Texas v. United States – How consumers can protect themselves amid threats to the Affordable Care Act

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Nissa ShaffiLast week a federal judge in Texas, Justice Reed O’Connor, ruled that the Affordable Care Act (ACA) is unconstitutional. The case against the ACA is being led by Texas Attorney General Ken Paxton on behalf of a group of 18 Republican state attorneys general, two governors, and two individual plaintiffs.

The lawsuit argues that because the individual mandate penalty has been repealed (effective 2019), it would render the entire ACA invalid, as the entirety of the law relies on the mandate. The lawsuit makes the claim that the absence of an individual mandate penalty would mean that the entire ACA would be unconstitutional.

While this news is disheartening, it is important for consumers to know that the ACA is still the law of the land. The ruling is currently at the federal district court level and is going to be appealed, led by California Attorney General Xavier Becerra, representing a group of 17 attorneys general in other states. Attorney General Becerra described the ruling as an “assault on 133 million Americans with preexisting conditions and the 20 million Americans who rely on the ACA’s consumer protections for healthcare.”

Although the federal deadline for open enrollment has passed, there are some states that have their own individual exchanges, with extended open enrollment deadlines:

NCL encourages residents of these states who are not enrolled in a marketplace plan to take advantage of these extended deadlines. You can also see if you qualify for a Special Enrollment Period, which allows individuals to sign up for health insurance outside of the Open Enrollment Period if they have had changes in certain life events. If you qualify for Medicaid or the Children’s Health Insurance Program (CHIP), you can apply at any time.

So take heart consumers. NCL believes strongly that this ruling–which comes from a right-wing Texas judge–is overbroad and will be reversed on appeal.

Postal banking, an idea whose time has come… again 

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Brian YoungToday’s banking system is failing middle-class Americans. Around 8.4 million U.S. households do not have a bank account, and nearly one in five households are underbanked. One of the biggest complaints low-income consumers have is that the overdraft fees and penalties charged by big banks whittle away the meager funds in their bank accounts. Unfortunately, the problem is not likely to improve as many banks, despite generating massive profits, are increasing their fees, closing branches, and laying off workers. Compounding the harms identified above, since 2008, 93 percent of branch closures have occurred in neighborhoods with a median income below the national average, which—unsurprisingly—only worsens socioeconomic inequality.

In order to fill the void, predatory payday and auto title lenders have popped up across the country. These lenders charge outrageous check-cashing fees and interest rates of nearly 400 percent on average. With these predatory rates, if a consumer takes out a $500 loan at 391 percent interest, they will owe $575 just two weeks later. With 400 percent interest rates, it is perhaps not surprising that the Consumer Financial Protection Bureau (CFPB) found that four out of five consumers who take out these loans either default or renew their payday loan within a year, costing them even more in interest and fees. The CFPB also found that by the time consumers escape these loans, one out of five new payday loans end up costing the borrower more than the amount they originally borrowed.

Fortunately, there is an alternative to trapping consumers into inescapable cycles of debt: postal banking. Postal banking is not a new idea. Many countries, including France and the United Kingdom, already provide access to affordable loans and other financial services via their postal service. The postal sector has been found to be the second-largest contributor to financial inclusion worldwide; only the banking industry has more financial customers. In fact, few know that from 1911 to 1967, the United States Postal Service (USPS) operated a robust Postal Savings System that once controlled more than $3.4 billion in assets.

Today, USPS no longer offers a savings program. That’s unfortunate, since 26.9 percent of American households are underserved by traditional banks, which means that their options are limited and that they are often forced into utilizing predatory financial services to cash their paychecks and make ends meet. Compounding the problem, many brick-and-mortar retail stores have embraced a new trend to refuse cash payments altogether. All of these developments underscore how having access to affordable and sustainable credit and digital payments is critically important.

The USPS is uniquely situated to provide relief to unbanked and underbanked Americas. Of its 30,000 locations, 59 percent are located in banking deserts, where there are either no banks or just one within an entire zip code.

Empowering Americans to participate in commerce is something the USPS could start doing tomorrow without any action by Congress. A 2014 Office of the Inspector report found that the USPS could, with current regulatory authority, offer a suite of financial products that would help underserved Americans collectively save billions of dollars a year from predatory fees, promote savings, and increase customer participation in e-commerce. It’s also a savvy business, in our view, for USPS to use its existing infrastructure to expand its current line of products and in so doing, boost its bottom line.

Indeed, a broad coalition of labor, public interest, and faith groups agree and are encouraging USPS to offer vital financial products that Americans need to climb the economic ladder. In the days and months ahead, NCL is looking forward to joining the postal banking movement and working to provide consumers with a public banking option.

The need for increased funding for Alzheimer’s research

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Nissa ShaffiOn November 28, in collaboration with Biogen and Eisai, The Hill hosted Preparing for a Treatment – Alzheimer’s Diagnosis and Care, which featured Senator Ed Markey (D-MA) and Senator Thom Tillis (R-NC), along with experts throughout the memory care and Alzheimer’s space. Senators Markey and Tillis discussed the vital need and urgency in funding for Alzheimer’s research and the need for a bipartisan effort towards a cure.

Senator Markey stated that more than five million Americans currently live with Alzheimer’s, and by 2050 that figure could triple to 16 million. Alzheimer’s remains one of the most underfunded and underdiagnosed chronic illnesses, despite having devastating effects equivalent to that of cancer or diabetes. Senator Markey reminisced on the Apollo moon landing in the ‘60s, recalling that the journey to the moon was an impressive feat for our nation and that we must now venture into the journey of the mind, a similarly vastly unexplored area.   

Senator Tillis emphasized the importance of continued development of new treatments for Alzheimer’s. He warned against disengaging in collaborative efforts with pharmaceutical companies on account of a few bad actors, as diminished engagement with pharmaceutical and biotech companies could have devastating effects on risk–taking and innovation.  

Experts from the panel agreed with the Senators that there is a great need for increased research in the biotechnology, pharmaceutical, and primary care spaces. The panelists stated that Alzheimer’s is currently the only disease that has no cure, methods of prevention, or strategies to slow down progression. However, there have been significant advancements made in the detection of Alzheimer’s in the form of amyloid positron emission tomography (PET) scans.  

Amyloid PET scans allow physicians to detect the development of amyloid plaques, which are clumps of insoluble plaques in the brain that destroy connections between nerve cells. These images can afford physicians the ability to detect Alzheimer’s in patients 10-15 years before a diagnosis, potentially transforming primary care delivery and forging a path towards prevention.   

The panelists also discussed the Bold Infrastructure for Alzheimer’s Act (S.2076), which would expand the public health infrastructure to support patients, caregivers, and communities in the Alzheimer’s space. Additionally, the bill would require greater reporting and analysis of state and national data on cognitive decline, caregiving, and health disparities. Introduced by Senators Susan Collins (R-ME), Shelley Moore Capito (R-WV), and Catherine Cortez Masto (R-NV), S. 2076 now enjoys 57 bipartisan co–sponsors, including Senators Markey and Tillis.     

The National Consumers League supports efforts such as S. 2076 that would make strides in addressing Alzheimer’s disease. NCL is also proud to be a partner in WomenAgainstAlzheimer’s We Won’t Wait Campaign, which seeks to unite women in a widespread effort to define Alzheimer’s as the 21st Century’s primary economic justice issue and health crisis for women. The Campaign promotes advocacy, education, and action on five key pillars: public funding, sex-based research, economic justice, diagnosis and treatment, and brain health. 

America’s consumers left out of latest Dieselgate compensation

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When Americans hear “Dieselgate,” they often think of Volkswagen. That’s because the automaker was investigated and sued by the U.S. government and consumers for installing emissions-cheating software in its diesel cars. The cost to VW for these actions could soon top $35 billion, globally – including $25 billion extracted by U.S. authorities in fines, penalties, civil damages, and restitution. But American consumers are still awaiting compensation for similar emissions cheating by other automakers.

Daimler-owned Mercedes Benz, BMW, GM, Renault, and FIAT are all accused of duping customers into thinking they were buying environmentally-friendly diesels that, in reality, were breaking air pollution laws. While the automakers haven’t yet faced consequences in the United States, European authorities are protecting their countries’ consumers by holding the companies to account. The European Union is investigating Daimler, BMW, and VW for colluding to limit clean emissions technologies, and countries like Switzerland have banned diesel models from Mercedes and Porsche.

German authorities launched an investigation into Daimler in March last year for suspected diesel emissions fraud. Two months later, state authorities raided Daimler’s headquarters and other sites around the country, confiscating files and computer drives. In June this year, the German transport ministry ordered Mercedes to recall up to 774,000 cars across Europe after tests found they manipulated diesel exhaust emissions.

In October this year, carmakers began to announce concessions. Daimler said it would offer major exchange incentives to its German customers of up to 10,000 euros (US$11,564) to swap out old diesel vehicle models with “more advanced exhaust gas treatment technology and substantially lower emissions.” Daimler also said it will participate in a federal hardware retrofit program paid for on its own dime. Meanwhile, Volkswagen also offered new incentives of up to 10,000 euros, including on several of its Audi models, and Renault became the first non-German car company in the country to offer similar trade-in perks.

If German customers are receiving thousands of dollars in compensation, shouldn’t American customers be receiving something too?

The answer might rest on differing levels of crackdown. Daimler is being investigated over its emissions systems by the Department of Justice, the Environmental Protection Agency, California Air Resource Board, the U.S. Securities and Exchange Commission, and other federal and state authorities, but the U.S. government has yet to take any public action. In February this year, Senators Ed Markey (D-MA) and Richard Blumenthal (D-CT) – each of whom NCL has honored with our highest consumer protection award over the years – called on the Justice Department to take appropriate action against Mercedes. After all, in the United States, there are estimated to be up to hundreds of thousands of Mercedes diesels that could be polluting up to 91 times the legal standard.

Earlier this month, the White House met with the CEOs of Daimler, Volkswagen, and BMW, including a face-to-face with President Trump. Unsurprisingly, there was no mention of the diesel emissions cheating or the ongoing investigations involving Daimler. If this Administration doesn’t take action against emissions cheaters, it will be up to legislators, the courts, and citizens to hold them accountable. German pressure helped secure buy-backs and retrofits for German consumers; American consumers also deserve to be compensated.

Gray market erectile disfunction medications pose risk to consumers

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Did you know the vast majority of online pharmacies are illegitimate? A review by the National Association of Boards of Pharmacy (NABP) found that only 2.4 percent of online pharmacies comply with U.S. pharmacy laws and practice standards. This alarming statistic sheds light on the growing threat of illegal, online pharmacies – a component of the gray market – to consumer health. While many online pharmacies may present themselves as a legal, safe, and/or cheaper option, purchasing medicines from these websites could come at the cost of safety and security if consumers do not take the appropriate precautions. 

Medications for erectile dysfunction (ED) – which affects 24 percent of men in the United States over the age of 18 – are among the most commonly sold medications on the gray market. Due to a number of factors including the stigma some consumers experience around sexual health conditions and treatments, many patients suffering from ED don’t talk to their doctors or have prescriptions filled. This creates an environment where consumers may instead seek out unsafe, illegitimate online pharmacies to get these prescription medicines.

In accordance with our mission to ensure all Americans have access to safe, effective medicines, the National Consumers League (NCL) partnered with Bayer to develop a white paper, Increased Consumer Risk from Erectile Dysfunction Medication Advertised and Sold on the Gray Market, to analyze the possible dangers consumers face by purchasing ED medications from illegal online pharmacies. NCL presented the paper’s findings in November at the Alliance for Safe Online Pharmacies (ASOP) Global Foundation’s Spotlight on Illegal Online Drug Sales Research Symposium in Washington, DC.

Based on the research, the white paper recommends five concrete policies to improve consumer safety, including:

  • Enhancing consumer awareness about the gray market and promoting health literacy;  
  • Encouraging healthcare providers to talk about the risks of illegal online pharmacies with their patients;  
  • Supporting collaborative law enforcement actions to combat illegal sales on the gray market; 
  • Increasing access to ED medicines by making them available over-the-counter, with robust consumer education and information programs; and
  • Adding to the body of evidence on the dangers of the gray market.     

To learn more about the research and the dangers of the gray market, read the full white paper here.

Abrupt campus closures of major for-profit college exemplifies flaws

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Tucked into the back page of the Washington Post last week was a report about the abrupt closure of another for-profit college chain, the Education Corporation of America (ECA). Virginia College and Brightwood College of Maryland announced they would shut down quickly – affecting 20,000 students at 75 campuses – and ECA says it’s on the brink of insolvency.

 

In a statement on Thursday, Brian Frosh, attorney general of Maryland, said this closure without advance notice or planning demonstrates how poorly equipped for-profit colleges are to provide a quality education to students and plan for stormy financial weather.

Now Maryland officials are scrambling to work with ECA to help its students transfer credits or have their loans forgiven.

NCL has written about the poor record of for-profit colleges – their high default rates, low graduation rates, targeting of low-income and students of color, and dependence on students’ taking out expensive federal loans with dubious employment options after getting a degree, if they even do get a degree.

In closing its doors, ECA complained that the Obama Administration had stripped its accreditor – the Accrediting Council for Independent Colleges and Schools (ACICS) – of the power to participate in the federal student aid program, which is easy money for these low-quality for-profit schools. ECA filed suit against the Department of Education as a result.

But what the ECA suit does not say about ACICS is how the accreditation agency had taken its own action against Virginia College over its concerns.

In a letter, ACICS told ECA’s Virginia College, “The Council has reviewed your recently submitted 2017 Campus Accountability Report (CAR) for the Macon, GA, campus, and the campus-level placement rate of 16% is materially below the Council standard of 60%.”

When your own accreditation agency says you’re failing to meet basic standards, then that’s not really the Department of Education’s fault.

Under Education Secretary Betsy DeVos, for-profit colleges have had a reprieve, but apparently not enough to save the likes of ECA from going under. Without the pipeline of federal loan money going to ECA via students taking out those loans, their enrollment has dropped, along with their reputation. We agree with Maryland AG Frosh, who said, “The continuing harm to students of for-profit colleges shows the need for the Department of Education to change course and start protecting students.”

Will Congress stand by after another mega-breach? 

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Once again, consumers are faced with the news of a data breach affecting millions of Americans. This time, it was Marriott Hotels, the parent company of brands like Starwood, Westin, Sheraton, W, and the eponymous Marriott. Every breach is bad, but this one looks particularly so. Marriott has acknowledged that information belonging to up to 500 million hotel guests’ data may have been exposed.

Thus far, Marriott has issued a statement revealing that an “unauthorized party” copied and encrypted information, which included personal data such as “people’s names, addresses, phone numbers, email addresses, passport numbers, dates of birth, gender, Starwood loyalty program account information, and reservation information.” In short, the crooks got away with everything they would need to defraud millions of consumers. 

Especially galling, it appears that the hackers had access to Marriott’s system as far back as 2014 until the company detected the problem on September 8, 2018. This would mean that Marriott neglected to disclose the hack to the public for almost two months. Numerous lawsuits have been filed against Marriott. Plaintiffs from Oregon to Maryland have claimed that Marriott was negligent in its poor management of their customers’ personal information and consequently exposing them to identity fraud. This cyberattack has surfaced as the second worst recorded data breach behind Yahoo’s 3 billion–account hack in 2013.  

As 2018 comes to an end, the rise of attacks have become more and more unsettling. For example, earlier this year Uber settled its hack and subsequent cover–up for $148 million. When the history of the Internet is written, data breaches will undoubtedly be cited as a key reason for consumers’ declining trust in companies that collect their data.  

Privacy advocates have called for stronger regulation of the companies that handle massive amounts of their users’ information. Despite the growing frustration surrounding consumer privacy, Congress has failed to seriously introduce, let alone pass, a federal consumer privacy bill. With the growing attention towards cyber hacks, Congress must make passing a federal consumer privacy bill that holds companies more accountable a top priority. There should be real penalties for those who handle their users’ information irresponsibly.  

This frustrating status quo may be changing, however. Senator Ron Wyden (D-OR) has drafted his own “Consumer Data Protection Act,” which is the first to propose jail time for business executives that negligently or intentionally fail to disclose cyberattacks. Although the bill contains some strong protections such as regulatory authority for the Federal Trade Commission, many believe it will not gain the necessary traction to pass both houses of Congress. Other bills, such as Intel’s privacy act discussion draft, also contains some much-needed protections. As it prepares to open a new session in January, Congress must address these massive data breaches and push for comprehensive legislation that will protect Americans. 

Minimum wage gets a boost in state initiatives

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Did you know that Arkansas will soon have the highest minimum wage in the United States at $9.25 an hour come January 2019? A quarter of the state’s workers will get a raise! Missouri isn’t far behind, with an initiative passing this fall as well.

As Congress and state legislatures remain in gridlock and unable to move progressive legislation, another very hopeful phenomenon is playing out through the initiative process, even in deep red states. Ballot initiatives are allowing citizens to directly support legislative reforms. As the Arkansas example shows, the greatest beneficiaries are those making minimum wages.

The federal minimum wage is stuck at a paltry $7.25;  for seven years, Congress has taken no action to change that. But 29 states, from Maine to Hawaii, and more than a dozen cities have increased their minimum wages. This translates into 60 percent of minimum wage workers making higher than the federal floor, adding $5 billion to the paychecks of 4.5 million low-wage workers.

Ten states are boosting their wage floors step by step, including California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, and Washington. Automatic cost-of-living increases will kick in in eight other states: Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota.

But let’s give credit where credit is due. The “Fight for $15” movement launched a campaign in liberal areas, first winning at Seattle Tacoma Airport in November 2013 with a referendum for $15 an hour. Within two years, New York and California had adopted $15 an hour as their target. The only thing that is slowing this campaign is state legislatures. When Albuquerque, Chicago, Los Angeles, Providence, Kansas City, San Francisco, San Diego, and Santa Fe each adopted their own minimum wage laws, 18 state legislatures passed laws preempting cities from increasing minimum wages.

Even the liberal DC City Council overruled Initiative 77, which would have done away with tipped wages and ensured all workers in the District earn the minimum wage.

The takeaway here is that increasing the minimum wage turns out to be very popular when placed on the ballot by initiative, even in red states like Arkansas. But reactionary state legislatures, bowing to pressure from the business community, too often work to undo these laws.

We are also cheered by Amazon’s announcement that it will pay all its workforce a base $15 minimum wage and JPMorganChase will pay $18 as a base wage.

Things are looking up for hourly workers. Florence Kelley, NCL’s General Secretary for our first 33 years and drafter of the first minimum wage laws in the United States, is surely smiling down upon us!

Groups urge federal agency to protect consumers from deception in the live event ticketing industry

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December 6, 2018

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242 or Taun Sterling, tauns@nclnet.org, (202) 207-2832

Washington, DC—The National Consumers League (NCL) and Sports Fans Coalition have filed comments with the Federal Trade Commission (FTC) calling the live ticketing industry “rigged” against consumers. The comments, filed in advance of the FTC’s “Online Event Ticket Workshop,” describe how market consolidation since the Live Nation-Ticketmaster merger in 2010 has allowed for the proliferation of deceptive practices such as holdbacks, restricted ticket transferability and the “drip pricing” fees added at the end of the ticket-buying process. 

“Ticketmaster and Live Nation should never have received the green light to merge in 2010. Our warnings about higher ticket prices and harms to the fan experience have been realized,” said John Breyault, NCL vice president of public policy, telecommunications, and fraud. “Since the merger, Ticketmaster has had free rein to gouge consumers with mandatory fees and take away consumers’ rights.” 

The groups’ comments noted that a majority of tickets for the most in-demand events are now held back and siphoned off by industry insiders and brokers to be sold on the secondary market at a substantial markup. The few tickets that actually make it to general on sale are often quickly scooped up by illegal ticket-buying bot software and listed on the secondary market at inflated prices. The comments also highlighted recent investigations into Ticketmaster’s apparent complacency about bot usage despite federal law that outlaws the use of such technology.  

The comments also presented data about the continuing proliferation of “white label ticket” websites, which lure consumers into secondary markets under the premise that they are buying tickets directly from the venue. The cost of tickets purchased on such sites can be significantly higher than face value. 

“Time after time we see fans suffer the most when markets become too concentrated,” said Sports Fans Coalition Executive Director Brian Hess. “The live-event ticket market is no exception. The ‘robust competition’ we were promised in 2010 has failed to materialize and as a result the fans bear the burden. The proliferation of drip pricing, holdbacks, transferability restrictions, bots, and white label sites demonstrate that a market absent of competition is one that is anti-fan.”  

The National Consumers League’s and Sports Fans Coalition’s full comments to the FTC are available here.

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About the National Consumers League

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

About Sports Fans Coalition

Sports Fans Coalition is the nation’s leading sports fan-advocacy organization. Founded in 2009, SFC has led the fight to overturn the FCC’s Sports Blackout Rule, reform the US Soccer system, and protect consumers from league abuses. For more information, visit www.sportsfans.org.

NCL applauds DC Council for taking action to protect consumers from deceptive fine print contracts – National Consumers League

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December 5, 2018

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242 or Taun Sterling, tauns@nclnet.org, (202) 207-2832

Washington, DC—The National Consumers League (NCL), the nation’s pioneering worker and consumer advocacy organization, applauds DC Council for taking action to protect consumers from deceptive automatic renewal clauses. Yesterday, DC Council voted unanimously to pass the “Structured Settlements and Automatic Renewal Protections Act,” which will require that clear notice and disclosure be provided to consumers before contracts automatically renew.  Automatic renewal clauses, also known as negative option clauses, are often snuck into the fine print of contracts to mask rate hikes, or cause gym memberships, newspaper subscriptions, or other services to renew without a consumer’s knowledge or consent.

The following statement is attributable to Brian Young, NCL’s public policy manager: 

Today’s action by the DC Council is a win for consumers. Soon, unscrupulous companies will be unable to sneak these clauses into the fine print of contracts to trick District residents into expensive services they no longer want or can afford. Polls show that 1 in 3 Americans has been tricked into agreeing to an automatically renewing contract. Today’s action by the Council to require companies to provide consumers with a clear notice of an automatic renewal clause and to receive a customer’s affirmative consent prior to converting a free trial into a lengthy contract is a giant step forward for consumer protection in the District. This legislation will ensure that these clauses are used fairly and ethically.

NCL applauds Councilmembers Mary Cheh, Charles Allen, David Grosso, and Anita Bonds for their hard work to provide this long overdue protection to District residents. We urge Mayor Bowser to quickly sign this bill into law. 

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About the National Consumers League

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.