NCL welcomes CFPB final rule enabling supervision of payment apps

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Media contact: National Consumers League – Lisa McDonald, lisam@nclnet.org, 202-207-2829

WASHINGTON, DC–Today, the Consumer Financial Protection Bureau finalized its larger participant rulemaking, allowing the Bureau to better ensure that payment app companies are complying with federal consumer protection law. As the use of payment apps has exploded over the past decade, CFPB oversight is critical to ensuring that consumers using these apps are receiving the full care and protections they are legally entitled to, including safeguards around payment errors, peer-to-peer fraud, and corporate surveillance.  

“As our financial system evolves, it’s important that regulators keep up. Director Chopra and CFPB staff have done invaluable work over the past three years to ensure that payment facilitators follow the law, even as the technology advances,” said NCL Vice President of Public Policy, Telecommunications, and Fraud John Breyault. “The final rule announced today will help better protect the millions of consumers who use digital wallets and payment apps every day.” 

Additional reading:

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About the National Consumers League (NCL) 

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.

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Consumer coalition supports DOT proposal to ban family seating fees, urges action on additional passenger protection issues

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November 8, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – Today, the National Consumers League (NCL) and six other public interest organizations filed comments supporting the U.S. Department of Transportation’s (DOT) proposed rule to ban fees charged to families trying to secure seats next to their children. NCL has long urged DOT to act on this important safety issue and applauds Transportation Secretary Buttigieg for taking the necessary steps toward ending this unjustifiable practice. 

“We have a basic right to fly with our children and not pay a junk fee for doing so,” said NCL Vice President of Public Policy, Telecommunications, and Fraud John Breyault. “Parents should not have to choose between an affordable airline seat and their children’s safety. Congress and DOT both reached the right conclusion that ending the airlines’ unjustifiable tax on families is the right thing to do for the flying public.” 

NCL also commended DOT for raising questions regarding air carriers’ obsession with add-on fees generally, like charges for providing drinking water to passengers or printing a physical boarding pass. The availability of 24/7 live customer service and seating that meets Federal Aviation Administration (FAA) safety guidelines were also basic services that the consumer coalition urged DOT to require airlines to provide, fee-free. 

“No matter what type of ticket you bought, you should not have to worry if your airplane seat meets FAA safety guidance or if you can receive drinking water on a long flight,” said NCL Public Policy Manager Eden Iscil. “Offering affordable fares is great, but that does not justify skimping on basic consumer protections, especially when it comes to our health and safety. DOT is the only agency in the country with a mandate to regulate these issues. If it doesn’t step in, no one else will.” 

The full comments submitted by NCL, the American Economic Liberties Project (AELP), Consumer Action, Consumer Federation of America (CFA), FlyersRights, Travelers United, and the U.S. Public Interest Research Group (U.S. PIRG) can be found here. 

Further reading: 

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About the National Consumers League (NCL) 

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.

Consumer groups file amicus brief supporting DOT’s airline fee transparency rule

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October 17, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – This week, the National Consumers League and three other public interest advocacy organizations filed a brief of amici curiae in Airlines for America, et. al v. Department of Transportation. The airline industry filed the lawsuit, claiming that the Department of Transportation (“DOT”) lacks the authority to protect passengers, after DOT finalized its rule requiring air carriers to disclose upfront the fees they charge for baggage and reservation changes or cancellations.

“DOT has put in place common-sense price transparency rules,” said NCL Vice President of Public Policy, Telecommunications, and Fraud John Breyault. “Travelers deserve to know up front how much it will cost to bring a bag on a plane or cancel or change their reservation. Unfortunately, the industry’s litigation goes much further than disputing a single rule they do not like. It strikes at the heart of DOT’s ability to issue consumer protection regulations across the board.”

If the industry’s litigation is successful, it could jeopardize decades of basic—yet critical—consumer protections implemented by DOT. In addition to threatening the ancillary fee transparency rule, a ruling by the 5th Circuit in favor of the airlines could jeopardize the Full Fare Advertising Rule requiring air carriers to include all mandatory charges within their advertised prices. The lawsuit comes just four years after the same airlines received more than $50 billion in taxpayer bailouts from the federal government during the COVID-19 pandemic.

The American Economic Liberties Project, Consumer Federation of America, NCL, and the US Public Interest Research Group filed the brief supporting the fee transparency rule.

Additional reading:

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About the National Consumers League (NCL) 

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.

NCL welcomes FTC’s click-to-cancel rule

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October 16, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – Today, the Federal Trade Commission (FTC) announced its final rule requiring the cancellation of subscriptions to be as easy as signing up. Slated to go into effect next year, subscription-based businesses will have to offer a simple cancellation mechanism and will be prohibited from lying about the goods and services they offer.

The following statement is attributable to NCL Vice President of Public Policy, Telecommunications, and Fraud John Breyault:

“Rather than trapping consumers with confusing cancellation processes, sellers should earn our dollars by competing to offer better products. The FTC is sticking up for everyday Americans and making clear that businesses cannot rely on deception to make a profit. NCL has long supported the Commission’s work to make subscriptions easier to manage for consumers, this rule will make those efforts even easier.”

Additional reading:

  • Public comments of NCL and five other organizations supporting the click-to-cancel rule, filed in response to the Commission’s 2023 notice of proposed rulemaking
  • Letter from NCL, Consumer Federation of America, and the National Consumer Law Center supporting the rule in a 2024 administrative law proceeding
  • Public comments of NCL on the harms of current negative-option business practices, filed in response to the Commission’s 2019 advanced notice of proposed rulemaking

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About the National Consumers League (NCL) 

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.

NCL urges Congress to strengthen consumer protections against aviation cyber incidents

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September 18, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – Today, NCL Vice President John Breyault testified before the U.S. Senate Committee on Commerce, Science, & Transportation. The hearing examined cybersecurity threats to the air travel industry and the impacts that these disruptions have on passengers. The Committee’s inquiry follows recent disruptive events in air travel stemming from digital vulnerabilities, such as last month’s cyberattack on Seattle-Tacoma International Airport and the mass outage attributed to a CrowdStrike update in July.  

“When cybersecurity incidents occur in the airline industry, consumers are often the ones who suffer most,” stated Breyault. “Flights are delayed or canceled, personal information is compromised, and families can find themselves stranded for days without recourse.” 

Despite the surge in digital threats targeting the aviation sector, key safeguards remain absent. In his testimony, Breyault urged Congress to take steps to reduce the risk of cyber incidents and to mitigate the harm to passengers when such mishaps occur. 

Specifically, NCL advocated for Congress to: 

  • Establish comprehensive data security standards to provide a baseline of protection for the data consumers routinely share when flying; 
  • Enact legal protections against hacking, fraud, and theft for the billions of dollars in airline rewards that consumers earn, store, and redeem each year; and 
  • Codify the U.S. Department of Transportation’s authority to implement delay compensation requirements for airlines, minimizing out-of-pocket costs for passengers needing food, drink, lodging, and alternative transportation during a flight disruption. 

Breyault’s full written testimony to the Senate Commerce Committee can be found here. 

More information on NCL’s recent work to protect the flying public can be found below. 

The Senate hearing can be viewed here.

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 About the National Consumers League (NCL) 

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.

NCL among one of many organizations expressing concern for the growing catalytic converter theft problem

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August 29, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – Today, the National Consumers League (NCL), along with many other organizations representing a cross-section of industry and interested stakeholders, signed a letter to the chairs of both the Committee on Armed Services and the Committee on Commerce, Science, and Transportation expressing their strong support of an amendment to combat the growing national problem of catalytic converter theft. Catalytic converters are being stolen at increasingly high rates because they contain valuable metals, such as rhodium, platinum, and palladium.

NCL’s CEO Sally Greenberg recently shared her own catalytic converter theft experience in this blog post.

The letter to the committees can be found here.

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 About the National Consumers League (NCL) 

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.

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Family seating rules are a victory for passenger rights

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August 1, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – The National Consumers League (NCL) today applauded the U.S. Department of Transportation (DOT) for proposing long-sought rules requiring air carriers to seat families together at no additional cost. These rules are the culmination of more than a decade of advocacy by advocates, including NCL for common-sense family seating protections.

The following statement is attributable to Sally Greenberg, chief executive officer of the National Consumers League:

“This decision marks the end of the ‘parent tax’ that airlines have gotten away with charging hard-working American families for far too long. Thanks to these common-sense, pro-family rules, parents will soon no longer have to choose between paying a junk fee to sit with their kids or put their children and other passengers at risk by being separated from them in the air. We applaud the leadership shown by the Biden-Harris Administration, Secretary Buttigieg and pro-consumer champions in Congress who helped bring these rules to fruition. NCL looks forward to participating in the rulemaking process and getting these protections across the finish line.”

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 About the National Consumers League (NCL) 

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.

Guest blog: NCL encourages FTC to propose new rule regarding protections for franchisees in response to exclusion from the agency’s non-compete covenants

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By Tesa Hargis, NCL summer intern

On April 24, 2024, the Federal Trade Commission (FTC) announced its final rule on non-compete covenants (the “Rule”).

Fifteen months earlier, on January 19, 2023, the FTC posted the notice of proposed rulemaking (NPRM) for the Non-Compete Clause Rule. The public comments on the proposed rule sought to answer the question of “whether the proposed rule should also apply to noncompete clauses between franchisors and franchisees.”

The Non-Compete Clause Rule comment period closed on April 19, 2023, after being extended from the original deadline of March 20, 2023. The FTC received 26,813 comments and posted 20,697 comments to the rulemaking docket.

A year after the notice and comment period for the Non-Compete Clause Rule lapsed, the FTC’s Final Non-Compete Rule was issued. The Rule bans non-compete agreements at the national level except for those between franchisors and franchisees. The Rule does, however, apply to non-competes between the employees of a franchisee.

Within the supplemental information of the Rule, the FTC explained that franchisees were excluded from the definition of “worker” within the rule because “the relationship between a franchisor and franchisee may be more analogous to the relationship between two businesses than the relationship between an employer and a worker.” However, many comments argued that franchisor-franchisee relationships are similar to employer-employee relationships because, like employees, franchisees generally lack bargaining power, and their interests are not generally protected “because franchisors generally do not entrust franchisees with trade secrets or details about their broader commercial strategy.”

The final rule ultimately does not apply to franchisor-franchisee non-competes, and those covenants remain subject to State common law and Federal and State antitrust laws.

Franchisor business practices and franchise agreements

Parallel to the comment period for the Non-Compete Clause Rule, in March of 2023, the FTC announced a separate request for public comment on franchisor business practices and franchise agreements in an effort to inform policy and enforcement efforts by hearing from a broad range of stakeholders and ensure a fair marketplace and halt unfair and deceptive franchise practices.

The comment period for the Franchise Agreements and Franchisor Business Practices closed on June 8, 2023, after being extended from the original deadline of May 9, 2023, with 5,291 comments received and 2,216 posted. A rule on Franchise Agreements and Franchisor Business Practices has yet to be proposed in response to the comment period which closed thirteen months ago.

Stakeholder comments

Franchisees such as William Kyle, who owns 14 McDonald’s franchises, have highlighted the restrictive nature of non-compete clauses in their agreements. Kyle describes his situation as a “take it or leave it” scenario, with a non-negotiable contract that includes an 18-month non-compete clause preventing him from starting a similar business within a ten-mile radius after his franchise term ends. This severely limits his ability to use his industry experience to support his family if McDonald’s denies him a contract renewal.

Similarly, Melissa Catalano, a Wellbiz Brands franchisee for over ten years, has expressed concerns about being trapped by franchisors who exploit their position. She detailed issues such as arbitrary fees, forced purchases of overpriced supplies, and restrictive policies that leave franchisees financially vulnerable and powerless.

Mark Liston, with over 40 years in the franchise sector, argues that the franchise model provides significant opportunities for business owners and should not be subjected to broad, sweeping regulations. He emphasizes that strong franchisor-franchisee relationships are mutually beneficial and that the franchise model has helped many achieve the American dream.

FTC developments

In response to the March 2023 request for public comment on franchisor business practices, the FTC released several significant statements on July 12, 2024. These include a Policy Statement asserting that certain contract provisions, such as non-disparagement and confidentiality clauses, are unlawful if they restrict franchisees’ communications with regulators. Additionally, the FTC issued Staff Guidance emphasizing that any new or increased fees not disclosed in the Franchise Disclosure Documents are likely violations of the FTC Act. The FTC also published an Issue Spotlight highlighting the top complaints from franchisees, including issues like unilateral changes to operating manuals and high default rates on SBA loans. Lastly, the FTC reopened the comment period until October 10, 2024, reflecting an ongoing commitment to addressing franchisee concerns.

Furthermore, on July 17, 2024, the FTC published an analysis detailing its stance against undisclosed “junk fees” imposed by franchisors, stating that such practices violate the Franchise Rule and Section 5 of the FTC Act.  This analysis explicitly targets undisclosed fees related to marketing, training, property improvement, and other franchisor-mandated products or services. While this is a step in the right direction, the ongoing process must ensure these guidelines are actionable and that franchisors do not continue to use their size and influence to bully franchise owners.

NCL’s position

NCL strongly urges the FTC to revise its current approach by proposing new rules to better protect franchisees. The exclusion of franchisor-franchisee agreements from the Non-Compete Rule, coupled with the delay in addressing franchisor business practices, has left significant gaps in protection for franchisees. The prolonged inaction following the comment period undermines the urgency to tackle pervasive and often exploitative practices in the franchising industry.

The FTC’s recent developments, including the stance against undisclosed “junk fees” and other contract provisions that restrict franchisees, are commendable but only a starting point. NCL calls for the FTC to prioritize robust and actionable regulations that ensure fair treatment of franchisees, promote transparency, and foster a competitive marketplace. It is crucial that the FTC heeds the thousands of stakeholder comments and implements comprehensive protections to address the power imbalances and unfair practices currently faced by franchisees.

NCL recently wrote a letter to FTC Chair Lina Khan on this issue, in which we highlighted that some of the largest franchisors control their franchisees to such an extent that they are effectively operating as the owners and operators of these individual locations while leveraging the legal benefits of being a franchisor. This creates a system where they enjoy the benefits of ownership without any of the risks – which they transfer to their franchisees. We are concerned that private equity firms take advantage of U.S. franchise law, and their heavy-handed control, if left unchecked, threatens to destroy the franchise model and even ruin the American Dream for so many hardworking franchisees.

Sources

Press Release

Non-Compete Clause Rule

Non-Compete Clause Rule Rulemaking Docket

Solicitation for Public Comments on Provisions of Franchise Agreements and Franchisor Business Practices

Solicitation for Public Comments on Provisions of Franchise Agreements and Franchisor Business Practices Rulemaking Docket

Financial Times

TroutmanPepper 

The National Law Review

Melissa Catalano Document (FTC-2023-0026-0001)

William Kyle (FTC-2023-0026-0001)

Mark Liston Document (FTC-2023-0026-0001)

The National Law Review: FTC Issues Statements Signaling Major Changes to its Oversight of Franchise Relationships and Franchise Disclosure Requirements

*Lathrop GPM: FTC Takes Action Impacting the Franchise Relationship

*Links are no longer active as the original sources have removed the content, sometimes due to federal website changes or restructurings.

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About the National Consumers League (NCL)

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 nclnet.org.

NCL sues Washington Nationals over junk fees not disclosed in advertised prices

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July 17, 2024

Media contact: National Consumers League – Lisa McDonald, lisam@nclnet.org, 202-207-2829

WASHINGTON, DC – Today, the National Consumers League (NCL) announced that it has sued the Washington Nationals on behalf of a class of affected consumers in the District of Columbia and beyond for violations of the D.C. Consumer Protection Procedures Act in connection with Nationals’ single-game ticket sales practices.

Consumers are entitled to truthful information from merchants, including information about prices. According to NCL’s complaint, the Nationals advertised deceptively low prices for their tickets by failing to disclose mandatory “ticket processing” fees that could increase ticket prices by more than 25%. The complaint explains that tickets the Nationals advertised on their website as “starting at $9” actually cost $11.25 once the mandatory “ticket processing fee” was added, and that in reality, the Nationals never intended to sell those tickets “starting at $9” on their official website.

Concealing fees of this sort – commonly known as “junk fees” – until late in the transaction is a misleading practice known as “drip pricing,” which frustrates and harms consumers, according to the complaint.

NCL’s complaint alleges that this has been a practice for the Nationals for years, and that these ticketing practices are misleading – and illegal under D.C. law. The D.C. Consumer Protection Procedures Act (CPPA), D.C. Code § 28-3901 et seq., provides a robust set of protections for consumers.  Among other things, it protects the basic right not to be misled about the price of goods and services being offered for sale.

“It’s disappointing that ticket sellers like the Nationals hide the real price of their tickets from consumers until so late in the process,” said Sally Greenberg, NCL’s chief executive officer. “The junk fees attached to the Nationals’ tickets are wrong, and they’re illegal.  We hope this lawsuit brings some much-needed reforms to the ticketing industry to help protect consumers from these abusive practices.”

NCL’s lawsuit seeks damages on behalf of the class of consumers as well as other relief.

Read the full complaint here.

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About the National Consumers League (NCL) 

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.

Chaotic evacuation of American Airlines Flight 2045 shows urgent need for updated evacuation standards and minimum seat sizes

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July 17, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – The evacuation of American Airlines Flight 2045 on July 12 at the San Francisco International Airport appears to have taken significantly longer to complete than the federal standard of 90 seconds. While only minor injuries have been reported, delays in the evacuation created an unacceptable risk of major injuries or death for the passengers and crew on board.

Such chaotic scenes again highlight the urgent need for the Federal Aviation Administration (FAA) to update its emergency evacuation standards to reflect the modern flying environment.

The lengthy American Airlines evacuation was not an anomaly; evacuations over the past decade have consistently exceeded the FAA’s 90-second standard. Evacuation standards were last updated in 2005 and over the intervening 19 years, the in-cabin environment has evolved substantially. Despite these changes, the FAA has rejected or failed to act on 27 recommendations from the FAA Emergency Evacuation Standards Advisory Rulemaking Committee or those of the U.S. Department of Transportation’s own Inspector General. 

As a result, the American Economic Liberties Project, Consumer Action, Consumer Federation of America, FlyersRights, the National Consumers League, Travelers United, and U.S. PIRG are calling on the FAA to urgently address its antiquated safety regulations by:

Updating outdated evacuation standards. Current standards do not reflect the modern cabin environment and do not account for passengers of all ages and body types, record-high passenger load factors, the proliferation of personal electronic devices, the increased amount of carry-on baggage, or the cramped seating conditions of modern aircraft.

Establishing minimum passenger seat sizes. Despite receiving two mandates from Congress and over 26,100 public comments on the issue, the FAA still has not set minimum dimensions for airplane seats. The consistent shrinking of passenger seating has allowed carriers to increase the number of passengers in the aircraft without also increasing the number of exits. Additionally, the cramped seating poses a physical impediment to quick evacuation of the aircraft. 

“The FAA has the ability to reduce the risk of the chaos like what unfolded on Flight 2045,” said John Breyault, National Consumers League vice president of Public Policy, Telecommunications, and Fraud. “Passenger safety and a profitable airline industry are not mutually exclusive. For too long, however, the agency has allowed the airline industry’s concerns about its bottom line to stand in the way of creating standards that lead to a safer cabin environment. That has to stop.”

“The FAA is long overdue in updating its emergency evacuation training and procedures,” said William J. McGee, senior fellow for Aviation & Travel at American Economic Liberties Project. “In recent years we’ve gotten very lucky, as numerous potentially deadly evacuations far exceeded the FAA’s own 90-second timeline. It’s time to rely on proven standards rather than luck.”

“This serves as another example of why the FAA must look at this issue with the importance it deserves,” said Teresa Murray, consumer watchdog director, U.S. PIRG. “The recent evacuation tests relied on ‘able-bodied adult subjects under 60,’ the FAA acknowledged in 2022. We all know this doesn’t reflect modern travel — planes filled with children, senior citizens, people with disabilities and people who are heavy. This issue must be prioritized before we have a tragedy.”

“Emergency landings and emergency evacuations occur several hundred times annually often due to smoke or fire in the cabin. The latest incident showed confusion and panic after a fire erupted in the rear of the plane,” said FlyersRights President Paul Hudson. “Needed improvements were recommended unanimously by the FAA Emergency Evacuation Advisory Rulemaking Committee in 2020. But it is up to FAA Administrator Whitaker to take action, without further delay.”

“This terrifying event is a stark reminder to the FAA to move forward with updated, safer evacuation standards and seating dimensions that reflect current air travel conditions,” said Erin Witte, director of consumer protection at Consumer Federation of America. “We urge the FAA to take the opportunity provided by Congress in the Reauthorization Act to publicly commit to addressing these issues.”

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About the National Consumers League (NCL) 

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.