shelves and into our homes.  The Consumer Product Safety Commission (CPSC) has failed to do its job and protect American consumers. 

Public Citizen just released a study showing that manufacturers often wait nearly three years before telling the CPSC about defective products that can kill people - and the agency typically takes another seven months to warn the public.  Some of these products include infant swings implicated in six deaths.

We need a strong, effective agency that can warn the public quickly about dangerous and defective products - and enforce the law against violators.  Under current law, the CPSC must ask permission from manufacturers to get vital safety information to the public.  What's more, the agency can't fine companies enough to make sure that they comply with the law.

The status quo is unacceptable - the CPSC should protect American consumers, not manufacturers!

The Senate commerce committee recently reported out the Consumer Product Safety Reform Act of 2007 (S. 2045), a bill that would give the CPSC much-needed muscle.  Now it goes to the full Senate for approval.  But, as happens all too often in Washington, D.C., bills that are carefully honed in committee become unrecognizable after amendments, concessions and the inevitable congressional horse trading take their toll on a proposal’s original intent.

Please urge your senators to ensure that the Senate bill passes intact - without weakening changes - for everyone's health and safety. 

New Study Shows Deadly Delays in Notification of Dangerous, Defective Products

Today we released a new report showing that despite a law requiring manufacturers to provide the Consumer Product Safety Commission (CPSC) with "immediate" notification of dangerous products, there are long delays before the public learns of dangerous, defective products.

The study, Hazardous Waits: CPSC Lets Crucial Time Pass Before Warning Public About Dangerous Products, covers 46 cases since 2002 in which the CPSC fined manufacturers for failing to adhere to the law requiring prompt reporting.  In addition, companies fined for tardy reporting took an average of 993 days - 2.7 years - between learning of a safety defect in their products and notifying the CPSC.

Perhaps as shocking, the CPSC then took an average of 209 additional days before disclosing the information to the public - even though each case concerned a product defect so dangerous that the item was recalled.  Under current law, the CPSC cannot disclose information about dangerous products without court approval or manufacturer agreement.

Among Public Citizen's findings:

• Graco waited 11 years to report its faulty infant swing, which was linked to reports of 181 falls that resulted in six deaths and nine serious injuries, including bone fractures and concussions. Graco made the report only after CPSC staff contacted the company.
• Hoover waited five years to report a vacuum cleaner with a faulty switch that had caused at least 96 fires. The CPSC then took another 279 days before negotiating a recall and informing the public.
• By February 2000, Polaris Industries had received 1,147 reports of faulty oil lines on its ATV, including 42 instances where the hot oil started a fire and 18 cases in which the oil seriously burned a rider.  But the company didn't report the defect to the CPSC for another year.

It's time to change the law to give the CPSC the authority to truly protect consumers.  Read the study and more about the problems with the CPSC.

Halliburton Victim Twice Over

Today, Jamie Leigh Jones will appear before the House Judiciary Committee and tell how she was gang raped by her co-workers in Iraq while working for a Halliburton subsidiary called KBR. Afterwards, her assaulters confined her to a shipping container and warned that if she left Iraq for medical treatment, she’d be fired. That’s where she was found by agents sent by the U.S. embassy to rescue her — after her father called their congressman, Representative Ted Poe (R-Texas).

Now, Jamie Leigh Jones has been victimized twice over. Because KBR/Halliburton requires employees to sign contracts containing a binding mandatory arbitration (BMA) in the fine print, Jones is being denied her constitutional right to bring her perpetrators before a jury and be heard.

But Jamie Leigh Jones will be heard by Congress today — and then, lawmakers should waste no time in re-opening the doors of justice for Jones and the rest of us. It’s time to ban binding mandatory arbitration in employment and consumer contracts once and for all. There may be no other device being used today by Halliburton and other corporate giants that does more to systematically deny rights to workers and consumers.

Congress is beginning to focus.

A Holiday Wish: Safer Toys

The Consumer Product Safety Commission (CPSC) is supposed to monitor and protect us from dangerous toys and thousands of other products.  Instead, it has been notoriously cozy with the manufacturing industry.  The result: deadly toys and products on our shelves and in our homes.

On Thursday, December 12, the House Committee on Energy and Commerce failed to adequately strengthen the “Consumer Product Safety Modernization Act” (H.R 4040).

The House bill does not do nearly enough to strengthen the agency, which presently doesn't have the same power as other regulatory agencies.  Many improvements in authority and standards are needed.  Congress at the very least should require CPSC to give consumers an “early warning” about potentially dangerous products, mandate broader pre-market testing requirements of toys, provide for more timely product recalls, and allow CPSC to stop potentially hazardous imports at ports of entry.

Representatives Edward Markey (D-MA), Jan Schakowsky (D-IL) and Anna Eshoo (D-CA) should be commended for their efforts in trying to improve the bill.  But the committee has rejected their sensible amendments - including one by Eshoo to reduce the allowable level of lead in children's products.  It seems the Democratic leadership on the committee has cut a deal with the Republicans to pass a watered-down, industry-friendly bill. 

Are most of the committee members really more interested in protecting industry profits and their campaign contributions than consumers?

It’s not too late for the committee to put safety first, as they will resume consideration of the bill again Tuesday, Dec. 18.

The Consumer Product Safety Commission has been giving many gifts to industry. Now it’s time for Congress to go back to the workshop and put something better under the tree for consumers.

Tort Costs Plummet in 2006, So Says Insurance Industry Consultant

U.S. tort costs plummeted in 2006, admits insurance industry consultant, Towers Perrin in its 2007 update issued yesterday.  Given exploding prices both in the grocery store and at the gas pump, this latest admission is a welcome change from other “news.”  TP reports the largest percentage decrease in the 56-year period contained in their study and the first decrease since 1997, a decrease of 5.5 percent in 2006 from 2005.

Having panned TP’s objectivity and methodology in past years, we are wary of their conclusions generally. As in the past, TP concedes here that its study examines only one side of the U.S. tort system; the costs. It makes no attempt to measure the benefits of tort for consumers and the public. They do (somewhat disingenuously) say “any connotation that an increase in tort costs is undesirable is unintended.” As noted in the past, TP includes as part of its cost estimate administrative expenses that are commonly characterized as very inefficient. Half of the costs they report are not costs in any real sense; they are merely transfer payments from wrongdoers to victims. 

Given that this study is one-sided, based on faulty methodology and has no apparent purpose, what is the point of the update? Perhaps its purpose can be found in the “future implications” section of the study where TP opines that tort costs will rise in 2007, 2008 and 2009. That “nugget” may provide just what the enemies of our legal system need to carry on their campaign to limit the rights of victims to recover damages when they are injured.  However, before industry moguls pin their hopes on that prediction they should remember that in 2006 TP predicted by 2007 tort costs would hit their highest levels since 1987.(1)  As we have said in the past, when it comes to TP, don’t believe most of what you read.

(1) 2006 Update on U.S. Tort Cost Trends, Towers Perrin, www.towersperrin.com/tillinghast

A Self-Inflicted "Crisis"

When NY’s Superintendent of Insurance announced a 14 percent across-the-board rate hike for medical liability insurance on July 1, 2007, doctors raised a hue and cry that the increase threatened a crisis in access to care because doctors could no longer afford to practice in New York and would be leaving the state or otherwise restricting their medical practices.  As in the past, doctors again blamed the premium increases on skyrocketing claims and lottery awards and demanded tort reforms that would cripple meritorious malpractice claims by the victims of medical negligence.

Today Public Citizen released a report that exposes these claims of the doctors as full blown, deliberate and obvious exaggeration: A Self-Inflicted “Crisis:” New York’s Medical Malpractice Troubles Caused by Flawed State Rate Setting and Raid on Rainy Day Fund. These same claims have been made by doctors during each of the three cycles of rising premiums that have occurred over the past thirty-plus years. Our report shows that rising malpractice premiums are not the result of any escalation in the frequency or severity in malpractice payments. The increase has nothing to do with patients, lawyers, judges, or our courts. It reflects an insurance problem.

Public Citizen’s analysis of the best available New York data demonstrates that the number of malpractice payments made on behalf of doctors in 2006 was at its lowest point since 1991. The total amount of malpractice payments for doctors, adjusted for inflation, was near or below fifteen year average in three of the past five years.

The amount of malpractice litigation in New York has not changed appreciably over the past eleven years. Thus, it is clear that the 14 percent increase in premiums did not reflect a sudden or dramatic change in either malpractice payments or litigation behavior.

A Lemon Court

Car dealers aren't doing much for their image these days - so, buyers beware.  Though it's not surprising, Mother Jones reports that car dealers are increasingly turning to a sneaky little device to relieve themselves of accountability when a deal goes bad: binding mandatory arbitration. If you were to try to sue them for say, selling you a lemon, you might find yourself tapped in arbitration.  Binding mandatory arbitration is a losing proposition for consumers, as we found in our recent report on how credit card companies use the predatory practice.

Ironically, these same car dealers fought tooth and nail just a few years ago to ban similar arbitration clauses in their contracts with car manufacturers:

The National Automobile Dealers Association wrote members of Congress in 2000 that if they weren't outlawed for the dealerships, mandatory binding arbitration clauses would allow "multinational motor vehicle manufacturers…to be able to unilaterally deny small business automobile and truck dealers rights under state laws that are designed to bring equity to the relationship between manufacturers and dealers." Congress agreed and passed legislation protecting the dealers.

The good news is that Congress is considering a ban on binding mandatory arbitration in consumer and employment disputes.  Please take a minute now to let your members of Congress know that you want to keep your right to take shady businesses to a public court with a judge or jury, instead of being trapped in a rigged, for-profit system where bad business practices flourish.

Party at Joan's

Earlier this month, the Wall Street Journal ran an editorial accusing us of being hand-puppets of their favorite boogie men-- the trial lawyers--because we oppose binding mandatory arbitration.  According to the Journal, our work to preserve the constitutional right to a trial by jury makes us all cabernet-swilling sell-outs. 

In her published letter to the editor, Public Citizen President Joan Claybrook sets them straight: 

"Party at Joan's"
November 17, 2007; Page A9

Your Nov. 7, broadside ("Party at Ralph's") on arbitration was baseless. We
oppose mandatory not voluntary arbitration requirements buried in the fine print of consumer contracts because they shred consumers' legal rights in favor of a secret, expensive, business-dominated system.

The consumer attorneys attending a reception at Public Citizen's office are
legal aid and private attorneys who toil in some of the least glamorous
corners of the law. They see firsthand the unfairness of this
industry-created system to avoid accountability. They work for consumers
harmed by home foreclosures, truth-in-lending violations, unfair debt
collection practices, predatory lending, auto dealer fraud and other
marketplace abuses.

To acquire a credit card, buy a home or car, open a bank account, use a cell
phone or get cable television, consumers usually must sign a contract
mandating arbitration to settle disputes. A mere signature effectively
eliminates their constitutional right to the public courts, extinguishes the
right to appeal, favors corporate repeat offenders whom arbitrators want to please and imposes substantial upfront costs.

License to Malpractice

Some of you might have heard about the doctor in New York, Dr. Harvey Finkelstein, who risked exposing over 600 people to HIV, hepatitis and other deadly diseases by reusing syringes. Among the many horrendous practices brought to light with this case, there are two that particularly highlight issues with the state’s health officials and medical board.

State health officials delayed the public release of the information to patients, which inexcusably delayed testing and possible treatment for those exposed. Then the state’s medical board incredibly found “no evidence of wrongdoing.”

Unfortunately, this is by no means a singular example of the worst medical malpractice offenders being ignored by the New York State Medical Board. Of the 127 doctors in New York who have made 10 or more malpractice payments since 1990, less than one-third have had reportable licensure actions taken against them.

It is clear that we need to fix the system that allows monstrous unaccountability like Finkelstein. As our Director, Laura MacCleery, put it, “The ‘I’ll scratch your back’ culture in medicine, in which doctors have claimed they are competent to police themselves, must end before more people are killed by criminal negligence.”

Stay tuned for Public Citizen’s upcoming in-depth analysis of the state of medical malpractice and insurance in New York.

Hey, it's better than indentured servitude

The lending industry gets a lot of flak for the way it conducts business.  Tactics such as targeting the working poor and racial minorities, imposing prepayment penalties, forcing pre-dispute arbitration clauses into contacts and setting other devious debt traps have received a lot of scrutiny.  Sure, no one likes to see a veteran and his family get kicked to the curb.  But you have to admit, it's a heck of a lot better than indentured servitude.

Kidding aside, Congress is taking action to help protect consumers.  Or is it? 

On Thursday, the House passed the Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915) in a 291-127 vote.  While it would do some good like requiring lenders to evaluate a borrower's ability to repay a loan, there are several provisions that consumer advocates and public interest groups are warning will make things worse for borrowers [PDF].

For example, a broad preemption provision would make current and stronger state laws on predatory lending obsolete.  Homeowners whose loans were sold off--usually to some Wall Street investment group--would be unable to fight back in foreclosure because there would be no meaningful federal protection from abuses by the new owners of their loans.

See if your Rep. voted for H.R. 3915.  If so, tell them they just took a big step backwards for consumers (House directory | 202-224-3121).

RECALL Nancy Nord

While parents were in panic over the lead paint on their children's toys (like "Robot 2000"), what was the head of the government agency in charge of protecting us doing?  Traveling - on the dime of the very industries she is supposed to be regulating.

Nancy Nord, the interim Chairwoman of the Consumer Product Safety Commission (CPSC), has not shied away from that fact that she accepts lavish trips from the industries she regulates and even claims that it is perfectly ethical. 

The CPSC is charged with monitoring thousands of products that we use everyday, including toys, but has been systematically gutted by lack of funding and industry-friendly political appointees.  A proposed bill, the CPSC Reform Act of 2007, would help fix that.  It would more than double the agency's funding, give it new powers to punish those who sell dangerous products, and offer protection to government whistleblowers who courageously report wrongdoing within the agency.

Guess who isn't a fan?

Nord. She is also opposed to a bill that would make her agency more effective and better protect consumers from dangerous products. Could her position having anything to do with a recent free trip to New Orleans?  Or maybe she is just more interested in protecting industry profits than consumers.

You can tell your senators to "RECALL" Nancy Nord and to PASS the CPSC Reform Action of 2007 with additional ethics reforms to prevent staff from accepting industry-sponsored travel.

Scary Movie Night

Public Citizen and Americans for Fairness in Lending teamed up to invite people host a scary movie night in the spirit of Halloween.  We offered to supply hosts with a copy of Maxed Out (while supplies lasted), our report "The Arbitration Trap: How Credit Card Companies Ensnare Consumers," a discussion guide and party favors if they invited friends and family over to share horror stories of consumers being haunted by credit card companies.

The response has been amazing.  From Alaska to Maine and from Wisconsin to Texas, people signed up to host movie nights.  And they are not just happening in living rooms.  People are hosting movie nights at high schools, universities, churches, community centers and even one overseas military base.  Before long, we ran out of our supply of free DVDs, but people still wanted to educate others about this issue and so either bought or rented a copy to screen.

Here is some of the feedback we have received from hosts so far:

"My guests and I couldn't believe what credit card companies are doing with these arbitration clauses.  I cut my card up and am looking for one that does not use them."
-Michael from Illinois

"I've decided to cut back on my credit card use because I'm furious with the shady business tactics they use with us. I'm really glad I signed up for the movie night and will try to reorganize it again for maximum effect."
-Holiday from California

"Maxed Out movie night was great! ...we paused the movie several times to discuss what the movie was talking about...We have decided to get involved with the college and high school kids and make this a huge event."
-Nanette from Oregon

Interested in hosting a Maxed Out Movie Night?  Sign up here.  If you find a copy of Maxed Out, we will send you an event kit with everything you will need.

Consumers Win in Hearing on Capitol Hill

Written by Paul Bland

On October 25, 2007, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held its second hearing on H.R. 3010, Rep. Hank Johnson's Arbitration Fairness Act. (This Subcommittee has jurisdiction over the bill.) H.R. 3010 would ban the use of pre-dispute binding mandatory arbitration in consumer, employment, franchise and medical contracts. (The first hearing was held on June 12th. I testified at it, and my testimony and a transcript of the hearing can be found on the Public Justice website.)

Three members of the Subcommittee attended the hearing. The first is Subcommittee Chairwoman Linda T. Sanchez. Rep. Sanchez has not yet co-sponsored the bill, but she spoke very sympathetically towards the situation of consumers and employees who have been treated poorly in mandatory arbitration systems. It also can’t be understated that Rep. Sanchez showed that she has put a lot of time into understanding the details of the issue, and she (along with her staff) have obviously put a great deal of work into interviewing and locating witnesses and giving both sides an opportunity to develop an extensive record. The second is Rep. Johnson, the sponsor of the bill, who is a courtly freshman representative from Georgia and a powerful orator. The third member was Ranking Subcommittee member Chris Cannon, who is a huge and uncritical fan of mandatory arbitration. In the course of carrying the water of the Chamber of Commerce on the issue, Rep. Cannon’s duties apparently include trying to craft personal attacks on anyone who comes forward with an individual story of having been abused by mandatory arbitration.

There were two panels. On the first panel:

Laura MacCleery, Director of Public Citizen's Congress Watch Division, who spoke about Public Citizen's report ("The Arbitration Trap: How Credit Card Companies Ensnare Consumers") summarizing more than 34,000 arbitrations handled by the National Arbitration Forum in California, and who also spoke in some detail about the problem of arbitration clauses that ban class actions. I have written in several forums that our law firm’s experience (interviewing hundreds of consumers, and dozens of consumer lawyers, strongly supports the conclusions of Public Citizen’s groundbreaking report). Laura spoke with fervor and energy, and was very articulate. Rep. Cannon tried to get her to admit that Public Citizen’s report is very limited in scope, but Laura pointed out (correctly) that it covered EVERY SINGLE case that the National Arbitration Forum reported handling in California over a period of several years.

Written by Paul Bland

On October 25, 2007, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held its second hearing on H.R. 3010, Rep. Hank Johnson's Arbitration Fairness Act. (This Subcommittee has jurisdiction over the bill.) H.R. 3010 would ban the use of pre-dispute binding mandatory arbitration in consumer, employment, franchise and medical contracts. (The first hearing was held on June 12th. I testified at it, and my testimony and a transcript of the hearing can be found on the Public Justice website.)

Three members of the Subcommittee attended the hearing. The first is Subcommittee Chairwoman Linda T. Sanchez. Rep. Sanchez has not yet co-sponsored the bill, but she spoke very sympathetically towards the situation of consumers and employees who have been treated poorly in mandatory arbitration systems. It also can’t be understated that Rep. Sanchez showed that she has put a lot of time into understanding the details of the issue, and she (along with her staff) have obviously put a great deal of work into interviewing and locating witnesses and giving both sides an opportunity to develop an extensive record. The second is Rep. Johnson, the sponsor of the bill, who is a courtly freshman representative from Georgia and a powerful orator. The third member was Ranking Subcommittee member Chris Cannon, who is a huge and uncritical fan of mandatory arbitration. In the course of carrying the water of the Chamber of Commerce on the issue, Rep. Cannon’s duties apparently include trying to craft personal attacks on anyone who comes forward with an individual story of having been abused by mandatory arbitration.

There were two panels. On the first panel:

Laura MacCleery, Director of Public Citizen's Congress Watch Division, who spoke about Public Citizen's report ("The Arbitration Trap: How Credit Card Companies Ensnare Consumers") summarizing more than 34,000 arbitrations handled by the National Arbitration Forum in California, and who also spoke in some detail about the problem of arbitration clauses that ban class actions. I have written in several forums that our law firm’s experience (interviewing hundreds of consumers, and dozens of consumer lawyers, strongly supports the conclusions of Public Citizen’s groundbreaking report). Laura spoke with fervor and energy, and was very articulate. Rep. Cannon tried to get her to admit that Public Citizen’s report is very limited in scope, but Laura pointed out (correctly) that it covered EVERY SINGLE case that the National Arbitration Forum reported handling in California over a period of several years.

Credit Card Report on Marketplace and More

Last week we released our report on credit card companies forcing consumers into binding mandatory arbitration and interest has been very high.

Listen to a short piece on American Public Media's program, Marketplace, or you can read more on The Consumerist where Ben Popken blogged about what consumers are up against, as did Elizabeth Warren on TPM Cafe.  We are really pleased to have the word spread so that together we can end the predatory practice of mandatory arbitration. 

You can download The Arbitration Trap: How Credit Card Companies Ensnare Consumers here.  Also, learn what you can do to protect yourself and tell Congress to stand up for consumers. 

Beware the Arbitration Trap the Credit Card Companies Set for You

Earlier this summer, we sounded the alarm about binding mandatory arbitration (BMA) clauses in the fine print of cable bills sent out by Comcast.  Comcast was not the first company to pull this trick on consumers and, sadly, we’ve learned it is far from the last.

Today, Public Citizen releases a ground-breaking report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers [pdf]. It shows how credit card companies rig their contracts with consumers, using binding mandatory arbitration to evade accountability, strip consumers of their rights and enforce their will. In fact, arbitrators rule for business between 94 and 97 percent of the time.

In a nutshell, BMA is private, corporate-dominated secret “court” that overwhelming rules against consumers. In this world, merely by signing your name on the dotted line, you have forfeited your right to a trial by jury. If someone steals your identity and runs out to buy a $4,000 plasma TV – and the credit card company wants YOU to pay for it – the dispute will automatically bypass the public civil justice system. Instead, it goes straight to an arbitrator who may have heard thousands of cases for that same credit card company. 

Intel Withdraws Class Action Ballot Initiative

A big win for the little guys! This week, Intel and its big-business allies at the California Chamber of Commerce and the misleadingly-named “Civil Justice Association of California” (CJAC) withdrew their ballot initiative aimed at rolling back Californians’ rights in court. The “time wasn't right,” said Intel spokesman Chuck Mulloy.

Why such an abrupt surrender? Perhaps it was the 30,000 faxes citizens organized by the Foundation for Taxpayer and Consumer Rights sent to Intel’s board of directors. Perhaps it was the sluggish fundraising. Or maybe the flurry of countermeasures filed in response, from a competing initiative enshrining the right to the class action to the “No Say, No Pay” act that would force top executives to disclose how much they pay themselves and allow their shareholders to dock their pay. Terrifying! Intel might also have been smarting from the initiative’s tendency to remind consumers of its egregiously racist advertisement. Or maybe it was simply the fact that this unpopular measure had no chance of passing.

Whatever the cause, we congratulate the Foundation for Taxpayer and Consumer Rights for its success, and Californians for keeping their constitutional rights!

Enough is Enough – Kyl Should Stop Blocking OPEN Government Act

Today, Public Citizen sent a letter to Senator Jon Kyl (R.-Ariz.), asking him to allow an important bill to increase access to government information to come to a vote in the Senate.

We’re not the only ones asking for a break. Last week, Sen. Dick Durbin (D.-Ill.), the Democratic whip, sought unanimous consent to bring up the OPEN Government Act again, which would critically improve the Freedom of Information Act (FOIA). The GOP again blocked consideration of the bill for the now-unmasked “Senator Anonymous ” – Senator Kyl (R.-Ariz.). At yesterday’s opening of the Senate session, Senate Majority Leader Harry Reid (D.-Nev.), asked for an end to objections over bringing the uncontroversial, bipartisan bill to the floor. Kyl did not back down.   

It’s time for Senator Kyl to stop obstructing a vote for FOIA and allow the OPEN Government Act to go to the floor. The bill would strengthen the law that provides access to government documents for the press and citizens. Senator Kyl is quibbling over a few parts of the bill, and Senators Leahy (D.-Vt.) and Cornyn (R.-Tx.) have tried to accommodate his concerns.

But there is a limit to how much compromise is deserved here. 

The current bill encourages the timely settlement of cases where the government lacks a reasonable basis to withhold information. The incentive it provides would strengthen FOIA, decrease the cost of litigation and benefit taxpayers. People of modest means should not be penalized when it comes to using FOIA.  In fact, the majority of FOIA requesters are individuals and businesses – taxpayers that deserve real and timely information about the actions of their government.

Senator Kyl should step aside now, and allow the Senate to vote on the OPEN Government Act.      

Comcast Getting Push Back

Last month, when we warned that consumer rights were being threatened by a little pamphlet quietly slipped into cable bills by Comcast, there was an outcry from Comcast customers. Now elected officials in Maryland are taking notice.

Today, the Washington Post reports that the Montgomery County Executive and at least one member of the state legislature are taking extraordinary steps to alert residents about the anti-consumer practice of binding mandatory arbitration:

"Comcast's unilateral action to change the subscriber agreement, with an artificial 30-day deadline, is simply anti-consumer," council member Duchy Trachtenberg (D-At Large), who chairs a management and fiscal policy committee, said in the release.

Jane E. Lawton (D), a state delegate who also serves as county cable administrator, called the policy change "one-sided."

County Executive Isiah Leggett said: "Vendors should not change the terms of service without first receiving the consent of the consumer, and the fact that Comcast has not done this is disturbing."

Comcast isn’t telling where else they are forcing consumers with disputes into binding arbitration without any recourse in the civil justice system.  We have heard reports of the notice being found in cable bills in Florida, D.C., Virginia, Delaware, and Massachusetts. However, Comcast operates in 39 states and the District of Columbia, so chances are other states are affected.      

What can you do? We have opt-out instructions and other ideas on our former blog post.  But you also might contact your county and state representatives and complain loudly about Comcast’s bad business practices.

Taking a Bite out of the Great Medical Malpractice Hoax

Laura MacCleery, Director of Public Citizen's Congress Watch division, debated Jim Copland of the Manhattan Institute for Policy Research on WNYC's "The Brian Lehrer Show."

The segment gets heated as they debate New York State's 14% increase in malpractice insurance and the civil justice system in preserving victim's rights. 

The show asks: what can be done to improve patient safety and hold the most dangerous doctors accountable? Is there really a medical malpractice crisis?

Click below to hear Laura debunk the myths and expose the lies told about doctors, patients and the insurance industry.

The Power of People Over Profit

After our activists helped to defeat Michael Baroody as the once-dangerous nominee for the Consumer Product Safety Commission (CPSC), we put out another call asking for letters-to-the-editor on the urgent need to have the agency represent consumers, not manufacturers.  One of our more moving and inspiring responses came from Lisa Lipin, a mother and consumer advocate from Skokie, Illinois.

Lisa has since been published in the Chicago Sun Times (“Bush should put people before profit”):

I am a Chicago mother who became a consumer advocate in June 2003 after my son was nearly strangled by a dangerous toy that already had been recalled in countries around the world.

I have been urging the Consumer Product Safety Commission to ban the Yo-Yo Water Ball for years. I successfully lobbied Illinois lawmakers to ban this toy effective Jan. 1, 2006, with Senate Bill 1960. I gained the support of U.S. Rep. Jan Schakowsky and Senators Richard Durbin and Barack Obama -- all of whom sent letters to the CPSC urging that the agency ban the toy. Unfortunately, the CPSC refuses to take action and sits idle on the issue.

I was so relieved to hear that Michael Baroody, executive vice president of the National Association of Manufacturers, had withdrawn his nomination to head the Consumer Product Safety Commission under immense public pressure. Baroody was clearly the wrong person for this position, given his background as an industry shill who spent the last 13 years of his career trying to disable the CPSC.

However, we must not forget that Baroody represents a regular practice by the Bush administration of promoting unqualified cronies and anti-government hacks to public office.

It is imperative that President Bush nominate a real advocate for consumers, rather than a spokesperson for big-business interests.

It is high time that the administration put people before profit!

The Chicago Parent also picked up a piece by Lisa, in which she challenges: "Who does the Consumer Product Safety Commission protect?" 

We congratulate Lisa on reaching thousands of readers!  We also thank her for being a relentless advocate for the safety of our children and all consumers.

Protect Your Rights – Opt Out of the "Comcastic" Fine Print

This month, Comcast consumers in Maryland had a little pamphlet called "Arbitration Notice" quietly slipped into their cable bill.

All the legalese can be boiled down to one sentence: "You have 30 days to opt-out of being automatically enrolled in our arbitration clause, thereby forfeiting your right to settle disputes with Comcast in a court of law in a trial by judge or jury."

This unfair and stealthy move by Comcast strips consumers of their rights. Access to justice in the courts is a longstanding cornerstone of corporate accountability.  Arbitration, on the other hand, is a private system stacked in favor of corporations – and an arbitrator’s decision, even if it’s wrong or absurd, cannot be appealed on the merits. 

Comcast is not just bullying consumers in Maryland, whose deadline to opt-out is July 15, 2007.  They are forcing consumers elsewhere into giving up their rights.  The mandatory binding arbitration is now a fixture in the Comcast “Terms of Use”.

Here’s how to stand up to Comcast and its corporate bullying:

• Opt Out: Go to Comcast's online opt-out form and preserve your rights (Don't forget to check the opt-out box!).  This will NOT affect your service.
• Make Noise: Call up Comcast – 1-800-COMCAST (1-800-266-2278) – and complain that they are automatically enrolling customers into their arbitration clause.  Demand to be allowed to opt-out of the binding mandatory arbitration clause!
• Tell a friend: email this post to friends and family.

You also can support the newly introduced legislation to ban the most egregious uses of binding mandatory arbitration clauses.  Be sure to tell us about your experiences with Comcast in the comments section below.

A Good Day for Consumer Justice

Many Americans are unknowingly stripped of their rights when they sign up for health insurance, cable television or credit cards.  Buried in the fine print of these contracts are clauses that force harmed consumers into a private system that is stacked in favor of giant corporations - sometimes with devastating consequences (see the comments).  Binding mandatory arbitration clauses are proliferating in contracts everywhere.

But now we can tip the scales back in favor of consumers.  Yesterday, Senator Russ Feingold (D-Wisc.) and Representative Hank Johnson (D-Ga.) introduced a groundbreaking legislation to restore the rights of millions of consumers, the Arbitration Fairness Act.  This measure bans the use of binding mandatory arbitration in employment, consumer, franchise or civil rights disputes.

Public Citizen's President Joan Claybrook had this to say at today's press conference:

Let me be blunt. Privatizing justice benefits big corporate interests like national banks and insurance companies but does not help ordinary people. Corporations have figured out that simply by inserting an arbitration clause in contracts for everyday consumer goods and services or employment, they can usually evade accountability for any harm they cause or laws they break -- laws meant to protect consumers and employees from the misuse and abuse of corporate power in the marketplace.

How? First, the contracts are take-it-or-leave-it, so individuals have no choice but to accept the arbitration clause if they want the product, service or job, even if they are required by law to buy the service, as is the case with auto insurance, or required by life's uncertainties to purchase a much-needed service like health insurance.

More on Fox for Henhouse

Yesterday Public Citizen President Joan Claybrook announced our opposition to the nomination of Micheal Baroody as the head of the Consumer Product Safety Commission (CPSC).  We also released a short summary of some of the reasons he's so wrong for the job.

Baroody’s nomination reflects an arrogant Administration attempt to further gut the CPSC by filling positions designed for public-minded honest brokers with the Administration’s corporate cronies. His nomination should be rejected by the Senate.

You might have read our first shot across the bow on this blog a few days ago . . . so stay tuned . . . and thanks for taking action.