CFA News Update - June 4, 2014

Court Ruling Boosts FCC’s Ability to Pursue Network Neutrality

A ruling last month by the United States Court of Appeals for the 10th Circuit – which denied petitions for judicial review of the FCC’s plan to reform the Universal Service Fund in order to provide support for expanded broadband access – provided strong support for the approach to network neutrality and universal service that CFA has been advocating before the Federal Communications Commission (FCC).  In its initial comments in the Open Internet Remand filed earlier this year, CFA urged the FCC to adopt a broad legal theory that identified multiple, complementary authorities and powers to achieve the primary goals of the Telecommunications Act of 1996 and argued that the Act instituted a new approach to flexibility in pursuing those goals

“The recent court ruling provides an extremely strong foundation for the approach to network neutrality and universal service that CFA has advanced at the FCC,” said CFA Research Director Mark Cooper in a press statement. “Specifically, we urged the Commission to assert §706 authority to promulgate an Open Internet order and §254 authority for Universal Service, while continuing to explore the possibility of also invoking Title II authority for both,” he said.   In recent testimony in the U.S. House of Representatives, FCC Chairman Wheeler  noted that this was the strategy the FCC was pursuing in its new Open Internet Notice of Proposed Rulemaking.

The 10th Circuit ruling “gives a huge boost to this strategy,” Cooper said, because:

  • It finds that §254 is an independent source of authority to include broadband access service in the definition of universal service.
  • It identifies §706 as a separate basis of authority that complements the §254 authority.
  • It recognizes the important role that flexibility has always played in implementation of the Communications Act and explains the logic of the new approach to flexibility embodied in the Telecommunications Act of 1996.
  • It systematically and thoroughly dispenses with a wide range of arguments “that are little more than screeds against change.”

Recent court rules should “send a message to Congress,” Cooper said. “The policy goals of the 1996 Act are clear and the Commission’s authority under the Act has become much clearer,” he said.  “Of course, Congress can change the law, or the policy goals, by passing new legislation that the President signs into law, or by overriding a presidential veto,” he added.  “But it should not create a vacuum and put the important goals of the Act in suspended animation by taking pot shots at the Commission’s efforts to implement the current law in ways that comply with the court’s reading of the Act.”

Lawmakers Urged To Build on CARD Act Success

Celebrating the 5th anniversary of the Credit CARD Act of 2009 last months, consumer advocates applauded the Act for saving Americans billions of dollars in predatory and excessive fees and urged lawmakers to build on the Act’s success by addressing abusive fees on debit and prepaid cards.  “The CARD Act is proof that upfront pricing and strong consumer protections can work together to give consumers safe choices in a competitive marketplace,” said CFA Director of Financial Services Tom Feltner in a press statement.

By one estimate, the CARD Act has saved consumers $12.6 billion annually in lower fees and interest charges.  A recent report from the Consumer Financial Protection Bureau identifies nearly $4 billion annual savings in fees alone.  But debit and prepaid card users remain exposed to abusive practices and excess fees similar to those addressed by the CARD Act for credit card users.  “Protecting consumers from unpredictable or hidden fees is the clear way forward in the debit and prepaid card markets because we know it works,” Feltner said.

FTC Report Sets Stage for Improved Regulation of Data Brokers

The Federal Trade Commission (FTC) issued a report on data brokers last week that includes recommendations for legislation to require more transparency and accountability in this industry.   In a press statement, CFA Consumer Protection Director Susan Grant called the report and its recommendations “significant and welcome steps in the agency’s ongoing work on privacy issues,” adding that “it is now up to Congress to enact the common-sense measures that the agency recommends.”

As the FTC notes, the data broker industry is huge and multi-faceted, collecting and supplying billions of data points about individuals for a variety of purposes. Yet it is largely invisible to those individuals, who have no idea what information about themselves is collected, how it is categorized, with whom it is shared, and how it may used, Grant noted.  Furthermore, individuals have limited control – or no control at all – over the collection, accuracy or use of their data, she said.  “Individuals must have the right and the means to know which data brokers have information about them for marketing purposes, to see what the data is and how it is categorized, to correct the data if necessary, and to exercise reasonable control over its collection and use,” Grant said.

The FTC’s legislative proposals would help to achieve those goals, Grant said, but she argued that the agency could and should have gone further. “The report suggests certain ‘best practices’ for the data broker industry, among which is ensuring that downstream users of the data do not use it for determining eligibility or unlawful discriminatory purposes,” she said. “CFA believes that this important protection should be in the legislative recommendations and urges that it be included in any bills that emerge as a result of this report.”

House Continues Its Attack on the CFPB

The House Financial Services Committee is once again considering a number of bills to weaken the Consumer Financial Protection Bureau (CFPB) and consumer financial protections. No fewer than eleven bills to undermine the agency or make it harder to protect consumers were considered in a legislative hearing of the Financial Institutions and Consumer Credit Subcommittee last month.

“Unfortunately the eleven bills being discussed today by the House Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Financial Services ignore the reality that the CFPB is effectively helping consumers and ensuring that our market place is more fair,” stated CFA Legislative Director Rachel Weintraub in a press statement. “These bills will thwart the progress that CFPB has made and will tie its hands in the future.”

The bills considered at the hearing include measures: to repeal the CFPB’s authority to ban or regulate the use of arbitration provisions in contracts for consumer financial products or services; to impose burdensome new obligations on the agency when it conducts research, collects data, issues guidance, or engages in rulemaking; and to reduce the agency’s ability to provide remediation to consumers when the company that defrauded them is insolvent.

“These bills are part of yet another effort to attempt to roll back the Dodd Frank Act which created an effective CFPB,” stated CFA Director of Financial Services Tom Feltner. “The CFPB must be able to regulate arbitration and have critical tools at its disposal without burdensome requirements in order to protect consumers. These bills do just the opposite.”

The bills are expected to be marked up as early as next week.

Warning of ATV Risks, CFA Launches New Web Resource

In time for Memorial Day weekend, which has traditionally been marked by a substantial number of deaths and injuries from all-terrain vehicles, CFA issued a new warning on the hazards of ATV use. CFA had already documented at least 103 deaths in 2014 as a result of ATV and recreational off-highway vehicle (ROHV) riding at the time of the press release, a  number that has risen to at least 131 since.  “Tragically, historical data shows that ATV related deaths and injuries over Memorial Day weekend are substantial,” said CFA Legislative Director Rachel Weintraub in a press statement that also included safety tips designed to reduce the injury risk.

At the same time, CFA launched a new web resources designed to provide key information to ATV riders, the public and policy makers. Available here, the new web page includes the latest research on ATVs on roads and ATV death and injury data; lists members of a new coalition formed to address this public health crisis; and includes advocacy efforts undertaken by this coalition.  “ATV riders and those who make decisions about ATV access need to be informed about the hazards posed by operating ATVs on roads,” said CFA Policy Advocate Michael Best. “Never before has this been more important in light of the growing trend among states to allow ATVs on roads.”

CFA to Honor Outstanding Consumer Service

CFA will hold its 44th annual Awards Dinner at the Capitol Hilton Hotel in Washington, D.C. on Wednesday, June 18.  Awards are to be presented to Sen. Elizabeth Warren (D-MA), former Director of the FTC Consumer Protection Bureau David Vladeck, Virginia Citizens Consumer Council President Irene Leech, and Kiplinger Publishing.  Tickets for the event are available here.