Watchdog Blog

Time for Congress to Pass Strong Consumer Protection Law

By Joe Newman
Cross-posted from CitizenVOX

Right now, leaders in the House and Senate are preparing to make decisions behind the scenes that will have a tremendous impact on consumer protection in this country. If they can put aside partisan differences and ignore the lobbyists from the manufacturing industry, they have a chance to craft a bill that should help to stem the flood of life-threatening, hazardous products that led to a record number of recalls last year. On Thursday, parents and consumer activists rallied near the Capitol to urge Congress to pass the strongest protections possible. It’s especially an important issue for parents. Last year some 25 million hazardous toys and children’s products, many laden with high concentrations of lead, were recalled.

The U.S. Senate and House of Representatives have each passed a version of the Consumer Product Safety Reform Act (S. 2663/H.R. 4040) and senior members from both houses of Congress are meeting in conference to negotiate a compromise bill.

The Senate and House bills take important steps toward better protecting American consumers by giving the CPSC more resources, improving product testing standards and increasing the penalties manufacturers face for violating the law, among other improvements.

You can take action by writing your member of Congress and urging them to pass the strongest bill possible.

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.

Manufacturers Lose Bid to Evade New Lobbying Law

The National Association of Manufacturers (NAM) lost round one of their attempt to overturn the part of last year's landmark lobbying reform law which requires it to reveal the businesses funding the goliath lobbying organization.  Public Citizen, the Campaign Legal Center, and Democracy 21 filed an amicus brief [pdf] explaining how the disclosure requirement is constitutional, and should be kept intact.  U.S. District Judge Kollar-Kotelly agreed with us.

Judge Kollar-Kotelly dismissed NAM’s constitutional challenge, stating in her opinion:

The Court has conducted a searching review of the NAM’s opening brief, the Opposition filed by Defendant Taylor and the Opposition filed by the Legislative Defendants, the two amici briefs filed in this case by Citizens for Reform and Ethics in Washington (''CREW'') and Campaign Legal Center, Democracy 21, and Public Citizen (jointly the ''CLC Amici''), and the NAM’s Reply brief, as well as the relevant statutes and case law.

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.

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.

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.

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.

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.

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.

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.

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.

The Beginning of the End of the SUV?

Decades of neglecting the rollover threat posed by Ford Explorers may end up having billion-dollar consequences for the automaker, reports the Sacramento Bee. On June 4, trial will begin in a Sacramento California Superior Court in a class-action suit claiming the automaker deceived customers about the safety of its Explorer models, and the damages may be large enough to bankrupt the automaker.

The claim is based on California’s unfair competition and false advertising laws, seeking damages and disgorgement of profits against Ford for marketing the sport-utility vehicle as a replacement for the quintessential family vehicle: the station wagon. Plaintiffs say Ford marketed the Explorer as safe and reliable despite Ford’s knowledge of the vehicle’s inherent rollover risk.

The value of Explorers owned inCalifornia depreciated $1,000 to $1,300 below normal levels after vehicle instability became widely publicized during the Ford/Firestone tire failures. Ford continues the blame faulty tire design for causing its SUVs to rollover, but if the jury is unpersuaded by this argument, Ford could be forced to pay $500 million in damages and an additional disgorgement of Ford’s $2.135 billion profits from California Explorer sales.

This marks the first such case to reach trial, although a similar suit is pending in Illinois.  The class of plaintiffs includes California residents who bought, owned or leased a 1991-2001 model-year Ford Explorer between 1990 and Aug. 9, 2000. Explorer drivers must still own their vehicle or must have sold it or ended their lease after Aug. 9, 2000. All qualifying residents are members of the lawsuit unless they opt out through the court’s Web site.

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.